Avala Announces Positive Preliminary Economic Assessment and Updated Mineral Resource for Timok Gold Project, Serbia

Avala Resources Ltd. (TSX VENTURE:AVZ) (the "Company" or "Avala") is pleased to
announce the results of an independent preliminary economic assessment ("PEA")
and an updated mineral resource estimate for its 100% owned Timok Gold Project
located in Eastern Serbia.


Highlights of the Timok Gold Project PEA



--  Open pit gold mine with an initial life of mine ("LOM") of 8.4 years. 
    
--  Average annual gold production LOM of approximately 81,000 ounces at
    US$788 cash cost per ounce. 
    
--  Average annual gold production of approximately 92,000 ounces for the
    first three years of production. 
    
--  LOM gold production of 680,000 ounces. 
    
--  Average LOM operating costs (including royalties, selling costs,
    closure/environmental costs and sustaining capital) of U$843 per ounce
    of gold. 
    
--  Annual processing rate of 1.68 million tonnes per year. 
    
--  Average LOM gold recovery of 75% from milling and flotation to produce a
    gold-rich concentrate. 
    
--  Estimated pre-production capital cost of US$177 million, including
    working capital. 
    
--  LOM net cash flow of US$127.6 million at a gold price of US$1300 per
    ounce. 
    
--  Net present value ("NPV") of US$65 million at a 5% discount rate and a
    gold price of US$1300 per ounce generating an internal rate of return
    ("IRR") of 14.3%. 
    
--  Project payback of 4.0 years. 
    
--  All economic outcomes presented in the PEA are the same on a pre- and
    after-tax basis as it is expected that the proposed level of investment
    and employment associated with the implementation of the proposed mine
    would qualify for a 10 year tax holiday under current Serbian tax
    legislation. 
    
--  Over 99.5% of the resources within the PEA pit designs are categorized
    as indicated resources. 



Purpose of the Study

The purpose of the PEA was to (a) provide a preliminary concept for the scale
and type of mining project that the Timok Gold Project could support, (b)
identify areas where additional work is required before a pre-feasibility study
can be completed and (c) demonstrate potential for positive economic returns
that would justify continued investment in the Timok Gold Project.


The PEA is preliminary in nature, based on mineral resources, and provides an
indication of potential viability of the Timok Gold Project. Mineral resources
that are not mineral reserves do not have demonstrated economic viability.
Mineral resource estimates do not account for mineability, selectivity, mining
loss and dilution. The PEA includes inferred mineral resources that are
considered too speculative geologically to have economic considerations applied
to them that would enable them to be categorized as mineral reserves. There is
also no certainty that these inferred mineral resources will be converted to the
measured and indicated categories through further drilling, or into mineral
reserves, once economic considerations are applied.


Additional details will be provided in a NI 43-101 technical report to be filed
on SEDAR within 45 days.


Project Throughput Trade-Off Study

Prior to initiating the PEA, Avala carried out an internal, preliminary
trade-off study to determine the optimum throughput rate for the Timok Gold
Project. Throughput rates of 5,000 tonnes per day (1.68 million tonnes per
annum) to 10,000 tonnes per day (3.36 million tonnes per annum) were evaluated
at gold prices from US$1250 per ounce to US$1500 per ounce. The results of the
study indicated that 5,000 tonnes per day provides the best project economics
relative to other operating and financial parameters.


Summary of Base Case Results

The base case assumptions included revenues using a gold price of US$1300 per
ounce and current prices for fuel, reagents, labor, power and other consumables
in Serbia. The key results are as follows:




----------------------------------------------------------------------------
               Preliminary Economic Analysis Base Case Summary              
----------------------------------------------------------------------------
Item                                                                   Value
----------------------------------------------------------------------------
LOM average gold recovery (%)                                             75
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Gold ounces produced (koz)                                               680
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Average annual gold production (koz)                                      81
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Ore mined (Mt)                                                          14.1
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LOM head grade (g/t Au)                                                  2.0
----------------------------------------------------------------------------
Waste material mined (Mt) (including capitalized pre-strip)             63.6
----------------------------------------------------------------------------
Waste to ore strip ratio                                                 4.5
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Construction capital, including working capital (US$M)                 177.0
----------------------------------------------------------------------------
Sustaining capital (US$M)                                               10.6
----------------------------------------------------------------------------
Gross gold revenue (US$M)                                              839.5
----------------------------------------------------------------------------
Net income (US$M) (1)                                                  127.6
----------------------------------------------------------------------------
Net present value at 5% discount rate (US$M) (1)                        64.9
----------------------------------------------------------------------------
IRR (%) (1)                                                             14.3
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Mine life (years)                                                        8.4
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Payback (years) (1)                                                      4.0
----------------------------------------------------------------------------
LOM direct cost (mining, processing and G&A) (US$/oz)                    567
----------------------------------------------------------------------------
LOM cash cost (direct cost + royalties and selling costs) (US$/oz)       788
----------------------------------------------------------------------------
LOM operating cost (cash cost + closure/environmental costs &               
 sustaining capital) (US$/oz)                                            843
----------------------------------------------------------------------------
LOM total cost (operating cost + implementation capital) (US$/oz)       1104
----------------------------------------------------------------------------
Average LOM mining cost (US$/t mined)                                  14.92
----------------------------------------------------------------------------
Average LOM processing cost (US$/t processed)                          11.69
----------------------------------------------------------------------------
Average LOM cost of sales (US$/t processed)                             7.96
----------------------------------------------------------------------------
Annual G&A costs (US$M)                                                 1.24
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(1) Same result on a pre- and after-tax basis due to the expected           
qualification to a 10-year tax holiday under current tax legislation in     
Serbia.                                                                     



The PEA is subject to a number of assumptions, including amongst others, that an
environmental impact assessment will be completed within the required timeline,
that all required permits will be obtained in a timely manner, that the Timok
Gold Project will have the support of the local government and community, that
the regulatory environment will remain consistent and that estimated costs will
not increase materially. The table below summarizes key assumptions in the PEA. 




                                                                            
----------------------------------------------------------------------------
               Preliminary Economic Analysis Key Assumptions                
----------------------------------------------------------------------------
Costs and Recoveries                    Capital Estimate                    
----------------------------------------------------------------------------
Fuel cost (US$/liter)          1.22     Mining (US$M)                 27.24 
----------------------------------------------------------------------------
Electricity cost                                                            
(US$/kWh)                      0.07     Process plant (US$M)          66.64 
----------------------------------------------------------------------------
Mill power usage                        Plant infrastructure                
(kWh/t)                          35     (US$M)                        16.72 
----------------------------------------------------------------------------
Mining (US$/t) - unit                   Area infrastructure                 
cost (ore)                2.36-2.55     (US$M)                         7.29 
----------------------------------------------------------------------------
Mining (US$/t) -                                                            
overall cost                            Regional                            
(waste+ore)                   14.92     infrastructure (US$M)          1.86 
----------------------------------------------------------------------------
Grade control (US$/t)          0.45     Miscellaneous                  7.62 
----------------------------------------------------------------------------
                                        Sub-Total Direct Cost               
Rehabilitation (US$/t)         0.09     (US$M)                       127.37 
----------------------------------------------------------------------------
Stockpile re-handling                                                       
(US$/t)                        1.50     Indirect cost (US$M)          19.14 
----------------------------------------------------------------------------
Plant feed at ROM pad                   Accuracy provision                  
(US$/t)                        0.25     (US$M)                        22.22 
----------------------------------------------------------------------------
Ore haulage (US$/t)                     Sub-Total Initial                   
(Kraku Pester)                 3.50     Capital (US$M)               168.73 
----------------------------------------------------------------------------
Processing (US$/t) -                                                        
full production year          11.55     Owner's costs (US$M)           8.29 
----------------------------------------------------------------------------
Concentrate costs                                                           
(TC/RC, transport                       Total Initial Capital               
etc.) (US$/dry t                        (US$M) - including                  
concentrate)            200.0-203.8     working capital              177.02 
----------------------------------------------------------------------------
General services                                                            
(US$/t)                        0.74                                         
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CAT mining equipment                                                        
financing cost (US$/t)         1.15     State royalty                     5%
----------------------------------------------------------------------------
Total operating cost                                                        
(US$/t)                       37.99                                         
----------------------------------------------------------------------------
Plant recoveries:                       Plant recoveries:                   
Bigar Hill                       80%    Kraku Pester                     56%
----------------------------------------------------------------------------
Plant recoveries:                       Overall plant                       
Korkan                           68%    recoveries: LOM                  75%
----------------------------------------------------------------------------



A full list of the assumptions will be set out in the NI 43-101 technical report
for the PEA.


Project Sensitivities

The Timok Gold Project PEA is based on producing a gold-rich sulphide
concentrate for sale to smelters. A small positive increase in gold price and/or
gold recovery has a marked effect on the project economics, as illustrated in
the table below (with the pit designs and schedules unchanged). The optimum pit
shells, which form the basis of the PEA pit designs, are most sensitive to plant
recovery and the gold price. The Company believes that the metallurgical
testwork recommended in the PEA may result in higher overall plant recoveries,
which would result in a higher conversion ratio. Independently, an increase in
the gold price will also increase the conversion ratio, as larger pits are
developed. As noted below, Avala also intends to assess the potential for
underground extraction of gold mineralisation beneath the open pit designs.




----------------------------------------------------------------------------
            Preliminary Economic Analysis Sensitivity Summary (1)           
----------------------------------------------------------------------------
                                    Gold Price    NPV@0%    NPV@5%       IRR
Sensitivity                           (US$/oz)    (US$M)    (US$M)       (%)
----------------------------------------------------------------------------
                           Gold Price Sensitivity                           
----------------------------------------------------------------------------
Gold price +US$150                        1450     219.2     132.1      22.4
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Gold price +US$100                        1400     188.7     109.7      19.8
----------------------------------------------------------------------------
Gold price +US$50                         1350     158.1      87.3      17.2
----------------------------------------------------------------------------
Base case gold price                      1300     127.6      64.9      14.3
----------------------------------------------------------------------------
Gold price -US$50                         1250      97.0      42.6      11.4
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Gold price -US$100                        1200      66.5      20.2       8.2
----------------------------------------------------------------------------
                            Recovery Sensitivity                            
----------------------------------------------------------------------------
Recovery +6%                              1300     191.0     111.0      19.9
----------------------------------------------------------------------------
Recovery +4%                              1300     169.9      96.6      18.1
----------------------------------------------------------------------------
Recovery +2%                              1300     148.7      80.3      16.3
----------------------------------------------------------------------------
Recovery -2%                              1300     106.4      49.6      12.3
----------------------------------------------------------------------------
Recovery -4%                              1300      85.2      34.3      10.2
----------------------------------------------------------------------------
                           Combined Sensitivities                           
----------------------------------------------------------------------------
Recovery +4% & gold price +US50           1350     202.1     119.2      20.8
----------------------------------------------------------------------------
Recovery +6% & gold price +US$100         1400     257.0     159.3      25.2
----------------------------------------------------------------------------
                                                                            
(1) Same result on a pre- and after-tax basis due to the expected           
 qualification to a 10-year tax holiday under current tax legislation in    
 Serbia.                                                                    



Mineral Resources

In conjunction with the preparation of the PEA, the mineral resource estimates
for the Bigar Hill and Korkan deposits (Oct 2013) and Kraku Pester deposit (Jan
2013) have been updated to constrain the deposits within pit shells for the
purposes of the PEA, based on the assumptions, parameters and methodology that
are summarised below. At this stage the Korkan East deposit has not been subject
to preliminary economic assessment. The Bigar Hill, Korkan and Kraku Pester
estimates are supported by 271,420.2 metres of drilling. The average drill
spacing is 40 meters by 40 meters for indicated resources and 80 meters by 80
meters for inferred resources. The mineral resources for Bigar Hill, Korkan and
Kraku Pester, which were used in the PEA, are listed in the table below. 




----------------------------------------------------------------------------
                             TIMOK GOLD PROJECT                             
              INDICATED AND INFERRED RESOURCES USED IN THE PEA              
----------------------------------------------------------------------------
                                 Indicated                 Inferred         
                         ---------------------------------------------------
                 Cut Off                  Million                    Million
                  Grade   Million     Au   Ounces  Million     Au     Ounces
Deposit        (Au g/t)    Tonnes  (g/t)     (Au)   Tonnes  (g/t)       (Au)
                                                                            
                                                                            
----------------------------------------------------------------------------
Bigar Hill           0.3    38.62   1.19     1.48      1.3    1.3        0.1
----------------------------------------------------------------------------
Korkan               0.3    22.35   1.07     0.77      2.7    0.9        0.1
----------------------------------------------------------------------------
Kraku Pester         0.3     6.45   1.05     0.22      0.3    0.8        0.0
----------------------------------------------------------------------------
Total                       67.42   1.14     2.48      4.3    1.0        0.2
----------------------------------------------------------------------------
Notes: (1) The effective date of the updated mineral resource estimate is   
           May 1, 2014.                                                     
       (2) The resource estimation was prepared by Chris Arnold MAusIMM     
           CP(Geo) of AMC Consultants Limited using the Canadian Institute  
           of Mining, Metallurgy and Petroleum (CIM), CIM Standards on      
           Mineral Resources and Reserves, Definitions and Guidelines       
           prepared by the CIM Standing Committee on Reserve Definitions and
           adopted by the CIM Council.                                      
       (3) The resources are constrained within pit shells returning the    
           maximum undiscounted values, based on the following assumptions: 
           NSR gold price of $1500/oz ($1700/oz spot price less $200/oz for 
           off-site concentrate costs), 85% gold recovery for Bigar Hill and
           Korkan, 80% recovery for Kraku Pester, 55 degree pit slopes,     
           US$2.00/t ore and waste mining costs (including rehabilitation   
           costs) andUS$12.70/t processing and other costs, resulting in cut
           off grades of 0.32g/t for Bigar Hill and Korkan and 0.34g/t for  
           Kraku Pester. Both cut off grades have been rounded to 0.3g/t for
           the reporting of resources within the designated pit shells.     
       (4) Mineral resources, which are not mineral reserves, do not have   
           demonstrated economic viability. The estimate of mineral         
           resources may be materially affected by environmental,           
           permitting, legal, title, taxation, sociopolitical, marketing, or
           other relevant issues.                                           
       (5) The quantity and grade of reported inferred resources in this    
           estimation are uncertain in nature and there has been            
           insufficient exploration to define these inferred resources as   
           indicated or measured mineral resources.                         
       (6) Totals and average grades are subject to rounding to the         
           appropriate precision.                                           
       (7) The key changes between the previous mineral resource estimate   
           for the Bigar Hill, Korkan and Kraku Pester deposits (news       
           release of October 16, 2013) and this updated mineral resource   
           are that the updated resource estimate is constrained within a   
           pit shell and has been reported at a lower cut-off, commensurate 
           with the gold price and costs parameters used to defined the     
           constrained pit.                                                 



The NI 43-101 technical report to be filed for the PEA will include the
technical and scientific data to support the updated mineral resource estimate.


Next Steps

Subject to the availability of funds, Avala plans to do the following work to
advance the Timok Gold Project.


Several metallurgical testwork programs have been undertaken since 2011 on
samples selected from the Timok Gold Project deposits. Initial work investigated
the potential for gold recovery from several processing options, including
cyanidation techniques. During 2012 and 2013, the metallurgical testwork focus
changed to the assessment of ultra-fine grinding and flotation to produce a
gold-rich sulphide concentrate for treatment by others. In addition, the
potential for upgrading via attritioning/scrubbing (pre-concentration) was
evaluated, which showed promise but was not taken further in the PEA design.
Testwork was successful in using primary grinding, ultra-fine grinding and
flotation to produce a gold bearing pyritic concentrate. Metallurgical
recoveries adopted for the design were 80%, 68% and 56% for Bigar Hill, Korkan
and Kraku Pester deposits respectively; into a design concentrate mass pull of
4%. Testwork to support pre-feasibility study activities would include:




--  Detailed mineralogical evaluation to improve understanding of gold
    associations with gangue and sulphide minerals; 
    
--  SAG milling characterization; 
    
--  Further evaluation of scrubbing/attritioning (pre-concentration)
    potential; 
    
--  Evaluation of finer grind sizes to improve flotation recovery; 
    
--  Larger scale ultra-fine grinding testwork to confirm specific energy
    requirements and to prepare flotation feed; 
    
--  Staged Flotation Reactor circuit testing; 
    
--  Production of concentrate for marketing purposes; and 
    
--  Liquid-solid separation testwork (concentrate and tailings). 



Avala has developed an extensive geo-metallurgical database for the Timok Gold
Project and plans to produce detailed three dimensional geometallurgical models
of the deposits to assist with effective targeting of further metallurgical
testwork.


Review of the Bigar Hill and Korkan resource models suggests there may be
potential for underground extraction of gold mineralization beneath the current
open pit designs. Avala plans to assess this potential, along with preliminary
assessment of the recently announced Korkan East deposit.


During Q1 2014 Avala was granted the right to explore on the Bigar Istok license
(15 square kilometers) which is located immediately due east of the Potoj Cuka
Tisnica exploration license, which hosts the currently defined deposits.
Previous exploration in this area has highlighted various gold-in-soil anomalies
together with evidence of historic gold and base metal mineralization as defined
by previous Serbian State exploration drilling. Avala believes that the
exploration potential of the Bigar Istok license area, together with the various
prospects located proximal to the currently defined deposits, remains high.


Qualified Persons

The PEA was completed by AMEC Australia Pty Ltd. under the supervision of Peter
Nofal, FAusIMM, with participation of AMEC Growth Regions Mining Services Group
UK and Gary Jobson, MAusIMM, of Macromet Pty Ltd. (metallurgy), Nick Journet,
ARSM, FAusIMM, of Dumpsolver Pty Ltd.(mining), Chris Arnold MAusIMM CP(Geo), AMC
UK, (geology and resource modeling), Fergus Anckorn, FAusIMM CP(Environmental),
of AMEC Earth and Environmental (UK) Ltd (Environmental, Social and Permitting),
Ciaran Molloy, MIMMM ICE QP of AMEC Growth Regions Specialty Mining Services
Group (Geotechnical & Civil Engineering), and Rod Cameron, F.Geol.Soc.London
Chartered Geologist, of AMEC Growth Regions Speciality Mining Services Group
(Tailings and Water Management). The Bigar Hill, Korkan and Kraku Pester updated
mineral resource estimate was undertaken by independent qualified person Chris
Arnold MAusIMM CP(Geo) of AMC. Mr. Arnold has reviewed and approved the contents
of this press release insofar as mineral resource estimates are concerned. Dr.
Julian F. H. Barnes, FAusIMM, MAIG, a director of the Company and special
consultant, is the Company's designated qualified person for purposes of the
PEA. All qualified persons have reviewed and approved the disclosure in this
press release related to their respective areas of expertise.


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 the Korkan,
Bigar Hill, Kraku Pester, and Korkan East deposits. Avala controls 100% of this
recently 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 had approximately $1.1 million in its treasury at March 31, 2014. Avala's
issued and outstanding share capital totals 254,492,223 common shares, of which
approximately 53.1% is held by Dundee Precious Metals Inc. (TSX:DPM).


Additional information about the Company is available on Avala's website
(www.avalaresources.com) and on SEDAR (www.sedar.com). 


Cautionary Statement Regarding Forward-Looking Information 

This press release contains 'forward-looking information' within the meaning of
Canadian securities legislation. Forward looking information in this press
release includes information about the results of a Preliminary Economic
Assessment (PEA). This PEA is the first in a series of development studies for
the project assessing the potential viability of a potential mining operation on
the Timok Gold Project. The operating and capital costs estimated in the PEA
were developed to be reasonable estimates within industry benchmarks. The PEA is
intended to quantify the project's cost parameters which will, in turn, be used
to guide ongoing exploration and engineering work and to define the optimal
scale of the operation for a feasibility study. Forward looking information in
this press release also includes information about planned metallurgical
testwork and the ability to increase metal recoveries through additional work,
completion of a pre-feasibility study, the potential to incorporate an
underground operation into the open pit plans for the Timok Gold Project, and
the exploration potential of the Bigar Istok license and the target areas nearby
Bigar Hill, Korkan, Kraku Pester, and Korkan East. This press release also
includes an updated mineral resource estimate. Mineral resources are not mineral
reserves and do not have demonstrated economic viability. Inferred resources
have a great amount of uncertainty as to their existence, and economic and legal
feasibility. Since forward-looking information is based on assumptions and
addresses future events and conditions, by its very nature it involves risks and
uncertainties. Certain assumptions used in the PEA and the resource estimate are
summarized in this press release. Actual results could differ materially from
those anticipated in the forward looking information for many reasons including,
but not limited to: changes in general economic conditions and conditions in the
financial markets; changes in demand and prices for gold; changes in prices of
inputs and other assumptions in the PEA and the resource estimate;
unavailability of the 10-year tax holiday; legislative, environmental and other
regulatory, political and competitive developments; operational difficulties
encountered in connection with the activities of the Company; and the Company's
financial condition and financial resources to execute its business plans. These
and other factors referred to in public disclosures and filings by the Company
should be considered carefully, and readers should not place undue reliance on
the Company's forward-looking information. The Company does not undertake to
update any forward-looking information, except as required by applicable
securities laws. 


Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this press release.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Avala Resources Ltd.
James Crombie
President and Chief Executive Officer
+1.450.640.0810
[e-mail]
www.avalaresources.com