Tlamino

Southern Serbia

Commodity: Gold and Silver

Location, Tenure and Ownership

In November 2016, Medgold was granted five exploration licences for precious and base metal mineralization in the Republic of Serbia. A block of three contiguous licences (Tlamino, Surlica-Dukat and Radovnica) totaling 300 square km is located in the southeast of the country, bordering Macedonia and Bulgaria. Within this block is the Donje Tlamino licence which is host to the Barje and Liska occurrences, which together make up the Tlamino Project.

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.

The three contiguous 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 Palaeozoic metasediments, including calcareous schists and marbles, which have been intruded by a series of Cenozoic 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 1960s and 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.

Tlamino Geology

The Tlamino Gold Project is located in southern Serbia, and includes two historical showings: Liska and Barje. Both showings are associated with a regional east-west striking detachment fault, which in the vicinity of these showings has been overlain by conglomerates. Mineralization is located at the contact of the basement metamorphic rocks and the base of the conglomerate cover. Liska, located approximately 1.5 km to the southwest of Barje, was drilled in the 1970s by Yugoslav state companies, and a lensoid-shaped mineralized volume of rock with 1-2 wt.% combined Pb-Zn was found to strike NE towards Barje. The mineralization at Liska is located at the base of the Miocene conglomerate and parallel to the slope of the detachment fault. Liska was found to contain little precious metals. At Barje, base metal contents are lower, but precious metals are found in much higher concentrations. The area between the two showings is overlain by a thin conglomerate cover likely in the range of 50 - 100 metres in thickness, and Medgold considers the exploration potential under the conglomerate, between the two showings, to be excellent.

Recent Medgold Exploration Work

After identifying the project in the fall 2016, Medgold completed a series of saw-cut surface channel samples over the outcrop at Barje, where approximately 70 m x 25 m of mineralized tectonic breccia is exposed on surface at the edge of the conglomerate cover. A total of 132 linear samples of 1 m in length by approximately 8 cm in width and 4 cm in depth, were collected from seven channels, designed to test as large an areal extent of the outcrop as possible. Three channels were cut across the outcrop in an east-west direction, while four channels were cut across the outcrop in a general north-south direction. Gold assays ranged from 0.78 g/t Au to 132.5 g/t Au, with an average grade of 8.11 g/t Au and a median grade of 4.74 g/t Au. Silver concentrations ranged from 10.3 g/t Ag to 2110 g/t Ag, with an average grade of 210.6 g/t Ag and a median grade of 111.5 g/t Ag.

Applying a top-cut of 31.104 g/t Au (affects 4 / 132 samples) and 700 g/t Ag (affects 6 / 132 samples), the channel length-weighted assay averages are summarized as follows:

Channel

Orientation

Length (m)

Au (g/t)

Ag (g/t)

AuEq (g/t)*

Pb (%)

Zn (%)

1

EW

30

6.64

137.1

8.60

0.33

0.13

2

EW

40

8.32

193.0

11.08

0.29

0.07

3

NS

11

5.55

189.3

8.25

0.20

0.03

4

NS

12

8.63

351.8

13.66

0.44

0.06

5

NS

18

5.71

207.1

8.67

0.54

0.18

6

EW

14.5

3.23

59.6

4.08

0.28

0.01

7

NS

7

7.05

82.0

8.22

0.61

0.02


*Gold equivalent (AuEq) calculated for gold and silver using a gold:silver price ratio of 70:1.


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.

Project History

The Tlamino 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. 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. 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).

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.

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."

More recently, a total of 4 diamond drill holes, for 831.2 m, were completed by Avala Resources (now Dundee Precious Metals; DPM) 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. Drill hole CKDD-03 was collared approximately 30 m to the southwest of the Medgold-sampled Barje outcrop and was inclined towards the northeast. At the time of drilling the mineralization at Barje was considered to be steeply dipping towards the southwest, and therefore this drill hole was expected to intersected mineralization at 40-60 m downhole. Instead, only a narrow 2 m thick zone of mineralization, at 14-16 m downhole, was intersected, and likely dispels the concept of a narrow and steeply dipping zone of mineralization. Medgold considers that the mineralization is more likely flat-lying and detachment-controlled, akin to the model developed for the Liska zone. Both listric normal faults and strike slip faults have been observed to offset the conglomerates, and it is postulated by Medgold that either normal or strike-slip faults have offset the Barje mineralization from the rocks immediately to the southwest. The presence of faults is supported by the topographic expression around the Barje outcrop by outcrop and regional structural geology interpretation. Fault offsets would provide a potential explanation for CKDD-03 not intersecting strata-bound mineralization as one might expect. The structural geology and fault kinematics of the area is currently a focus of research by Medgold geologists.

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.

Qualified Person

Mr. David Clark, M.Sc., P.Geo., is a Qualified Person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects. Mr. Clark prepared the technical information contained in this news release and has approved its disclosure.

Quality Assurance and Quality Control

Channel sampling at Barje followed a standardized protocol to ensure representative and unbiased quantities of material from across each sample. Samples were delivered by Medgold personnel directly to the assay lab prep facilities in Bor, Serbia. Samples were analysed by ALS Chemex using analytical method codes Au-ICP21 and ME-MS61, with overlimits for gold and silver analysed by GRA21, and for Ag, Pb, and Zn by OG62. Medgold routinely inserted appropriate multi-element geochemical standards and blanks into its sample stream at Barje, and additionally collected regular field duplicate samples.

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.

Simic, M. (2002) Lezista i pojave zlata u Srbiji. Radovi Geoinstituta, Beograd, v37, 5-66.