Tlamino

MINERAL RESOURCES

An Inferred Mineral Resource containing approximately 680,000 oz AuEq in 7.1Mt grading 3.0 g/t AuEq at cut-off grade of 0.7 g/t AuEq was reported on January 30, 2020, and is presented in Table 1. Example cross-section and a block model view of the resource are given in Figure 1. This estimate was prepared in accordance with National Instrument 43-101 (NI 43-101) and CIM Definition Standards by Addison Mining Services Ltd. of the United Kingdom.

Notes to the Mineral Resource Estimate:

1. The independent Qualified Person for the Mineral Resource Estimate, as defined by NI 43-101, is Mr. Richard Siddle, MSc, MAIG, of Addison Mining Services Ltd since November 2014. The effective date of the Mineral Resource Estimate is January 13, 2020.
2. These Mineral Resources are not Mineral Reserves as they do not have demonstrated economic viability. The quantity and grade of reported Inferred Resources in this Mineral Resource Estimate are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as Indicated or Measured, however it is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
3. Mineral Resources in Table 1 are presented as undiluted and in-situ for an open-pit scenario and are considered to have reasonable prospects for economic extraction. Pit optimization was carried out assuming pit slopes of 45° with other parameters as per the cut-off grade (see below).
4. A cut-off grade of 0.7 g/t AuEg was used for the Mineral Resource Estimate. This cut-off grade was calculated on the basis of the following assumptions: a gold price of 1350 USD/oz, a silver price of 16 USD/oz, mining costs of 3.30 USD/t, mining recovery and dilution of 5% and processing costs including tailings and concentrate handling of $21/t. G&A costs were included within mining and processing costs. Per metallurgical test work completed to date, recovery to concentrate after flotation of 89.4% for gold and 92.3% for silver were assumed; metals were assumed to be 80% payable. Recovery of gold and silver from partially oxidized material has not been tested. For the selection of cut-off grade and for pit optimization parameters, the partially oxidized material was assumed to have the same concentrate recoveries as indicated from the combined fresh rock composites.
5. Geological and block models for the Mineral Resource Estimate used data from 33 surface drillholes performed by Medgold in 2018 and 2019; data from four drillholes completed by Avala Resources Ltd., a prior operator, were used to constrain the model though they did not intercept significant mineralization. The drill database was validated prior to resource estimation and QA/QC checks were made using industry-standard control charts for blanks, core duplicates and commercial certified reference material inserted into assay batches by Medgold and by comparison of umpire assays performed at a second laboratory. No QA/QC was possible on the data relating to the drilling by Avala.
6. The geological model as applied to the Mineral Resource Estimate comprises two mineralized domains, a shallowly inclined high-grade hydrothermal breccia unit and a lower-grade schist unit immediately overlying the hydrothermal breccia. Individual wireframes were created for each domain. Weathering domains of fresh and partially oxidized material were defined within the two mineralised domains.
7. The block model was prepared using Micromine version 2020, Services Pack 1, A 10 m x 10 m x 4 m block model was created with sub-blocks of minimum 2 m x 2 m x 2 m on domain boundaries. Grade estimation from drillhole data was carried out for Au, Ag, As, Cu, Pb, Zn, Fe, S using Ordinary Kriging and was validated by comparison of input and output statistics, kriging neighbourhood analysis and by inspection of the assay data and block model in cross section. A gold equivalent (AuEq) grade was calculated for each block using the formula AuEq = ((Ag g/t) x 0.012)) + (Au g/t).
8. Bulk density values were calculated for each block of the model based on a broad linear relationship observed between 152 measured bulk density values within the mineralized domains and the assayed values of As, Cu, Fe, S, Pb and Zn. Blocks within the partially oxidized material were assigned a single bulk density value of 2.54 g/cm3.
9. Estimates in Table 1 have been rounded to two significant figures.
10. CIM Definition Standards for Mineral Resources have been followed.
11. The independent Qualified Person has been made aware that Medgold’s previously approved three-year work program for The Donje Tlamino exploration licence covering the Barje Prospect ended 31st October 2019. Medgold met all minimum work and expenditure requirements related to this work program and has submitted an additional work program to cover a further 3-year exploration period. Medgold has no reason to expect that the additional work program should not be renewed. The independent Qualified Person is not aware of any additional known environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues that could materially affect the Mineral Resource Estimate.

Figure 1 – Cross-sections through the Barje Mineral Resource Estimate for the Barje Prospect

Metallurgical Test Work

Metallurgical test work for the Mineral Resource Estimate included bulk rougher flotation tests on two composite samples blended from approximately 50 kg of drill core representing medium- and high-grade gold mineralization within unweathered hydrothermal breccias at the Barje Prospect. The composites reported head grades of 2.04 g/t and 10.99g/t Au and gold recoveries to concentrate of 88.2% and 90.5%, respectively. The same composites reported silver head grades of 15.1 g/t Ag and 107.2 g/t Ag, and silver recoveries to concentrate of 88.2% and 96.4% respectively. A summary of these results is presented in Table 2.

The metallurgical test work used conventional flotation methodology at a grind size of -74 microns, a pH of 8.2, a conditioning time of 3 minutes and a flotation time of 9 minutes. Metallurgical analyses were performed by Resource Development Inc. of Wheat Ridge, Colorado, and were overseen by Woods Process Services LLC of Denver, Colorado.

Medgold commenced exploration at Tlamino in 2016, since which mapping, extensive soil and channel sampling, Induced Polarization and Electrical Resisivity surveys, and diamond drilling have been completed.

CHANNEL SAMPLING

Channel sampling at what is now known as the Discovery Outcrop (CH_BAR_01-11) returned a best interval of 84 meters at 5.6 g/t Au and 105.2 g/t Ag in altered schists within the area in which the Mineral Resource Estimate was subsequently defined. Sampling of a nearby Yugoslav-era adit returned 52 meters at 2.20 g/t Au and 88 g/t Ag.

DIAMOND DRILLING

Between May 2018 and October 2019, Medgold completed a 55-hole diamond drilling campaign at the Tlamino Project, comprising testing of targets at the Barje, Liska and Karamanica Prospects.

Drilling at Barje intersected a zone of continuous, tabular, near-surface gold mineralization that is seen to extend 700 meters east-west by 250 meters north-south within a structurally-bound, shallowly-dipping hydrothermal breccia below altered schist, and it was from within this body that the Mineral Resource Estimate was generated. Mineralization at Barje ranges in vertical grade-thickness from 10 to 151 gram-meters and appears to be bounded to its south by a fault. Drilling west of this zone returned only sporadic intervals of gold mineralization. A summary of the collar locations from drilling at the Barje, Liska and Karamanica Prospect is provided in Table 3

* Coordinates are given in WGS84 datum and UTM zone 34 projection.

The best drill intersections for the Tlamino Project are summarized in Table 4:

GEOPHYSICS: INDUCED POLARIZATION AND ELECTRICAL RESISTIVITY

A 39 line kilometer Induced Polarization and Electrical Resistivity survey completed by Medgold, over an rea of approximately 4 km 2 identified a chargeable feature extending to the west of the Barje Prospect beneath cover for over 1 kilometer. While the Discovery Outcrop itself is observable in the chargeability data there does not appear to be a conclusive relationship between gold mineralization and chargeability at the Barje Prospect.

In June 2016, Medgold completed a $1.5-million private placement to Fortuna Silver Mines (“Fortuna”) issuing 10-million units at $0.15 per unit.  Each unit consists of a share and a warrant at $0.15 for one year from closing. Fortuna and Medgold subsequently formed a Strategic Alliance to generate new gold and silver targets in central and southern Serbia. Medgold also granted Fortuna the right 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 which included the Donje Tlamino licence. Medgold subsequently undertook a program of channel-chip sampling at Barje (see above). In March 2017, Fortuna elected to option the Tlamino Project, and must incur expenditures of US$3.0-million to acquire 51% of the project within 3 years. To earn an additional 19% Fortuna must spend an additional US $5-million within a 3 year period, and complete a Preliminary Economic Assessment (PEA).

In February 2017, Fortuna exercised its warrants for total proceeds of $1.5 million which was allocated for target generation in Central and Southern Serbia. Fortuna was granted the right to option a second project, on the same terms of the first.

See press release January 9, 2017 for further details.

See press release July 18, 2017 for further details.

See press release November 15, 2017 for further details.