Dr. Elena Clarici reports

MEDGOLD RESOURCES CORP. COMPLETES REVERSE TAKEOVER OF BALKAN METALS CORP.

Electrum Discovery Corp. (Medgold Resources Corp.) has closed its previously announced transaction resulting in the reverse takeover by Medgold of Balkan Metals Corp. (BMC), along with completion of a concurrent non-brokered private placement, a 1:16 share consolidation and name change.

As a result of the transaction, Electrum now holds a portfolio of exploration licences in Serbia covering close to 1,000 square kilometres, making Electrum the largest holder of highly prospective exploration ground in Serbia. Management looks forward to advancing the company's flagship Timok East Project.

The transaction

Pursuant to the terms of an amalgamation agreement entered into between Medgold, BMC and 1397383 B.C. Ltd., a wholly owned subsidiary of Medgold (MergeCo), dated Jan. 27, 2023, as amended, the company completed a three-cornered amalgamation under the Business Corporations Act (British Columbia) with BMC and MergeCo pursuant to which BMC and MergeCo amalgamated and the company issued 54,888,763 common shares of the company postconsolidation (the resulting issuer shares) to BMC shareholders in exchange for their common shares of BMC.

The transaction constituted a reverse takeover pursuant to the policies of the TSX Venture Exchange. Please refer to Medgold's management information circular dated July 14, 2023, filed under the company 's profile on SEDAR+ for further details of the transaction. Immediately prior to closing of the transaction, Medgold completed the consolidation, and, at closing of the transaction, changed its name to Electrum Discovery.

Financing

In connection with the transaction, BMC completed the private placement consisting of the sale of 21.6 million subscription receipts at a price of 10 cents per subscription receipt to raise gross proceeds of $2.16-million. Immediately prior to the completion of the amalgamation, each subscription receipt automatically became, without any further action or payment of any additional consideration, one unit of BMC, with each such unit consisting of one BMC share and one common share purchase warrant. As a result of the amalgamation, the holders of the BMC shares received one resulting issuer share for every BMC share held, and all outstanding share purchase warrants of BMC were exchanged for share purchase warrants of Electrum on a one-for-one basis.

BMC paid 7 per cent cash finder's fees in the aggregate amount of $41,300 to certain finders. BMC also issued to the finders an aggregate of 413,000 share purchase warrants having the same terms as the warrants issued pursuant to the private placement (such amount being equal to 7 per cent of the total number of BMC units purchased by subscribers that the finders introduced to BMC). The finders' warrants entitle the holder thereof to purchase one resulting issuer share at a price of 20 cents per share for a period of 12 months.

On closing of the transaction, a total of $2,118,700 is available to the company which the company intends to use as follows:

• Geochemical, geophysical and drilling work at Timok East: $1.2-million;
• The payment of expenses related to the transaction: $434,517;
• Anticipated general and administrative expenses for the next year: $250,000.

The company has unallocated working capital of $234,183.

A detailed update on Electrum's technical program will be issued in the coming days.

As a result of the transaction, the company has 63,313,064 resulting issuer shares outstanding on a non-diluted basis and 90,247,214 resulting issuer shares outstanding on a fully diluted basis.

Please refer to the reconciliation herein of the 63,313,064 resulting issuer shares issued and outstanding.

On completion of the transaction, the principals of BMC and certain other shareholders of BMC, as required by the policies of the TSX-V, entered into a Tier 2 value escrow agreement with the company and Computershare Investor Services Inc., as escrow agent, in respect of 13,549,365 resulting issuer shares, 500,000 resulting issuer share purchase warrants and 68,750 resulting issuer stock options. Under the terms of the escrow agreement, 10 per cent of such escrowed securities are to be released upon the TSX-V's issuance of its final bulletin in respect of the transaction, with subsequent 15-per-cent releases occurring six, 12, 18, 24, 30 and 36 months from closing.

In addition, 419,685 resulting issuer shares are subject to contractual restrictions consistent with Tier 2 value escrow and a further 641,400 resulting issuer shares are subject to contractual resale restrictions providing that such resulting issuer shares are released as follows: 10 per cent are to be released upon the TSX-V's issuance of its final bulletin in respect of the transaction, with subsequent 15-per-cent releases occurring in six, 12, 18, 24, 30 and 36 months.

TSX-V approval and resumption of trading

The transaction remains subject to receipt of final approval from the TSX-V and fulfilment of all of the requirements of the TSX-V in order to obtain such approval. Until final approval of the TSX-V is obtained and a final exchange bulletin is issued, which is expected on or about Jan. 19, 2024, trading in the resulting issuer shares will remain halted. Resumption of trading is expected on or about Jan. 23, 2024. Upon resumption of trading, the resulting issuer shares will trade under the symbol ELY and the company will be listed as a Tier 2 mining issuer.

Board of directors and executive management

Concurrently with the completion of the transaction, the following individuals were appointed as directors or officers of Electrum:

• Dr. Elena Clarici -- president, chief executive officer and director;
• Michael Thomsen -- director;
• Eric Rasmussen -- director;
• Ralph Rushton -- director;
• Kevin Bales -- chief financial officer;
• Brett Kagetsu -- corporate secretary.

Also concurrently with the completion of the transaction, Jeremy Crozier resigned as President, CEO and director, Michael Skead resigned as a director, and Sally Whittall resigned as corporate secretary of Medgold.

Warrant repricing

Prior to closing, the exercise price of 3,332,046 common share purchase warrants previously issued by BMC as disclosed in the circular has been reduced from 25 cents for the first year after issuance and 30 cents until expiry to an exercise price of 20 cents to better reflect current market conditions. All other terms of the preclosing warrants have remained unchanged, save and except for such preclosing warrants are now exercisable purchase resulting issuer shares.

Renewal of Luka claims

On Aug. 3, 2023, the Serbian Ministry of Mining and Energy advised BMC that it had issued decision No. 310-02-736/2018-02 with respect to the renewal of the Luka claims and to allow for further exploration to be conducted on such claims. BMC received a formal copy of the decision on Oct. 2, 2023.

Additional information

The Cusip/ISIN number for the resulting issuer shares is 28616D108/CA28616D1087.

About Medgold Resources Corp.

Electrum Discovery is an emerging, Canadian-based mineral exploration and development company focused on the Western Tethyan belt with activities in the Republic of Serbia. The current focus of the company is its flagship copper-gold Timok East project.

Electrum's management team has been focused on maximizing shareholder value through the acquisition and advancement of a large portfolio of copper-gold assets, while fostering sustainability, governance and knowledge transfer in the region.

We seek Safe Harbor.