MED Medgold Resources Corp

Medgold Resources Corp. (TSX VENTURE:MED), the European focused gold exploration
company, is pleased to announce that it has signed a Letter of Intent ("LOI")
with Klondike Gold Corp ("Klondike") for the acquisition of 100% of its
Portuguese assets which comprise five gold exploration permits covering 600 sq
km in northern Portugal, primarily located along the Valongo Belt. The Company
is also conducting a $1.5 million non-brokered private placement to primarily
fund exploration activity. Both the acquisition and private placement are
subject to TSX Venture Exchange approval. 


Highlights



--  Four of five acquired exploration licences are located along the Valongo
    Belt - a major gold-bearing district. 
--  Near-surface gold mineralization previously delineated at Castromil
    within the Legares licence area: 
    --  Historical mineral resource estimate of 2.42Mt at 1.89g/t Au for
        approximately 145,000 oz Au. A qualified person has not done
        sufficient work to classify the historical estimate as a current
        mineral resource, and the Company is not treating the historical
        resource as current. See below for a discussion of the historical
        estimate. 
    --  Strong potential to significantly increase known mineralization
        following recent work by Company's consultant demonstrating that the
        mineralization described in the historical resource estimate is open
        at depth and along strike in both directions.
--  The fifth licence, Ponte de Barca, shares similar geology and
    mineralization style to the Company's Boticas gold project, where
    Medgold has identified broad areas (20 to 40 metres) grading 2 to 4 g/t
    Au hosted by sheeted veins. 
--  Acquisition is in line with strategy to secure and develop a portfolio
    of highly prospective gold projects focused on western Europe. 
--  Financing being arranged for $1.5 million. 



Dan James, the President of Medgold, said, "By significantly increasing our
exploration portfolio, this acquisition underpins our objective to become a
leading gold explorer and developer in Western Europe. Our land-holding in
Portugal now covers over 1,000 sq km of highly prospective ground, and hosts
numerous areas of gold mineralization, such as the Valongo Belt. Recent
reinterpretation of the structural setting and geological controls on
mineralization within the Valongo Belt, by geological consultant and Company
adviser, Jim Mortensen, has led to significant upgrading of the exploration
potential of the region. With the funds raised we look forward to continuing
this work in the New Year, strategically advancing these projects along the
development curve, as we look to delineate and prove-up economic zones of gold
mineralization. This acquisition allows Medgold to advance significantly in
building a first-class exploration portfolio and generating significant
shareholder value through successful exploration and development."


The Klondike Projects

The Klondike projects combine five exploration licences (Balazar, Valongo,
Legares, Castelo do Paiva and Ponte de Barca), totaling 604 sq km, with four
covering the majority of the Valongo anticline, plus Ponte de Barca, which
covers several orogenic gold occurrences in the very north of Portugal. The
Valongo anticline is a large overturned fold hosting numerous gold occurrences,
many of which were exploited by the Romans. Recent interpretations clearly
demonstrate that mineralization within the Valongo Belt was introduced by a
series of faults and fractures, and is focused into 'saddle reefs' and en
echelon vein arrays, commonly with zones of massive sulphide and quartz veining
in a number of different lithologies. 


The most advanced project is the Castromil project, located within the Legares
licence. Historical exploration, undertaken by both Connary Minerals plc
("Connary") and previous explorers, focused on near-surface high-grade
mineralization, and included multiple phases of shallow percussion and diamond
drilling, culminating in a 1997 mineral resource estimate (historical, see
below) of 2.42 Mt at 1.89 g/t Au measured and indicated for approximately
145,000 oz Au. ("Class III feasibility study, Castrolmil Gold Mine, Portugal,
for Connary Minerals plc", ACA Howe Mining & Metallurgy Ltd., October 1997; "the
Connary Report"). Recent work by the Company's adviser, Jim Mortensen, clearly
demonstrates that the mineralization is open at depth and along strike in both
directions, highlighting the potential for additional discovery.


A qualified person has not done sufficient work to classify the historical
mineral resource given in the Connary Report as a current mineral resource, and
the Company is not treating the historical mineral resource as current. Neither
the qualified person nor the Company has independently verified the information
contained in the Connary Report. The historical mineral resource was prepared by
ACA Howe Mining & Metallurgy Ltd. using a geologically constrained block model,
with block grades calculated using an anisotropic inverse distance weighting
method with an elliptical search radius oriented down the plunge of interpreted
mineralized rock volumes. The qualified person has been unable to verify whether
the definitions of "measured" and "indicated" used in the Connary Report in the
context of its mineral resource statement are equivalent to those set out in
section 1.2 of National Instrument 43-101. The mineral resource statement in the
Connary Report does not report the measured and indicated resource categories
separately, and reports no resources in the inferred category. The definition of
"Class III feasibility study" described in the Connary Report does not
correspond to the definition of "feasibility study" as set out in section 1.4 of
National Instrument 43-101. The work described in the Connary Report appears to
the Company and its qualified person to have been performed to a high technical
standard and they consider it reliable, but it is currently unknown what work
would be required to upgrade or verify the historical mineral resource as
current, or if it is possible.


The Ponte de Barca licence is located in northern Portugal and approximately 75
km northeast from the city of Porto. The geology and controls on mineralization
are very similar to the Boticas project, where high-grade mineralization is
controlled by a series of strike-extensive and high-angle tension veins.
Klondike has completed some limited rock-chip sampling, with 15 samples
collected, yielding results from trace to 14.8, 12.9 and 12.0 g/t Au. The
Company has not independently verified Klondike's results.


The Acquisition

The terms for the acquisition of Klondike's Portuguese assets are as follows:



--  Payment of $10,000 in cash upon signing of the LOI. 
--  Medgold will have up to 45 days to complete due diligence and if
    satisfactory will make a payment of $40,000 in cash and $100,000 in
    Medgold shares, and complete the acquisition. 
--  A final payment in 12 months of $100,000 in cash and $250,000 in cash or
    shares (to be decided by Medgold). 
--  On closing of the purchase, Klondike will retain a 2.0% NSR, which will
    be re-purchasable for $1.0 million per percentage point.



Private Placement

The Company is also pleased to announce that it has arranged, subject to TSX
Venture Exchange approval, a non-brokered private placement financing of up to
15 million units at $0.10 per unit, for proceeds of up to $1.5 million. Each
unit will consist of one common share and one warrant entitling the holder to
purchase one additional common share of the Company at $0.15 for one year from
closing. 


The Company may pay finder's fees on a portion of the financing, payable in cash
or units, plus finder's warrants which will be exercisable into one common share
of the Company at a price of $0.15 for one year from closing.


The net proceeds of the placement will be used towards exploration of the
Company's properties in Europe and for general working capital purposes. 


Qualified Person 

Mr. David Clark, M.Sc., P.Geo. (APEGBC), Consulting Geologist to the Company, is
a Qualified Person as defined by National Instrument 43-101 - Standards of
Disclosure for Mineral Projects. Mr. Clark has approved the disclosure of
technical information contained in this news release. 


About Medgold

Medgold is aiming to become the leading Mediterranean-focused gold exploration
and project development company, with an extensive portfolio and pipeline of
projects across Portugal, Italy and Spain, targeting economically stressed, but
politically stable European countries that are seeking foreign investment to
invigorate the mining sector.


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


ON BEHALF OF THE BOARD

Daniel P. James, President & Director 

Forward-looking statements

This press release may contain forward-looking statements including, but not
limited to, comments regarding the timing and content of upcoming work programs,
geological interpretations, receipt of property titles, potential mineral
recovery processes, and other related matters. Forward-looking statements
address future events and conditions and therefore involve inherent risks and
uncertainties. Medgold's projects in Europe are at an early stage and all
estimates and projections are based on limited, and possibly incomplete, data.
More work is required before the mineralization and the projects' economic
aspects can be confidently modelled. Actual results may differ materially from
those currently anticipated in this news release. No representation or
prediction is intended as to the results of future work, nor can there be any
promise that the estimates and projections herein will be sustained in future
work or that the projects will otherwise prove to be economic.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Medgold Resources Corp. (Vancouver)
Ralph Rushton
Investor Relations
+1 604-801-5432
ralphr@goldgroup.com


Medgold Resources Corp. (UK and Portugal)
Dan James
President
+44 (0) 7972 579188
dj@medgoldresources.com
www.medgoldresources.com

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