Medgold Resources Corp. (the "Company" or "Medgold") is pleased to announce that Fortuna Silver Mines Inc. ("Fortuna") has elected to exercise its common share purchase warrants for total proceeds to Medgold of CAD $1.5 million. As a result of the warrant exercise, Medgold and Fortuna will extend their Strategic Alliance for a further 12 months and Medgold has granted Fortuna the right to option a second project. Upon exercise of the warrants, Fortuna will own 24.2% of Medgold shares.
Medgold is also pleased to report that results from recent surface channel sampling at its Tlamino Project (the "Project") in southern Serbia include 40 m of 8.32 g/t Au and 193 g/t Ag.
Dan James, President of Medgold, commented: "We're extremely pleased by these initial results from Serbia. Medgold has been in the country for just over a year and we've taken major steps forward. Through funding from Fortuna, significant regional work has been accomplished, geological targets identified and Medgold has been awarded five exploration licences.
Medgold will continue this regional work funded by our Strategic Alliance with Fortuna throughout 2017, allowing us to generate additional projects using the proceeds from the warrant exercise. I am proud of our rapid progress in Serbia. It underscores Medgold's commitment and focus on discovery and moves us closer to our aim of becoming one of the leading European gold explorers."
Fortuna Strategic Alliance
Medgold and Fortuna have signed an amendment to their Strategic Alliance announced by Medgold on June 13th, 2016. Fortuna now has the right to enter into separate option agreements to earn up to a 70% interest in two geological target areas (each a "Selected Property") identified by Medgold's generative work. , Fortuna can earn a 51% stake in each Selected Property by spending USD $3.0 million on each Selected Property over three years. Once it has earned 51%, Fortuna can elect to form a 51:49 joint venture with Medgold to further develop the Selected Property; or can elect to earn an additional 19% interest in the Selected Property by spending an additional USD $5.0 million in qualified expenditures and completing a Preliminary Economic Assessment ("PEA") on the Selected Property.
Fortuna has elected to exercise all of its 10 million warrants at $0.15, for total proceeds to Medgold of CAD $1.5 million. Medgold will use these funds to continue project-generating exploration in Serbia over the next 12 months.
The warrant exercise is subject to TSX Venture Exchange approval as Fortuna will own 24.2% of Medgold's issued shares and become a Control Person of Medgold. As required by the Exchange, Medgold obtained shareholder approval to the warrant exercise at its annual general meeting held in December 2016.
The Tlamino Gold Project
The Tlamino Gold Project is located in southern Serbia, and includes two historical showings: Liska and Barje. Both showings are associated with a regional east-west striking detachment fault, which in the vicinity of these showings has been overlain by conglomerates. Mineralization is located at the contact of the basement metamorphic rocks and the base of the conglomerate cover. Liska, located approximately 1.5 km to the southwest of Barje, was drilled in the 1970s by Yugoslav state companies, and a lensoid-shaped mineralized volume of rock with 1-2 % combined Pb & Zn was found to strike NE towards Barje. The mineralization at Liska is located at the base of the conglomerate and parallel to the slope of the detachment fault. Liska was found to contain little precious metals. At Barje, base metal contents are lower, but precious metals are found in much higher concentrations. The area between the two showings is overlain by a thin conglomerate cover likely in the range of 50 - 100 metres in thickness, and Medgold considers the exploration potential under the conglomerate, between the two showings, to be excellent.
After identifying the project in the fall 2016, Medgold completed a series of saw-cut surface channel samples over the outcrop at Barje, where approximately 70 m x 25 m of mineralized tectonic breccia is exposed on surface at the edge of the conglomerate cover. A total of 132 linear samples of 1 m in length by approximately 8 cm in width and 4 cm in depth, were collected from seven channels, designed to test as large an areal extent of the outcrop as possible. Three channels were cut across the outcrop in an east-west direction, while four channels were cut across the outcrop in a general north-south direction. Gold assays ranged from 0.78 g/t Au to 132.5 g/t Au, with an average grade of 8.11 g/t Au and a median grade of 4.74 g/t Au. Silver concentrations ranged from 10.3 g/t Ag to 2110 g/t Ag, with an average grade of 210.6 g/t Ag and a median grade of 111.5 g/t Ag.
Applying a top-cut of 31.104 g/t Au (affects 4 / 132 samples) and 700 g/t Ag (affects 6 / 132 samples), the channel length-weighted assay averages are summarized as follows:
*Gold equivalent (AuEq) calculated for gold and silver using a gold:silver price ratio of 70:1.
The channel samples described here represent the sampling of an outcrop face. Medgold's current exploration model for Barje is premised on the interpretation that the outcrop face represents a faulted oblique cross-section through 'strata-bound' mineralization striking NE-SW, and located at the base of the conglomerate sequence, directly analogous to the mineralization at Liska. However, Medgold does not yet have direct observational evidence to suggest its interpretation is correct. The reader is cautioned therefore that the true thickness of the mineralization described here is unknown, and further work will be required before the true thickness of mineralization can be determined.
A plan map showing the locations of the channel samples has been posted on Medgold's website at http://www.medgoldresources.com/.
A detailed structural interpretation of the Tlamino Project is currently underway, and previous historical exploration work is being integrated into Medgold's exploration model and conceptual understanding of the mineralization. Exploration drill targets for the Project will be developed over the winter, in anticipation of a first phase of drilling in spring/summer 2017.