Medgold Secures $1.5-million Investment and Strategic Alliance for Serbian Exploration

Posted Under: Exchange Filings

Vancouver, Canada, June 13, 2016, Medgold Resources Corp. (TSX-V: MED) (the “Company” or “Medgold”) is pleased to announce a C$1.5-million strategic investment in the Company by Fortuna Silver Mines Inc. (“Fortuna”), a leading mid-tier precious metals miner. The private placement is part of a broader strategic alliance between Medgold and Fortuna to explore for precious metal deposits in Serbia. Subject to stock exchange approval, Fortuna will purchase 10.0 million units at $0.15 per unit, representing a premium of 36% to the closing price of Medgold’s shares on June 10. Each unit is comprised of one common share in Medgold and one warrant entitling Fortuna to acquire one additional Medgold common share at $0.15 for a period of 12 months.

Medgold will use the proceeds of the private placement on project-generating exploration in Serbia within 12 months. If Fortuna exercises its warrants, Medgold will use the exercise proceeds on further exploration work in Serbia within 12 months following the date of the warrant exercise.

In conjunction with the private placement, Medgold has granted Fortuna the right to enter into an option agreement to earn up to a 70% interest in one of the geological target areas (a “Selected Property”) identified by Medgold’s project generation and exploration work in Serbia, by spending a total of US$8.0 million on the Selected Property and completing a PEA.

Dan James, the President of Medgold, said: “I’m delighted to welcome Fortuna as a strategic investor into Medgold. Our early-stage work in Serbia is already generating some very interesting targets – we have eight licences currently under application with the Ministry of Mines. Our agreement with Fortuna firstly secures the funding we need -at a premium to market- to kick off an aggressive project generation program in the country. Secondly, it provides Medgold with a potential partner for the advanced exploration to possible PEA level of at least one of the targets generated by our work.

Once we make a discovery, we can tap into the experience of Fortuna’s first-rate mining, engineering and geological team who have re-commissioned the Caylloma mine in Peru, and built and operate a modern underground silver-gold mine at San Jose in Mexico, which is acknowledged as one of the best run silver mines in the industry. Fortuna’s geological team has already spent time on the ground with our geologists reviewing some early-stage targets and we’re excited to start working with them as we move our strategic alliance forward.”

Option Terms

To acquire an initial 51% interest in the Selected Property, Fortuna must spend a minimum of US$3.0 million on the Selected Property by no later than the third anniversary of the date of the option agreement. Once it has earned 51% Fortuna can elect to form a 51:49 joint venture with Medgold to further develop the Selected Property; or Fortuna can elect to be granted the option to earn an additional 19% interest in the Selected Property by completing a Preliminary Economic Assessment on the Property and spending an additional US$5.0 million in qualified expenditures within three years following the date of the election by Fortuna.

About Fortuna Silver Mines Inc.

Fortuna is a growth oriented, silver and base metal producer focused on mining opportunities in Latin America. Its primary assets are the Caylloma silver mine in southern Peru and the San Jose silver-gold mine in Mexico. The company is selectively pursuing acquisition opportunities throughout the Americas and in select other areas. For more information, please visit its website at www.fortunasilver.com.

About Medgold

Medgold is a European-focused, TSX-V listed exploration and development company targeting gold properties in northwest Iberia and the under-explored gold provinces of southern Europe. Run by a highly experienced management team with a successful track record of building value in resource companies, Medgold is aiming to become a leading European gold company.

Additional information on Medgold can be found on the Company’s website at www.electrumdiscovery.com and by reviewing the Company’s page on SEDAR at www.sedar.com

ON BEHALF OF THE BOARD

“Dan James”
Daniel P. James, President & Director

For Further Information, Contact:

President
Dan James (UK)
dj@medgold.pubco.net
+44 7972 579188

Investor Relations 
Ralph Rushton (Vancouver)
ralphr@goldgroup.com
+1 604-630-5544

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Forward-looking statements


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 proposed strategic alliance between the Company and Fortuna. 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, completion of the private placement; advancement of the strategic alliance between the Company and Fortuna; 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: that the private placement will be completed as planned; that the strategic alliance between the Company and Fortuna will advance as anticipated; 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.