Midway Gold Corp Reports Operating Results (10-K)
Midway Gold Corp has a market cap of $163 million; its shares were traded at around $1.69 .
Highlight of Business Operations: Under the terms of the EDM Agreement, Midway shall have a period of 120 days from the last of the following events to occur to elect to enter into a joint venture agreement with Barrick with respect to the Spring Valley Project: (i) upon receipt of notice from Barrick that it has not elected to earn the additional 10% interest by spending an additional US$8,000,000; (ii) upon receipt of notice from Barrick that it has timely incurred the additional US$8,000,000 expenditure on the Spring Valley Project to earn the additional 10% interest; (iii) upon receipt of notice from Barrick that it has elected but failed to timely incur the additional US$8,000,000 expenditure on the Spring Valley Project. If Midway fails to notify Barrick within the 120-day period, Midway will be deemed to have elected to enter into the joint venture with Barrick.
Barrick conducted and funded exploration in 2009 on the Spring Valley Project at the required level of US$4,000,000 and in 2010 at the required program of US$5,000,000. Barrick has informed Midway that it intends to conduct and fund the 2011 required program of US$7,000,000 to maintain the EDM Agreement.
On July 1, 2010 Barrick paid Midway's US$1,000 a month option payment totaling US$12,000 to George D. Duffy to maintain its option to purchase 2 unpatented lode mining claims. Alternatively Midway can purchase these claims for US$500,000 with any payments already paid credited against the total.
On December 2, 2010 Barrick entered into a sub-lease and option agreement with a third party for mineral rights underlying the surface rights acquired by the Company in 2006. The agreement requires Barrick to spend a cumulative amount of US$2,000,000 in work expenditures on the ground leased over a period of six years, and to make advance royalty payments in the amount of US$100,000 per year thereafter, up to a cap of US$2,500,000. The advance royalty payments may be credited against a 3% NSR royalty payable from production on the area of ground leased.
Midway acquired its interest in the January 7, 2003 mineral lease agreement with Newark Valley Mining Corp. ("NVMC") formerly Gold Standard Royalty Corporation and formerly the Lyle Campbell Trust as a result of its acquisition of Pan-Nevada Gold Corporation on April 13, 2007. On or before January 5 of each year Midway must pay an advance minimum royalty of the greater of US$60,000 or the US dollar equivalent of 174 ounces of gold valued by the average of the London afternoon fixing for the third calendar quarter preceding January 1 of the year in which the payment is due. The minimum advance royalties will be creditable against a sliding scale NSR production royalty of between 2.5% and 4%. Midway must incur a minimum of US$65,000 year work expenditures, including claim maintenance fees, during the term of the mining lease. On January 1, 2010 the Company paid $174,702 (US$167,040). Subsequent to the year end the Company paid US$213,455 on January 1, 2011.
On July 20, 2010, Midway announced the results of a preliminary economic assessment ("PEA") for the Pan gold project. The PEA included an independent audit of an updated mineral resource estimate prepared by Midway. The updated resource estimates are shown in the table below. The PEA assumes the Pan gold deposit will be developed as an open pit mine and heap leach operation. The forecast mine life was 9 years with a total of 327,000 ounces of gold recovered and produced for sale. Initial project capital costs, as evaluated in the PEA, are estimated at US$45,000,000 plus working capital of US$5,000,000 and a 20% contingency totaling US$9,000,000. The PEA was prepared under the supervision of William J. Crowl, Donald Hulse, and Terre Lane of Gustavson Associates, LLC, each of whom is independent of Midway and is a "qualified person" under NI 43-101. For further information on this project, please see the PEA entitled "NI 43-101 Preliminary Economic Assessment of the Pan Gold Project, White Pine County, Nevada", dated July 20, 2010, which is available under Midway's company profile at www.sedar.com.
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