Midway Gold Corp. ("Midway" or the "Company") (MDW:TSX-V;
MDW:NYSE-AMEX) announces the results of a Feasibility Study (FS)
for its Pan gold project in White Pine County, Nevada. The NPV of
the project is robust at a range of gold prices, accelerating from
$123 million at $1,200/oz gold to $344M at $1,900/oz gold. The IRR
grows from 32% to 79% using the same range. Both use a 5% discount
rate and are after tax figures. Proven and Probable Mineral
Reserves increased 20% over the previous estimate to 864,000 oz of
gold within 48.3M tonnes at a grade of 0.56 grams per tonne (gpt)
gold.
Table 1. After Tax Project Economics
at Selected Gold Prices (US$)
Gold price/oz $1,200 $1,550
$1,725 $1,900 NPV @ 5% $123M
$235M $290M $344M
IRR 32% 56% 67% 79%
Payback years
2.59 1.70 1.41 1.20
Payback multiple 2.88 4.53 5.40 6.30
Pan is an oxidized gold deposit with a low strip ratio (1.79:1),
mineable by open pit methods and treatable by heap leaching. These
parameters result in a low capex project with anticipated very
favorable economics. The mine plan used in the FS is based on
producing 17,000 short tons of ore per day over an 8 year period.
Ore will be crushed, agglomerated, and placed on a heap leach pad.
Gold recoveries are estimated to average 75%; annual production is
expected to exceed 81,000 oz of gold per year.
The capital costs to build the mine are estimated to be $99M
which includes $8.2M working capital and $6.8M contingency. The
operating cash cost is projected to be $585/oz which includes
royalties, state taxes, and a 5% contingency. The total production
cost including capital is projected to be $824/oz.
Mineral Reserves were based upon a design pit using Lerchs
Grossmann generated pit surfaces that maximize revenue based on a
$1,200 per ounce three-year trailing average price of gold. Cutoff
grades of 0.21 gpt in the South pit and 0.27 gpt in the North &
Central pits produced the project’s highest NPV.
Table 2: Total Pan Mineral Reserves,
November 2011
Pit
Area
Cutoff Grade(grams/tonne) Metric
Tonnes(x 1000) Gold
Grade(grams/tonne) Ounces Gold
(x 1000)
Proven North &
Central 0.27 13,085 0.60 251 South 0.21 12,160 0.61 236 All Pits
25,245 0.60 487
Probable North & Central
0.27 10,994 0.50 178 South 0.21 12,073 0.51 199 All Pits
23,067 0.51 377
Proven plus
Probable North & Central 0.27 24,078 0.55 429 South 0.21
24,233 0.56 435
All Pits 48,311 0.56
864
Note: The tonnage and total ounces of gold were determined from
the statistical block model. Average grades were calculated from
the tonnage and total ounces and then rounded to the significant
digits shown. Calculations based on this table may differ due to
the effect of rounding.
The latest estimate of Mineral Resources is 1.13M oz of gold
comprised of 579,000 oz gold in 37M tonnes of 0.49 gpt gold in the
Measured category and 551,000 oz gold in 43M tonnes of 0.40 gpt
gold in the Indicated category using a 0.14 gpt gold cutoff grade
(see NI 43-101 effective Sept. 1, 2011; filed Nov. 2, 2011).
Mineral Resources are inclusive of the Mineral Reserves reported
above.
Mineralization at North Pan remains open at depth where many
drill holes have bottomed in mineralization. North Pan is also open
to the north where limited drilling shows that the gold zone
continues below post-mineral volcanics. At South Pan, the deposit
remains open at depth, to the south and to the east. Midway plans
to complete 14,000 meters of development drilling in 2012 targeted
to further expand the Pan resource.
Midway has submitted a mine plan of operations to the principal
permitting agencies which has initiated the permitting process for
the project.
The FS was prepared by Gustavson Associates, LLC (“Gustavson”)
of Lakewood, Colorado. A NI 43-101 technical report summarizing the
FS will be filed on SEDAR within 45 days. The open pit Mineral
Reserves and Resources were completed by Gustavson, with Terre Lane
and Donald E. Hulse acting as the Qualified Persons.
This release has been reviewed and approved for Gustavson by
Terre Lane (QP-MMSA), William J. Crowl (R.G., QP-MMSA), and Donald
E. Hulse (P.E.) of Gustavson, each a "qualified person" as that
term is defined in NI 43-101. This release has been reviewed and
approved for Midway by William S. Neal (M.Sc., CPG), Vice President
of Geological Services of Midway, a "qualified person" as that term
is defined in NI 43-101.
ON BEHALF OF THE BOARD
"Kenneth A. Brunk"
Kenneth A. Brunk, Director, President and COO
About Midway Gold Corp.
Midway Gold Corp. is a precious metals company with a vision to
explore, design, build and operate mines in a manner accountable to
all stakeholders while producing an acceptable return to its
shareholders. For more information about Midway, please visit our
website at www.midwaygold.com or contact R.J. Smith, Manager of
Corporate Administration, at (877) 475-3642 (toll-free).
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This press release contains forward-looking statements about the
Company and its business. Forward looking statements are statements
that are not historical facts and include, but are not limited to,
reserve and resource estimates, estimated NPV of the project,
anticipated IRR, estimated strip ratio, anticipated mining methods
at the project, the estimated economics of the project, anticipated
gold recoveries and annual production, estimated capital costs,
operating cash costs and total production costs, planned
development drilling and anticipated expansion of the resource, and
the outcome of the permitting process. The forward-looking
statements in this press release are subject to various risks,
uncertainties and other factors that could cause the Company's
actual results or achievements to differ materially from those
expressed in or implied by forward looking statements. These risks,
uncertainties and other factors include, without limitation risks
related to fluctuations in gold prices; uncertainties related to
raising sufficient financing to fund the planned work in a timely
manner and on acceptable terms; changes in planned work resulting
from weather, logistical, technical or other factors; the
possibility that results of work will not fulfill expectations and
realize the perceived potential of the Company's properties;
uncertainties involved in the interpretation of drilling results
and other tests and the estimation of gold reserved and resources;
the possibility that required permits may not be obtained on a
timely manner or at all; the possibility that capital and operating
costs may be higher than currently estimated and may preclude
commercial development or render operations uneconomic; the
possibility that the estimated recovery rates may not be achieved;
risk of accidents, equipment breakdowns and labor disputes or other
unanticipated difficulties or interruptions; the possibility of
cost overruns or unanticipated expenses in the work program; risks
related to projected project economics, recovery rates, and
estimated NPV and anticipated IRR and other factors identified in
the Company's SEC filings and its filings with Canadian securities
regulatory authorities. Forward-looking statements are based on the
beliefs, opinions and expectations of the Company's management at
the time they are made, and other than as required by applicable
securities laws, the Company does not assume any obligation to
update its forward-looking statements if those beliefs, opinions or
expectations, or other circumstances, should change.
This press release, the feasibility study and the technical
report referred to in this press release use the terms "resource",
"reserve", "measured resources", "indicated resources" and
"inferred resources", which are terms defined under Canadian
National Instrument 43-101 and the Canadian Institute of Mining and
Metallurgy Classification system. Estimates of mineral reserves in
the feasibility study and in this press release are compliant with
the definitions in the U.S. Securities and Exchange Commission
(“SEC”) Industry Guide 7. Previous estimates of resources in the
technical report referred to in this press release have been
prepared in accordance with NI 43-101 and differ from the
definitions in U.S. SEC Industry Guide 7. Under SEC Industry Guide
7 standards, a "final" or "bankable" feasibility study is required
to report reserves, the three-year historical average price is used
in any reserve or cash flow analysis to designate reserves and the
primary environmental analysis or report must be filed with the
appropriate governmental authority. Mineral resources are not
mineral reserves and do not have demonstrated economic viability.
We advise investors that while those terms are recognized and
required by Canadian regulations, the SEC does not recognize them.
U.S. investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into
reserves as defined in the SEC's Guide 7. In addition, "inferred
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. U.S. investors are cautioned not to
assume that part or all of an inferred resource exists, or is
economically or legally minable. Accordingly, outside of the
reserves reported in this press release and in the feasibility
study, disclosure in this press release and in the technical
reports referred to in this press release may not be comparable to
information from U.S. companies subject to the reporting and
disclosure requirements of the SEC.