(MENAFN- ProactiveInvestors - N.America) Fortuna Silver Mines Inc (TSE:FVI, NYSE:FSM) is to increase its stake Medgold Resources Corp (CVE:MED).
Fortuna has elected to exercise its Medgold common share purchase warrants, generating proceeds of C$1.5mln for Medgold, and lifting Fortuna's stake to 24.2%.
Medgold and Fortuna have also agreed to extend their strategic alliance for a further 12 months, with Medgold granting Fortuna the right to option a second project in Serbia. The alliance was announced on 13 June of last year.
Fortuna now has the right to enter into separate option agreements to earn up to a 70% interest in two geological target areas identified by Medgold's generative work.
Fortuna can earn a 51% stake in each selected property by spending US$3.0mln on each over three years.
Once it has earned 51%, Fortuna can elect to form a 51:49 joint venture with Medgold to further develop the selected property, or it can elect to earn an additional 19% interest in the property by spending an additional US$5.0mln in qualified expenditures and completing a preliminary economic assessment on the selected property.
Medgold also revealed it is pleased with the results from recent surface channel sampling at its Tlamino project, in southern Serbia.
A total of 132 linear samples of one metre in length by about 8 centimetres (cm) in width and 4cm in depth were collected from seven channels.
Highlights include 40 metres of 8.32 grams per tonne (g/t) gold and 193 g/t silver.
Gold assays ranged from 0.78 g/t to 132.5 g/t gold, with an average grade of 8.11 g/t gold and a median grade of 4.74 g/t gold.
Silver concentrations ranged from 10.3 g/t to 2110 g/t silver, with an average grade of 210.6 g/t silver and a median grade of 111.5 g/t silver.
"We're extremely pleased by these initial results from Serbia. Medgold has been in the country for just over a year and we've taken major steps forward. Through funding from Fortuna, significant regional work has been accomplished, geological targets identified and Medgold has been awarded five exploration licences,' said Dan James, president of Medgold.
'Medgold will continue this regional work funded by our strategic alliance with Fortuna throughout 2017, allowing us to generate additional projects using the proceeds from the warrant exercise. I am proud of our rapid progress in Serbia. It underscores Medgold's commitment and focus on discovery and moves us closer to our aim of becoming one of the leading European gold explorers," he added.
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