Avala unveils maiden 1.5M oz. gold resource in Serbia

Canadian explorer Avala Resources (AVZ-V) is making strides towards establishing a multi-million ounce, near-surface gold deposit in the historic mining region of Timok in eastern Serbia.

Avala released the first of three scheduled resource estimates on its wholly owned Timok gold project on July 6. The new resource incorporates 44,000 metres of definition drilling at Timok’s Bigar Hill zone.

Bigar Hill is the most advanced-stage target at Timok, which features sediment-hosted gold mineralization running for 70 km along the western margins of the Timok magmatic complex.

Avala controls the largest land position in Serbia, with 970 sq. km of mineral concessions. Exploration activities have uncovered sediment-hosted gold occurences in the Timok region after stream sediment and soil sampling identified a 20-km-long belt of anomalous, gold-arsenic-antimony-mercury-thallium mineralization that led to five targets discovered during trenching: Korkan, Bigar, Kraku Pestar, Strnjak and Umka.

After jump-starting exploration at Timok, Avala isolated three priority targets that form the nucleus of an 180,000-metre resource drill program costing US$25 million.

Along with the infill drilling at Bigar Hill, the company is undertaking 35,000 metres at its Korkan deposit, 10,000 metres at its Kraku Prestar target and up to 35,000 metres of exploration drilling at auxiliary targets.

Avala’s maiden Bigar Hill resource estimate is 38 million inferred tonnes grading 1.3 grams gold per tonne for 1.5 million contained oz. gold at a 0.4 gram gold cut-off.

“Infill drilling is confirming the continuity and near-surface nature of gold mineralization across a substantial area,” president and CEO James Crombie comments. “We are now very much focused on completing initial resource definition drilling programs on our other two high-priority target areas, Korkan and Kraku Pestar, which we expect to finalize towards mid-year.”

Resource drilling began at Korkan in January, and Avala released initial results from the program in April. The company cut promising grades ranging from 1 gram to 3 grams within 250 metres of surface. Highlights included: 68 metres of 3.15 grams gold starting from 44 metres depth in hole 57; 37 metres grading 2.6 grams gold from 208 metres in hole 69; and 31 metres of 1.56 grams gold from 228 metres in hole 70.

Kraku Pestar’s drill program started up in early February, with the goal of establishing a resource on a 600-by-300-metre near-surface gold anomaly encountered during scout drilling.

Kraku Pestar hosts the lowest grades from the three deposits so far, though the zone demonstrates lengthy gold intercepts near surface, with previous highlights including: 84 metres grading 1.28 grams gold from 3 metres in hole 1; 49 metres carrying 1.23 grams gold from 144 metres in hole 2; and 66 metres of 1.05 grams gold from 51 metres in hole 10.

The combined resource estimates will form the basis of a preliminary economic assessment on the Timok project scheduled for completion by year-end.

Early stage metallurgical tests have demonstrated that 52% of the fresh sulphide material and 84% of the oxide material is recoverable through carbon-in-leach processing. Test work to date suggests flotation would be the most appropriate pre-concentration method, with initial flotation recoveries on sulphide material ranging from 77% to 86%.

Avala was formed in July 2010, when international gold miner Dundee Precious Metals (DPM-T) spun out its Serbian holdings in a qualifying transaction that saw Avala receive the Timok portfolio and US$19.6 million in cash. Dundee received 68.6 million units of what became Avala shares, and holds a 50.2% stake in the smaller company.

The continued alliance with Dundee is paying off for Avala, which maintains an unusually strong exploration budget, including US$31 million in its treasury to start the year.

Avala traded within a 52-week range of 65¢ and $1.44, on modest 6,000-share-per-day trade volumes. The company has 214 million shares outstanding with a presstime market capitalization of $150 million. Avala closed at 70¢ following news of the Bigar Hill resource.