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Midway Gold Corp. (TSX.V and NYSE Amex: MDW) announces the results of a positive Prefeasibility Study of its Pan gold project located in White Pine County, Nevada. The accompanying National Instrument (NI) 43-101 technical report will be filed on SEDAR within 45 days. This NI 43-101 report was independently prepared by Gustavson Associates, LLC (“Gustavson”) of Lakewood, Colorado, and concludes that the Pan Project is economically viable and amenable to heap leach mining operations, as summarized below.
Highlights of the Prefeasibility Study (Base Case at $1,050/oz gold)
• Resource growth over the July 2010 Preliminary Economic Assessment
o 848,700 contained ounces in Measured and Indicated Resource categories at a grade of 0.016 oz gold per short ton at a 0.008 oz/ton cutoff grade
• Proven and Probable Reserves of 716,900 contained ounces grading 0.017 oz/ton gold
• Robust project economics
o Capital costs of US$79.25 million including 15% contingency
o Total cash operating costs (including taxes) projected to be $431 per oz
o Total cash costs (including royalties) projected to be $473 per oz
o Fully loaded production cost (cash costs and capital) is expected to be $666 per oz
o At $1,050 per oz gold, after-tax net present value (NPV) at 5% discount of US$91.1 million and internal rate of return (IRR) of 32.5% using a 0.008 oz/ton cutoff grade
o At $1,250 per oz gold, the NPV increases to approximately $142 million (55% higher)
o At $1,450 per oz gold, the NPV increases to approximately $192 million (111% higher)
• Project lifespan in excess of 9 years with heap leach stacking of 17,000 tons per day (tpd)
o Average of 77,000 ounces per year produced over 8.5 years of operation
• Average estimated recovery of 80% gold for the South Pit and 70% gold for the North Pit
• Life of mine (LOM) strip ratio of 1.40:1
• Expansion potential includes
o Inferred resources in the $1,050 pit
o Open mineralization at depth and along strike at North and South Pan
Pan Mineral Reserves and Resources
The open pit mineral reserves and resources were completed by Gustavson, with Ms. Terre A. Lane and Mr. Donald E. Hulse acting as the Qualified Persons (QP). The Prefeasibility Study demonstrates the project is economically viable therefore the Measured and Indicated Mineral Resources within the designed pits are considered Proven and Probable Reserves. Only the two main ore bodies (North Pan and South Pan) are included in the mine design. A 0.008 oz/ton cutoff grade resulted in the highest NPV for the project and is the selected Base Case. Mineral Reserves were based upon a design pit using Lerchs Grossmann generated pit surfaces that maximize revenue based on a $1,050 per ounce three-year trailing average price of gold.
The resource estimation includes all data collected through February 28, 2011, including 15 core holes drilled in 2010 by Midway as well as new lithology and alteration models for breccia controlled mineralization. Ordinary Kriging was used to estimate gold grades in a block model with blocks 20 feet wide, 20 feet long and 20 feet high. Measured and Indicated resource estimates are limited to drill intervals with fire assay results. Inferred resource estimates include all available assay data.
The mineral resources and reserves are summarized in Table 1 and Table 2 below. Mineral resources are inclusive of mineral reserves.
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Table 1: Gustavson Total Pan Mineral Resource, March 2011
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| Cutoff Grade (gold oz/ton) |
Short Tons (x 1000) |
Gold Grade (gold oz/ton) |
Ounces (x 1000) |
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| Measured | ||||||||||||
| 0.01 | 21,996 | 0.019 | 426.9 | |||||||||
| 0.008 | 25,025 | 0.018 | 453.7 | |||||||||
| 0.006 | 28,110 | 0.017 | 474.5 | |||||||||
| 0.004 | 30,685 | 0.016 | 487.9 | |||||||||
| Indicated | ||||||||||||
| 0.01 | 21,273 | 0.016 | 346.2 | |||||||||
| 0.008 |
26,814
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0.015 | 394.8 | |||||||||
| 0.006 | 32,162 | 0.013 | 432.2 | |||||||||
| 0.004 | 36,629 | 0.013 | 456.1 | |||||||||
| Measured plus Indicated | ||||||||||||
| 0.01 | 43,269 | 0.018 | 770.7 | |||||||||
| 0.008 | 51,839 | 0.016 | 848.7 | |||||||||
| 0.006 | 60,272 | 0.015 | 909.8 | |||||||||
| 0.004 | 67,314 | 0.014 | 946.2 | |||||||||
| Inferred | ||||||||||||
| 0.01 | 4,977 | 0.016 | 80.5 | |||||||||
| 0.008 | 7,164 | 0.014 | 100.2 | |||||||||
| 0.006 | 10,834 | 0.012 | 125.1 | |||||||||
| 0.004 | 14,690 | 0.010 | 144.7 | |||||||||
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Table 2: Gustavson Total Pan Mineral Reserve, March 2011
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| Cutoff Grade (gold oz/ton) |
Short Tons (x 1000) |
Gold Grade (gold oz/ton) |
Ounces (x 1000) |
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| Proven | ||||||||||||
| 0.01 | 20,481 | 0.020 | 402.5 | |||||||||
| 0.008 | 23,012 | 0.018 | 425.4 | |||||||||
| 0.006 | 25,289 | 0.017 | 441.3 | |||||||||
| 0.004 | 27,047 | 0.017 | 450.2 | |||||||||
| Probable | ||||||||||||
| 0.01 | 15,656 | 0.017 | 265.1 | |||||||||
| 0.008 | 18,540 | 0.016 | 291.1 | |||||||||
| 0.006 | 20,944 | 0.015 | 308.0 | |||||||||
| 0.004 | 23,775 | 0.016 | 374.2 | |||||||||
| Proven plus Probable | ||||||||||||
| 0.01 | 36,137 | 0.018 | 667.6 | |||||||||
| 0.008 | 41,553 | 0.017 | 716.5 | |||||||||
| 0.006 | 46,233 | 0.016 | 749.3 | |||||||||
| 0.004 | 50,822 | 0.016 | 824.4 | |||||||||
| Inferred within $1,050 Pit Design | ||||||||||||
| 0.01 | 530 | 0.015 | 8.1 | |||||||||
| 0.008 | 774 | 0.013 | 10.3 | |||||||||
| 0.006 | 1,110 | 0.011 | 12.6 | |||||||||
| 0.004 | 1,542 | 0.010 | 14.8 | |||||||||
Expansion Potential
Additional mineralization not included in the Prefeasibility Study includes Inferred resources in the $1,050 pit, open mineralization at depth and along strike at North and South Pan. Mineralization at North Pan has not been closed off at depth, particularly along the Pilot Shale-Devil’s Gate Limestone contact, or to the north where it trends under Tertiary volcanic rocks. At the South Pan deposit, mineralization is open to the east and to the south where the deposit also trends under Tertiary volcanic rocks.
Mining and Production
Midway plans to use conventional open pit mining methods, using front end loaders and in-pit crush and convey with mobile jaw crushers and mobile conveyors conveying waste to the waste dump. The majority of the material from the mine will be drilled and blasted prior to loading. The initial mining fleet consists of two loaders, two jaw crushers, and two 100-ton trucks, with various support equipment. The mine plan produces 6.1 million tons of ore per year for delivery to the heap leach (17,000 tpd). Peak ore and waste production is estimated to be 52,000 tpd. The pit design is based on inter-ramp slope angles of 50 degrees for South Pan, 45 degrees for North Pan. The face slope angles are 70 degrees for South Pan and 63 degrees for North Pan.
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Table 3: Operating Costs
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| Description | US$ Per ton of ore |
US$ Per oz of gold |
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| Mining | 1.76 | 136.92 | ||||||||||
| Processing | 2.46 | 191.02 | ||||||||||
| G&A | 0.33 | 25.88 | ||||||||||
| Production Taxes | 0.50 | 38.44 | ||||||||||
| Contingency — 10% | 0.51 | 39.23 | ||||||||||
| Total Operating Cost | $5.56 | $431.48 | ||||||||||
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Table 4: Initial Capital Costs
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| Description | US$ | |||||
| Construction capital | 58.11 million | |||||
| Owner’s capital | 4.42 million | |||||
| Contingency (15%) | 9.45 million | |||||
| Working capital and inventory | 7.26 million | |||||
| Total | $79.25 million | |||||
Metallurgy and Processing
Material from the North and South Pan pits will be processed using conventional heap leaching methods. Ore from both pits will be crushed by the primary in-pit mobile jaw crusher and secondary and tertiary cone crushers to a nominal 0.5 inches prior to leaching. The fines will be agglomerated. Crush size and leach kinetics are based on current metallurgical testing. Additional testing for optimization is underway.
Barren solution will be distributed on the leach pad with drip tube emitters. Pregnant solution and storm water storage ponds are integral to the leach pad system. Pregnant solutions will be treated in an adsorption/desorption refining (ADR) plant using conventional unit processes.
Opportunities and Recommendations
Gustavson has recommended the following work plans as part of Midway’s ongoing project development effort to further refine costs, recoveries, engineering, and mine designs in order to produce a Feasibility Study:
• Proceed with the NEPA / EIS (environmental) permitting process.
• Expand the mineral resource and mineral reserve to determine the total mineral resource potential at depth and along strike at North and South Pan.
• Complete a statistical review of the RC/core twin holes completed on the property.
• Complete metallurgical testing of 29 composite diamond core samples.
• Selective core drilling to determine if historic RC assays are under-reporting gold grades. Limited data suggests that core assays average 30.5 percent higher grade than corresponding RC assays.
• Selectively re-drill areas with older mine lab solution assays, which average 14.7 percent lower gold grades than twin holes with fire assays.
This release has been reviewed and approved by Mr. Donald E. Hulse (P.E.), Principal Mining Engineer of Gustavson, and a “qualified person” as that term is defined in NI 43-101. This release has also been reviewed and approved for Midway by Mr. William S. Neal (M.Sc. and CPG), Vice President of Geological Services of Midway, and 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).
