A summary of the mineral resource estimate using various cut-offs is tabulated below:

1. The effective date of the mineral resource estimate is 30th June 2012.
2. The gold price used in this estimate was the mean gold price for 2010 and 2011 of US$1350/oz. First phase, extensive metallurgical test work is nearing completion and, based on information to date, along with possible projected throughput rates for the entire Timok Gold Project, typical mining costs and a range of processing costs and indicative ranges of processing recoveries it is, at this stage, believed that possible cut off grades lie in the range of 0.4g/t to 0.8g/t.
3. 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.
4. 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 an indicated or measured mineral resources.

The Timok Gold Project comprises several targets including Bigar Hill, Korkan and Kraku Pestar. The Bigar Hill resource estimate is the first of three scheduled resource estimates, with Korkan and Kraku Pestar to follow. The initial Korkan resource definition drilling program was recently completed and the database is expected to be closed off presently, following which the data will be forwarded to AMC. The Kraku Pestar drilling database is due to follow as soon as selected 40 meter by 40 meter drilling is completed. Infill drilling at 40 meter by 40 meter spacing has re-started at Bigar Hill. Avala controls 100% of this newly identified sediment-hosted gold belt which totals approximately 250 square kilometres.

1. HIGHLIGHTS

• Independent resource estimation has been completed by AMC on the Bigar Hill deposit.
• The resource estimate is based on 199 drill holes (74 diamond drill holes and 125 reverse circulation drill holes). Details of the drilling and sampling program are summarised in the table below.

• A very large amount of check sampling and assaying has been completed, as part of Avala’s standard QAQC procedures, which is summarised below.

• Block model preparation and resource estimation has been completed using Datamine and Isatis. One-meter composites (the standard Avala sampling unit) were used to define geological boundaries and mineralized wireframes, whilst three-meter down hole composites were used for statistical analysis, variography and resource estimation.

• Resource estimation has been completed using the geostatistical technique, Local Multiple Indicator Kriging (“Local MIK”). Local MIK is a form of Multiple Indicator Kriging (“MIK”) where the grades are ‘mapped’ directly into selective mining unit (“SMU”) sized blocks from a MIK estimate. Bulk density has been estimated into the block model using inverse distance weighting. Three main mineralized zones were defined; within the overlying andesite (“Andesite”), surrounding the boundary of the S1/S2 sedimentary units (“MSSS”) and surrounding the S1/underlying limestone boundary (“MSSL”). A total of 11 indicator cut offs were used to define the metal distribution within the model cells. Upper limits were used in the top ‘bin’ of the indicator cut offs whilst an upper cut of 8.0g/t was used for the Andesite-hosted mineralization.

• The mineral resource was estimated 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 CIM Council.The in-situ resource estimate is within the defined mineralized wireframes and is reported at a wide range of lower cut off grades. The initial, comprehensive, phase of metallurgical test work is being completed and will be used, along with the Preliminary Economic Analysis, which has recently been initiated and is being managed by G-Mining Services Inc. of Montreal, to define the appropriate cut off grade for the complete Timok Gold Project (Bigar Hill, Korkan and Kraku Pestar). The Bigar Hill grade-tonnage report is summarised in the table below (reported to the appropriate level of precision).

2. ADDITIONAL INFORMATION

Drilling and Sampling

• Figure 1 shows the location of the Bigar Hill deposit within the Timok Gold Project, whilst Figure 2 displays the drilling carried out to date at Bigar Hill along with a gram-meter map of mineralization. Figure 3 shows a typical cross section through the Bigar Hill deposit illustrating the shallow dipping nature of gold mineralization.
• Diamond drilling has been carried out such that drill holes are always started using PQ core and then reduced to HQ triple tube (HQ3) once competent rock has been intersected. The diamond drill core size is kept as HQ or HQ3 for as long as possible. Drill core is carefully packed for transport to the sample preparation facility in Bor.
• Reverse circulation (RC”) drilling is carried out with specialised custom drill rigs, which include separate, very high capacity compressed air boosters in order to ensure sampling is under dry conditions. ‘Blow backs’ are routinely used for every meter of advance (all the material within the drill stem for the relevant meter of advance is displaced into the sample bag prior to advancing to the next meter). The cyclone is cleaned thoroughly at every rod change and the hole is thoroughly conditioned (completely dried if any moisture has entered the drill hole) before drilling is re-initiated. If sampling cannot be carried out under dry conditions, the drill hole is abandoned and is then re-entered as a diamond core ‘tail’. Each meter sample is weighed using electric scales and the data is recorded using data loggers in order to compare with the theoretical sample mass for the particular drill bit diameter and the lithology being drilled.
• The average core recovery is 97% and the average RC sample recovery is 88%, with an average one-meter RC sample bag weight of 36.5kg.
• All but 6 diamond holes (BHDD002, 003, 011, 021, 024 and BHDD053) and one RC hole (BHRC025) have had their drill hole collars surveyed by DGPS by Avala surveyors (registered independent surveyors regularly audit Avala’s survey control and procedures). The 7 holes had to be surveyed using a traditional total station theodolite due to dense forest cover and a poor DGPS signal.
• The diamond drill holes were down hole surveyed every 30 meters using electronic survey equipment, whilst an average 48 metre spacing was used for the down hole surveying of RC holes.
• Bigar Hill has been drilled on a nominal 80 meter by 80 meter grid spacing with a portion of the resource area having been drilled at a collar spacing of 40 meters by 40 meters. Approximately 22% of the surface area of the Bigar Hill deposit has been drilled at 40 meters by 40 meters, with further infill drilling at Bigar Hill having been re-started now that the Korkan first-pass resource drilling program is complete. Diamond ‘twin’ drilling of the RC drill holes will continue across the target area at a nominal rate of 15% of total RC drilling.
• RC and diamond core sampling has been carried out using Avala’s detailed protocols throughout the entire drilling program.

Density Measurements

• Density measurements are routinely taken every three meters down hole from diamond drill core. The bulk density of the core billets is measured at the SGS managed laboratory at Bor using the industry standard wax-seal immersion method. The table below summarises the numbers of density measurements for each rock type in the Bigar Hill drill hole data set, relative to the mineralized wireframes for the resource model.

Twin Drilling

• Twin drilling has been routinely performed with a target of at least 15% of all RC holes being twinned with diamond drilling.
• At Bigar Hill there have been 22 DD/RC twins and one DD/DD twin and one RC/RC twin. Based on total meterage drilled at Bigar Hill, some 23% of the drilling relates to twin drilling (10,652 meters out of the current deposit total of 44,680 drilled meters). The routine reverse circulation-diamond ‘twin’ drilling program continues to confirm that the majority of mineralized intercepts and hence the deposit style, is dominated by layer-parallel, lithology-controlled gold mineralization and that there can be close spaced variation in gold grade, as is typical for gold deposits.

Assaying

• All Bigar Hill, drilling has been routinely assayed for gold (Au), silver (Ag) and sulphur (S). The number of samples in the Bigar Hill resource estimation database is summarized below. In a future resource update, including the 40 meter by 40 meter drilling that has been re-started; the resource model will be updated for these additional elements.
• The table below summarizes the primary and referee assaying that comprises the Bigar Hill resource estimation database along with the assay methods that have been used.

Variography

• Detailed variography has been carried out for the 11 indicator cut offs that have been used in the Local MIK grade estimation.
• The table below summarises the modelled gold variography.

Resource and Grade Modelling

• Detailed interpretation of the geological and grade data has resulted in the modelling of 3 main zones of gold mineralization, which have been termed Andesite, MSSS (straddling the boundary and including the S1 and S2 sedimentary units) and MSSL (straddling the boundary and including the S1 and limestone units). The interpreted mineralized zones are in contact for much of the deposit.
• One-meter composites were used to define lithological boundaries, geological boundaries and the mineralized zone outlines. Three-meter down hole composites were used for statistical analysis, variography and grade estimation. The table below summarizes the number of 3 meter composites within the various domains.

• The block model closely matches the volumes of the mineralized zone wireframes as shown in the table below.

Grade-Tonnage Reporting

• The resource model has been categorized as Inferred Resources using the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines. While the grade estimate has been classified as Inferred Resource, Avala believes that higher confidence resources should be defined once all the 40m x 40m infill drilling is incorporated into the future resource estimate. The current resource estimate has significant regions defined by 40m x 40m spaced drilling that confirms the mineralization zone continuity noted in the 80m x 80m spaced drilling. The table below summarizes the grade-tonnage data, subdivided by the three interpreted mineralized zones.
• In the table below the reported tonnes, grade and contained gold have been rounded to the appropriate level of precision for the reporting of an Inferred Resource, and the numbers may not correlate exactly due to rounding errors.

Please see the following link to view all Korkan-Bigar and Kraku Pestar drill holes located spatially in three dimensions: http://www.corebox.net/properties/timok-gold-project

3. 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. The Company has established a laboratory facility at Bor, Eastern Serbia which is independently managed by SGS. Trench samples were prepared at the laboratory facility at Bor and the samples have been assayed at the SGS managed laboratory at Chelopech in Bulgaria or the laboratory facility at Bor. Diamond drill core has been prepared at the laboratory facility at Bor and assayed at either the SGS managed laboratory at Chelopech in Bulgaria or the assay laboratory at Bor. A one meter sampling interval has been used where possible for the Timok Gold Project diamond drilling program. Half core is routinely submitted to the laboratory for analysis. Reverse circulation drill samples have been prepared at the laboratory facility at Bor and assayed at the laboratory at Bor. A one meter sampling interval has been used for the Timok Gold Project reverse circulation drilling program. Following Avala standard quality assurance procedures, a full suite of field and laboratory duplicates and replicates along with internationally accredited standards and blanks, 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 are 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 is routinely entered into geology and structural geology spread sheets using Field Marshal software for subsequent inclusion in an acQuire database and validation.

4. QUALIFIED PERSONS

The Bigar Hill resource estimate was undertaken by independent qualified person Chris Arnold MAusIMM CP(Geo) of AMC. Mr. Arnold of AMC has reviewed and approved the contents of this press release insofar as the Bigar Hill mineral resource estimate is concerned.

AMC is completing a technical report for the mineral resource estimate in compliance with NI 43-101 to be filed on SEDAR within 45 days of this press release.

The other technical information contained in this press release was prepared and approved by Dr Julian F. H. Barnes, FAusIMM, MAIG, a director of the Company and special consultant. Dr. Barnes is a ‘qualified person’ within the meaning of that term under NI 43-101.

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 Bigar Hill, Korkan, and Kraku Pestar. Avala controls 100% of this newly 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 is well-capitalized, with approximately $20 million in its treasury at May 31, 2012, which it plans to use for the exploration and development of its mineral projects in Serbia. Avala’s issued and outstanding share capital totals 214,492,223 common shares, of which approximately 51.4% is held by Dundee Precious Metals Inc. (TSX:DPM).

Cautionary Statement Regarding Forward-Looking Information

This press release contains ‘forward-looking information’ within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, “forecast”, “project”, “budget”, “schedule”, “may”, “will”, “could”, “might”, “should” or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by the Company as at the date of the information and is subject to known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking information.

Forward looking information in this news release includes information with respect to the Bigar Hill mineral resource estimate and its potential expansion and upgrade to a higher level of confidence, the Company’s plans to complete resource estimates on the Korkan and Kraku Pestar project areas and to complete a preliminary economic assessment, the timing and location of future work programs, the results and interpretation of studies and exploration activities, the nature of the mineralization of the project, the potential size of the sediment-hosted gold system, and the possibility that the Timok Gold Project will prove to be economic.

Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be factors that cause results to be other than as anticipated, estimated or intended. There can be no assurance that the forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information contained herein, except in accordance with applicable securities laws.

Figures 1, 2 and 3 are available at the following link: http://media3.marketwire.com/docs/Fig1%2c2%2c3_AVZ0706.pdf.