Medgold hunts for gold in Serbia with partner Fortuna

Medgold Resources (TSXV: MED; US-OTC: MGLDF) is wrapping up a nearly 5,000 metres exploration program at its Tlamino gold-silver-lead-zinc project in southern Serbia that partner Fortuna Silver Mines (TSX: FVI; NYSE: FSM) is funding.

Fortuna extended the original 2,400-metre program based on early results, including 13.35 metres from 41.45 metres downhole grading 5.06 grams gold, 109 grams silver, 1.44% lead and 2.85% zinc.

The two companies also cut 38.2 metres from 19.8 metres grading 3.98 grams gold, 158 grams silver, 0.21% lead and 0.45% zinc, with a 6.85 metre interval from 48.15 metres downhole at 13.49 grams gold and 788 grams silver.

Medgold shifted its focus to Serbia in 2016 after spending a few years and roughly ?,?4 million looking for gold in Portugal. It found some, but not enough, working with Centerra Gold (TSX: CG; US-OTC: CAGDF) on two projects - Boticas-Chaves - that never became economic.

"If something's not working you have to be able to stand up and say it's not working," Medgold president Daniel James says in an interview with The Northern Miner.

Medgold generated projects in Serbia using historical work done in the 1950s by Yugoslavian state companies as a guide. James says those companies had performed quality mapping and mineral exploration, assaying for nearly everything except gold.

Geologists work on Medgold's Tlamino project in Serbia. Credit: Medgold Resources.

"We thought that there was an opportunity to come into Serbia using the lead-zinc mineralization as a bit of a vector," he explains.

When Medgold took its own rock chip samples, the first three all graded higher than 10 grams gold, with one in the 30s and one in the 20s. Medgold did channel sampling, IP geophysics and mapping, and was able to determine that the mineralization was flat lying. That discovery outcrop later became the Tlamino gold project.

At the same time, the company formed a strategic alliance with Fortuna. Both companies share a chairman in Simon Ridgway, who is also Medgold's CEO.

Fortuna invested $3 million in Medgold across two $1.5 million installments to own nearly 24% of the company. It then entered an option agreement in March 2017 that grants it the right to earn a 70% interest in Tlamino by spending US$8 million on the project and completing a preliminary economic assessment. It can earn a 51% interest in the project by spending US$3 million over three years.

Exploration at Tlamino now operate under a three-person technical committee. Fortuna holds two seats on the committee, while Medgold operates everything on the ground.

Dundee Precious Metals (TSX: DPM; US-OTC: DPMLF) had explored the area previously, digging a few trenches and drilling a couple of holes. It dropped the project after failing to hit mineralization at depth.

"The reason they didn't is because it's flat lying," James says. "They then walked away in about 2007-2008, and we were able to see the drill core and reinterpret that and appreciated that it was flat lying."

Medgold now believes it has identified a large, intermediate-sulphidation epithermal system. It lies flat up to 100 metres thick. Medgold is focused on a higher grade zone it believes is up to 30 metres thick.

This year Medgold and Fortuna have drilled a little over 4,000 metres at Tlamino. Medgold completed its initial drill campaign at the project's Barje zone between May and July 2018, drilling seven holes. Phase two began in late July.

With four holes left in the program, the two companies will stop just shy of 5,000 metres in November when snowy weather conditions will end their field season. Medgold says it intends to come back in April and continue drilling.

Right now the companies are drilling two holes in the Liska zone, just south of Barje. Liska lies in the same zone of mineralization as Barje, but is much more lead-zinc rich - which doesn't come as a surprise, considering the Yugoslavian explorers reported it as one of the regions lead-zinc occurrences.

Medgold will soon break for the winter but plans to resume exploring in spring 2019. Credit: Medgold Resources.

Still, James says Medgold believes it may be part of the same gold system as Barje.

Although it has focused largely on Tlamino this summer, Medgold also collected about 1,000 soil samples from its Ljubata gold project, 30 km to the northwest and on the other side of a mountain range.

Ljubata is made up of 3 exploration licenses that total 300 square kilometres. Two exploration licenses comprise the Tlamino project, Donje Tlamino and Surlica-Dukat; both are approximately 100 square kilometres. Donje Tlamino hosts Barje and Liska.

The five exploration licenses cover 500 sq. km of an area called the Crnook Dome in the Serbo-Macedonian Massif belt of metamorphic rocks that run north-south through Serbia and into Macedonia, Bulgaria and Greece.

The company is following the same detachment structure, a ring around the Crnook Dome, from the Barje zone 8 km west to its Karamanica zone, then north in a clockwise motion to Ljubata West followed by Ljubata North.

The company is currently doing geophysics on Karamanica as part of an ongoing 40 km geophysics program. It's taken some rock chip samples there, as well, and says the 2 km by 2 km soil anomaly shows indications of a high angle zone of polymetallic mineralization.

The leases are located near the borders of Bulgaria and Macedonia, approximately five hours south of the capital, Belgrade, and close to the town of Bosilegrad.

Shares of Medgold are currently trading at 29 ? with a 52-week range of 14 ? to 51 ?. The company has a $26 million market capitalization. It's proposing a $1 million private placement to raise money to explore Ljubata.

"By the middle of next year we should have a good idea of what we're dealing with," James says.