Valongo Belt

Northern Portugal

Commodity: Gold

Joint Venture Partner

Centerra Gold Corp.
www.centerragold.com

Introduction & Location

Four of Medgold's licences (Lagares, Valongo, Balazar, Castelo de Paiva) are located in the Valongo region hosted by rocks belonging to the Valongo Belt (VB); a northwest trending belt of rocks roughly 70-80km long, located in northern Portugal, just to the east of Porto and striking to near Viano de Castelo on the northern Portuguese coast (Figure 1). The belt is largely comprised of the Hercynian-aged Valongo Anticline, an area of historic antimony, gold and tungsten production.

The VB hosts many gold-antimony, tin-tungsten and lead-zinc-silver occurrences. The Romans mined gold and antimony in several places, including Castromil (Lagares licence). Production, mainly of gold and antimony has also taken place more recently. The main gold deposits known are: Moirama, Banjas and Castromil. There is also a lead-zinc-silver deposit at Terramonte, located within the Castelo de Paiva licence, which previously mined. As with most of Medgold's other projects in Portugal, there are extensive Roman workings in the Valongo belt indicating production of gold and other commodities.

Ownership

The 100%-owned Valongo Belt property covers a total of 600 square kilometers. Medgold has optioned all four Valongo Projects including Lagares.

Centerra Gold Corp. is a mid-tier gold producer. They have the option to earn 51% interest by spending $3m over 3 years, and the option to earn a further 19% by spending $3m over 2 years.

For further details on the joint venture, 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

Target Type

Medgold is exploring the Valgongo Belt primarily for orogenic gold deposits.

Project History

Several very extensive and comprehensive geochemical datasets have been generated during previous exploration campaigns in the Valongo Belt. Regional stream sediment sampling that was carried out by the BRGM/EDM consortium between 1985 and 1993 covers most of the central and southeastern parts of the Valongo Belt, including all of the Valongo and Castelo de Paiva concessions, and part of the Lagares and Balazar concessions. These surveys outlined a large number of anomalies most of which were not adequately followed-up.

Medgold acquired its land position in the VB from Klondike Gold Corp. in January 2014. The Klondike projects combine five exploration licences (Balazar, Valongo, Lagares, Castelo do Paiva and Ponte de Barca), totalling 604 sq km, with four covering the majority of the Valongo anticline, plus Ponte de Barca, which covers several orogenic gold occurrences in the very north of Portugal. The Valongo Anticline is a large overturned fold hosting numerous gold occurrences, many of which were exploited by the Romans. Recent interpretations clearly demonstrate that mineralization within the VB was introduced by a series of faults and fractures, and is focused into 'saddle reefs' and en echelon vein arrays, commonly with zones of massive sulphide and quartz veining in a number of different lithologies.

The most advanced project in the VB is the Lagares gold project, which includes Castromil and Serra da Quinta prospects. Historical exploration, undertaken by both Connary Minerals plc ("Connary") and previous explorers, focused on near-surface high-grade mineralization, and included multiple phases of shallow percussion and diamond drilling.

The Castromil gold deposit is hosted in a granite at its sheared contact with metasediments. There is extensive hydrothermal alteration. The deposit straddles the Sousa river, the southeastern section being known as the Serra da Quinta deposit.

Valongo Belt Geology

The only comprehensive study of the metallogeny of the VB was a 1993 PhD thesis by Helena Couto (now a professor at the University of Porto), who compiled existing geological and mineral deposit data for many of the main historical Sb-Au and Au-As mines and occurrences in the central Valongo Belt, and also produced a substantial body of structural, petrographic and geochemical data for these occurrences. Little else has ever been published on the geology or mineral deposits of the VB, and as a result it has been very difficult to place this belt in any kind of consistent regional geological or metallogenic framework. There have been several mineral exploration campaigns undertaken in the belt, but none of this data has previously been compiled into a comprehensive synthesis.

The VB is underlain mainly by weakly metamorphosed (lower greenschist facies) Precambrian to lower Paleozoic schists and quartzites. The dominant structure in the region is the Valongo Anticline, a north-northwest trending, gently plunging, slightly overturned anticlinal structure. In the central part of the VB the northeast limb of the anticline is moderately dipping, whereas the southwest limb is nearly vertical to slightly overturned. The axial trace of the anticline curves around to a more northwesterly strike in the southeastern part of the belt, and the fold is more open in this region.

Three main styles of mineralization have been recognized in the Valongo Belt, based mainly on metal associations: these are: 1) Au-As dominant; 2) Sb-Au dominant; and 3) Pb-Zn-Ag dominant. Most mineralization in the central VB is associated with quartz vein systems that are developed mainly in quartzite and conglomerate units, commonly in close proximity to the contact with the overlying and underlying schist units. The Au-As occurrences and deposits are located mainly along the northeastern flank of the Valongo Anticline, whereas the Sb-Au occurrences appear to be localized along the crest and in the southwestern flank of the structure.

Information Sources:

Investigations of Au, Sb and Pb-Zn-Ag Mineralization in the Valongo, Castelo de Paiva andPonte da Barca Concessions, Northern Portugal : by James K. Mortensen (Consultant; 11197 Canyon Crescent, Delta, BC, Canada); Alexandre Lima (Consultant); and Patricia Santos (Klondike Gold Corporation Portugal) Unpublished Klondike Gold Internal Company report.

Aster study of Valongo District, northern Portugal Michael Baker Geological Consultant Undertaken for Medgold Resource Ltd by Michael Baker, Geological Consultant Job No. 113 February 2014. Unpublished Internal Medgold Company report.