Avalon Signs Letter of Intent to Acquire ''Giant'' Overpressured Gas Prospect in U.S. Rockies.

BELLINGHAM, Wash. -- Headline of release should read: Avalon Signs Letter of Intent to Acquire ''Giant'' Overpressured Gas Prospect in U.S. Rockies (sted Avalon Buys ''Giant'' Overpressured Gas Prospect in U.S. Rockies).

The corrected release reads:

AVALON SIGNS LETTER OF INTENT TO ACQUIRE ''GIANT'' OVERPRESSURED GAS PROSPECT IN U.S. ROCKIES

Avalon Gold Corporation (OTCBB:AVGC) announces it has signed a Letter of Intent to acquire an undivided 85% working interest in a giant gas field lease in the prolific natural gas producing Uinta Basin, located in the US Rockies, Utah. The lease comprises 13,189 acres with a potential 4 TCF recoverable gas and is overpressured by a 0.55 - 0.85 gradient.

According to available data in the area, the prospect property has been delineated using several hundred miles of seismic. The seismic data confirms the thick Emery pay section and shows several sediment wedges in the prospect area. "We feel the data supports a basin wide deep gas accumulation covering the entire field," states Robert Waters, President of Avalon Gold. This giant gas lease borders other leases owned by EOG Resources Inc. (NYSE:EOG) and EnCana Corp (TSE:ECA.TO) (NYSE:ECA).

Major energy companies today recognize that tight gas reservoirs, where geological formations make production complex, and coal-bed methane, where gas is extracted from coal deposits, are two of the more important near term sources to boost North American production of natural gas as demand outstrips supply and drives up prices.

The US Geological Survey estimated (in 1995) basin-center and deep-basin gas resources in the Rocky Mountain Laramide basins to be 250 TCF. The Drunkards Wash Field, just south of the prospect area is estimated to have between 2-4 TCF of recoverable gas. The Jonah Field Overpressured Gas Plain, which is analogous to our prospect area, has similar overpressuring, depth, reservoir rocks and is estimated to be 2.5+ TCF.

Often covering several townships, basin centered gas accumulations are typically large and continuous in areal extent. They also form a special group of continuous-type gas accumulation which differs significantly from conventional accumulation in their geological and production characteristics.

The Ferron and Emery formations were deposited as clastic wedges that pinch out across the basin into marine shale. These clastic wedges contain thick total coal (up to 250 feet) deposited in a stacked sequence adjacent to stacked shoreface sands. Deep burial of the coal beds resulted in the generation of large volumes of thermogenic gas. Overpressuring is also present east of the prospect but without the good reservoir quality of the prospect.

The geologic conditions previously mentioned are major components of the Basin Centered Gas Concept that has gained credibility over the past few years beginning with the Elmworth field in Alberta, Canada. This field was penetrated by at least 56 wells looking for deeper objectives before John Masters, President of Canadian Hunter Exploration, determined that the vast area of supposedly "tight" sandstones were actually productive even though the sands themselves demonstrated little porosity and permeability. Several similarities exist between Elmworth field and the Company's Uinta Basin Overpressured Gas Prospect:

1. Both are in front of the Foothills Disturbed Belt

2. In both areas the Cretaceous/Tertiary is very thick in the basin but much thinner on the shelf.

3. Both have abundant coals with high gas contents.

4. In Canada there is as much as 400 TCF of gas recoverable from the sandstones and 50 TCF in the coals.

5. In both areas shoreface sands play an important role as gas reservoirs.

6. In both areas the trap is a dynamic capillary pressure trap and cuts across stratigraphic and structural boundaries.

"Avalon Gold intends to change its name in the near future to reflect its focus on strictly oil and gas projects, such as its holdings in the LAK Ranch Oil Field in Wyoming, and now the Uinta Basin Project in Utah," declares Robert Waters, President.

On behalf of the company,

Robert Waters, President

For further information contact: 1-888-488-6882

Visit our web site at www.avalongold.ws

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical fact are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays in testing and evaluation of products an other risks detailed from time to time in Avalon's filings with the Securities & Exchange Commission.