Tlamino

The Tlamino Project comprises a block of two contiguous licences granted in November 2016, Donje Tlamino and Surlica-Dukat, totalling 192 square km. The project is located in the southeast of the country, bordering Macedonia and Bulgaria. The Donje Tlamino licence hosts two main targets, Barje and Liska. The Surlica-Dukat licence includes the Karamanica target.

The licences are located in the Serbo-Macedonian Massif (“SMM”), a belt of greenschist to amphibolite metamorphic facies, Silurian-aged mid-crustal rocks that runs through Serbia along a north-south axis, extending southwards through Macedonia and Bulgaria and into Greece. In Serbia, the SMM lies west and sub-parallel to the upper Cretaceous Timok Belt, which hosts a number of copper-gold porphyry-epithermal deposits. The SMM is under-explored when compared to the Timok Belt, having seen lead and zinc exploration work by the Yugoslav government and Yugoslav state companies from the 1950s to the 1970s, but far less exploration post-2000. In Greece, the SMM hosts several well-known gold deposits including the Skouries high-grade Au-Cu porphyry and the Olympias Au-rich, polymetallic carbonate replacement deposit, both owned by Eldorado Gold.

Medgold’s licences are located along the Macedonian and Bulgarian borders, approximately 40 km southeast of the city of Vranje, in southeast Serbia. They cover areas of Paleozoic metasediments, including calcareous schists and marbles, which have been intruded by a series of Oligo-Miocence aged porphyritic felsic hypabyssal intrusives, volcano-clastics and dykes, and locally covered with recent alluvial sediments (conglomerates). Contact zones between the intrusive rocks and favourable country rock are responsible for the known base and precious metal showings within the licence areas. Fairly extensive exploration was completed by the Yugoslav government and Yugoslav state companies in the 1950s to 1970s for lead and zinc. Precious metals are often referenced in the historical and archival exploration documentation, but were not the focus of any exploration efforts, nor systematically documented. Today, it is recognized that these mineralized systems are structurally controlled, intermediate sulphidation epithermal in nature, and their lack of historical precious metal exploration presents significant exploration upside for Medgold.

The Tlamino Project area was explored in the latter half of the 20th century by the Yugoslav national geological survey and by Yugoslav state exploration companies for their lead and zinc potential. Liska returned higher base metal values and was explored more comprehensively, but it appears neither showing was systematically evaluated for gold and silver. The lead-zinc mineralization at Liska was drilled by Yugoslav state companies in the 1960s and 1970s. The mineralization at Liska was found to consist of an elongate lensoid body approximately 30 m in thickness, located at the base of the conglomerate and trending to the NNE towards the Barje showing.

Historical Resources
These resource estimates are historical in nature and are described in the documents referenced below. A qualified person has not done sufficient work to classify the historical estimates as current mineral resources, and Medgold is not treating the historical estimates as current mineral resources.
These estimates were made using the Russian resource categorization system, developed in the USSR in the 1960s. This system divides resource categories into three major groups: prognostic resources (P1, P2, P3), evaluated reserves or resources (C2), and fully explored reserves or resources (A, B, C1). The Liska mineralization was drilled on sections, almost exclusively with vertical holes, and polygonal bounding volumes from parallel sections with weighted average grades were used to estimate the deposit’s tonnage and grade. The documents reviewed by Medgold indicate that the Yugoslav state companies categorized the Liska deposit into B and C1 categories. The reader is cautioned that there is no general equivalence between resource categories as defined by the Russian system and the resource categories as defined by the Canadian Institute of Mining. Particularly, the Russian system does not explicitly separate technical and economic factors. It should not be construed that Medgold interpret the historical records as being indicative of any resources, historical or current, that can be attributed directly into CIM resource categories.
The work described in the various historical reports appears to have been done to a high standard, and Medgold believes it is reliable. However, as complete records for the drilling have not been found, and as no core from these drilling campaigns appears to still exist, it is not possible for Medgold to verify this historical resource. It is likely that a full re-drilling of the mineralization would be necessary in order to verify the historical resource as current.

A total of 4,657m from 37 holes were drilled between 1974 and 1977. A resource estimation undertaken in 1983 calculated 4.862 Mt at 0.54% Pb and 1.00% Zn. A further resource estimation of 6.8 Mt at 0.44% Pb, 1.12% Zn and 8 g/t Ag was referenced in Serbian literature in 1996, 2001 and 2002 3 . Reconstructions of the drilling by Medgold show that the mineralization was still open to the NE when drilling ceased, and indeed the last reports on the area indicate that drilling between Barje and Liska was planned future work (that was never undertaken).

The historical resource estimation at Liska, which shows a significant volume of mineralized rock to exist at the contact of the overlying conglomerates and detachment faulted basement is considered by Medgold to be highly significant for the exploration upside of Barje. The approximately 30 m thick, strata-bound mineralization at Liska is considered by Medgold to potentially be analogous to that of the mineralization at Barje, whereby a low-angle detachment fault underlies and represents the principal control upon the distribution of mineralization. Geochemically, Liska assays 1-2 wt% combined Pb & Zn but is only anomalous in precious metals. Barje, conversely, shows lower base metals but much higher contents of gold and silver. During a site visit by consulting geologist, Dr. Richard Sillitoe, he stated that the “markedly higher gold and silver values at Barje compared to those at Liska could be a product of temperature-controlled mineralization zoning.”

In the mid 2000s, Avala Resources (now Dundee Precious Metals; DPM) explored the area and completed multiple geochemical surveys and rock chip sampling and trenching near Barje.

A total of 4 diamond drill holes, for 831.2 m, were completed by Avala Resources in 2007 in the vicinity of the Barje showing. Medgold recently acquired a dataset from DPM, containing regional exploration data covering our recently granted licences as well as the drilling data from Barje.

One drill hole targeted the Barje outcrop, but Medgold considers that it was collared in a down-faulted block below Barje and consequently missed the Barje mineralization. A further three drill holes were completed by DPM, located to the east of the Barje outcrop. These intersected sequences of tectonic breccias considered by Medgold to represent the Crnook detachment fault, as at Barje, but off the Liska-Barje axis. This axis may play an important role in focusing mineralization. Mineralization within the tectonic breccias in these holes was locally anomalous.

References
Maric, A. (1983) Tehnicko-ekonomska ekspertiza mogucnosti eksploatacije rudne strukture Podvirovi-Bozilovo leziste i tehnicko-ekonomska ekspertiza mogucnosti eksploatacije rudnih lezista u podrucju Karamanice. SOUR Geozavod, Beograd.
Simic, M. (1996) Metalogenija zone Mackatica-Blagodat-Karamanica. Doktorska disertacija Rudarsko-geoloskog Fakulteta, Beograd, pp 256. (Metalogeny of Mackatica-Blagodat-Karamanica. PhD thesis; Faculty of Geology and Mining, Belgrade)
Simic, M. (2001) Metalogenija zone Mackatica-Blagodat-Karamanica. Posebna izdanja Geoinstituta, Beograd, v.28.
Silitoe, R. (2016) Gold and Exploration of Medgolds Precious and Base Metal Prospects in Serbia – Internal Report.
Simic, M. (2002) Lezista i pojave zlata u Srbiji. Radovi Geoinstituta, Beograd, v37, 5-66.

THE FORTUNA OPTION AGREEMENT

MEDGOLD RESOURCES CORP. TSX.V: MED

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, 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 has the right 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 were 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.

MEDGOLD’S CHANNEL SAMPLING

BARJE

Medgold has completed three phases of saw-cut surface channel samples over the outcrop at Barje.

Results from the first two phases of sampling (CH_BAR_01-11) creates a contiguous channel interval of 84 metres at 5.6 g/t Au and 105.2 g/t Ag (or 84 metres at 7.1 g/t AuEq, using a 70:1 Ag:Au price ratio).  This channel, in combination with the other parallel and conjugate channels, clearly demonstrates a consistently high-grade mineralized zone extensive over a broad area.  From a total of 205 samples, combining both phases of sampling, and applying a top-cut of 31 g/t Au (affects 4 samples) and 700 g/t Ag (affects 6 samples), the average grade is 5.6 g/t Au and 130 g/t Ag, and 198 samples (97%) returned assays greater than 1 g/t Au.  The overall area sampled is approximately 100 metres by 30 metres.  Mineralization appears open to the west, north, and east.1

The third phase of channel sampling (CH_BAR_12-14) was from an adit at Barje was excavated by a Yugoslav state company in the 1950s as part of their regional exploration for Pb-Zn mineralization. The entire surface of the exposed outcrop was channel sampled by Medgold. To properly sample a short interval of collapsed material in the adit, the channels were split into three intervals (channels 12-14), each contiguous with the others, with the result that the adit was sampled from start to end. The composited grade of the adit was 2.20 g/t Au and 88 g/t Ag, with 36 out of 52 samples assaying greater than 1 g/t Au, a minimum grade of 0.49 g/t Au, and a maximum grade of 25.3 g/t Au.

From these three phases of channel sampling a total of 298 samples were collected, which includes 41 Quality Assurance samples (blanks, standards and field duplicate). A summary of the channel intervals is shown below:

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. 

Outcrop Sampling and geological model
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.

MEDGOLD’S GROUND GEOPHYSICAL SURVEY

INDUCED POLARIZATION / RESISTIVITY

Following a detailed structural interpretation of the geology between the Barje and Liska prospects, the Company has completed an Induced Polarization / Resistivity (IP-Res) geophysical study which has identified a high chargeability anomaly which extends to the west of the Barje outcrop under cover for over 1 kilometre.

The objective of the 39 line-kilometre IP-Resistivity program was to analyse an area covering 4 square kilometres, focusing on the Barje-Liska prospects, for near-surface sulphide-rich mineralization.  The program commenced at the Liska prospect, which has been historically drill-tested for Pb-Zn mineralization by the former Yugoslav state companies in the 1950s and 1970s, and results from both the drilling and IP-Resistivity survey support the geological model of relatively flat-lying mineralization at the contact of the basement rocks and the overlying schists.

At Barje, located 1.5 kilometres to the northeast of Liska, a large high-chargeability anomaly was identified just west of the Barje outcrop.  The anomaly measures approximately 1 kilometre east to west and approximately 400 metres north to south.  The southern limit of the anomaly appears to track a large-scale regional detachment fault, which has been assumed to be a principal control on mineralization at both Barje and Liska, and its surface expression trends east-west.  The anomaly continues northwards, which is considered to be the northerly extension of the same detachment fault, but beneath cover and steepening topography.  Interestingly, the high-grade saw-cut channel sampling completed at the main Barje outcrop is located on the eastern flank of the chargeability anomaly.  At this stage, it is unknown whether the chargeability anomaly is directly related to gold mineralization; however, it is clear that the surface rocks exposed in the area of the chargeability anomaly consist of schists which display similar alteration and mineralization as seen in the schist stratigraphically overlying the mineralization at Barje. The Barje outcrop itself is observed in the chargeability data as a weaker NNE trending corridor; this also constitutes an exploration target to be followed up.