Avala Resources Updates on Gold Targets at Korkan Area in Serbia

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

HIGHLIGHTS

• Surface trenches on the Korkan target area have outlined an erosional window into the strongly gold mineralised target stratigraphy.
• The Korkan target area, as currently defined by gold surface geochemistry, is approximately 4.5 km in length and up to 1 km wide and is underlain by Jurassic limestone, conglomerates and sandstone with varying carbonate content.
• Trench sampling of the Korkan target area returned the following wide, high-grade gold intercept (0.4g/t cut-off grade):

• • 140m @ 2.67g/t
    • Including: 74m @ 4.27g/t
• The trench sampling follows up and confirms the initial 'discovery' trench (JASTR009), excavated in 2008 which returned the following intersections:
  • 59m at 2.50g/t and
  • 58m at 2.61g/t.

• Avala controls 100% of the newly identified sediment hosted gold belt which totals approximately 250 sq km.
• Gold deposits in the Republic of Serbia are subject to a 3% NSR.
• Avala intends to systematically drill test all currently defined priority target areas.

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.

Geological mapping of the sediment hosted gold belt suggests mineralization is associated with a complex lithological and structural sequence of limestone/marble, calc-silicate hornfels, biotite-magnetite hornfels, monzonite (pre-ore Potoj Cuka stock), diorite dykes, andesitic volcanic and volcaniclastic rocks, schists, conglomerates, sandstones and tuffaceous sedimentary rocks.

The belt is extensively faulted and intruded by numerous diorite and monzonite complexes with associated thermal metamorphic aureoles, indicating the potential for sufficient permeability and rheologic contrast for fluid movement and hydrothermal deposition.

The Korkan target area is underlain by massive Jurassic limestone, overlain by a quartz pebble conglomerate and sandstone sequence with a carbonate matrix component which is the host to the strongly mineralised interval intersected by the surface trenches. The quartz pebble conglomerate is overlain by a carbonate-clast conglomerate which is not mineralized. Avala currently believes that this 'cover sequence' may postdate the gold mineralising event. The quartz pebble conglomerate and sandstone unit appears to dip moderately (~40°) towards the south-south west under the 'cover sequence' and towards the Bigar target area.

The Korkan target area represents possible stratabound sediment hosted gold mineralization within a favourable sedimentary unit; the quartz pebble conglomerate.

The strongly mineralised interval cut in surface trench KOTR033 is generally oxidised and the effects of supergene processes are currently not known.

TRENCH

• The recently completed trench program at Korkan consisted of 1,658 meters for 829 samples and was designed to follow up a previous high grade trench (JASTR009) defined during the initial wide spaced (nominal 800m spacing) trench program and to help refine geological contact relationships due to the poor exposure in the area.
• KOTR033 was designed orthogonal to the high-grade (JASTR009) trench due to the recognition that the initial trench was not favourably located to be representative of the true width of the quartz pebble conglomerate unit.
• Highlights from the Korkan target area include the following trench intercepts (0.4g/t Au cut-off grade):

• KOTR033: 140m @ 2.67g/t

• Including:
  • 74m @ 4.27g/t
  • 18m @ 1.19g/t
  • 6m @ 2.10g/t
  • 6m @ 1.38g/t

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, recently completed trenches have outlined significant gold associated with quartz pebble conglomerates and sandstone with a carbonate matrix component. The outcropping area of gold mineralisation is a small (170 meter x 120 meter) erosional window into the target stratigraphy.
• The recognition that the Korkan and Bigar target areas are separated by a 'cover sequence', which appears to be post-mineral has significant implications for the gold potential of the sediment hosted gold belt.
• Initial drill testing of the Korkan stratabound sediment hosted gold target area should commence in the first week of November 2010.
• Trenching programs will continue on multiple target areas within the sediment hosted gold belt in order to define the extents of the anomalous gold and to further define priority target areas to be drilled as soon as the results of the current trench programs are received and interpreted.
• Further geophysical modelling along with detailed geological mapping are underway.

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. Following Avala standard 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.