In June 2016, Medgold completed a $1.5 million private placement to Fortuna Silver Mines (“Fortuna”) by way of the issuance of 10.0 million units at $0.15 per unit. Each unit consists of one common share and one warrant $0.15 for one year from closing. Using the placement funds, Fortuna and Medgold commenced with a Strategic Alliance, to generate new gold and silver targets in Serbia. The generative exploration work focused on the Oligo-Miocene igneous belt of Central and Southern Serbia. In addition, Medgold granted Fortuna the option to enter into an option agreement to earn up to a 70% interest of a Selected Project, by spending US $8 million in qualifying expenditures over 6 years.
In late 2016, Medgold received its first exploration licences in Serbia, resulting from target generation work, and which included the Donje Tlamino licence. Immediately following the licence issuance, Medgold undertook a program of channel-chip sampling at the Barje prospect, located within the Donje Tlamino licence, and yielded a best result of 40 m of 8.32 g/t Au and 193 g/t Ag.
In March 2017 and following the completion of 12 months of generative work, Fortuna elected to option the Tlamino Project (comprised of the Donje Tlamino and Surlica-Dukat licences), and thus agreed to incur expenditures of US$3.0 million to acquire 51% of the project within 3 years, and have the second option to earn a further 19% over 3 years, by spending US $5 million and completing a Preliminary Economic Assessment (PEA).
In addition, Fortuna exercised their warrants in February 2017, for total proceeds of $1.5 million, and secured 24% of the capital of Medgold. The proceeds are to be used within the Strategic Alliance, for a further 12 months, aiming to generate new projects in Central and Southern Serbia. Fortuna was granted the right to option a second project, on the same terms of the first, whereby they can earn up to a 70% interest of a second Selected Project, by spending US $8 million in qualifying expenditures over 6 years.