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. A Technical Report for the Project will be filed on www.sedar.com within 45 days.

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 began exploring in 2016 and completed an extensive soil sampling grid, and IP geophysical survey, mapping and channel-chip sampling at Barje.

CHANNEL SAMPLING

Channel sampling at what is now called the Discovery Outcrop (CH_BAR_01-11) returned a best channel interval of 84m at 5.6 g/t Au and 105.2 g/t Ag. Sampling of an old adit returned 52m at 2.20 g/t Au and 88 g/t Ag.

GEOPHYSICAL SURVEY: IP / RESISTIVITY

The Company completed a 39 line-km (4 sq.km) Induced Polarization / Resistivity (IP-Res) survey which identified a high chargeability anomaly extending to the west of the Barje outcrop under cover for over 1km. The anomaly is believed to relate to near surface, flat-lying sulphide mineralization at the contact of the basement rocks and the overlying schists. Medgold’s subsequent drill results support this geological model.

At Barje, a large high-chargeability anomaly -measuring approximately 1km east to west and 400m north to south- was identified just west of the discovery outcrop. The southern limit of the anomaly appears to track the regional detachment fault east to 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, schists exposed in the area of the chargeability anomaly 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.

DIAMOND DRILLING

Between May to July 2018, Medgold completed a very successful 7-hole diamond drilling campaign at Barje to test the up-dip continuity of mineralization north of the main Barje outcrop, and to test for sulphide mineralization associated with the large-scale chargeability anomaly. All drill holes intersected significant near-surface mineralization. A second phase of diamond drilling commenced in late July 2018, with a planned 2,400 m program, designed to test the westerly continuity of the flat-lying mineralized structure intersected in the Phase 1 drilling campaign. A summary of the collar locations, for both phases of drilling, is shown in the table below:

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

To date, all drill holes have intersected significant mineralization associated with a flat-lying detachment fault. A summary of the best drill intersections are as follows:

BAR001, collared approximately 70m north of the Barje outcrop, was designed to confirm that mineralization extends in a third dimension along a north-northeast axis from the outcrop. BAR003 and BAR004 are both collared on the same pad as BAR001 and drilled in a fan array (BAR001 to the south, BAR003 to the north, and BAR004 vertical).

BAR002, collared approximately 300m north-northeast of the Barje outcrop was designed as an up-dip step-out from the outcrop and BAR001.

BAR005 is collared 160 m to the NNW of the Barje outcrop and drilled towards the southeast. BAR006 and BAR007 are collared 190 m to the NW of the Barje outcrop, with BAR006 drilled to the southeast and BAR007 drilled to the northwest. All three drill holes intersected intervals of approximately 100 m of moderate to strong sericite and silica alteration with precious metal grades increasing with depth. All culminate with intersections of 13-30 m of intense brecciation and sulphide mineralization close to the contact of the detachment fault. BAR006 and BAR007 are located on the eastern flanks of an IP-chargeability anomaly, considered to be associated with disseminated sulphide mineralization, which continues for at least a further 500 m to the west.

BAR008: Collared 140m to the west of BAR001 (Discovery Outcrop, see press release 11th June 2018) and BAR013 is collared a further 70m to the west. Both yielded strongly mineralized intersections of Au and Ag mineralization. BAR008 intersected a zone of very high-grade mineralization, yielding 10.35 g/t Au, 235 g/t Ag and 9.57 % Pb+Zn over 5.85m, hosted within the Triple-X zone.

BAR009: Collared 70m to the northeast of the Discovery Outcrop on the extreme flanks of the IP-Chargeability anomaly.

BAR010: Collared on the same collar as BAR002, but drilled to the east-northeast, it yielded 38.20m at 3.98 g/t Au, 158 g/t Ag and 0.66 % Pb+Zn, including 6.85m at 13.49 g/t Au, 788 g/t Ag and 3.09 % Pb+Zn. The high-grade mineralized intersection in BAR010 is located 35m away from a similar intersection previously reported in BAR002.

BAR011 and BAR012b: Located approximately 250m to the northwest of the Discovery Outcrop on the northern flanks on the IP-chargeability anomaly. Strongly mineralized zones within the Triple-X Zone were intersected in both BAR011 and BAR012b yielding 10.75m at 4.76 g/t Au, 33 g/t Ag and 0.67 % Pb+Zn, and 15.20m at 1.68 g/t Au, 10 g/t Ag and 0.49 % Pb+Zn, respectively.

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.