To some, the mention of gold in Portugal sparks a debate about monetary bailout for a country mired in debt, or World War II, so-called Nazi gold and stockpiles of bullion said to be locked in vaults at the Bank of Portugal on the aptly-named Gold Road in Lisbon estimated in 2011 to be in excess of $18 billion, as discussed in the Wall Street Journal and Time.
To others, it has nothing to do with wolfram and gold swapping; it means actual gold mining in Spain’s neighbor.
Portugal is a focal point for Vancouver-based Medgold Resources Corp. (TSX-Venture:MED), with two advanced exploration projects in the northern part of the country and two other grass roots projects. Medgold also has one early-stage project just north of Portugal in Spain. Following a $1.65-million capital raise in February, the company has been advancing its Lagares, Vila de Rei and Ponte da Barca exploration projects, which cover over 1,000 square kilometrEs in Portugal.
Sampling this summer at Lagares has shown some encouraging results to build upon historical exploration, including 36.17 g/t gold over 4.6 metres. A channel sampling program followed, with results disclosed earlier this month showing 69.0 metres grading 4.15 g/t gold; 40.7 metres grading 5.73 g/t gold (including 5.2 metres @ 15.5 g/t gold); and 15.5 metres grading 9.44 g/t gold (including four metres
@ 18.0 g/t gold).
On Tuesday, the company said it is passing on a portion of its portfolio, granting to Toronto-based Centerra Gold Inc. (TSX:CG) the option to acquire up to 70% of the Lagares, Balazar, Castelo de Paiva and Valongo licences in northern Portugal.
Lagares, which covers about 600 square kilometres, is the principal license of the Valongo Belt properties.
The pact represents Centerra’s first foray into Portugal. The company currently is producing gold at its controversial Kumtor gold mine in the Kyrgyz Republic.
Kumtor is the largest gold mine operated in Central Asia by a Western-based company, having produced more than 9.2 million ounces of gold between 1997 and the end of 2013. Centerra is also producing at its Boroo gold mine in Mongolia.
From March 2004 through to December 2013, the Boroo mine has produced approximately 1.5 million ounces of gold. Combined, the two mines produced 319,585 ounces of gold in the first three quarters this year.
Per the agreement, Centerra can earn a 51% interest in the assets by spending $3.0 million in the first three years in expenditures on the property, broken down into $1 million in the first year, $1.5 million in the second year and $500,000 in the third year. $100,000 of the expenditures is earmarked to pay Klondike Gold Corp. (TSX-Venture:KG) to complete Medgold's obligations relating to its purchase of the property from Klondike earlier in 2014. Upon completing the 51% earn-in, Centerra can acquire an additional 19% interest by spending another $3 million in exploration on the project in the subsequent two years.
Medgold will be the initial operator and manager of the project.
In a statement today, Medgold President Dan James called the agreement a "significant milestone" for the company “providing funding security for the project without immediate equity dilution and allowing us to plan for drilling at Lagares in early 2015."
Shares of Medgold were trading in a range of 12 – 16 cents in the first half of the year before sinking to their current range of 4 – 5 cents, closing Monday at 4.5 cents each. Shares of Centerra Gold slumped during May from over $5 to a low of $3.11 on a warning that it could shutter operations at its Kumtor mine if requisite approvals and permits weren’t received. Shares bounced back sharply upon government approvals to a 52-week high of $6.80 in June. Shares closed Monday at $5.42.
