Medgold Announces Letter of Intent with Fortuna Silver Mines to Consolidate Ownership of the Tlamino Project, Serbia
Vancouver, Canada – TheNewsWire - June 18, 2020 – Medgold Resources Corp. (TSXV:MED)|(FRA:1XD) is pleased to announce that it has entered into a non-binding Letter of Intent (the “Letter”) with Fortuna Silver Mines Inc. (NYSE:FSM) (TSX:FVI) (“Fortuna”) to acquire Fortuna’s 51% interest in the Tlamino Project located in Serbia (the “Project”).
Under the terms of the Letter, Medgold has secured an exclusive option (the “Option”) to purchase Fortuna’s 51% interest in the Project for a cash consideration of US$ 3.468 million. The Option is valid for three years and is exercisable upon the earlier of (i) the expiry of the term of the Option, (ii) the date of completion of a sale by Medgold of a 100% interest in the Project to a third party, or (iii) the date of completion of a merger between Medgold and a third party.
Fortuna will also be entitled to deferred monthly option fees (the “Monthly Fees”) of US$23,000 per month commencing from the date of the Definitive Agreement (as defined below) to the date of exercise of the Option, payable upon exercise of the Option. In the event that the Option is exercised within 12 months of the date of the Definitive Agreement (as defined below), the Monthly Fees will be fixed at US$276,000. Should Medgold not complete a sale of the Project or corporate merger within the term of the Option, Medgold will transfer its undivided 49% interest in the Project to Fortuna for no consideration, such that Fortuna will then hold an undivided 100% interest in the Project.
If Medgold completes a sale of the Project or corporate merger as described above and receives consideration attributable to the Project in excess of US$ 13 per ounce of the Project’s Inferred Mineral Resource (see The Tlamino Project below), Medgold will pay to Fortuna an asset sale bonus equal to 10.2% of any amount in excess of US$13 per ounce, less all of Medgold’s costs related to the sale or corporate merger.
The Option is subject to the execution of a definitive agreement (the “Definitive Agreement”) to be entered into between Medgold and Fortuna within 60 days of the effective date of the Letter, and will contain terms and conditions customary for transactions of this type. The Option is subject to approval from the TSX Venture Exchange, and the boards of directors of both companies. Medgold and Fortuna have a director in common.
Pursuant to the terms of the option agreement between Medgold and Fortuna dated March 6, 2017, and as later amended, Fortuna has earned a 51% interest in the Project by spending US$ 3 million in exploration expenditures, as announced on January 30, 2020.
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 announced in regard to the Barje Prospect on January 30, 2020. As part of this work, bulk rougher flotation tests were performed on two composite samples which, formed of 50.39 kg of core from the Company’s 2018 drilling program at the Barje prospect, yielded head grades of 2.04 g/t Au and 10.99 g/t Au and gold recoveries to concentrate of 88.2% and 90.5%, respectively. The same composite samples yielded 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.
The Tlamino Project covers an area of approximately 200km2 in southern Serbia and is held by Medgold under two exploration licenses. Outcropping mineralization was first observed at the Barje Prospect by Yugoslav State agencies in the 1950s and 1960s when a short adit was opened but no drilling was carried out. The prospect was then held by private and public companies between approximately 2005 and 2012 during which time limited drilling failed to intersect significant mineralization.
Medgold conducted mapping, surface sampling and geophysics (IP) followed by diamond drilling at the Barje Prospect in 2018 and 2019, all fully funded by Fortuna, which successfully intersected gold mineralization in a shallowly inclined body of hydrothermal breccia below altered schist (as announced on March 21, 2019). The Inferred Mineral Resource at the Barje Prospect extends from surface to a depth of approximately 110m as a shallowly inclined zone over an area of approximately 600 m x 350 m. The true thickness of mineralization generally ranges between 10 m to 40 m.
Qualified Person and Data Verification
Mr. Thomas Sant, FGS, CGeol, EurGeol, Consultant Exploration Manager for Medgold and Qualified Person as defined by NI 43-101, has reviewed and approved the scientific and technical content of this news release. Mr. Sant is not independent of the Company.
Medgold is a TSX-V listed, gold exploration company targeting early-stage properties in the Balkan region. Run by an experienced management team with a successful track-record of building value in resource companies, Medgold is focused on growth through fast-paced exploration and resource definition in the prospective and under-explored Balkan region.
Jeremy Crozier (Vancouver), +1 604 801 5432, firstname.lastname@example.org
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
Certain statements contained in this news release constitute forward-looking statements within the meaning of Canadian securities legislation. All statements included herein, other than statements of historical fact, are forward-looking statements and include, without limitation, statements about the potential acquisition by the Company of Fortuna’s interest in the Tlamino Project, and the mineral resource estimate for the Tlamino Project. Often, but not always, these forward looking statements can be identified by the use 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 similar expressions, including negative variations.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any results, performance or achievements expressed or implied by forward-looking statements. Such uncertainties and factors include, among others, whether the Company will obtain stock exchange approval to the Option, and acquire Fortuna’s interest in the Tlamino Project; the Option is subject to the execution of the Definitive Agreement; the uncertainties inherent in the estimation of mineral resources; changes in general economic conditions and financial markets; the Company or any joint venture partner not having the financial ability to meet its exploration and development goals; risks associated with the results of exploration and development activities, estimation of mineral resources and the geology, grade and continuity of mineral deposits; unanticipated costs and expenses; and such other risks detailed from time to time in the Company’s quarterly and annual filings with securities regulators and available under the Company’s profile on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are based on the assumptions, beliefs, expectations and opinions of management, including but not limited to: the Company will obtain stock exchange approval to the Option; the execution of the Definitive Agreement; that the accuracy of the mineral resource estimate for the Tlamino Project; that the Company’s stated goals and planned exploration and development activities will be achieved; that there will be no material adverse change affecting the Company or its properties; and such other assumptions as set out herein. Forward-looking statements are made as of the date hereof and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by law. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking statements.