LOI To Create A Leading Copper-Gold Explorer Focused on Balkan Region

VANCOUVER – Medgold Resources Corp. has entered into a non-binding arm’s length letter of intent (LOI) to acquire all of the issued and outstanding common shares of Balkan Metals Corp. With mineral rights covering close to 1,000 square kilometers, the resulting company will be the largest holder of highly prospective exploration ground in the Republic of Serbia.

Balkan Metals will reimburse certain of Medgold’s expenses related to the Transactions in consideration of the issuance by Medgold to Balkan Metals of Convertible Debentures. Medgold will consolidate its common shares on a 16:1 basis. Balkan Metals will arrange a private placement financing in Medgold to raise C$2.0 million.  Medgold Shareholders immediately prior to the closing of the Transactions will receive a contingent value right (a CVR”), with the CVR entitling the holders thereof to receive a pro-rata portion of cash payment, or at the election of the Company, an equivalent amount of Resulting Issuer Shares. In consideration for the transfer to Medgold of 100% of the issued shares of Balkan Metals, Medgold will issue an aggregate of 26,264,266 post-consolidation common shares to the shareholders of Balkan Metals, being one Medgold Share for each Balkan Metals Share. The name of the Company will be changed to Balkan Metals Corp.

The Transactions will constitute a “reverse takeover” pursuant to the policies of the TSX Venture Exchange and are subject to receipt of Exchange acceptance and receipt of approval of Medgold Shareholders to be sought at a shareholders’ meeting.