Midas Gold Corp. (TSX:MAX) today announced the results of an independent,
National Instrument 43-101 compliant Preliminary Economic Assessment ("PEA" or
"Study") completed on its Golden Meadows Project (the "Project") in Idaho as
summarized in Table 1 below. The purpose of the Study was to (a) provide a
preliminary concept for the scale and type of mining project that the Golden
Meadows Project could support, (b) identify options and alternatives for
consideration by Midas Gold in consultation with regulators, governments,
communities and other interested parties, (c) identify areas where additional
work is required before a pre-feasibility study ("PFS") can be completed, and
(d) demonstrate potential for positive economic returns that would support
continued investment in the Golden Meadows Project. With this Study in hand,
Midas Gold intends to actively engage with interested parties to evaluate
potential options and considerations for the possible development of this large
scale, long life mining operation in order to manage and mitigate impacts and
ensure the sustainability of Midas Gold's activities.
The Golden Meadows property has been the site of extensive open pit and
underground mining for almost 100 years and, as such, has seen considerable
disturbance and environmental impact. Midas Gold's approach to the conceptual
design of this project has been to select economic approaches and alternatives
that mitigate and minimize the results of its proposed activities, to remediate
considerable amounts of legacy disturbance and to develop a closure and
reclamation concept that leaves the site with enhanced fisheries, wetlands and
other productive environmental attributes. Midas Gold plans to engage with
regulators, governments, communities, tribes, non-governmental agencies and
other interested parties to consider the options identified in the PEA, to
evaluate reasonable alternatives and to develop preferred options that can be
incorporated into a future PFS and, if warranted, the permitting process for a
full-scale mining operation.
Table 1: Preliminary Economic Assessment Highlights, Golden Meadows
Project, Idaho(1)
(Base Case, at US$1,400/oz of gold)
--------------------------------------------------------------------------
Life-Of-Mine
Years 1-8 (14.2 years)
--------------------------------------------------------------------------
Annual Annual
Average Total Average Total
--------------------------------------------------------------------------
Payable Gold (K oz) 390 3,121 348 4,922
--------------------------------------------------------------------------
Payable Antimony (M lbs) 9.9 79.3 6.4 90.6
--------------------------------------------------------------------------
Cash Costs (US$/oz) (2) (Net of
by-product credits) 331 425
--------------------------------------------------------------------------
Initial Capital (US$M) 879
--------------------------------------------------------------------------
Pre-tax NPV5% (US$M) 2,136
--------------------------------------------------------------------------
After-tax NPV5% (US$M) 1,482
--------------------------------------------------------------------------
IRR (Pre-tax/After-tax) 33.7%/27.2%
--------------------------------------------------------------------------
After-tax Payback (Production Years) 3.0
--------------------------------------------------------------------------
(1) In this release, "M" = million, "K" = thousands, all amounts in US$
(2) See non-IFRS measures below
"This Preliminary Economic Assessment demonstrates potential for a robust, long
life, low cost mining operation at Golden Meadows that could be in the lowest
quartile of global gold producers," said Stephen Quin, President and CEO of
Midas Gold Corp. "The Study provides the basis for us to engage the various
interested parties in discussions related to the options and scenarios laid out,
and to work with them to determine the optimal and preferred options. The Golden
Meadows Project represents a tremendous opportunity to create significant long
term, well paid employment in an economically depressed part of Idaho, generate
a substantial stream of revenue to county, state and federal governments, to
remediate and improve the environmental sustainability of this heavily disturbed
site, and to create attractive returns for our shareholders," he said. "With a
positive Study in hand, we have the basis from which to enter into meaningful
discussions with interested parties to ensure we understand their perspectives,
collect their input and consider options to improve and enhance the conceptual
plan laid out in the PEA."
Conference Call, Webcast and Conferences
Midas Gold will be hosting a conference call and webcast to discuss highlights
of the PEA at 7:00 AM PDT on Wednesday September 5, 2012. Details are provided
toward the end of this news release.
Midas Gold is also attending and presenting at the Precious Metals Summit in
Vail, Colorado, on September 6-7, 2012, and is attending the Gold Forum in
Denver, Colorado, September 9-12, 2012.
Preliminary Economic Assessment
The PEA was compiled by SRK Consulting (Canada) Inc. ("SRK") who was engaged by
Midas Gold Corp.'s wholly owned subsidiary, Midas Gold, Inc. ("MGI"), to
evaluate potential options for the conceptual development of a mine at the
Golden Meadows Project based on information available up to the date of the
Study. Ausenco Solutions Canada Inc. (infrastructure and mineral processing);
Blue Coast Metallurgy Ltd. (metallurgy); RTR Resource Management, Inc.
(permitting and social and environmental considerations), and JDS Energy and
Mining Inc. (project management and economic analysis) also contributed to the
Study. Additional details are provided in a technical report to be filed on
SEDAR by mid-September 2012.
Midas Gold instructed SRK and the other Study contributors to conduct the PEA
with the sustainable operation and long-term reclamation of the Project as a key
design consideration, with the intent to build a project that would eventually
result in an improvement of the environmental conditions that currently exist at
Golden Meadows due to historic mining in the area.
The PEA summarized in this news release is intended to provide only an initial,
high-level review of the Project potential and design options, which is
preliminary in nature. The PEA mine plan and economic model include the use of
Inferred resources. Inferred resources are considered to be too speculative
geologically to be used in an economic analysis except as permitted under
NI43-101 in PEA studies. There is no guarantee that Inferred resources can be
converted to Indicated or Measured resources, and as such, there is no certainty
the Project economics described herein will be realized.
Project Concept
The preliminary designs presented in the PEA are based on the recognition that
the site has been previously extensively mined and thus considerations were made
for economic feasibility, mitigation or cleanup of "targeted" legacy
environmental issues, improvement of water quality, minimizing mining-related
disturbance, and protection of the fishery during operations and on mine
closure. In formulating the mine closure, consideration was given to
re-establishment of the upstream fishery, backfilling open pits (when
appropriate) as part of waste management, and focusing meeting applicable water
quality standards during operation with mechanical treatment and on passive
water treatment for long term closure. Additional details of these
considerations are provided in the 'Environmental', 'Closure and Remediation'
and 'Permitting' sections below.
The Project, as currently envisioned, consists of three gold mineral resources
with zones of antimony and silver mineralization located in an area of
significant historic mining activity. Conventional open pit methods are
recommended for mining the three deposits (Yellow Pine, Hangar Flats, and West
End), all of which are located within three kilometres of each other.
The deposits contain oxide and sulphide mineralization that are contemplated to
be treated with different extraction processes. The oxide material is amenable
to milling and then vat leaching to recover gold and silver only. Sulphide
materialization is recommended to be milled and treated with sequential
flotation to produce two products: an antimony concentrate for off-site shipment
to a third party smelter and a gold concentrate that would be further processed
on site using pressure oxidation (POX) followed by vat leaching and cyanide
destruction within the plant building to produce gold-silver dore.
Production is assumed to be nominally 20,000 t/d or 7.3 Mt/year of mill feed.
With this assumed production rate, the mine life would be approximately 14.2
years, with approximately 101 Mt of material processed. The mine would have an
overall strip ratio of 3.7 tonnes of waste rock per tonne of economic
mineralized rock. Gold accounts for approximately 93% of the value of the
payable metals, antimony accounts for about 7% of the payable value and silver
has a negligible economic contribution.
Mineral Resources
Updated mineral resources were estimated for each of the three deposits that
comprise the Golden Meadows Project. The mineral resource estimates are
summarized in Table 2 below and were previously reported by deposit in news
releases dated May 16, 2012, June 4, 2012 and June 27, 2012. Antimony and silver
values were only estimated within certain limited sub-domains and are summarized
in Table 3 below. As a result, the grades for these metals in Table 2 are
reported averaged over the entire, much larger gold mineral resource volumes,
which may underrepresent the overall grades for these metals.
Table 2: Mineral Resource Estimate(1)- All Three Deposits comprising the
Golden Meadows Project, Idaho
Prepared by SRK Consulting (Canada) Inc., June 25, 2012
--------------------------------------------------------------------------
Contain-
Contain- Contain- Anti- ed
ed Silver ed mony Anti-
Mineral Gold Gold Grade Silver Grade mony
Resource Tonnes Grade (000s (5) (000s (4)(5) (000s
Category (000s) (g/t) oz) (g/t) oz) (%) lbs)
--------------------------------------------------------------------------
Open Pit Oxide(2) Mineral Resources
--------------------------------------------------------------------------
Indicated 10,573 0.90 305 0.00 - 0.00% 122
--------------------------------------------------------------------------
Inferred 2,201 0.97 68 0.00 - 0.00% 178
--------------------------------------------------------------------------
Open Pit Sulphide(3) Mineral Resources
--------------------------------------------------------------------------
Indicated 67,653 1.80 3,925 0.60 1,312 0.07% 108,385
--------------------------------------------------------------------------
Inferred 53,917 1.63 2,822 0.93 1,603 0.08% 92,606
--------------------------------------------------------------------------
Total Open Pit Oxide + Sulphide(2)(3) Mineral Resources
--------------------------------------------------------------------------
Indicated 78,226 1.68 4,229 0.52 1,312 0.06% 108,507
--------------------------------------------------------------------------
Inferred 56,117 1.60 2,890 0.89 1,603 0.07% 92,784
--------------------------------------------------------------------------
(1) Mineral resources are reported in relation to a conceptual pit shell.
Mineral resources are not mineral reserves and do not have demonstrated
economic viability - see "Compliance with NI43-101" below. All figures are
rounded to reflect the relative accuracy of the estimate. All composites
have been capped where appropriate.
(2) Open pit oxide mineral resources are reported at a cut-off grade of 0.42
g/t Au. Cut-off grades are based on a price of US$1,400 per ounce of gold
and a number of operating cost and recovery assumptions, plus a 15%
contingency (as detailed in June 27, 2012 news release).
(3) Open pit sulfide mineral resources are reported at a cut-off grade of
0.75 g/t Au. Cut-off grades are based on a price of US$1,400 per ounce of
gold and a number of operating cost and recovery assumptions, plus a 15%
contingency (as detailed in June 27, 2012 news release).
(4) Where antimony grades are shown as "0.00" there is antimony present but
it rounds to 0.00.
(5) Antimony and silver were not estimated for the entire West End deposit
and significant portions of the Hangar Flats and Yellow Pine deposits due to
a lack of sufficient assays, and these un-estimated volumes are averaged
into the totals at an assumed zero grade.
Table 3: Antimony Subdomains(1) Mineral Resource, Yellow Pine & Hangar
Flats Deposits
Prepared by SRK Consulting (Canada) Inc., June 25, 2012 for the Golden
Meadows Project, Idaho
--------------------------------------------------------------------------
Contain-
Contain- ed
ed Contain- Anti- Anti-
Mineral Gold Gold Silver ed mony mony
Resource Tonnes Grade (000s Grade Silver Grade (000s
Category (000s) (g/t) oz) (g/t)(000s oz) (%) lbs)
--------------------------------------------------------------------------
Open Pit Sulphide(2) Mineral Resources
--------------------------------------------------------------------------
Indicated 9,999 2.31 743 3.15 1,012 0.49% 108,507
--------------------------------------------------------------------------
Inferred 8,639 2.08 576 5.04 1,400 0.49% 92,784
--------------------------------------------------------------------------
(1) Mineral resources are reported in relation to a conceptual pit shell.
Mineral resources are not mineral reserves and do not have demonstrated
economic viability - see "Compliance with NI43-101" below. All figures are
rounded to reflect the relative accuracy of the estimate. All composites
have been capped where appropriate.
(2) Open pit sulphide mineral resources are reported at a cut-off grade of
0.75 g/t Au. Cut-off grades are based on a price of US$1,400 per ounce of
gold and a number of operating cost and recovery assumptions, plus a 15%
contingency (see details below). The antimony subdomain is further limited
to discrete zones of mineralization with grades that exceed 0.1% Sb.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Mineral resource estimates do not account for mineability,
selectivity, mining loss and dilution. These mineral resource estimates include
Inferred mineral resources that are normally considered too speculative
geologically to have economic considerations applied to them that would enable
them to be categorized as mineral reserves. There is also no certainty that
these Inferred mineral resources will be converted to Measured and Indicated
mineral resource categories through further drilling, or into mineral reserves
once economic considerations are applied.
The mineral resource estimates for the Hangar Flats, West End, and Yellow Pine
deposits were prepared by SRK as summarized herein. The economically driven pit
shell that limits the mineral resource was based entirely on gold value, with
antimony and silver reporting within the resource-limiting pit but not defining
it. Within the resource-limiting pit, antimony and silver grades are reported
without any cut-off. Any mineralization lying outside the resource-limiting pit
is not reported as mineral resources.
Since the date of this mineral resource estimate, additional drilling has been
completed, and is continuing to infill and extend the mineralization reported
herein and updated mineral resource estimates are targeted for the end of Q1/13.
Conceptual Life-of-mine Open Pit Production Schedule
Individual conceptual mine plans were developed for each of the Hangar Flats,
West End and Yellow Pine deposits. The conceptual Life-of-mine ("LOM") plan is
summarized in Table 4, which is attached at the end of this release. The mine
plans utilized approximately 80% of the recently reported mineral resource for
the Golden Meadows Project that is summarized above.
Processing
The gold in the three deposits comprising the Golden Meadows Project is
primarily contained in pyrite and arsenopyrite, while the antimony is contained
in stibnite, and silver in pyrite, arsenopyrite and stibnite. As a result, the
mineralized material contemplated to be processed would be crushed, ground and
sulphides recovered by sequential flotation of the stibnite and then,
subsequently, the pyrite and arsenopyrite, yielding two concentrates. The
mineralized material is considered to be of medium hardness, with bond ball mill
work indexes ranging from 13.0 to 13.7kWh/t. The conceptual base case approach
to the sulphide concentrates is for the stibnite (antimony, along with minor
gold and silver) concentrate to be sold to third parties for processing, while
the pyrite-arsenopyrite concentrate (containing the gold) will be pressure
oxidized on site and gold recovered as dore. Based on metallurgical test work
completed to date, recoveries utilized in the PEA are as set out in Table 5
below. The grade of the gold concentrate is designed to manage sulphur grades
for onsite pressure oxidation; were the gold concentrates to be shipped off-site
for processing, higher concentrations are achievable.
Table 5: Recoveries Utilized in PEA, Golden Meadows Project, Idaho
--------------------------------------------------------------------------
Yellow Hangar
Process Units Pine Flats West End
--------------------------------------------------------------------------
Sulphides with Recoverable Antimony Grades
--------------------------------------------------------------------------
Antimony Flotation
--------------------------------------------------------------------------
Concentrate grade % Sb 50 50 n/a
Recovery % 80 80 n/a
--------------------------------------------------------------------------
Gold-bearing Sulphide
Flotation
--------------------------------------------------------------------------
Concentrate grade % Sulphur 10+ 10+ n/a
Gold Flotation Recovery % 88 89 n/a
POX Residue Gold
Extraction % 98 98 n/a
Overall Gold Recovery % 86 87 n/a
--------------------------------------------------------------------------
Sulphides Without Recoverable Antimony Grades
--------------------------------------------------------------------------
Gold-bearing Sulphide
Flotation
--------------------------------------------------------------------------
Concentrate grade % Sulphur 10+ 10+ 10+
Recovery % 93 92 Variable (1)
POX Residue Gold
Extraction % 98 98 98
Overall Gold Recovery % 91 90 Variable (1)
--------------------------------------------------------------------------
Oxides
--------------------------------------------------------------------------
Gold Leach Extraction % 80 80 Variable (1)
--------------------------------------------------------------------------
(1) Depending on degree of oxidation
Indicative economic analysis shows that the slightly lower overall gold recovery
in the material with recoverable antimony is more than offset by the
recoverable, payable antimony values.
Tailings & Waste Rock Management
A total of 101 Mt (68.7 Mm3) of tailings are expected to be produced during the
14.2-year mine life of the recommended project. Based on results of current
metallurgical test work and the recommended processing options, three separate
tailings streams would be produced: oxide, POX, and flotation tailings. The
geochemistry of the POX and oxide tailings suggests they may require containment
within a lined facility, while the flotation tailings are considered to be
relatively benign and could be placed in a separate unlined facility. However,
the buffering capacity of the flotation tailings may serve to neutralize the POX
tailings, and create a more benign product overall, which suggests that
co-mingled tailings contained within a single, lined facility may be the better
option. The recommended tailing storage facility ("TSF") would consist of a
lined basin and lined rock fill dam constructed in stages throughout the LOM.
The downstream face of the rock fill dam would be buttressed by the waste rock
facility ("WRF"), substantially reinforcing the dam. Waste rock from the mining
operations at West End is recommended to be backfilled into the Yellow Pine pit.
Other waste rock is recommended to be deposited in a designed WRF adjacent to
the Hangar Flats deposit. In order to schedule waste placement within the waste
facilities and isolate potential leachable material, a detailed waste management
plan would be developed, including components of geochemical characterization,
water management, and capping to limit infiltration.
Capital Costs
Capital costs ("CAPEX") estimates were done based on Q3 2012, un-escalated U.S.
dollars and are summarized in Table 6 below. Vendor quotes were obtained for all
major equipment. Some of the costs were developed from first principles, while
some were estimated based on factored references and experience with similar
projects.
Table 6: Capital Cost Estimate, Golden Meadows Project
--------------------------------------------------------------------------
Pre-
production Sustaining Total
Area Detail (M$) (M$) (M$)
--------------------------------------------------------------------------
Direct Costs Open Pit Mine 121.9 107.2 229.1
-----------------------------------------------------------
Processing and Utilities 243.0 79.6 322.6
-----------------------------------------------------------
On-site Infrastructure 93.1 38.8 131.9
-----------------------------------------------------------
Off-site Infrastructure 67.0 0.0 67.0
--------------------------------------------------------------------------
Indirect Costs 148.9 19.4 168.3
--------------------------------------------------------------------------
Owner's Costs 39.7 0.0 39.7
--------------------------------------------------------------------------
Closure Costs 0.0 53.0 53.0
--------------------------------------------------------------------------
CAPEX Without Contingency 713.6 298.0 1,011.6
--------------------------------------------------------------------------
Contingency (variable) 165.7 4.7 170.4
--------------------------------------------------------------------------
TOTAL CAPEX ESTIMATE with Contingency 879.4 302.6 1,182.0
--------------------------------------------------------------------------
Operating Costs
Operating cost estimates ("OPEX") were done based on Q3 2012, un-escalated U.S.
dollars and are summarized in Table 7 below. Most costs were developed from
first principles, although some were estimated based on factored references and
experience with similar projects.
Table 7: Operating Cost Estimate, Golden Meadows Project
-------------------------------------------------------------------------
Unit Cost Estimate
-----------------------------------------------------
Cash Cost(2)$/Au
Item $/t Mined $/t Milled ounce Payable
-------------------------------------------------------------------------
Mining 1.67(1) 7.78 160
-------------------------------------------------------------------------
Mineral Processing 13.94 287
-------------------------------------------------------------------------
General and
Administration 4.14 85
-------------------------------------------------------------------------
Total (without by-product credits) 25.86 532
-------------------------------------------------------------------------
Total (with by-product credits) 425
-------------------------------------------------------------------------
(1) Excluding pre-strip (Year -1) mining which is captured as a capital cost
(2) see non-IFRS measures below
In the first eight years of operation, cash costs without by-product credits
average US$479 per payable ounce of gold, and just US$331 per payable oz of gold
after by-product credits are applied (see non-IFRS measures below).
Costs were independently estimated for oxides, low-antimony sulphides and
high-antimony sulphides, as set out in Table 8 below.
Table 8: Operating Cost Estimate by Type of Mineralization, Golden Meadows
Project
--------------------------------------------------------------------------
Item Unit Combined Oxide Sulphide High Sb
--------------------------------------------------------------------------
Mining ($1.67/tonne $/t milled
mined(i)) 7.78 7.78 7.78 7.78
--------------------------------------------------------------------------
Stockpile material $/t milled 0.13 0.13 0.13 0.13
handling
--------------------------------------------------------------------------
Crushing and $/t milled 2.83 2.83 2.83 2.83
Grinding
--------------------------------------------------------------------------
Oxide Processing $/t oxide milled 0.82 5.53
--------------------------------------------------------------------------
Sb Flotation $/t high Sb milled 0.28 1.66
--------------------------------------------------------------------------
Au Flotation $/t sulphide milled 1.77 2.08 2.08
--------------------------------------------------------------------------
POX $/t sulphide milled 7.87 9.23 9.23
--------------------------------------------------------------------------
Water Management $/t milled 0.25 0.25 0.25 0.25
--------------------------------------------------------------------------
General and $/t milled 4.14 4.14 4.14 4.14
Administrative
--------------------------------------------------------------------------
Total 25.86 20.66 26.44 28.10
--------------------------------------------------------------------------
(i) Excluding pre-strip (Year -1) mining which is captured as a capital cost
Production Schedule
Based on the conceptual mining schedule for the three deposits and recoveries
summarized above, Table 9 sets out the estimated contained and payable metals
over the life-of mine and is attached at the end of this release.
Economic Analysis
The economic assessment in the PEA is preliminary in nature and uses inferred
mineral resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be categorized
as mineral reserves, and there is no certainty that this PEA will be realized.
The inferred mineral resource used in the mine plan is 37% of the total
life-of-mine mineral resource.
Four potential cash flow cases were studied using metal prices summarized in
Table 10 below. All cash flow cases used the same mineral resource estimate,
mine plan and production factors, as shown in Table 11 below.
Table 10: Metal Price Assumptions for the Four Economic Cases, Golden
Meadows PEA
--------------------------------------------------------------------------
Gold Silver Antimony
Price Price Price
Case ($/ounce) ($/ounce) ($/pound) Basis
--------------------------------------------------------------------------
Case A 1,200 20.00 5.50 Gold price used in the
mine optimization. The
gold price is
approximately the 5-year
trailing average to the
end of July 2012.
--------------------------------------------------------------------------
Case B (Base 1,400 23.50 6.00 Approximate three-year
Case) trailing average gold
price to the end of July
2012.
--------------------------------------------------------------------------
Case C 1,600 27.00 6.50 Approximate eighteen-
month trailing average
gold price to the end of
July 2012.
--------------------------------------------------------------------------
Case D 1,800 30.00 7.00 An upside case to show
project potential at a
gold price about 12%
higher than prices at the
end of July 2012.
--------------------------------------------------------------------------
Table 11: Summary of Production - All Cases, Golden Meadows PEA
--------------------------------------------------------------------------
Item Unit Value
--------------------------------------------------------------------------
LOM PRODUCTION
--------------------------------------------------------------------------
Waste Mined Mt 372
--------------------------------------------------------------------------
Mineralized Material Mined Mt 101
--------------------------------------------------------------------------
Strip Ratio (Waste tonnes:mineralized material
tonnes) t:t 3.7
--------------------------------------------------------------------------
Daily Mill Throughput t/d 20,000
--------------------------------------------------------------------------
Annual Mill Throughput Mt 7.3
--------------------------------------------------------------------------
Mine Life Production Years 14.2
--------------------------------------------------------------------------
MILL HEAD GRADE - OVERALL
--------------------------------------------------------------------------
Gold g/t Au 1.72
--------------------------------------------------------------------------
Silver g/t Ag 1.60
--------------------------------------------------------------------------
Antimony % Sb 0.08
--------------------------------------------------------------------------
Oxide Process
--------------------------------------------------------------------------
Tonnes Mt 15.0
--------------------------------------------------------------------------
Gold g/t Au 1.05
--------------------------------------------------------------------------
Silver g/t Ag 0.10
--------------------------------------------------------------------------
Gold Flotation Process (excluding Antimony Flotation)
--------------------------------------------------------------------------
Tonnes Mt 69.0
--------------------------------------------------------------------------
Gold g/t Au 1.75
--------------------------------------------------------------------------
Silver g/t Ag 0.42
--------------------------------------------------------------------------
Sb Flotation Process (greater than 0.1% Sb only)
--------------------------------------------------------------------------
Tonnes Mt 17.4
--------------------------------------------------------------------------
Gold g/t Au 2.18
--------------------------------------------------------------------------
Silver g/t Ag 0.67
--------------------------------------------------------------------------
Antimony % Sb 0.45
--------------------------------------------------------------------------
CONCENTRATE PRODUCTION
--------------------------------------------------------------------------
Antimony Concentrate dry metric tonnes 126,474
--------------------------------------------------------------------------
LOM PAYABLE METAL
--------------------------------------------------------------------------
Gold Koz 4,922
--------------------------------------------------------------------------
Silver Koz 335
--------------------------------------------------------------------------
Antimony Klb 90,618
--------------------------------------------------------------------------
The results of the economic analysis are summarized in Table 12 below.
Table 12: Economic Results by Case, Golden Meadows PEA
--------------------------------------------------------------------------
Pre-tax After-tax
Parameter Unit Results Results
--------------------------------------------------------------------------
Case A ($1,200/ounce Au, $5.50/pound Sb, $20.00/ounce Ag)
--------------------------------------------------------------------------
NPV0% M$ 2,549 1,874
NPV5% M$ 1,464 1,036
IRR % 27 22
Payback period Production years 2.8 3.7
--------------------------------------------------------------------------
Case B ($1,400/ounce Au, $6.00/pound Sb, $23.50/ounce Ag) - Base Case
--------------------------------------------------------------------------
NPV0% M$ 3,580 2,557
NPV5% M$ 2,136 1,482
IRR % 34 27
Payback period Production years 2.3 3.0
--------------------------------------------------------------------------
Case C ($1,600/ounce Au, $6.50/pound Sb, $27.00/ounce Ag)
--------------------------------------------------------------------------
NPV0% M$ 4,611 3,233
NPV5% M$ 2,808 1,923
IRR % 40 32
Payback period Production years 1.9 2.6
--------------------------------------------------------------------------
Case D ($1,800/ounce Au, $7.00/pound Sb, $30.00/ounce Ag)
--------------------------------------------------------------------------
NPV0% M$ 5,642 3,910
NPV5% M$ 3,480 2,364
IRR % 46 36
Payback period Production years 1.7 2.3
--------------------------------------------------------------------------
The contribution to the project economics, by metal, is about 93% from gold, 7%
from antimony, and less than 1% from silver.
Using a discount rate of 5%, the after-tax break-even gold price for the project
is $880/ounce gold (63% of the Case B gold price) assuming no contribution from
antimony or silver.
Sensitivity Analysis
Sensitivity analyses were performed using metal prices, mill head grade, CAPEX,
and OPEX as variables. The value of each variable was changed plus and minus 20%
independently while all other variables were held constant. The results of the
sensitivity analyses are shown in Table 13 below.
Table 13: Sensitivity Analysis - All Cases, Golden Meadows PEA
----------------------------------------------------------------------
After-tax NPV5%(M$)
------------------------------------
-20% 0% 20%
Case Variable Variance Variance Variance
----------------------------------------------------------------------
Case A CAPEX 1,176 1,036 889
OPEX 1,242 1,036 816
Metal Price or Grade 436 1,036 1,593
----------------------------------------------------------------------
Case B CAPEX 1,619 1,482 1,344
(Base Case) OPEX 1,683 1,482 1,277
Metal Price or Grade 828 1,482 2,122
----------------------------------------------------------------------
Case C CAPEX 2,060 1,923 1,786
OPEX 2,124 1,923 1,721
Metal Price or Grade 1,193 1,923 2,652
----------------------------------------------------------------------
Case D CAPEX 2,501 2,364 2,227
OPEX 2,565 2,364 2,163
Metal Price or Grade 1,547 2,364 3,181
----------------------------------------------------------------------
Economic Impacts
The economic analysis set out in the PEA also provides some indications of the
potential economic impact of the Golden Meadows Project on the local, Idaho and
US economies, should the future work and permitting support development of a
mining operation. Highlights include:
-- Direct employment of more than 400 people during the three-year
construction phase and 425 people during the subsequent 14.2 year
operating phase at annual salaries estimated to average more than double
the average 2010 census reported salaries for Idaho;
-- A study by the University of Idaho estimates 2.5 times as many
community-based jobs are likely to be dependent on each direct job at
such a mine, with such jobs related to contracting, transportation,
services and other support activities;
-- An average annual payroll of $20 million during the conceptual 14.2 year
life of mine;
-- Gross investment of approximately over $500 million in capital equipment
and equipment manufacturing during the construction phase, with an
additional $200 million or more during operations, the substantial
majority of which is expected to be sourced from within the United
States; and,
-- Approximately $1,023 million in direct taxes to all levels of
government, including payments to the local county ($3 million), State
($220 million) and Federal ($800 million) governments over the 14.2 year
operating life of the project, but excluding payroll taxes, state sales
taxes and income taxes paid by employees.
MGI is already having a significant impact on the local economy, with upwards of
115 people directly employed or working with contractors on site in 2011 and 146
so far in 2012, making MGI the largest private sector employer in Valley County,
more than 70% of whom reside in the State of Idaho and almost half are from
Valley and adjacent Adams counties. MGI has also been able to utilize a
significant number of contractors and suppliers from within Valley and Adams
counties and the State of Idaho, with an estimated 85% of its project
expenditures being spent in Idaho, approximately half of which is being spent
with local entities.
Environmental
Midas Gold and MGI recognize the importance of protecting the environment and,
to facilitate the development of a sustainable project, Midas Gold established
the following environmental objectives for the Project:
-- Protect surface and ground water quality;
-- Protect and enhance the fishery;
-- Maintain or enhance the objectives of CERCLA-ordered environmental
improvements;
-- Minimize potential for sedimentation and spills along transportation
corridors; and
-- Incorporate environmental enhancement opportunities into the conceptual
concurrent and final reclamation plans.
In order to achieve Midas Gold's and MGI's objectives, SRK has incorporated the
following design considerations, from an environmental perspective, into the
recommended Project:
-- Minimize the project footprint - the concepts of backfilling pits, where
practical, and concentrating tailings storage in one location (rather
than multiple smaller locations) are high priorities for design.
Minimizing the footprint enables better protection of water quality and
simpler, more effective water management.
-- Management of water - a comprehensive water management strategy to
minimize and reuse water supplies in order to support in-stream flow
requirements for important fish species has been developed for
additional study as part of this PEA.
-- Management of waste - the waste management plan for the project involves
the potential for segregation and selective handling and placement of
potentially reactive waste rock, and storage of flotation, oxide, and
POX tailings in a synthetically lined facility. Further, blending of the
plus 90% by volume, inert flotation material with the small volume POX
tailings, is expected to chemically neutralize any residues in the POX
tailings.
-- Reduce contact of Project infrastructure (including roads in particular)
with waterways - The conceptual design presented in this PEA of an
alternate road corridor to the Project site would move the main
transportation route away from much of the environmentally sensitive
Johnson Creek & South Fork of the Salmon River ("SFSR") waterways.
-- Enhance the fishery - The environmental design also involves the
creation of three fish spawning reaches in the East Fork of the SFSR
("EFSFSR") above the planned Yellow Pine pit, backfilling of the Yellow
Pine pit, and construction of a new channel through the backfilled area
that would provide fish passage into the upper reaches of the EFSFSR and
Meadow Creek drainage areas that are currently inaccessible due to the
steep gradient within the abandoned Yellow Pine pit.
-- Clean up past environmental degradation - Selective environmental clean-
up projects would be considered as part of the overall mine plan, where
feasible; additional reclamation treatments at the historic spent ore
disposal area ("SODA") is an example of this opportunity.
-- Management of air quality - The use of the best practice control
technology and practices to control air emissions at the site would be
employed.
-- Environmental Monitoring - Monitoring to ensure compliance with all
applicable air, water, waste, and reclamation objectives and to validate
the effectiveness of water treatment and best management practice (BMP)
technologies is a fundamental component of the Project.
Closure and Remediation
The conceptual closure plan is focused on effective remediation of a
considerable area degraded by historic mining practices (including waste dumps,
abandoned pits, leach pads, former mill and smelter location, etc.) by re-mining
areas of past disturbance, creating substantially improved containment, and
managing waste materials in fully engineered and contained facilities. The
conceptual closure plan would create more than 60 hectares of new wetlands,
restore local drainages, reopen fish pathways along the EFSFSR south of the
current Yellow Pine pit lake to migratory species (including salmon), and create
three fisheries enhancement habitats. In addition, all newly-generated waste
would be covered and planted to create sustainable vegetative cover.
Recognizing that there is already substantial disturbance from extensive past
open pit and underground mining within its Golden Meadows project boundaries,
over the past several years Midas Gold has undertaken a series of voluntary
remediation efforts to mitigate the on-going impact of legacy environmental
disturbance, including reclaiming more than five acres of ground disturbed prior
to Midas Gold's involvement in the area, planting 5,000 trees in 2011 (with a
further 7,800 scheduled for planting in the fall of 2012) to reduce suspended
solids run-off, application of dust suppression materials to almost seven miles
of public roads, and replaced or repaired numerous culverts and other stream
crossings, all of which has helped to reduce the sediment loading of local
drainages, enhancing the downstream water quality and fish habitat.
Permitting
Midas Gold has developed an integrated plan to address the potential
Environmental Impact Statement ("EIS") and the potential regulatory process for
any new mining operation, should such be warranted after the additional
recommended work and further studies are completed. The plan considers: (a)
environmental baseline study needs, (b) MGI's ultimate "preferred alternative"
to be described in the PFS, (c) a concurrent EIS and permitting schedule, (d)
environmental risk management strategy, including "offsets" to potential
impacts, and (e) an internal management program driven by scheduling milestones
and cost tracking.
Substantial existing environmental baseline information generated by previous
operators and governmental agencies is being confirmed and supplemented by MGI.
This baseline is a compilation of previous studies and several EIS conducted for
recent mining operations, remedial cleanup investigations, and multiple resource
agency inventories. The new supplemental studies by MGI are aimed at describing
'current mining' environmental conditions at the site.
Project Risks & Opportunities
Aside from the risks typical of all large scale mining projects, such as
confidence in mineral resource estimates, metallurgical performance, capital and
operating cost increases, commodity price decreases, etc., the principal Project
risks identified in the PEA include the following:
1. Ability to acquire a mining permit while maintaining an reasonable
development timeline;
2. Success in converting Inferred resources to Measured or Indicated
categories; and
3. The ability to attract and retain experienced professionals given the
competitive state of the global mining industry.
Excluding the typical opportunities for such a mining project as that
conceptualized in the PEA, such as higher metal prices, lower costs, etc., a
number of specific opportunities have been identified at Golden Meadows and
include the following:
1. Increases in mineral resources - all of the three deposits that
contributed mineral resources to the conceptual plan laid out in the PEA
are open to expansion and drilling is continuing. Additional mineral
resources could extend the mine life, increasing the Project NPV and
IRR.
2. Higher grade mineral resources - if MGI was successful in defining
higher grade mineral resource within or around the existing deposits, or
in completely new deposits, these mineral resources could displace lower
grade material into the future, increasing the Project NPV and IRR.
3. Increased by-products - as noted in the mineral resource section above,
antimony and silver grades have only been estimated for a small portion
(approximately 17%) of the overall mineral resource. As additional
drilling and modelling is completed, were by-product values extended
into the un-estimated areas, higher by-product production could be
contemplated and could result in reduced net operating costs, increasing
the Project NPV and IRR.
4. Conversion of in-pit unclassified material - the currently contemplated
pits have significant volumes of material with little to no drilling
that are therefore unclassified tonnes treated as waste in the current
financial model. Drilling has been on-going in 2012, and is continuing,
with the objective of converting some portion of these unclassified
tonnes to mineral resources above contemplated cut-off grades, which
would result in increased mineral resources and mine life, positively
affecting the NPV and IRR of the Project.
5. Improved geotechnical parameters - the currently contemplated pits have
slopes assigned to them based on limited geotechnical information.
Geotechnical drilling is currently in process to assist with better
defining the appropriate geotechnical parameters, which could result in
steeper pit walls, reducing strip ratios and therefore lowering
operating costs.
6. Potential increases in design throughput - such increases could result
in an improved capital return scenario.
7. Alternate oxide material processing options - such options could allow
earlier or parallel processing of oxide materials, increasing production
and economic returns.
8. Generation of quicklime - generation of quicklime from local limestone
sources could reduce costs and the number of vehicles required to bring
materials to site.
Moving Forward
MGI intends to use the recommendations in the PEA as the basis for informed
discussions with tribal and other governments, NGOs, regulatory agencies,
recreational groups, local communities and others in order to cooperatively
develop a Project that is sustainable both from an economic and environmental
perspective.
MGI did not wait for completion of the PEA to initiate activities it knew would
be required to advance the Project towards completion of a PFS and design of a
project that may subsequently warrant the filing of permit applications. MGI has
already completed approximately 38,246m of in-fill and step-out drilling in 2012
in and around the mineral resources summarized herein with the objective of (a)
upgrading the confidence in the existing Inferred mineral resources and better
defining potential by-product values, (b) testing currently unclassified
material within the current pit limits for its potential to host mineralization,
(c) testing for possible extensions to the existing mineral deposits, (d)
geotechnical drilling, and (e) commencing the testing for other potential
deposits, such as Scout. In addition, MGI has begun collecting additional
metallurgical samples for further testing, is continuing its geotechnical and
baseline environmental assessments, is assessing potential local sources of
limestone, and is continuing with other Project related activities.
All of the new 2012 drilling is to be incorporated in a new mineral resource
estimate scheduled for completion in Q1/13, while all other information,
including possible 2013 drilling, is to be incorporated into future studies
(whether an updated PEA or a PFS) and to provide sufficient detail and
confidence to contemplate the filing of permit applications, should the Project
economics warrant once this additional information has been collected and
incorporated into such studies.
Illustrations
To view the conceptual project layout and closure, please click here:
http://media3.marketwire.com/docs/MAX0904.pdf
Updated Technical Report
Midas Gold plans to file a NI 43-101 Technical Report on SEDAR by mid-September
detailing the information set out herein.
Compliance with National Instrument 43-101
Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Mineral resource estimates do not account for mineability,
selectivity, mining loss and dilution. These mineral resource estimates include
inferred mineral resources that are considered too speculative geologically to
have economic considerations applied to them that would enable them to be
categorized as mineral reserves. There is also no certainty that these Inferred
mineral resources will be converted to the Measured and Indicated categories
through further drilling, or into mineral reserves, once economic considerations
are applied.
The mineral resources at Golden Meadows are contained within areas that have
seen historic disturbance resulting from prior mining activities. In order for
MGI to advance its interests at Golden Meadows, the Project will be subject to a
number of Federal, State and local laws and regulations and will require permit
to conduct its activities. However, MGI is not aware of any environmental,
permitting, legal or other reasons that would prevent it from advancing the
project.
For readers to fully understand the information in this news release, they
should read the Technical Report (to be available on SEDAR or at
www.midasgoldinc.com by mid-September 2012) in its entirety, including all
qualifications, assumptions and exclusions that relate to the information set
out in this news release which qualifies the Technical Information. The
Technical Report intended to be read as a whole, and sections should not be read
or relied upon out of context. The technical information in that report is
subject to the assumptions and qualifications contained in the Technical Report.
Non-IFRS Performance Measure
"Cash Operating Costs" is a non-IFRS Performance Measure. This performance
measure is included because this statistic is a key performance measure that
management uses to monitor performance. This performance measure does not have a
meaning within IFRS and, therefore, amounts presented may not be comparable to
similar data presented by other mining companies. This performance measure
should not be considered in isolation as a substitute for measures of
performance in accordance with IFRS.
Conference Call & Webcast Details
Midas Gold will be hosting a conference call and webcast at 7:00 AM PT on
Wednesday September 5, 2012 to discuss highlights of the PEA on the Golden
Meadows Project and to provide analysts and investors the opportunity to ask
questions; call in details are as follows:
Canada & USA Toll Free Dial In: 1-800-319-4610
Outside of Canada & USA call: +1-604-638-5340
International local numbers are available at:
http://services.choruscall.com/links/itfsa.html. Callers should dial in 5 - 10
min prior to the scheduled start time and simply ask to join the Midas Gold
call.
Midas Gold will also webcast the presentation to accompany the discussion;
simply click on the following link to access the presentation:
http://services.choruscall.com/links/midas20120905.html.
The conference call will be available for replay by calling Canada & USA Toll
Free 1-800-319-6413 or Outside Canada & USA Call: +1-604-638-9010.
Alternatively, international local numbers are available at:
http://services.choruscall.com/links/itfsa.html and enter the code 8230 followed
by the # sign. The call will be available for one month.
Quality Assurance
The technical information in this news release has been approved by Stephen P.
Quin, P. Geo., President and CEO of Midas Gold Corp., and a Qualified Person.
The resource estimation for the gold deposits at Golden Meadows was completed by
David Rowe, C.P.G of SRK under the supervision of Guy Dishaw, P. Geo, of SRK.
The other QPs responsible for the PEA study are set out below.
-- Gordon Doerksen, P.Eng., JDS Energy and Mining Inc. (overall project
management and economic analysis);
-- Dino Pilotto, P.Eng., SRK Consulting (Canada) Inc. (mining);
-- Bruce Murphy, FSAIMM, SRK Consulting (Canada) Inc. (mine geotech);
-- Maritz Rykaart, P.Eng., SRK Consulting (Canada) Inc. (waste management)
-- John Duncan, P.Eng. SRK Consulting (Canada) Inc. (water management);
-- Chris Martin, C.Eng., Blue Coast Metallurgy Ltd. (metallurgy);
-- Kevin Scott, P.Eng., Ausenco Solutions Canada Inc. (infrastructure and
mineral processing); and
-- Rick Richins, BS, MS, RTR Inc. (environmental considerations).
About Midas Gold and the Golden Meadows Project
Midas Gold Corp., through its wholly owned subsidiaries Midas Gold Inc. and
Idaho Gold Resources, LLC, is focused on the exploration and, if warranted,
development of the Golden Meadows Project in the Stibnite-Yellow Pine district
of central Idaho. The principal gold deposits identified to date within the
Golden Meadows Project are the Hangar Flats, West End and Yellow Pine deposits,
all of which are associated with important structural corridors.
Forward-Looking Statements
Statements contained in this news release that are not historical facts are
"forward-looking information" or "forward-looking statements" (collectively,
"Forward-Looking Information") within the meaning of applicable Canadian
securities legislation and the United States Private Securities Litigation
Reform Act of 1995. Forward Looking Information includes, but is not limited to,
disclosure regarding possible events, conditions or financial performance that
is based on assumptions about future economic conditions and courses of action;
the timing and costs of future exploration activities on the Corporation's
properties; success of exploration activities; permitting time lines and
requirements, requirements for additional capital, requirements for additional
water rights and the potential effect of proposed notices of environmental
conditions relating to mineral claims; planned exploration and development of
properties and the results thereof; planned expenditures and budgets and the
execution thereof. In certain cases, Forward-Looking Information can be
identified by the use of words and phrases such as "plans", "expects" or "does
not expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "potential" "confirm" or "does not anticipate",
"believes", "contemplates", "recommends" or variations of such words and phrases
or statements that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved".
Statements concerning mineral resource estimates may also be deemed to
constitute forward-looking statements to the extent that they involve estimates
of the mineralization that may be encountered if the Golden Meadows Project is
developed. In making the forward-looking statements in this news release, the
Corporation has applied several material assumptions, including, but not limited
to, certain assumptions as to production rate, operating cost, recovery and
metal costs as set out in this news release, that any additional financing
needed will be available on reasonable terms; the exchange rates for the U.S.
and Canadian currencies in 2012 will be consistent with the Corporation's
expectations; that the current exploration and other objectives concerning the
Golden Meadows Project can be achieved and that its other corporate activities
will proceed as expected; that the current price and demand for gold will be
sustained or will improve; that general business and economic conditions will
not change in a materially adverse manner and that all necessary governmental
approvals for the planned exploration on the Golden Meadows Project will be
obtained in a timely manner and on acceptable terms; the continuity of the price
of gold and other metals, economic and political conditions and operations.
Forward-Looking Information involves known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Corporation to be materially different from any future results, performance
or achievements expressed or implied by the Forward-Looking Information. Such
risks and other factors include, among others, risks related to the availability
of financing on commercially reasonable terms and the expected use of proceeds;
operations and contractual obligations; changes in exploration programs based
upon results of exploration; changes in estimated mineral reserves or mineral
resources; future prices of metals; availability of third party contractors;
availability of equipment; failure of equipment to operate as anticipated;
accidents, effects of weather and other natural phenomena and other risks
associated with the mineral exploration industry; environmental risks, including
environmental matters under U.S. federal and Idaho rules and regulations; impact
of environmental remediation requirements and the terms of existing and
potential consent decrees on the Corporation's planned exploration on the Golden
Meadows Project; certainty of mineral title; community relations; delays in
obtaining governmental approvals or financing; fluctuations in mineral prices;
the Corporation's dependence on one mineral project; the nature of mineral
exploration and mining and the uncertain commercial viability of certain mineral
deposits; the Corporation's lack of operating revenues; governmental regulations
and the ability to obtain necessary licences and permits; risks related to
mineral properties being subject to prior unregistered agreements, transfers or
claims and other defects in title; currency fluctuations; changes in
environmental laws and regulations and changes in the application of standards
pursuant to existing laws and regulations which may increase costs of doing
business and restrict operations; risks related to dependence on key personnel;
and estimates used in financial statements proving to be incorrect; as well as
those factors discussed in the Corporation's public disclosure record. Although
the Corporation has attempted to identify important factors that could affect
the Corporation and may cause actual actions, events or results to differ
materially from those described in Forward-Looking Information, there may be
other factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that Forward-Looking
Information will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on Forward-Looking Information.
Except as required by law, the Corporation does not assume any obligation to
release publicly any revisions to Forward-Looking Information contained in this
news release to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
To view Tables 4 and 9 please click on the following link:
http://media3.marketwire.com/docs/MAX0904b.pdf