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Midway Gold Corp. (MDW)

Wall Street Analyst Forum

March 27, 2008 12:30 pm ET


Alan Branham - President and CEO



Good afternoon, ladies and gentlemen. In our ongoing attempt to adhere to the public schedule, I'd like to introduce the next company in this afternoon's metals and mining program, Midway Gold Corp. Midway Gold Corp. is a precious metals and mines or precious metals exploration company that engages in the acquisition, exploration and development of mineral properties in Nevada.

The company focuses on the discovery and development of quality precious metals resources in stable mining areas. Midway controls over 69 square miles of Nevada land on four prolific gold trends. Currently, Midway is actively exploring and developing eight gold properties, four are advanced stage projects that contain resources in excess of 1.8 million ounces of gold.

Without any further introduction, I'd like to introduce Alan Branham, President, Chief Executive Officer and Director of the company.

Alan Branham

Alright. Well, thank you for coming and thank you for having me here to present. You're going to hear a talk that's a little bit different than the last few that you've heard. We're at a little earlier stage than most companies. We actually have three discoveries in Nevada that are expanding. And before I start, I guess I should put up the obligatory forward-looking statement, because I will be making some statements that are subject to change.

One of the things that when you evaluate exploration companies, they are a little more difficult to evaluate than resource companies that are actually going into production because how do you evaluate them, what do they have? And I thought I'll take just a few minutes and talk about the discovery process and what it does for a public company.

And you will see that we're on the early stages of the discovery process. We have three projects that have discoveries that are moving towards becoming mines. And in Nevada, it cost people on the average about $8 to $35 an ounce to make a discovery. That's to create a resource. That's going out into the mountains with a brand new idea, stepping out from a mine site with a brand new idea, making discovery.

And if you look at the market cap companies as they make the discovery, the value that's passed on to the shareholders comes from the market. And typically, we see anywhere from $35 to $150 an ounce depending on the quality of the ounces that are discovered. And that's determined by the grade and the geometry, the location, the metallurgy. Things in Nevada are tended to be valued much better than, say, things in the Congo, political risk, things like that are all key factors to the value of those resources.

Then, as the company moves along, they start to take those resources and convert them to reserves. What they're doing is removing risk from those resources. They are doing metallurgical work. They are doing environmental permitting. They are doing things that make it more and more certain that they are going to be able to remove those metals out of the ground. And when you see those resources convert to reserves, they become more valuable.

And I've got a couple of examples. Newmont bought Miramar up in the Northwest territories. And if you look at their resource and reserve, they were purchased for about $166 an ounce. And if you look at the Barrick Rio Tinto transaction that occurred just a week ago, where they bought out the 40% interest on the Cortez trend out in Nevada, Barrick paid, my calculation was $369 an ounce. So those reserve ounces in stable places next to mines are more and more valuable.

And then, once you convert it to a reserve, you start to put it into a mining production. And typically in Nevada, mines are producing gold anywhere from $200 to $500 an ounce. And I think in average it's about $400 an ounce depending on the grade and the quality of the resource. And as the gold price increases, well, the mines benefit and the shareholders benefit.

What I'm going to show you is that Midway is earlier on in this discovery process. We create a lot of opportunities for our shareholders through new discoveries and through acquisitions. We currently have our most advanced project, Midway Project, which isn't as advanced of all things that you've seen today, but you'll see it is an attractive way for our shareholder to see some significant benefit in the future.

We've got a lot of potential new discoveries, and I'll talk a little bit more about that. And I'll talk about our largest growth potential which is our Spring Valley project in Nevada.

We have four gold projects with NI, National Instrument 43-101 compliant resources. That's our Spring Valley, Pan, Midway and Afgan. And that came through a very aggressive drill program for the last three years. In fact, the last three years we were the most aggressive junior in Nevada, drilling more holes and finding more gold than any other company that I know about.

Because of that, Barrick Gold Corporation stepped up, gave us $10 million so that we could explore, and bought equity in our company. And they're just like anybody else. They are shareholders. There is no joint venture. There is no backend right. We own everything a 100%. And we currently have underground development work in progress at Midway.

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