Construction at Pan Gold Project Nears Completion Midway Expects First Gold Production in March
March 03 2015 - 6:30PM
Business Wire
Midway Gold Corp. (TSX and NYSE-MKT: MDW) (the “Company” or
“Midway”) is pleased to announce that construction of the Pan Gold
Mine (“Pan”) in Nevada is approximately 93% complete and first gold
production is expected by the end of March.
Recent Pan Project Milestones:
- On February 7, after six days of
irrigation, initial breakthrough of fresh water that had been
cycled through the pad was realized.
- As of the end of February, 3.1 million
tons of ore have been placed on the heap leach pad.
- 2.0 million tons of ore are currently
being irrigated with solution flows to the leach pad at
approximately 14% of capacity, as the system ramps up to the design
of 5,000 gallons per minute.
Bill Zisch, Midway’s President & CEO commented, “While we
have encountered some delays, we continue to make good progress and
construction of our Pan gold project is now 93% complete. With
recent milestones achieved, we expect first gold production at Pan
by the end of March. We have contracted Jacobs Field Services to
support commissioning of the process facilities and have moved
beyond delays associated with the loss of one of our water wells.
In addition, we have secured temporary local occupancy permits that
allow us to begin operation of the ADR (Adsorption/Desorption
Recovery) plant. We expect to begin leaching with cyanide this week
and estimate that we will be able to produce gold approximately
twenty days following the application of cyanide solution. We are
excited to become a new producing company this month. Generation of
revenue from Pan will mark the culmination of a great deal of
collective efforts over the past several years.”
Resolution of Previously Announced Delays:
- The second production well (PW2) that
had a mechanical malfunction on January 1, 2015 was abandoned and a
replacement well is approximately 87% complete. Prior to initiating
irrigation of the heap, both operating ponds were filled to
capacity by pumping solely from the first production well (PW1) at
a rate that was below the more productive PW2. While both ponds are
now filled, the Company did experienced a delay of several days
while the pump motor was replaced on PW1. Having begun irrigation,
water is no longer likely to be a source of leaching delays as PW1
has more than adequate capacity to provide make-up water for leach
operations as planned. In addition to replacing PW2, Midway will
begin developing a permitted third well to support construction of
a leach pad expansion scheduled for later this year.
- Temporary local occupancy permits have
been received for the ADR plant and are not expected to contribute
to any further delays.
On-Going Construction:
- ADR plant instrumentation and equipment
installation, and commissioning of the refinery, represent a
majority of the remaining plant construction activities.
- The 69 kV power line to the Pan mine is
76% complete with line power expected in early May. In the
meantime, mobile generators are providing power to the project.
Spending for completion of the power line is expected to be within
budget.
- Ore control assays, currently
outsourced to a commercial lab, are expected to be provided on–site
with commissioning of the lab in April.
- The total capital expenditure at
project completion is estimated to be US$84 million and the
estimate of project spending as of January 31, 2015 is
approximately US$76 million.
Current Operations and Budgeting:
- Contract mining, being performed by
Ledcor CMI Inc., has ramped up and is currently exceeding planned
production levels of 55,000 tons per day. In 2015 to date, tons
mined, including tons placed on the pad, have exceeded budget.
- Early sampling of ore grades have
generally been below modeled grades with tonnage variances being
both positive and negative. As is appropriate during start-up of a
mine when observing initial variances averaging below expectations,
the Company has engaged an independent engineering firm to review
modeling, sampling, and assaying practices to gain an informed
understanding of tonnage and grade variances to date. Sustained
gold production from the heap will provide an additional data point
from which to complete an assessment of initial model performance
and will provide the first estimate of actual gold recoveries.
- During 2015, near mine exploration
expenditures at Pan are budgeted at US$2.5 million. Exploration
drilling of the South Pan deposit will target expanding the
northern and southern extensions of the existing resource along
with targeting of the Wendy Deep zone. Step-out drilling in these
areas will allow us to evaluate the potential to upgrade resources
to reserves and exploration drilling will allow us to evaluate
expanding the resources as these areas remain open at this time.
While there is no assurance of exploration success, the objective
of the exploration program is to determine if the mine life at Pan
can be extended or production expanded.
- Midway has drawn US$47.5 million of the
US$53 million project finance facility held with Commonwealth Bank
of Australia (“CBA” or the “Lender”). The Company is required to
satisfy certain covenants, tests and obligations related to the
facility, including schedule and other contingencies, in order to
continue to draw amounts available under the facility and to remain
in compliance with its terms. Based on current projections, a two
week delay from an internal targeted mid-March pour will likely now
result in a working capital shortfall of about US$5 million. In
addition, Midway is working through the terms of a credit amendment
with the Lender. As a contingency, these terms may require the
Company to fund project working capital for a scenario under which
first production is assumed to be May 1, 2015 and potentially defer
project distributions which could increase corporate working
capital needs from prior estimates. The Company’s performance in
the coming weeks will impact the amount of these contingencies and
Midway is evaluating alternatives to fund working capital
needs.
- Sustaining capital in 2015 includes
US$8 million for construction of the second stage of the heap leach
pad at Pan. This expansion, anticipated for completion by September
2015, is planned to more than double leach pad capacity. A total of
2.2 million square feet, capable of holding up to 12 million tons,
will be added to the existing pad, which has a current capacity of
approximately 8 million tons.
Gold Rock Development Activities:
The team that successfully led Pan through the timely completion
of the National Environmental Policy Act (NEPA) permitting process
have now shifted their attention to Gold Rock, with activities this
year focused primarily on the funding of the NEPA process and the
collection of baseline data. On February 13, the Company received
its Notice of Availability (NOA) from the Nevada Bureau of Land
Management (BLM) for Gold Rock and has initiated a public comment
period that will conclude on March 30, 2015. Approximately US$1
million is budgeted for Gold Rock permitting activities in
2015.
About Midway Gold Corp.
Midway Gold Corp. is a precious metals company with a vision to
explore, design, build and operate gold mines in a manner
accountable to all stakeholders while seeking returns for
shareholders.
The scientific and technical information in this release has
been reviewed and approved for Midway Gold Corp. by Eric LeLacheur,
Nevada District Geologist, and “Qualified Person” as defined under
NI 43-101.
Midway Gold Corp.Jaime Wells, 720-979-0900Investor
Relationswww.midwaygold.com
Neither the TSX, its Regulation Services Provider (as that term
is defined in the policies of the TSX ) nor the NYSE MKT 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,
statements about the Company's intended work plans and estimates,
including construction plans and progress on the Pan Project,
estimated production dates, percentage completion, permitting
expectation, total capital expenditures for mine construction,
evaluation of preliminary sampling, tonnage and grade estimates,
projected mine expenditures, projected exploration expenditures,
projected revenues, potential to expand resources or reserves,
budget and capital requirement estimates and plans for expansion,
second stage construction of the leach pad in relation to the Pan
Project, projected working capital needs and potential outcomes of
negotiations with our lender. Forward-looking statements are
typically identified by words such as: “plan", "expect",
"anticipate", "intend", "estimate", “budgeted” and similar
expressions or the negative of such expressions or which by their
nature refer to future events. 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 the
timing and completion of the Company's intended work plans, 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,
modelling, engineering and other analysis; risk of inaccurate
estimation of gold resources and reserves; inability to meet debt
covenants and obligations; the possibility that the estimated
recovery rates and grades may not be achieved as modelled or
projected; the possibility that capital and operating costs may be
higher than currently estimated and may render operations
uneconomic; 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; inherent, unanticipated and unknown risks associated with
startup and commissioning of the ADR plant and production
activities; the possibility that required permits may not be
obtained on a timely manner or at all; changes in interest and
currency exchanges rates; local and community impacts and issues;
environmental costs and risks; 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. Although the
Company believes that such forward-looking statements are
reasonable, it can give no assurance that such expectations will
prove to be correct. For the reasons set forth above, investors
should not attribute undue certainty to or place undue reliance on
forward-looking statements.
Midway Gold Corp.Jaime Wells, 720-979-0900Investor Relations