Avala Resources Updates on Drilling Results at Korkan-Bigar target Area

Avala Resources Ltd. (TSX VENTURE:AVZ) has presented an update on drill and trench results from the Korkan-Bigar target area, part of the sediment-hosted gold belt within the Cretaceous magmatic arc bordering the Timok Magmatic Complex in Eastern Serbia.

"The initial drill results from the wide-spaced drilling program on the Korkan-Bigar target area are very much in line with our expectations from this style of sediment-hosted gold mineralization," said James Crombie, President and CEO of Avala. "We will continue to aggressively drill test this large gold mineralized area which represents one of the multiple target areas within the 20 kilometer long sediment-hosted gold belt defined to date".

1. HIGHLIGHTS

• Wide-spaced 'step out' drilling on the Korkan target area has confirmed strong gold mineralization within the target stratigraphy, a sequence of intensely altered and decarbonatized conglomerates and sandstones.
• Drilling of the Korkan target area returned the following wide, medium grade gold intercepts (0.4g/t cut-off grade):
   
  • KODD002 (located 160 meters south from discovery drill hole KODD001):
    • 20m @ 2.63g/t (from 132m)

      • Including: 17m @ 3.00g/t (from 132m)

  • KODD007 (located approximately 440 meters southeast from discovery drill hole KODD001):
    • 38m @ 1.09g/t (from 233m)

      • Including: 20m @ 1.76g/t (from 241m)

• Geological mapping and surface soil geochemistry suggests that the Korkan and Bigar target areas are part of one contiguous zone, obscured in the center by a barren overlying clastic sediment and marl unit. Recent trenching at Bigar North, some 1.5 kilometers to the south of the Korkan discovery trenches, has intersected gold mineralization within a conglomerate and sandstone unit and has returned the following (0.4g/t cut-off grade):
   
  • BITR060: 82m @ 0.74 g/t
     
• The combined Korkan-Bigar target area is over 10 kilometres long and 2.5 kilometers wide.

2. GEOLOGY AND MINERALIZATION STYLE

• 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.
• The Korkan-Bigar target area is underlain by massive Jurassic limestone, unconformably overlain by a polymict conglomerate and sandstone sequence with a carbonate matrix component which is the host to the strongly mineralized interval intersected by the initial drill hole KODD001 which returned 52 meters at 4.30g/t gold (previously reported in a news release dated Nov. 10, 2010). The polymict conglomerate is overlain by calcareous sediments (conglomerate, mudstone and sandstone) which do not contain gold, along with an unmineralized overlying marl unit. Avala believes that these overlying sedimentary units represent a barren 'cover sequence'. The polymict conglomerate and sandstone unit, which is host to the gold mineralization intersected to date, appears to have been very gently folded under the 'cover sequence' and 'daylights' again at the northern part of the Bigar target area.
• The Korkan-Bigar target area represents possible stratabound sediment-hosted gold mineralization within a favourable sedimentary unit; the polymict conglomerate and sandstone.

3. DRILLING AT KORKAN

• Following initial diamond drilling (KODD001) on the Korkan target area a program of step out drilling, on a nominal 160 meter by 160 meter spacing, has been started. The results of diamond drill holes KODD002 to KODD007 are discussed in this release.
• Diamond drill hole KODD002, located 160 meters south of KODD001 (52m @ 4.30g/t) has returned (0.4g/t cut-off grade):
   
  • 20m @ 2.63g/t Au (from 132m)
    • Including 17m @ 3.00g/t Au (from 132m)
       
• Diamond drill hole KODD005, located 320 meters south of KODD001 has returned (0.4g/t cut-off grade):
   
  • 13m @ 0.52g/t Au (from 229m)
  • 1m @ 22.4g/t Au (open) (from 256m; end of hole = 257m)
     
• Diamond drill hole KODD007, located approximately 440 meters southeast of KODD001 has returned (0.4g/t cut-off grade):
   
  • 5m @ 0.43g/t (from 50m)
  • 38m @ 1.09g/t Au (from 233m)
    • Including 20m @ 1.76g/t Au (from 241m)
       
• Drill holes KODD003, KODD004 and KODD006 have intersected low grade gold mineralization within the clastic sediments located immediately above the footwall, massive Jurassic limestone, the low grade gold intercepts intersected at shallower levels within KODD007 show the potential for 'stacked' mineralization within the target stratigraphy.
• Strong gold mineralization is hosted within polymict conglomerate and sandstone intervals which have been strongly decarbonatized with intense, sooty, fine grained pyrite matrix infill. The target stratigraphy unconformably overlies massive Jurassic limestones. To date gold mineralization within the footwall, massive limestones has been of a low tenor, however, recent results from KODD005 indicate the potential for higher gold grades.

TRENCHING AT BIGAR

• The recently completed trench program at Bigar consisted of 2,684 meters for 1,336 samples (2 meter standard sample interval) and was designed to follow up previous trench sample assay results obtained during the initial wide spaced (nominal 800m spacing) trench program. The trench program was also designed to help refine geological contact relationships due to the poor exposure in the area.
• Recent highlights from the Bigar target area include the following trench gold intercept

• • BITR060: 82m @ 0.74g/t
     
• In particular, trench BITR060 (together with previously reported trenches BITR057 & BITR058, Nov. 10, 2010) have returned wide, low grade gold intervals from the sandstone-dominated sedimentary unit which is believed by Avala to represent a continuation of the 'target stratigraphy', which was intersected in diamond drill hole KODD001, southwards from the Korkan target area which was intersected in diamond drill hole KODD001 - a distance of approximately 2 kilometers.

DISCUSSION

• A major sediment hosted gold belt bordering the western boundary of the Timok Magmatic Complex, identified by soil and trench samples, extends over 20 km along strike and is approximately 8 km wide.
• 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.
• At Korkan, initial diamond drilling and at Bigar, trenching, have outlined significant gold mineralization over a north-south length in excess of 4 kilometers, associated with polymict conglomerate and sandstone which have been variably decarbonatized and mineralized with sooty, fine grained pyrite which contains significant gold values.
• 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 lithological and stratigraphic unit has significant implications for the gold potential of the Korkan-Bigar area and the entire sediment-hosted gold belt.
• Drill testing of the Korkan-Bigar stratabound sediment-hosted gold target area will continue with wide spaced (nominal 160 meter x 160 meter) diamond drill holes to allow Avala to effectively scale the potential size of the sediment-hosted gold system.
• In addition, the Jurassic limestone package has strongly anomalous gold in soil geochemistry where it is exposed in the Korkan-Bigar target area and numerous gold mineralized trench intercepts have been returned to date, hosted in limestone, which require drill follow-up in due course.
• Avala controls 100% of the newly identified sediment hosted gold belt which totals approximately 250 sq km and intends to systematically drill test all currently defined priority target areas.

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. Trench samples were prepared at the SGS managed laboratory facility at Bor, Eastern Serbia and the samples have been assayed at the SGS managed laboratory at Chelopech in Bulgaria or the SGS managed laboratory facility at Bor, Eastern Serbia. Diamond drill core has been prepared at the SGS managed laboratory facility at Bor, Eastern Serbia and assayed at either the SGS managed laboratory at Chelopech in Bulgaria or the SGS managed assay laboratory at Bor, Eastern Serbia. A one metre sampling interval has been used where possible for the Sediment-Hosted Gold Belt diamond drilling program. Following Avala standard quality assurance procedures, a full suite of field and laboratory duplicates and replicates along with internationally accredited standards 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 supervised the preparation of the technical data in this press release.