Lagares

Lagares, Portugal

Commodity: Gold

Location, Tenure and Ownership

The Lagares gold project is located 22km east of Porto close to the town of Sobreira in northwestern Portugal, and is easily accessible by road with key infrastructure close by. The project is covered by an 8000ha exploration licence which Medgold acquired from Klondike Gold Corp. in January 2014.

The 79.4 sq km Lagares property is located in the central-eastern part of Medgold's 100%-owned Valongo Belt property which covers 372.1 sq km. Medgold has optioned all four Valongo Projects including Lagares to Centerra Gold Corp. ("Centerra"). Lagares is currently under its 3rd year of contract out of 5. Centerra, a mid-tier gold producer, has the option to earn a 51% interest by spending $3m over 3 years, and the option to earn a further 19% by spending $3m over 2 years. (please review this press release: http://www.medgoldresources.com/s/news-releases.asp?ReportID=686917&_Type=News&_Title=Medgold-Options-Portugal-Licences-to-Centerra-Gold)

Geology and Mineralization


The project is located on the eastern flanks of the Valongo anticline; a large overturned fold hosting numerous gold occurrences, many of which were mined by the Romans. The main geological control on mineralization in the area is an intrusive contact between a package of Silurian meta-sediments and granites which has subsequently been faulted. In the Castromil area, this contact coincides with a northwesterly trending shear zone, against which the granite has been thrust over the metasediments.

The control on mineralization at the Castromil project is structural: the sheared sediment-granite contact is believed to be the primary fluid conduit. However, recent drilling results demonstrate that the best developed mineralization and alteration is actually associated with flat-lying tabular units, which are strike-parallel to the Railway Fault but are shallower dipping. Previous explorers focused on the Railway Fault and the contact, but Medgold's drilling showed that the mineralization is open to the northeast where the interpreted shallow-dipping structures continue beneath alluvial cover.

While the exact structural controls upon the distribution of mineralization are not too clear, it is apparent that fluids have channeled along pre-existing structures and fractures. It is therefore important to try and understand the pre-mineral tectonics which created the pre-mineral structural framework. It is also unclear whether deformation was on-going during gold emplacement, but there are some local examples of brecciated mineralization indicating that there is some minor syn-mineral deformation. Most importantly, however, there seems to be almost no post-mineral deformation resulting is near-perfectly preserved mineralization.

The alteration associated with the gold mineralization was previously poorly understood; early explorers focused almost solely on the oxide mineralization where the sulphide mineralization and associated alteration are weathered and difficult to observe. The recent drilling, which has drilled below the oxidation level has identified a clear alteration zonation, grading outwards from zones of intense and gold-rich mineralization. The most intense alteration, associated with the highest grade primary gold mineralization, is comprised almost entirely of silica and pyrite. These zones, where oxidized would have been exploited by the Romans. The alteration then zones out through silica-sericite-pyrite (also known as phyllic or QSP) and kaolinite-illite (argillic) alteration, before a final broad zone of illite-smectite-chlorite (propylitic) alteration.

Gold occurs throughout the entire alteration suite, but is typically most enriched when associated with silica-pyrite, which commonly occur as lenses or veins within any of the alteration zones.

Target Type

Structurally-controlled and intrusion-hosted gold mineralization occurs at the intrusive margins between deformed Silurian sediments and late-Hercynian granites. Gold mineralization is exposed over a 4km strike length as a series of prospects, the most notable being Castromil and Serra da Quinta..

Highlights
  • A total of 2,988M has been drilled in 31 holes of an initial 3,000 metre program.
  • Project joint ventured with Centerra Gold Inc. who have been granted an option to earn a 51% interest in the project by spending US$3 million over 3 years and then having the right to earn an additional 19% by spending a further US$3 million over 2 years.
  • Drilling highlights include:
    • MLG-001: 10.90 m @ 2.32 g/t Au from surface, section 150mS
    • MLG-003: 19.95 m @ 3.16 g/t Au from surface, section 450mS *
    • MLG-004: 17.49 m @ 4.44g/t Au from 10.00m, section 400mS
    • MLG-006: 7.65m @ 4.36 g/t Au; from surface, section 300m
    • MLG-007: 10.53m @ 3.07 g/t Au; from 17.53m down-hole, section 450m
    • MLG-008: 28.65m @ 1.30 g/t Au; from surface, section 450m
    • MLG-009: 4.00m @ 3.86 g/t Au, from 46.00m (section 550m, Castromil)
    • MLG-011: 7.80m @ 1.38 g/t Au, from 13.20m (section 650m, Castromil)
    • MLG-013: 12.85m @ 1.55 g/t Au from 9.95m (section 1125m, Serra da Quinta)
    • MLG-014; 14.58M @ 1.03 g/t Au from 13.00m (section 1175m, Serra da Quinta)
    • MLG-015: 9.00m @ 1.51 g/t Au from surface (section 1125m, Serra da Quinta)
    • MLG-017: 13.77m @ 2.03 g/t Au from surface (section 1375m, Serra da Quinta)
    • MLG-018: 8.20m @ 1.28 g/t Au from 9.80m (section 1125m, Serra da Quinta)
    • MLG-022: 8.62m @ 1.56 g/t Au from 24.63m (section 1375m, Serra da Quinta)
    • MLG-023: 2.26m @ 5.41 g/t Au from 16.00m (section 1450m, Serra da Quinta)
  • Channel-chip results include:
    • 69.00 m @ 4.15 g/t Au (line 150)
    • 40.70 m @ 5.73 g/t Au, including 5.20 m @ 15.50 g/t Au (line 300)
    • 15.50 m @ 9.44 g/t Au, including 4.00 m @ 18.00 g/t Au (line 300)
    • 4.60 m @ 36.17 g/t Au (from underground sampling at Serra da Quinta, reported in June 03, 2014)
* Includes intervals of 19.1 g/t Au (5.45 to 6.00 m), 31.4 g/t Au (10.40 to 11.00 m), and 38.7 g/t Au (13.04 to 13.25 m).

Project History

Originally discovered by the Romans, the Castromil and Serra da Quinta areas have been the focus of several modern exploration programs with a period of fairly intense exploration in the late-eighties and nineties by Billiton and Connary Minerals, respectively.

Year Company Summary
Pre 20th Century ROMAN EMPIRE Exploitation of oxide ores using open pit and underground methods
1941 to 1946 MINAS GOLD DOURO Development of a number of adits at Castromil and Serra da Quinta and sampled Roman works
1964 to 1966 NORANDA 9 holes (827m) at Castromil, resample of underground works
1988 to 1989 BILLITON 112 holes (4,681m) and resampling, initial resource definition and metallurgical testwork at Castromil and Serra da Quinta
1994 to 1997 CONNARY MINERAL Ltd Initial economic evaluation and mining studies at Castromil based on historic data and drilling and metallurgical testwork. Connary completed 265 shallow RAB holes (2,533m) and 17 diamond drill holes (647m) at Castromil and Serra da Quinta
2007 BERALT 42 roto percussion holes (1,458m) at Serra da Quinta
2013 KLONDIKE GOLD CORP. Data acquisition and review 
2014 to present MEDGOLD RESOURCES Compilation of historic data, mapping, channel sampling. JV with Centerra. Diamond drilling.

Many of the Minas Gold Douro exploration adits are accessible still via the floors of the ancient Roman quarries. No historical data exists from the work, however Medgold has mapped most of the workings.

In 1964, Noranda Inc. began work, but stopped abruptly in 1966 due to a sharp drop in the gold price. Work completed included resampling of the adits and the drilling of 9 holes at Castromil. Medgold have not been able locate any of the historic data associated with this campaign.

In 1988, Billiton carried out a comprehensive exploration program leading to the delineation of historic gold resources at both Castromil and Serra da Quinta. A significant amount of data from this period exists and has been incorporated, where possible, into the Medgold programs and databases. This includes basic geological logging and assay data, and partial drill hole recovery data. In 1991, Billiton performed metallurgical testwork on composite samples of surface and adit mineralization from Castromil, achieving >92% recoveries.

In 1991, metallurgical testwork was performed on composite samples of surface and adit mineralization from Castromil, by Billiton. The overall results stated that achievable recoveries from mineralization was >92%.

The surrounding area was also explored during this period as part of a larger survey carried out by a Portuguese and French Government consortium. The work included stream sediment sampling with multi-element analysis.

The Portuguese Government body, the Instituto Geologico e Mineiro (IGM), reassessed the area and reinterpreted the Billiton data. Previous rights were subsequently relinquished and Connary Minerals was awarded the central concession.

Connary Minerals Ltd. explored the area between 1994 and 1997 and concluded that exploitation of the Castromil deposit was potentially viable. Work by Connary focused on near-surface gold mineralization. They completed further shallow drilling and metallurgical testwork, and completed an initial feasibility study ('Class III Feasibility Study') on the Castromil zone, culminating in a historical resource of 2.42 Mt at 1.89 g/t Au for approximately 145,000 oz Au1.

Historical drilling at Castromil and Serra da Quinta by Billiton and Connary Minerals yielded the following highlights2:

Castromil
  • 33.4 m at 2.82 g/t Au, including 12.00 m @ 6.13 g/t Au, from surface (95-09, Connary Minerals, 1995)
  • 29.3 m at 2.57 g/t Au from surface (96-02, Connary Minerals, 1996)
  • 27.3 m at 2.61 g/t Au from 3.4 m (MIL09, Billiton Portuguesa, 1988)
  • Serra da Quinta
  • 13.1 m at 3.84 g/t Au from 1.0 m, including 2.9 m at 13.15 g/t Au from 4.36 m (BIL67, Billiton Portuguesa, 1990)
  • 18.6 m at 3.73 g/t Au from 4.2 m (MIL29, Billiton Portuguesa, 1988)
  • 11.3 m at 3.75 g/t Au from 11.4 m (95-13, Connary Minerals, 1995)
1 This historical data is provided for information purposes and Medgold has not completed sufficient work to verify these results.

2 These results have not been independently verified by Medgold and are quoted for illustration purposes.


Historical reports indicate a total of approximately 3,417m of diamond drilling was completed in 79 holes at Castromil and approximately 1,295m of diamond drilling was completed in 51 holes at Serra do Quinta.

Klondike Gold Corp. was granted the Lagares License in 2013 covering the Castromil and Serra Da Quinta prospects, and Medgold acquired the project from Klondike gold in late 2013.

Medgold's Channel Sampling Results

Medgold's recent channel sampling campaign at the Lagares Project outlined significant broad widths of gold mineralization. Highlights include:
  • 69.00 m @ 4.15 g/t Au
  • 40.70 m @ 5.73 g/t Au, including 5.20 m @ 15.50 g/t Au
  • 15.50 m @ 9.44 g/t Au, including 4.00 m @ 18.00 g/t Au
Medgold geologists collected 800 contiguous channel-chip samples (including 90 QA/QC samples), using a diamond saw, from 9 lines over a total sample length of 732.53m. Lines were spaced 100 to 150 metres apart, orientated northeast-southwest, and perpendicular to the main structural trend and covered a total strike of 1,450m.

Of the 800 samples, 422 samples assayed greater than 0.5 g/t Au (59% of total) and many of the lines started or ended >0.5 g/t Au grade material.

A summary of the results is as follows:

Line From To Length (m) Au (g/t) Selected intervals
150 0.00 69.00 69.00 4.15  
300 0.00 40.70 40.70 5.73 inc 5.20 m @ 15.50 g/t Au
300 46.70 62.20 15.50 9.44 inc 4.00 m @ 18.00 g/t Au
400 0.00 60.28 60.28 3.10  
550 53.20 105.10 51.90 2.07  
700 0.00 55.90 55.90 2.42  
1150 20.50 40.50 20.00 2.94  
1350 42.89 49.85 6.96 4.63  
1450 5.00 35.60 30.60 3.15 inc 4.00 m @ 8.02 g/t Au
1450 54.60 78.50 23.90 2.59 inc 8.10 m @ 5.07 g/t Au

* Intervals were calculated using a 0.5 g/t Au cut-off and with maximum internal dilution of 3 metres. No top-cuts were applied. The true thicknesses of the mineralized intervals are currently unknown, and may be shorter than the channel sample intervals reported here. A location map and full details of the results can be found at www.medgoldresources.com.

In addition to the granite hosted mineralization, strong potential has now been recognized in the footwall meta-sediments adjacent to the granites, which have previously been reported as barren. Maximum gold grades of 44.0, 17.2 and 10.6 g/t Au were reported from samples within an extensive breccia within the sediments.

Medgold's Drilling Results

The first phase of significant work under Medgold's Agreement with Centerra was a program of 2,988 metres of diamond drilling in 31 holes. 1,784 gold assays were performed. The program includes some verification drilling to confirm results obtained by previous drilling campaigns. The majority of the drill-holes were inclined between 60° and 70° to the southwest, beneath the limits of the historical drilling. Previous explorers, including the Romans, generally targeted oxide mineralization due to the very high gold grades and excellent gold recoveries typically obtained with this material. However, the sulphide-associated gold mineralization has not been well tested, and the recent drilling cut some broad widths of semi-massive sulphide mineralization, predominantly pyrite, where the highest gold grades have been identified.

Medgold's drill results correlated well with both the historical drilling and our recent channel-chip results. The Company's geological model for the Lagares system has also evolved, and we now understand that the strongest mineralization is hosted in shallow-dipping tabular zones broadly associated with the northwest-trending Railway Fault.

Outcropping gold mineralization extends along a northwest-trending strike of 4km with only 500m drill-tested by Medgold. Gold-associated hydrothermal alteration in the granitic host-rock is up to 200m wide and is continuous for over 100m vertically, showing a zonation from silica-pyrite through phyllic and kaolinite alteration to low-temperature propylitic alteration. The highest gold grades are associated with the silica-pyrite alteration phase.

Due to access restrictions, three drill-holes were steeply inclined towards the northeast, effectively sub-parallel to the dip orientation of the mineralization, but still intersected the shallowly northeast-dipping, tabular mineralized zones, albeit obliquely. Assays and geological information provided by these drill-holes suggests that the mineralized zones extend at low-angles to the northeast beyond the main hill of the Castromil prospect beneath valley lands where no bedrock is exposed. The continuity of these zones will be the focus of future drilling.

A summary of the drill-collars is shown in the table below.

Hole ID Line ID (mS) X UTM29 WGS 84 Y UTM29 WGS 84 Z (m) Azimuth Dip Total Depth (m) Recovery (%)
MLG001 150 550992  4,556,256  184 222 -70 80.20 85
MLG002 150 551,034  4,556,290  174 222 -70 83.40 86
MLG003 450 551,240  4,556,058  167 222 -60 87.80 92
MLG004 400 551,251  4,556,147  143 222 -70 129.70 89
MLG005 300 551,173  4,556,232  150 222 -60 101.35 86
MLG006 300 551,146  4,556,185  150 222 -60 77.20 90
MLG007 450 551,289  4,556,121  138 222 -60 117.85 91
MLG008 450 551,291  4,556,125  138 42 -60 142.95 94
MLG009 575 551,385  4,556,050  128 222 -70 77.45 85
MLG010 650 551,450  4,556,006  123 222 -60 110.90 88
MLG011 650 551,452  4,556,009  123 42 -60 116.50 90
MLG012 300 551,173  4,556,234  150 42 -60 104.35 90
MLG013 1125 551,796  4,555,669  100 222 -70 76.00 92
MLG014 1175 551,825  4,555,628  99 222 -60 110.50 88
MLG015 1125 551,841  4,555,722  87 222 -75 112.15 91
MLG016 1125 551,748  4,555,628  119 222 -75 133.60 89
MLG017 1375 551,907  4,555,432  150 222 -60 106.90 88
MLG018 1125 551,748  4,555,628  119 222 -75 19.05 67
MLG019 1075 551,767  4,555,721  89 222 -60 86.25 91
MLG020 1450 551,941  4,555,352  163 222 -60 69.80 87
MLG021 1300 551,873  4,555,503  139 222 -60 63.55 78
MLG022 1375 551,957  4,555,487  126 222 -60 93.30 85
MLG023 1450 551,968  4,555,377  145 222 -60 77.40 84
MLG024 1300 551,918  4,555,554  112 222 -60 96.20 90
MLG025 1575 552,107  4,555,351  151 222 -60 76.90 82
MLG026 1600 552,097  4,555,304  163 222 -60 83.20 89
MLG027 1175 551,879  4,555,685  89 222 -60 113.00 88
MLG028 1850 552,258  4,555,106  191 222 -60 66.85 88
MLG029 CN 550,830 4,557,150 242 270 -60 96.15 94
MLG030 450 551,370 4,556,223 136 222 -80 200.30 95
MLG031 CN 550,916 4,557,110 249 270 -60 77.30 95

New Targets

São Domingos, in the extension of Serra da Quinta, Castromil North and Teso in the overturned limb of the Valongo anticline, are the immediate targets under development.

Greenfield areas of S. Domingos and Castromil North show soil anomalism and visible alteration. In S. Domingos no significant historical work was carried out and in Castromil N, the two holes drilled by Medgold and Centerra seem to have missed the bulk mineralization and only picked up narrow gold intersections not consistent with the alteration settings identified on surface mapping.

The TESO target was highlighted from historical exploration data held on file, and was previously sampled by Connary and BRGM. However, the exact position of the samples is unknown. Gold-in-soil concentrations of up to 684 ppb Au and rock samples with grades up to 1.1 g/t Au are stated in the historical reports. Teso is 3km from northeast of Banjas, 2.5km SW from the mineralization at Lagares. Currently a detailed exploration program is under development for this target.

Centerra JV - Option Terms

Medgold has granted to Centerra the exclusive right to earn a 51% interest in the Property by incurring expenditures on the Property totaling USD$3.0 million over three years, of which USD$500,000 is committed to be spent by Centerra. To keep the option in good standing, Centerra must incur USD$1.0 million in the first year, a further USD$1,500,000 in the second year, and a further USD$500,000 in the third year. Of these expenditures, USD$100,000 will be paid to Klondike Gold Corp. to complete Medgold's obligations relating to its purchase of the Property from Klondike earlier in 2014. Medgold will be the initial operator and manager of the project.

Once Centerra has acquired the initial 51% interest in the Property, it may acquire a further 19% (for a total 70% interest) by incurring an additional USD$3.0 million on exploration within two years.

QA/QC

Samples were prepared by ALS Minerals at the Seville Laboratory, Spain. Samples were analyzed for gold by fire assay with atomic absorption finish, and multi-elements were analyzed by inductively coupled plasma mass spectrometer (ICP-MS) and inductively coupled plasma emission spectrometer (ICP-AES) by ALS Minerals at the Omac Laboratory, Ireland. Certified reference materials (CRM's), blanks and field and laboratory duplicates were routinely inserted for quality assurance and quality control.