MGLDF - Medgold signs Option Agreement with Fortuna Silver Mines to Acquire Full Ownership and Management Control of the Tlamino Project Serbia
(TheNewswire)
Vancouver, Canada – TheNewswire- January 7,2021 – Medgold ResourcesCorp. (TSXV:MED ) | ( FRA: 1XD) is pleased to announce that it has entered into adefinitive Option Agreement (the “ Agreement ”) with Fortuna Silver MinesInc. (NYSE: FSM) (TSX: FVI) (“ Fortuna ”) to acquire Fortuna’s 51% interest in the TlaminoProject, located in Serbia (the “ Project ”).
The terms of the Agreement provide Medgold with an exclusive option(the “ Option ”) to purchaseFortuna’s 51% interest in the Project for a cash consideration ofUS$ 3.468 million. The Option is valid for three years and isexercisable (i) at any time at the election of Medgold prior to theexpiry of the term of the Option; or (ii) at the date of completion ofa sale by Medgold of a 100% interest in the Project to a third party;or (iii) at the date of completion of a merger between Medgold and athird party, whichever arises soonest.
In the event that Medgold completes a sale of the Project or corporatemerger during the term of the Option and receives consideration inexcess of US$ 8.84 million (the “ Sale Consideration ”), Medgold will pay to Fortuna an assetsale bonus equal to 10.2% of any amount in excess of the SaleConsideration, less all of Medgold’s costs related to the sale orcorporate merger. No other consideration is due by Medgold toFortuna under the terms of the Agreement. The monthly Option Feesreferred to in the non-binding letter of intent announced on June 18,2020 have been struck.
Should Medgold not exercise the Option or complete a sale of theProject or corporate merger within the term of the Option, Medgoldwill transfer its undivided 49% interest in the Project to Fortuna forno consideration, such that Fortuna will then hold an undivided 100%interest in the Project.
Jeremy Crozier, President and CEO of Medgold, remarked: “Sealing this new deal withFortuna provides Medgold with the immediate management control, and apath to full ownership, over the Tlamino Project necessary forunlocking the intrinsic value of the Project. This agreement, aswell as the preparation of the PEA which is expected to illustrate therobust self-standing nature of Tlamino, establish a clear base fromwhich to advance the Project though its next stages. We thankFortuna for their support of Tlamino and Medgold, and for theircollaboration in establishing this new agreement.”
Pursuant to the terms of the option agreement betweenMedgold and Fortuna (the “ Original Option ”) dated March 6, 2017, andas later amended, Fortuna has earned a 51% interest in the Project byspending US$ 3 million in exploration expenditures, as announced on January 30, 2020. The Original Option is terminated under theterms of the Agreement.
The granting of the Option is subject to approval bythe TSX Venture Exchange. Medgold and Fortuna have a commondirector, and Fortuna is a significant shareholder of Medgold. IfMedgold determines it will exercise the Option, Medgold will seekminority shareholder approval in accordance with National Instrument61-101, Protection ofMinority Securityholders in Special Transactions .
An Inferred Mineral Resource containingapproximately 680,000 oz AuEq in 7.1Mt grading 3.0 g/t AuEq at cut-offgrade of 0.7 g/t AuEq was announced in regard to the Barje Prospect on January 30, 2020 , and the Project is currently the subject ofa Preliminary Economic Assessment (“ PEA ”), as announced on August 5, 2020 .
On October 28, 2020, the Company reported thecompletion of metallurgical test work from the Barje Prospect, whichdemonstrated the production of a flotation concentrate grading 48.9g/t Au and 824 g/t Ag with recoveries to concentrate of 83.4 % forgold and 82.4% for silver from a composite sample representing themain hydrothermal breccias; this material type hosts approximately 72%of the total gold inventory reported in the current Mineral ResourceEstimate for the Barje Prospect. A second composite samplerepresenting the mineralized schist immediately above the hydrothermalbreccias produced a flotation concentrate grading 24.4 g/t Au and 238g/t Ag with recoveries to concentrate of 71.2% for gold and 79.2% forsilver; this second material type hosts approximately 16% of the totalgold inventory reported in the current Mineral ResourceEstimate.
These highly positive results will be incorporated intothe PEA.
The Tlamino Projectcovers an area of approximately 200km 2 in southernSerbia and is held by Medgold under two exploration licenses. Outcropping mineralization was first observed at the Barje Prospectby Yugoslav State agencies in the 1950s and 1960s when a short aditwas opened but no drilling was carried out. The prospect was thenheld by private and public companies between approximately 2005 and2012 during which time limited drilling failed to intersectsignificant mineralization.
Medgold conductedmapping, surface sampling and geophysics (IP) followed by diamonddrilling at the Barje Prospect in 2018 and 2019, all fully funded byFortuna, which successfully intersected gold mineralization in ashallowly inclined body of hydrothermal breccia below altered schist(as announced on March 21, 2019). The Inferred Mineral Resource atthe Barje Prospect extends from surface to a depth of approximately110m as a shallowly inclined zone over an area of approximately 600 mx 350 m. The true thickness of mineralization generally rangesbetween 10 m to 40 m.
Qualified Person andData Verification
Mr. Thomas Sant, FGS, CGeol, EurGeol,Consultant Exploration Manager for Medgold and Qualified Person asdefined by NI 43-101, has reviewed and approved the scientific andtechnical content of this news release. Mr. Sant is not independentof the Company.
Medgold is a TSX-V listed, goldexploration companytargeting early-stage properties in the Balkan region. Run by anexperienced management team with a successful track-record of buildingvalue in resource companies , Medgold isfocused on growth through fast-paced exploration and resourcedefinition in the prospective and under-explored Balkanregion .
Additionalinformation on Medgold can be found on the Company’s website at www.medgoldresources.com and by reviewing theCompany’s page on SEDAR at www.sedar.com .
JeremyCrozier, President and CEO
For Further Information,Contact:
Jeremy Crozier(Vancouver ) , +1 604 801 5432,info@medgoldresources.com
Neither the TSXVenture Exchange nor the Investment Industry Regulatory Organizationof Canada accepts responsibility for the adequacy or accuracy of thisrelease.
Certain statementscontained in this news release constitute forward-looking statementswithin the meaning of Canadian securities legislation. Allstatements included herein, other than statements of historical fact,are forward-looking statements and include, without limitation,statements about the potential acquisition by the Company ofFortuna’s interest in the Tlamino Project, the mineral resourceestimate for the Tlamino Project, and the proposed PEA. Often, butnot always, these forward looking statements can be identified by theuse of words such as “estimate”, “estimates”, “estimated”,“potential”, “open”, “future”, “assumed”,“projected”, “used”, “detailed”, “has been”,“gain”, “upgraded”, “offset”, “limited”,“contained”, “reflecting”, “containing”, “remaining”,“to be”, “periodically”, or statements that events,“could” or “should” occur or be achieved and similarexpressions, including negative variations.
Forward-lookingstatements involve known and unknown risks, uncertainties and otherfactors which may cause the actual results, performance orachievements of the Company to be materially different from anyresults, performance or achievements expressed or implied byforward-looking statements. Such uncertainties and factors include,among others, whetherthe Company will obtain stock exchange approval to the Option, andultimately acquire Fortuna’s interest in the Tlamino Project;whether the PEA will be completed; the uncertainties inherent in theestimation of mineral resources; changes in general economicconditions and financial markets; the Company or any joint venturepartner not having the financial ability to meet its exploration anddevelopment goals; risks associated with the results of explorationand development activities, estimation of mineral resources and thegeology, grade and continuity of mineral deposits; unanticipated costsand expenses; and such other risks detailed from time to time in theCompany’s quarterly and annual filings with securities regulatorsand available under the Company’s profile on SEDAR at www.sedar.com. Although the Company has attempted to identify important factorsthat could cause actual actions, events or results to differmaterially from those described in forward-looking statements, theremay be other factors that cause actions, events or results to differfrom those anticipated, estimated or intended.
Forward-lookingstatements contained herein are based on the assumptions, beliefs,expectations and opinions of management, including but not limited to: the Company willobtain stock exchange approval to the Option; the accuracy of the mineralresource estimate for the Tlamino Project; that the PEA will becompleted; that the Company’s stated goals and planned explorationand development activities will be achieved; that there will be nomaterial adverse change affecting the Company or its properties; andsuch other assumptions as set out herein. Forward-looking statementsare made as of the date hereof and the Company disclaims anyobligation to update any forward-looking statements, whether as aresult of new information, future events or results or otherwise,except as required by law. There can be no assurance thatforward-looking statements will prove to be accurate, as actualresults and future events could differ materially from thoseanticipated in such statements. Accordingly, investors should notplace undue reliance on forward-looking statements.
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