Avala Resources Completes the Initial Kraku Pester Resource Definition Drilling Program, Serbia

Avala Resources Ltd. (TSX VENTURE:AVZ) (the "Company" or "Avala") is pleased to
present an update on progress and drill results from the Kraku Pester project
area, part of the Timok Gold Project, a new gold discovery in an emerging
sediment-hosted gold belt located in Eastern Serbia.




1.  HIGHLIGHTS 

--  The recently completed Kraku Pester resource definition program was
    focused on establishing continuity of mineralization. The drilling
    program has used a nominal 80 meter by 80 meter grid spacing, together
    with a subset of the target area at a nominal 40 meter by 40 meter grid
    spacing. The drill holes are located within the Kraku Pester mineralized
    'footprint' that was outlined by Avala during the earlier, 160 meter by
    160 meter diamond drilling program, which started in August, 2010. 
--  Recently completed resource definition reverse circulation (RC) and
    diamond (DD) drilling at Kraku Pester has returned the following
    moderate to strong, selected gold intercepts (0.4g/t Au cut-off grade): 

----------------------------------------------------------------------------
Hole ID             From (m)      To (m)Interval (m)    Au (g/t) Gram-meters
----------------------------------------------------------------------------
PERC035(i)                39          49          10        4.44          44
PERC040                    8          21          13        0.59           8
PERC040                   31          63          32        1.24          40
PERC040                   83         176          93        1.20         112
PERC041                    2          37          35        0.76          27
PERC041                   73         126          53        1.61          85
PERC046                    2          55          53        0.86          46
PERC046                  114         169          55        1.16          64
PERC047                    4         132         128        1.16         148
PERC060                    6          42          36        1.02          37
PERC062                   15          65          50        1.34          67
PERC070                   10          50          40        1.17          47
PERC075                    1          52          51        2.12         108
PERC077/PEDT077(                                                            
ii)                        1         138         137        1.63         224
PEDT077                  144         155          11        1.02          11
PEDT077                  162         178          16        0.71          11
PERC081                   12         105          93        1.80         167
PERC087                    5          86          81        1.46         118
PERC089                    9          80          71        1.19          84
PERC093                    3         107         104        1.41         147
PERC094                   63         139          76        3.07         233
PEDD031(iii)              17        56.6        39.6        1.13          45
PEDD034                   47          85          38        1.49          57
PEDD035                    5         110         105        1.35         142
----------------------------------------------------------------------------

    --  Note: Intersections calculated using 5 meter minimum thickness, 5
        meter maximum included waste. 
    --  Note: The listing does not include 'twin' diamond drill hole
        intersections of drilled RC holes. 
    --  (i) Denotes a nominal 80 meter by 80 meter infill drill hole; all
        other listed drill holes are nominal 40 meter by 40 meter infill
        drill holes. 
    --  (ii) PERC077 continued as diamond tail PEDT077 (refer to Table 1). 
    --  (iii) Drill holes terminate in mineralization i.e. mineralization
        remains open at depth. 

--  The Timok Gold Project comprises several targets including Bigar Hill,
    Korkan and Kraku Pester. Avala controls 100% of this newly identified
    sediment-hosted gold belt which totals approximately 250 square
    kilometres (Figure 1). 
--  The Company reported an initial resource estimate for Bigar Hill on July
    6, 2012. The Bigar Hill mineral resource prepared by AMC Consultants
    Limited (UK) ("AMC") has been estimated at 38,000,000 tonnes grading an
    average of 1.3 g/t gold in the inferred resource category for 1,500,000
    ounces of gold, using a 0.4 g/t gold cut-off. 
--  The Bigar Hill resource estimate was the first of three scheduled
    resource estimates, with Korkan and Kraku Pester to follow. The initial
    Korkan resource definition drilling program was completed in August and
    the database has been closed off, with the data forwarded to AMC. The
    Kraku Pester drilling database has now been closed off, with the data
    forwarded to AMC. 
--  Infill drilling at 40 meter by 40 meter spacing has re-started at Bigar
    Hill and Korkan. 
--  Exploration diamond drilling continues to test new targets within the
    Timok Project area. 
--  Avala currently has five diamond drill rigs and two RC drill rigs
    operating on the Timok Gold Project. 

2.  DRILLING AT KRAKU PESTER 



Resource Definition Drilling: 



--  Avala commenced RC drilling at Kraku Pester on the 26th February, 2012.
    Drilling was completed in September, 2012 for a total of 24,954.5 meters
    (9,992.5 meters of diamond drilling and 14,962 meters of reverse
    circulation drilling). 'Twin' diamond drilling of reverse circulation
    drill holes represented approximately 7% of total RC drilling. 
--  The Kraku Pester project, covering an area of approximately 0.15 square
    kilometers, has been drilled on a nominal 80 meter by 80 meter grid
    spacing. In addition, a portion of the target area has been drilled on a
    nominal 40 meter by 40 meter grid spacing to provide geostatistical
    support for resource estimation purposes. 
--  Refer to Table 1 for a summary of all intersections at a 0.4g/t Au cut-
    off grade for all Kraku Pester reverse circulation and diamond drill
    holes. Figure 2 shows a gram-meter total metal contour plot (intervals
   greater than 0.4g/t Au x thickness), of all Kraku Pester drilling to
    date, superimposed on topographic contours. Figure 3 shows a
    representative cross-section through Kraku Pester. Figure 4 shows all
    Kraku Pester drill hole collar locations. 
--  The routine reverse circulation-diamond 'twin' drilling program
    continues to confirm that the majority of mineralized intercepts and
    hence the deposit style, are dominated by layer-parallel,
    lithology/fault-controlled gold mineralization. 
--  The reverse circulation-diamond 'twin' drill holes suggest that there
    can be close spaced variation in gold grade, as is typical for gold
    deposits. 
--  Multiple gold mineralized intercepts per hole are a common feature of
    the gold mineralization outlined to date in the Bigar Hill, Korkan and
    Kraku Pester target areas. 



Exploration Drilling:



--  Wide-spaced, nominal 160 meter by 160 meter diamond drilling
    approximately 1,000 meters southeast of the area of Kraku Pester
    resource definition drilling has returned the following moderate to
    strong gold intercepts (0.4g/t Au cut-off grade): 

---------------------------------------------------------------------------
Hole ID                                      Interval                      
                       From (m)     To (m)        (m)   Au (g/t)Gram-meters
---------------------------------------------------------------------------
PSDD001                      39         49         10       0.55          6
PSDD004                      32         42         10       2.75         28
PSDD004                     167        179         12       6.05         73
---------------------------------------------------------------------------

    --  Note: Intersections calculated using 5 meter minimum thickness, 5
        meter maximum included waste. 

--  Gold mineralization is hosted within the upper portion of the target
    stratigraphy which consists of volcanic-lithic clastic sediments
    (variably hornfelsed) and also within the footwall monzonite. 
    
--  Mineralization remains demonstrably open to the south and wide-spaced,
    diamond drilling continues. Figure 5 shows the location of the Kraku
    Pester resource definition area relative to PSDD001 and PSDD004. Refer
    to Table 2 for a summary of all intersections at various cut-off grades
    for Kraku Pester South diamond drill holes PSDD001 to PSDD005. 
--  Avala is very encouraged to have intercepted a new, discrete zone of
    gold mineralization approximately 1 kilometer south of Kraku Pester. The
    Kraku Pester South intercept confirms both the exploration approach and
    the potential of the belt, as the new intercepts are associated with a
    strong gold in soil anomaly and encouraging trench sampling. 

3.  KRAKU PESTER RESOURCE ESTIMATION 

--  Following site visits by AMC, the Kraku Pester exploration database has
    been delivered to AMC in order to undertake independent resource
    estimation compliant with Canadian NI 43-101. 
--  It is planned to complete the initial resource estimate on Kraku Pester
    by the end of Q4, 2012. 
--  The current Kraku Pester database is based on 14,962 meters of RC
    drilling and 9,992.5 meters of diamond drilling for a total of 24,954.5
    meters in 139 drill holes. The database includes over 50,000 analyses
    (gold, silver and sulfur) including 34,296 gold assays, of which
    approximately 26% are internationally accredited standards, blanks and
    routine QAQC duplicate and replicate check assays. All drill holes have
    been down-hole surveyed at regular intervals, with drill collars
    surveyed using DGPS or total station surveying methods. The topographic
    surface is based on detailed DGPS and total station surveying methods,
    with an average survey station spacing of approximately 15 meters by 15
    meters. Over 1,500 bulk density measurements have been collected, using
    standard wax-sealed immersion methods. Over 7 diamond/RC drill pairs
    have been completed to date. 
--  All drill hole assaying and bulk density measurements have been carried
    out independently by SGS. 

4.  GEOLOGY, MINERALIZATION STYLE AND DISCUSSION 

--  Sediment-hosted gold, located along the western margin of the Timok
    Magmatic Complex, represents a previously unrecognized style of gold
    mineralization within the Timok region. 
--  Within the Timok Gold Project, stratabound, fault-controlled breccia
    together with minor karst-infill breccia represent the styles of
    sediment-hosted gold mineralization recognized to date. 
--  At Kraku Pester, sediment-hosted gold mineralization is of a
    predominantly stratabound and fault-controlled breccia style and also
    occurs within the pre-mineral, footwall monzonite intrusive. 
--  Gold mineralization appears to be associated with fine-grained pyrite
    (sulfidation reaction) and a number of alteration styles including
    kaolinitization, decarbonatization of calcareous sedimentary rock
    adjacent to the gold mineralization and occasionally, silicification. 
--  Gold mineralization is predominantly hosted within a favourable
    sedimentary package - the 'target stratigraphy' - which is underlain by
    Jurassic and Lower Cretaceous limestones and consists predominantly of
    calcareous sandstones and conglomerates. Mineralization is also hosted
    in the underlying carbonate sequence, dominantly within tectonized
    structures. 
--  The upper portion of the target stratigraphy consists of 'red'
    sandstones and volcanic-lithic clastic sediments, which are in turn,
    overlain by calcareous marls, andesitic volcanic and volcaniclastic
    rocks, representing the youngest portion of the target stratigraphy. 
--  Figure 1 shows the location of the Korkan-Bigar trend and the Kraku
    Pester target area within the greater sediment-hosted gold belt, as
    defined in this image by mapped 'target stratigraphy'. Figure 1 also
    shows anomalous gold soil geochemistry, on which the total metal contour
    plots, based on drill intersections, are superimposed. The significant
    potential of the belt can be clearly seen when the surface area of the
    mineralized 'footprints' of the currently drilled target areas within
    the Korkan-Bigar trend are compared to the overall extent of the
    presently defined gold soil anomalies. 
--  A major sediment-hosted gold belt bordering the western boundary of the
    Timok Magmatic Complex, identified by soil and trench samples, extends
    over 50 kilometers along strike and is up to 8 kilometers wide. 
--  Soil sampling has been completed to the south of the currently defined
    50 kilometer strike in order to attempt to determine the overall extent
    of the belt which, based on the extent of mapped 'target stratigraphy',
    has the potential to be approximately 70 kilometers in length. 
--  The geology, geochemistry and available drill intersections suggest a
    strong similarity to the style of gold mineralization typified by the
    North Carlin Trend, Nevada, USA. 
--  The recognition that the majority of the significant trench and diamond
    drill intercepts returned to date occur within the same flat lying or
    shallow dipping sedimentary package has significant implications for the
    gold potential of the Korkan-Bigar trend and the entire sediment-hosted
    gold belt. 
--  Avala intends to systematically explore all currently defined priority
    target areas on the belt. 
--  Please see the following link to view all Korkan-Bigar and Kraku Pester
    drill holes located spatially in three dimensions:
    http://www.corebox.net/properties/timok-gold-project 

5.  SAMPLING AND ANALYSIS 



The majority of soil samples have been assayed at the ALS Chemex laboratory,
Perth, Australia. More recent programs have been assayed at the SGS managed
laboratory at Chelopech in Bulgaria using a combination of ICP-OES and ICP-MS;
whereas, gold has been assayed by low level detection fire assay method with an
AAS finish. The Company has established a laboratory facility at Bor, Eastern
Serbia which is independently managed by SGS. Trench samples were prepared at
the laboratory facility at Bor and the samples have been assayed at the SGS
managed laboratory at Chelopech in Bulgaria or the laboratory facility at Bor.
Diamond drill core has been prepared at the laboratory facility at Bor and
assayed at either the SGS managed laboratory at Chelopech in Bulgaria or the
assay laboratory at Bor. A one metre sampling interval has been used where
possible for the Sediment-Hosted Gold project diamond drilling program. Half
core is routinely submitted to the laboratory for analysis. Reverse circulation
drill samples have been prepared at the laboratory facility at Bor and assayed
at the laboratory at Bor. A one metre sampling interval has been used for the
Timok Gold Project reverse circulation drilling program. Following Avala
standard quality assurance procedures, a full suite of field and laboratory
duplicates and replicates along with internationally accredited standards and
blanks, have been submitted with each batch of samples.


Trench sampling was carried out as channels in the wall just above the trench
floor on 2m intervals. Except where extensive soil cover is encountered,
trenches were sampled in their entirety. The samples were routinely weighed
prior to final bagging to maintain an even sample size and to avoid sampling
bias in harder rock types. An average channel sample weight was maintained at
3kg/m, which produces a consistent sample weight approximating half HQ core
samples. Field duplicate samples were taken every 20 samples and known standards
were inserted into the sample stream after every 20th sample. A geological and
structural log was completed as for diamond drilling. All data collected in the
field was routinely entered into geology and structural geology spread sheets
using Field Marshal software for subsequent entry to an acQuire database and
validation.


Dr Julian F. H. Barnes, a qualified person under National Instrument 43-101, a
Director and the Company's Special Consultant, has approved the technical data
in this press release.


Further information about the Timok Gold Project and the Bigar Hill mineral
resource estimate as well as information about geology, mineralogy, sampling,
interpretations, analytical procedures, and quality assurance and quality
control measures, refer to the NI 43-101 Technical Report prepared by Chris
Arnold, MAusIMM (CP) of AMC Consultants (UK) Limited and Deepak Malhotra, P.
Eng, PhD (SME), of Resource Development Inc. dated June 30, 2012. The report is
available on SEDAR (www.sedar.com) and on the Company's website.


About Avala Resources Ltd.: Avala Resources is a mineral exploration company
focused on the exploration and development of the Timok Gold Project in Eastern
Serbia. The Timok Gold Project comprises several targets, including Bigar Hill,
Korkan, and Kraku Pester. Avala controls 100% of this newly identified
sediment-hosted gold belt which totals approximately 250 square kilometers. The
common shares of Avala trade on the TSX Venture Exchange under the symbol AVZ.


Avala is well-capitalized, with approximately $10 million in its treasury at
August 31, 2012, which it plans to use for the exploration and development of
its mineral projects in Serbia. Avala's issued and outstanding share capital
totals 214,492,223 common shares, of which approximately 51.4% is held by Dundee
Precious Metals Inc. (TSX:DPM).


Cautionary Statement

This press release contains 'forward-looking information' within the meaning of
applicable Canadian securities legislation. Generally, forward-looking
information can be identified by the use of forward-looking terminology such as
"anticipate", "believe", "plan", "expect", "intend", "estimate", "forecast",
"project", "budget", "schedule", "may", "will", "could", "might", "should" or
variations of such words or similar words or expressions. Forward-looking
information is based on reasonable assumptions that have been made by the
Company as at the date of the information and is subject to known and unknown
risks, uncertainties, and other factors that may cause actual results or events
to differ materially from those anticipated in the forward-looking information. 


Forward looking information in this news release includes information with
respect to the Bigar Hill mineral resource estimate and its potential expansion,
the Company's plans to complete resource estimates on the Korkan and Kraku
Pester project areas, the timing and location of future work programs, the
results and interpretation of studies and exploration activities, the nature of
the mineralization of the project, the potential size of the sediment-hosted
gold system, the possibility that the Timok Gold Project will prove to be
economic, and the suggested similarity to the style of gold mineralization of
the North Carlin Trend project. 


Although the Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be factors that cause results to be other
than as anticipated, estimated or intended. There can be no assurance that the
forward looking information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
information. The Company does not intend to update the forward-looking
information except as required by law. Accordingly, readers should not place
undue reliance on forward-looking information contained herein. 


Figures and tables are available at the following link:
http://file.marketwire.com/release/AVZ_FIG_TAB.pdf.