Avala unveils maiden resource in Serbian goldfields

VANCOUVER — 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 — a Balkan country formerly part of Yugoslavia. Avala released the first of three scheduled resource estimates on its 100%-owned Timok gold project on July 6, which incorporates 44,000 metres of definition drilling at its Bigar Hill zone.

Bigar Hill is the most advance-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 worth of mineral concessions. Exploration activities uncovered occurrences of sediment-hosted gold in the Timok region after stream-sediment and soil sampling identified a 20-km-long belt of anomalous gold-arsenic-antimony-mercury-thallium mineralization, which led to the discovery of five targets during trenching, including: Korkan, Bigar, Kraku Pestar, Strnjak, ad Umka.

After jump starting exploration activities at Timok, Avala isolated three priority targets that form the nucleus of an 180,000-metre resource drill program carrying a hefty US$25 million price tag. Along with in-fill drilling at Bigar Hill, the company is undertaking 35,000 metres at its Korkan deposit, 10,000 metres at its Kraku Prestar target, as well as up to 35,000 metres of exploration drilling at auxiliary targets.

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

“Infill drilling has continued to confirm the continuity and near surface nature of gold mineralization across a substantial area,” commented president and CEO James Crombie. “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 commenced at Korkan in early January, and Avala released initial results from the program in mid-April. The company continued to cut promising grades ranging from 1 gram to 3 grams within 250 metres of surface, with highlights including: 68 metres carrying 3.15 grams gold starting from 44 metre 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 metre by 300 metre near-surface gold anomaly encountered during scout drilling. Kraku Pestar hosts the lowest grades out of the three deposits so far, though the zone continues to demonstrate lengthy gold intercepts near surface, with previous highlights including: 84 metres grading 1.28 grams gold from 2.5 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 for a preliminary economic assessment on the entire Timok project scheduled for completion by the end of the year. Early-stage metallurgical tests have demonstrated that 52% of the fresh sulfide material and 84% of the oxide material was recoverable via carbon-in-leach processing. Test work to date has suggested flotation would be the most appropriate pre-concentration method, with initial flotation recoveries on sulfide material ranging from 77% to 86%.

Avala was formed in July 2010, when international gold miner Dundee Precious Metals (DPM-T) spun its Serbian holdings into the company 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 continues to hold a 50.2% stake in the smaller company.

An alliance with Dundee has continued to pay dividends for Avala, as the company maintains an unusually strong exploration budget, including US$31 million in treasury to start the year.

Avala has 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 out the day at 70¢ following the news of the Bigar Hill resource.