Attached files

file filename
EX-4.6 - COMMON SHARE PURCHASE WARRANT INDENTURE PROVIDING FOR THE ISSUE OF UP TO 3,330,000 COMMON SHARE PURCHASE WARRANTS DATED NOVEMBER 22, 2010 BETWEEN MIDWAY GOLD CORP. AND COMPUTERSHARE TRUST COMPANY OF CANADA. - Midway Gold Corpex46.htm
EX-4.5 - COMMON SHARE PURCHASE WARRANT INDENTURE PROVIDING FOR THE ISSUE OF UP TO 5,539,333 COMMON SHARE PURCHASE WARRANTS DATED JUNE 10, 2010 BETWEEN MIDWAY GOLD CORP. AND COMPUTERSHARE TRUST COMPANY OF CANADA. - Midway Gold Corpex45.htm

 

 


UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549



FORM 10-K


x

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

 

 

 

OR


 

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

          




Commission file number: 001-33894











MIDWAY GOLD CORP.

 (Exact Name of Registrant as Specified in its Charter)

British Columbia

 

98-0459178

(State of other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

Suite 280 - 8310 South Valley Highway

 

 

Englewood, Colorado


White Rock, British Columbia, Canada V4B 1E6

 

80112

(Address of Principal Executive Offices)

 

(Zip Code)

 

(720) 979-0900

(Registrant's Telephone Number, including Area Code)


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  


Title of Each Class

Name of Each Exchange on Which Registered


Common Stock, No Par Value

NYSE Amex


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  Not Applicable





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o Nox


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)

of the Act.  Yes o Nox


Indicate by checkmark whether the registrant (1)  filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o





Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes o No o


Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):


      Large Accelerated Filer o

 Accelerated Filer o

Non-Accelerated Filer o  Smaller Reporting Company x



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o Nox


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter:    As of June 30, 2010, the aggregate market value of the registrant's voting common stock held by non-affiliates of the registrant was US$36 million  based upon the closing sale price of the common stock as reported by the NYSE Amex of US$0.46 per share on June 30, 2010.  


The number of shares of the Registrant's Common Stock outstanding as of March 15, 2011 was 101,038,746.


DOCUMENTS INCORPORATED BY REFERENCE


Portions of our Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2011 Annual Meeting of Shareholders are incorporated by reference to Part III of this Annual Report on Form 10-K.






TABLE OF CONTENTS
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 1
PRELIMINARY NOTES 2
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING RESOURCE AND RESERVE ESTIMATES 4
GLOSSARY OF MINING TERMS 5
PART I   10
ITEM 1. DESCRIPTION OF BUSINESS 10
ITEM 1A. RISK FACTORS AND UNCERTAINTIES 15
ITEM 2. DESCRIPTION OF PROPERTIES 26
ITEM 3. LEGAL PROCEEDINGS 49
ITEM 4. [RESERVED] 49
PART II   50
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 50
ITEM 6. SELECTED FINANCIAL DATA 56
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS 57
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 62
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 63
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 63
ITEM 9A. CONTROLS AND PROCEDURES 63
ITEM 9B. OTHER INFORMATION 65
PART III 65
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 65
ITEM 11. EXECUTIVE COMPENSATION 65
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERS 65
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 65
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 65
PART IV 65
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 65
SIGNATURES

 

 

 

 





CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K and the exhibits attached hereto contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future.  These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of our management.  These statements include, but are not limited to, comments regarding:


·

our expected plans of operation to continue as a going concern;

·

the establishment and estimates of mineral reserves and resources;

·

the grade of mineral reserves and resources;

·

anticipated expenditures and costs in our operations;

·

planned exploration activities and the anticipated outcome of such exploration activities;

·

plans and anticipated timing for obtaining permits and licenses for our properties;

·

anticipated closure costs;

·

expected future financing and its anticipated outcome;

·

anticipated liquidity to meet expected operating costs and capital requirements;

·

estimates of environmental liabilities;

·

our ability to obtain financing to fund our estimated expenditure and capital requirements;

·

factors expected to impact our results of operations; and

·

the expected impact of the adoption of new accounting standards.

 

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.  Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:


·

risks related to our ability to continue as a going concern;

·

risks related to our history of losses and our requirement for additional financing to fund exploration and, if warranted, development of our properties;

·

risks related to our lack of historical production from our mineral properties;

·

uncertainty and risks related to cost increases for our exploration and, if warranted, development projects;

·

uncertainty and risks related to the effect of a shortage of equipment and supplies on our ability to operate our business;

·

uncertainty and risks related to mining being inherently dangerous and subject to events and conditions beyond our control;

·

uncertainty and risks related to our mineral resource estimates being based on assumptions and interpretations;

·

risks related to changes in mineral resource estimates affecting the economic viability of our projects;

·

risks related to differences in US and Canadian practices for reporting reserves and resources;

·

uncertainty and risks related to our exploration activities on our properties not being commercially successful;

·

uncertainty and risks related to encountering archeological issues and claims in relation to our properties;

·

uncertainty and risks related to fluctuations in gold, silver and other metal prices;

·

risks related to our lack of insurance for certain high-risk activities;

·

uncertainty and risks related to our ability to acquire necessary permits and licenses to place our properties into production;

·

risks related to government regulations that could affect our operations and costs;



1





·

risks related to environmental regulations;

·

risks related to land reclamation requirements on our properties;

·

risks related to increased competition for capital funding in the mining industry;

·

risks related to competition in the mining industry;

·

risks related to our possible entry into joint venture and option agreements on our properties;

·

risks related to our directors and officers having conflicts of interest;

·

risks related to our ability to attract qualified management to meet our expected needs in the future;

·

uncertainty and risks related to currency fluctuations;

·

risks related to our status as a passive foreign investment company;

·

risks related to recent market events and general economic conditions; and

·

risks related to our securities.


This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled "Item 1A. Risk Factors", "Item 2. Description of the Business" and "Item 7. Management's Discussion and Analysis" below.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.  We qualify all of our forward-looking statements by these cautionary statements.


PRELIMINARY NOTES

Reporting Currency, Financial and Other Information

All amounts in this Annual Report are expressed in Canadian Dollars.  Unless otherwise indicated, the United States Dollar is denoted as "US$."

 

Financial information is presented in accordance with generally accepted accounting principles ("GAAP") in the United States ("US GAAP") which do not differ in any material respects from GAAP in Canada as applicable to Midway.

 

Information in Part I and II of this report includes data expressed in various measurement units and contains numerous technical terms used in the gold mining industry. To assist readers in understanding this information, a conversion table and glossary are provided below.

Exchange Rate Information

The table below sets forth the average rate of exchange for the Canadian Dollar at the end of the five most recent calendar years ended December 31.  The table also sets forth the high and low rate of exchange for the Canadian Dollar at the end of the six most recent months.  For purposes of this table, the rate of exchange means the noon exchange rate as reported by the Bank of Canada on its web site at www.bankofcanada.ca.  The table sets forth the number of Canadian Dollars required under that formula to buy one United States Dollar.  The average rate means the average of the noon exchange rates on each day of each month during the period as reported by the Bank of Canada.

 

 

 

2010

2009

2008

2007

2006

Average for Period

1.03

1.14

1.07

1.07

1.13


 

Feb

2011

Jan
2011

Dec
2010

Nov 
2010

Oct
2010

Sept
2010

High for Period

0.9905

0.9974

1.0111

1.0170

1.0229

1.0381

Low for Period

0.9849

0.9911

1.0050

1.0099

1.0145

1.0292





The noon rate of exchange on March 15, 2011 as reported by the Bank of Canada for the conversion of Canadian dollars into United States dollars was $1.0173 (US$1.00 = Cdn$0.9830).  

Metric Conversion Table

For ease of reference, the following conversion factors are provided:


 

 

 

 

Metric Unit

U.S. Measure

U.S. Measure

Metric Unit

 

 

 

 

1 hectare

2.471 acres

1 acre

0.4047 hectares

1 metre

3.2881 feet

1 foot

0.3048 metres

1 kilometre

0.621 miles

1 mile

1.609 kilometres

1 gram

0.032 troy oz.

1 troy ounce

31.1 grams

1 kilogram

2.205 pounds

1 pound

0.4541 kilograms

1 tonne

1.102 short tons

1 short ton

0.907 tonnes

1 gram/tonne

0.029 troy ozs./ton

1 troy ounce/ton

34.28 grams/tonne

 

 

 

 


The following abbreviations are used herein:

 

Ag

 

= silver

 

M    m

 

= meter

Au

 

= gold

 

m(2)

 

= square meter

Au g/t

 

= grams of gold per tonne

 

m(3)

 

= cubic meter

g

 

= gram

 

Ma

 

= million years

ha

 

= hectare

 

Oz

 

= troy ounce

km

 

= kilometer

 

Pb

 

= lead

km(2)

 

= square kilometers

 

T

 

= tonne

kg

 

= kilogram

 

t

 

= ton

lb

 

= pound

 

Zn

 

= zinc

m

 

= meter

 

 

 

 




3





CAUTIONARY NOTE TO U.S. INVESTORS REGARDING RESOURCE AND RESERVE ESTIMATES

The mineral estimates in this Annual Report on Form 10-K have been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws.  The terms "mineral reserve", "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the United States Securities and Exchange Commission ("SEC") Industry Guide 7 under the United States Securities Act of 1993, as amended (the "Securities Act").  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.


In addition, the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC.  Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.  "Inferred mineral 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. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.  Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.


Accordingly, information contained in this Annual Report on Form 10-K and the documents incorporated by reference herein contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.



4





GLOSSARY OF MINING TERMS

We estimate and report our resources and we will estimate and report our reserves according to the definitions set forth in NI 43-101.  We will modify and reconcile the reserves as appropriate to conform to SEC Industry Guide 7 for reporting in the U.S.  The definitions for each reporting standard are presented below with supplementary explanation and descriptions of the parallels and differences.


NI 43-101 Definitions:

 

 

indicated mineral resource

 

The term "indicated mineral resource" refers to that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be established with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

 

 

 

inferred mineral resource

 

The term "inferred mineral resource" refers to that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

 

 

 

measured mineral resource

 

The term "measured mineral resource" refers to that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

 

 

 

mineral reserve

 

The term "mineral reserve" refers to the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. The study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that might occur when the material is mined.

 

mineral resource

 

The term "mineral resource" refers to a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.

 

 

 

opt

 

Troy ounce per short ton

 

 

 

probable mineral reserve

 

The term "probable mineral reserve" refers to the economically mineable part of an indicated, and in some circumstances a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

 

 

 

proven mineral reserve1

 

The term "proven mineral reserve" refers to the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study.

 

 

 

qualified person2

 

The term "qualified person" refers to an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development, production activities and project assessment, or any combination thereof, including experience relevant to the subject matter of the project or report and is a member in good standing of a self-regulating organization.

 

 

 

5



 

 

SEC Industry Guide 7 Definitions:


exploration stage

 

An "exploration stage" prospect is one which is not in either the development or production stage.

 

 

 

development stage

 

A "development stage" project is one which is undergoing preparation of an established commercially mineable deposit for its extraction but which is not yet in production. This stage occurs after completion of a feasibility study.

 

 

 

mineralized material

 

The term "mineralized material" refers to material that is not included in the reserve as it does not meet all of the criteria for adequate demonstration for economic or legal extraction.

 

 

 

probable reserve

 

The term "probable reserve" refers to reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

 

 

 

production stage

 

A "production stage" project is actively engaged in the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.

 

proven reserve

 

The term "proven reserve" refers to reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.

 

 

 

reserve

 

The term "reserve" refers to that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves must be supported by a feasibility study done to bankable standards that demonstrates the economic extraction. ("Bankable standards" implies that the confidence attached to the costs and achievements developed in the study is sufficient for the project to be eligible for external debt financing.) A reserve includes adjustments to the in-situ tonnes and grade to include diluting materials and allowances for losses that might occur when the material is mined.

  

1 For Industry Guide 7 purposes this study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

 

2 Industry Guide 7 does not require designation of a qualified person.

 

 

 

6



 

Additional definitions for terms used in this Annual Report filed on Form 10-K:

argillite

Low grade metamorphic clay rich sedimentary rock (shale, mudstone, siltstone).


block model

The representation of geologic units using three-dimensional blocks of predetermined sizes.

 

breccia

A rock in which angular fragments are surrounded by a mass of fine-grained minerals.


CIM

Canadian Institute of Mining and Metallurgy.


CSAMT

Controlled source audio magneto telluric survey method.


cut off or cut-off grade

When determining economically viable mineral reserves, the lowest grade of mineralized material that qualifies as ore, i.e. that can be mined at a profit.


diamond or core drill

A type of rotary drill in which the cutting is done by abrasion rather than by percussion. The drill cuts a core of rock which is recovered in long cylindrical sections.


diatreme

Brecciated rock formed by volcanic or hydrothermal eruptive activity, generally in a pipe or funnel like orientation.


EM

An instrument that measures the change in electro-magnetic conductivity of different geological units below the surface of the earth.


fault

A rock fracture along which there has been displacement.


feasibility study

Group of reports that determine the economic viability of a given mineral occurrence.


formation

A distinct layer of sedimentary or volcanic rock of similar composition.


g/t or gpt

Grams per metric tonne.


geophysicist

One who studies the earth; in particular the physics of the solid earth, the atmosphere and the earth's magnetosphere.




7





geotechnical work

Tasks that provide representative data of the geological rock quality in a known volume.


grade

Quantity of metal per unit weight of host rock.


gravity

A methodology using instrumentation allowing the accurate measuring of the difference between densities of various geological units in situ.


host rock

The rock containing a mineral or an ore body.


mapping or geologic mapping

The recording of geologic information such as the distribution and nature of rock units and the occurrence of structural features, mineral deposits, and fossil localities.


mineral

A naturally formed chemical element or compound having a definite chemical composition and, usually, a characteristic crystal form.


mineralization

A natural occurrence in rocks or soil of one or more metal yielding minerals.


mining

The process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product. Exploration continues during the mining process and, in many cases, mineral reserves are expanded during the life of the mine operations as the exploration potential of the deposit is realized.


National Instrument 43-101

NI 43-101 - Canadian standards of disclosure for mineral projects.


NSR

A net smelter returns royalty, which is customarily calculated by subtracting from gross revenues a deduction for calculated mill recoveries, transport costs of any concentrates to a smelter, treatment and refining charges, and other deductions at the smelter and multiplying that result by the prescribed rate.


open pit

Surface mining in which the ore is extracted from a pit or quarry, the geometry of the pit may vary with the characteristics of the ore body.


ore

Mineral bearing rock that can be mined and treated profitably under current or immediately foreseeable economic conditions.


ore body

A mostly solid and fairly continuous mass of mineralization estimated to be economically mineable.


outcrop

That part of a geologic formation or structure that appears at the surface of the earth.


preliminary feasibility study

and pre-feasibility study

As defined in NI 43-101, each mean a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established and an effective method of mineral processing has been determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, economic, social, and environmental factors and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of a mineral resource may be classified as a mineral reserve.


porphyry

An igneous rock characterized by visible crystals in a fine-grained matrix.



8






quartz

A mineral composed of silicon dioxide, SiO2 (silica).


reclamation

The process by which lands disturbed as a result of mining activity are modified to support beneficial land use. Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings storage facilities, leach pads and other mine features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.


reverse circulation drilling (RC)

A rotary percussion drill in which the drilling mud and cuttings return to the surface through the interior of the drill pipe.


SEC Industry Guide 7

U.S. reporting guidelines that applies to registrants engaged or to be engaged in significant mining operations.


sedimentary rock

Rock formed at the earth's surface from solid particles, whether mineral or organic, which have been moved from their position of origin and re-deposited, or chemically precipitated.


strike

The direction, or bearing from true north, of a vein or rock formation measured on a horizontal surface.


strip

To remove overburden in order to expose ore.


vein

A thin, sheet like crosscutting body of hydrothermal mineralization, principally quartz.



9





PART I

As used in this Annual Report on Form 10-K ("Annual Report"), references to "Midway," the "Company," "we," "our," or "us" mean Midway Gold Corp., its predecessors and consolidated subsidiaries, or any one or more of them, as the context requires.

ITEM 1.   DESCRIPTION OF BUSINESS

General development of Midway Gold Corp.

Midway Gold Corp. was incorporated under the Company Act (British Columbia) on May 14, 1996, under the name Neary Resources Corporation. On October 8, 1999, Midway changed its name to Red Emerald Resource Corp. On July 10, 2002, it changed its name to Midway Gold Corp. Midway became a reporting issuer in the Province of British Columbia upon the issuance of a receipt for a prospectus on May 16, 1997. The common shares were listed on the Vancouver Stock Exchange (a predecessor of the TSX Venture Exchange) on May 29, 1997. On July 1, 2001, Midway became a reporting issuer in the Province of Alberta pursuant to Alberta BOR#51-501.  Midway's shares are currently listed on the NYSE Amex and Tier 1 of the TSX.V under the symbol "MDW."


We are an exploration stage company engaged in the acquisition, exploration, and, if warranted, development of gold and silver mineral properties in North America. Our mineral properties are located in Nevada and Washington. The Midway, Spring Valley, Pan, Gold Rock and Golden Eagle gold properties are exploratory stage projects and have identified gold mineralization and the Burnt Canyon and Thunder Mountain projects are earlier stage gold and silver exploration projects. We are working towards transitioning ourselves from an exploration stage company to a gold production company with plans to advance the Pan gold property located in White Pine County, Nevada through to production by as early as 2013, dependent upon the anticipated production of a final feasibility study on the Pan gold property later this year.


The corporate organization chart for Midway as of the date of this Annual Report is as follows:

 


Our registered office in Canada is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, British Columbia, Canada V6C 2X8. Our principal executive and head office in the United States is located at 8310 South Valley Highway, Suite 280, Englewood, Colorado 80112, U.S.A. We maintain a website at www.midwaygold.com. Information contained on our website is not part of this Annual Report.

Financial Information about Segments

Segmented information is contained in note 16 of the "Notes to the Consolidated Financial Statements" contained in the section titled "Item 7. Financial Statements and Supplementary Data" below of this Annual Report and is incorporated herein by reference.



10





Narrative Description of Business

We are focused on exploring and, if warranted, developing quality precious metal resources in stable mining areas. Our principal properties are the Spring Valley, Midway, Pan and Gold Rock gold and silver mineral properties located in Nevada and the Golden Eagle gold mineral property located in Washington. Midway holds certain other, non-material mineral exploration properties located in Nevada.


Cautionary Note to U.S. Investors - In this Annual Report, we use the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", which are geological and mining terms as defined in accordance with NI 43-101 under the guidelines adopted by CIM, as CIM Standards in Mineral Resources and Reserve Definition and Guidelines adopted by the CIM. US investors in particular are advised to read carefully the definitions of these terms as well as the "Cautionary Note to U.S. Investors Regarding Resource and Reserve Estimates" above.

Spring Valley Property, Pershing County, Nevada

The Spring Valley project is located 20 miles northeast of Lovelock, Nevada. Spring Valley is a diatreme/porphyry hosted gold system covered by gravel. Gold has been intercepted over an area 5,200 feet long by 3,500 feet wide that extended to a depth of 1,400 feet, suggesting the presence of a large mineral system. The Spring Valley project is under an exploration and option to joint venture agreement with Barrick Gold Exploration Inc. ("Barrick").  Barrick is funding 100% of the costs to earn an interest in this project. Barrick has informed us that it intends to conduct and fund the 2011 required program of US$7,000,000 to maintain its option agreement.


On March 2, 2009, we announced an updated inferred mineral resource estimate as at December 31, 2008 of 87,750,000 tons at a grade of 0.021 ounces per ton ("opt") containing 1,835,000 ounces of gold using a cut off grade of 0.006 opt gold using a $715 Lerchs-Grossman shell.  For further information on this project, please see the report entitled "Spring Valley Project, Nevada, NI 43-101 Technical Report" dated effective March 25, 2009, which is available under the Company's profile at www.sedar.com.


Cautionary Note to U.S. Investors:  Please read carefully the section titled "Cautionary Note to U.S. Investors Regarding Resource and Reserve Estimates" above.

See the section titled "Item 2.  Description of Properties" below for additional information.

Midway Property, Nye County, Nevada


The Midway property is located in Nye County, Nevada, approximately 15 miles northeast of the town of Tonopah and 210 miles northwest of Las Vegas. It is a high-grade epithermal quartz-gold vein system, on the Round Mountain - Goldfield gold trend.  We plan a diamond drill program in 2011 to define continuity, grade and true width of the veins and to complete a preliminary economic assessment by the end of 2011.


See the section titled "Item 2.  Description of Properties" below for additional information.


Pan Gold Property, White Pine County, Nevada

The Pan gold property is located at the northern end of the Pancake mountain range in western White Pine County, Nevada, approximately 22 miles southeast of Eureka, Nevada, and 50 miles west of Ely, Nevada. The Pan gold project is a sediment-hosted gold deposit located along the prolific Battle Mountain/Eureka gold trend. Gold mineralization occurs in shallow oxide deposits, along a two-mile strike length of a faulted anticline. We have targeted this project for an open pit, heap leach operation that could be in production by 2013, dependent upon the anticipated completion of a final feasibility study on the Pan gold property later this year.


On July 20, 2010, we announced the results of a preliminary economic assessment ("PEA") for the Pan gold project.  The PEA included an independent audit of an updated mineral resource estimate prepared by us.  The measured plus indicated mineral resource, which was announced by us on July 20, 2010, in metric units of measure and is reported in the PEA in imperial units of measure (which is the standard unit of measure in the United States), stands at 42,750,352 short tons containing 682,248 ounces of gold at a grade of 0.016 opt, using a 0.004 opt cut-off grade.  The PEA assumes the Pan gold deposit will be developed as an open pit mine and heap leach operation.  The forecast mine life was 9 years with a total of 327,000 ounces of gold recovered and produced for sale.  Initial project capital costs, as evaluated in the PEA, are estimated at US$45,000,000 plus working capital of US$5,000,000 and a 20% contingency totaling US$9,000,000.  The PEA was prepared under the supervision of William J. Crowl, Donald Hulse, and Terre Lane of Gustavson Associates, LLC, each of whom is independent of the Company and is a "qualified person" under NI 43-101. For further information on this project, please see the PEA entitled "NI 43-101 Preliminary Economic Assessment of the Pan Gold Project, White Pine County, Nevada", dated July 20, 2010, which is available under the Company's profile at www.sedar.com.



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Cautionary Note to U.S. Investors:  Please read carefully the section titled "Cautionary Note to U.S. Investors Regarding Mineral Reserve and Resource Estimates" above.

See the section titled "Item 2.  Description of Properties" below for additional information.

Gold Rock Property, White Pine County, Nevada


Gold Rock is a sediment-hosted gold deposit located along the prolific Battle Mountain/Eureka gold trend 8 miles from the Pan project. The property includes the Easy Junior Mine, which reportedly produced approximately 2.9 million tons at a grade of 0.026 opt for 74,945 ounces of gold. We have commissioned an independent NI 43-101 compliant mineral resource estimate in early 2011.  We plan on conducting a reverse circulation and core drill program in 2011 to further explore this property.  

See the section titled "Item 2.  Description of Properties" below for additional information.


Golden Eagle Property, Ferry County, Washington

Golden Eagle is located on private ground 3 miles from Republic, Washington. Golden Eagle is a volcanic hosted, epithermal gold system with disseminated gold in quartz veins and extensive breccia bodies. Previous operators defined a large area of gold mineralization on the property. We have commissioned a preliminary economic assessment study to evaluate mining options and will be assessing processing and permitting options in 2011.


On June 25, 2009, we announced an indicated resource estimate as at May 1, 2009, of 31,400,000 tons at a grade of 0.055 opt containing 1,744,000 ounces of gold.  There is an additional inferred resource estimate of 5,100,000 tons at a grade of 0.038 opt containing 192,000 ounces of gold. Both resource estimates made at May 1, 2009, used a cut off grade of 0.02 opt gold and a $750 Lerchs-Grossman shell.  For further information on this project, please see the report entitled "Golden Eagle Project, Washington State, USA, Technical Report" dated effective July, 2009, which is available under the Company's profile at www.sedar.com.


Cautionary Note to U.S. Investors:  Please read carefully the section titled "Cautionary Note to U.S. Investors Regarding Mineral Reserve and Resource Estimates" above.  

See the section titled "Item 2.  Description of Properties" below for additional information.


Thunder Mountain, Burnt Canyon and Roberts Gold Properties

Thunder Mountain is a gold and silver rich epithermal vein and disseminated gold system hosted in rhyolite tuffs and flow dome complexes located six miles southeast of the Midway project.  From August 2008 until it was terminated in May, 2009, the project was funded by an exploration and option to joint venture agreement with Kinross Gold USA. Kinross conducted a first pass drill program but did not encounter any significant results.  

Burnt Canyon is a volcanic hosted epithermal system with gold identified in numerous rock and soil samples.  The project lies between high grade veins in the Seven Troughs district and the Wildcat disseminated gold deposit to the north.  The Company plans a first pass drill program in 2011 on this project.


Roberts Gold, located on the Battle Mountain/Eureka gold trend in Nevada, was abandoned and we wrote off $119,980 of deferred acquisition costs in the year ended December 31, 2010.



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See the section titled "Item 2.  Description of Properties" below for additional information.

Employees

In 2010, we located our principal executive office in Denver, Colorado and established a regional office in Ely, Nevada.  As of December 31, 2010, we had 12 employees, including 8 full-time employees at our principal executive office in Denver, Colorado and 3 full-time employees based in Ely, Nevada.

Reclamation

We generally are required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping and re-vegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts are conducted in accordance with detailed plans, which must be reviewed and approved by the appropriate regulatory agencies.

Government Regulation

Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We have obtained or have pending applications for those licenses, permits or other authorizations currently required in conducting our exploration and other programs. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in the United States. There are no current orders or directions relating to us with respect to the foregoing laws and regulations.


On lands owned by the United States, mining rights are governed by the General Mining Law of 1872 as amended ("General Mining Law"), which allows the location of mining claims on certain federal lands upon the discovery of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties and development and operation of mines is governed by both federal and state laws.  Federal laws that govern mining claim location and maintenance and mining operations on federal lands are generally administered by the Bureau of Land Management ("BLM"). Additional federal laws, governing mine safety and health, also apply. State laws also require various permits and approvals before exploration, development or production operations can begin. Among other things, a reclamation plan must typically be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. Local jurisdictions may also impose permitting requirements (such as conditional use permits or zoning approvals).  


For a more detailed discussion of potential negative effects of these laws and regulations please see the section heading "Item 1A.—Risk Factors" below.

Environmental Regulation

Our mineral projects are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. The development, operation, closure, and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to our proposed operations may be encountered. We are currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our operations are conducted in material compliance with applicable laws and regulations.


Changes to current local, state or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.



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During 2010, there were no material environmental incidents or material non-compliance with any applicable environmental regulations. We anticipate that we will not incur material capital expenditures for environmental control facilities during the current fiscal year.

Mine Safety and Health Administration Regulations

We consider health, safety and environmental stewardship to be a core value for the Company.  

Our exploration properties are subject to regulation by the Federal Mine Safety and Health Administration ("MSHA") under the Federal Mine Safety and Health Act of 1977 (the "Mine Act").  Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (The "Dodd-Frank Act"), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the fiscal year ended December 31, 2010, we had no such specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events in relation to our United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act

Gold Price History

The price of gold is volatile and is affected by numerous factors all of which are beyond our control such as the sale or purchase of gold by various central banks and financial institutions, inflation, recession, fluctuation in the relative values of the US dollar and foreign currencies, changes in global and regional gold demand, and the political and economic conditions of major gold-producing countries throughout the world.

The following table presents the high, low and average afternoon fixed prices in U.S. dollars for gold per ounce on the London Bullion Market over the past five years:

Year

 

High

 

Low

 

Average

2006

 

725

 

525

 

603

2007

 

841

 

608

 

695

2008

 

1,011

 

713

 

872

2009

 

1,212

 

810

 

972

2010

 

1,421

 

1,058

 

1,225

2011 (to March 15, 2011)

 

1,437

 

1,319

 

1,377



Data      Source: www.kitco.com

 

 

Seasonality

Seasonality in the states of Nevada and Washington is not a material factor to the Company's operations for its projects.  Certain surface exploration work may need to be conducted when there is no snow on the ground but it is not a material issue for the Company.

Competition

We compete with major mining companies and other natural mineral resource companies in the acquisition, exploration, financing and development of new prospects.  Many of these companies are larger and better capitalized than we are. There is significant competition for the limited number of gold acquisition and exploration opportunities. Our competitive position depends upon our ability to successfully and economically explore, acquire and develop new and existing mineral prospects. Factors that allow producers to remain competitive in the market over the long term include the quality and size of their ore bodies, costs of operation, and the acquisition and retention of qualified employees. We also compete with other mining companies for skilled mining engineers, mine and processing plant operators and mechanics, geologists, geophysicists and other technical personnel. This could result in higher turnover and greater labor costs.



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Available information


We make available, free of charge, on or through our Internet website, at www.midwaygold.com, links to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our internet address is www.midwaygold.com.  Our internet website and the information contained therein or connected thereto are not incorporated into this Annual Report.

ITEM 1A.   RISK FACTORS AND UNCERTAINTIES

Risks related to Midway's business

Readers should carefully consider the risks and uncertainties described below before deciding whether to invest in our common shares.


Our failure to successfully address the risks and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations, and the trading price of our common shares may decline and investors may lose all or part of their investment.  We cannot assure you that we will successfully address these risks or other unknown risks that may affect our business.


Estimates of mineralized material are forward-looking statements inherently subject to error.  Unforeseen events and uncontrollable factors can have a significant impact on mineralized material estimates and actual results may differ from estimates.


We have a history of losses and will require additional financing to fund exploration and, if warranted, development.


In the fiscal year ended December 31, 2010, we had a loss of $5,826,972 and we have had accumulated losses of $62,094,575 since inception.


We have not commenced commercial production on any of our mineral properties. We have no revenues from operations and anticipate we will have no operating revenues until we place one or more of our properties into production. All of our properties are in the exploration stage, and we have no known mineral reserves on our properties. We currently do not have sufficient funds to fully complete exploration and development work on any of our properties, which means that we will be required to raise additional capital, enter into joint venture relationships or find alternative means to finance placing one or more of our properties into commercial production, if warranted. If the Company fails to raise additional funds it will curtail its activities and may risk being unable to maintain its interests in its mineral properties.


Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration and development or production on one or more of our properties and any properties we may acquire in the future or even a loss of property interests. This includes our leases over claims covering the principal deposits on our properties, which may expire unless we expend minimum levels of expenditures over the terms of such leases. We cannot be certain that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable or acceptable to us. Future financings may cause dilution to our shareholders.




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We have no history of producing metals from our mineral properties.


We have no history of producing metals from any of our properties. Our properties are all exploration stage properties in various stages of exploration. Our Midway, Spring Valley, Pan and Golden Eagle properties are exploratory stage exploration projects with identified gold mineralization, and our Burnt Canyon and Gold Rock projects are each early stage exploration projects. Advancing properties from exploration into the development stage requires significant capital and time, and successful commercial production from a property, if any, will be subject to completing feasibility studies, permitting and construction of the mine, processing plants, roads, and other related works and infrastructure. As a result, we are subject to all of the risks associated with developing and establishing new mining operations and business enterprises including:


§

completion of feasibility studies to verify reserves and commercial viability, including the ability to find sufficient gold reserves to support a commercial mining operation;

§

the timing and cost, which can be considerable, of further exploration, preparing feasibility studies, permitting and construction of infrastructure, mining and processing facilities;

§

the availability and costs of drill equipment, exploration personnel, skilled labor and mining and processing equipment, if required;

§

the availability and cost of appropriate smelting and/or refining arrangements, if required;

§

compliance with environmental and other governmental approval and permit requirements;

§

the availability of funds to finance exploration, development and construction activities, as warranted;

§

potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants which may delay or prevent development activities;

§

potential increases in exploration, construction and operating costs due to changes in the cost of fuel, power, materials and supplies; and

§

potential shortages of mineral processing, construction and other facilities related supplies.


The costs, timing and complexities of exploration, development and construction activities may be increased by the location of our properties and demand by other mineral exploration and mining companies. It is common in exploration programs to experience unexpected problems and delays during drill programs and, if warranted, development, construction and mine start-up. Accordingly, our activities may not result in profitable mining operations and we may not succeed in establishing mining operations or profitably producing metals at any of our properties.


Increased costs could affect our financial condition.


We anticipate that costs at our projects that we may explore or develop, will frequently be subject to variation from one year to the next due to a number of factors, such as changing ore grade, metallurgy and revisions to mine plans, if any, in response to the physical shape and location of the ore body. In addition, costs are affected by the price of commodities such as fuel, rubber, and electricity. Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in costs at any significant location could have a significant effect on our profitability.


A shortage of equipment and supplies could adversely affect our ability to operate our business.


We are dependent on various supplies and equipment to carry out our mining exploration and, if warranted, development operations. The shortage of such supplies, equipment and parts could have a material adverse effect on our ability to carry out our operations and therefore limit or increase the cost of production.


Mining and resource exploration is inherently dangerous and subject to conditions or events beyond our control, which could have a material adverse effect on our business and plans.


Mining and mineral exploration involves various types of risks and hazards, including:


§

environmental hazards;

§

power outages;

§

metallurgical and other processing problems;

§

unusual or unexpected geological formations;

§

personal injury, flooding, fire, explosions, cave-ins, landslides and rock-bursts;

§

inability to obtain suitable or adequate machinery, equipment, or labor;

§

metals losses;

§

fluctuations in exploration, development and production costs;

§

labor disputes;

§

unanticipated variations in grade;

§

mechanical equipment failure; and

§

periodic interruptions due to inclement or hazardous weather conditions.

 

 

 

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These risks could result in damage to, or destruction of, mineral properties, production facilities or other properties, personal injury, environmental damage, delays in mining, increased production costs, monetary losses and possible legal liability. We may not be able to obtain insurance to cover these risks at economically feasible premiums. Insurance against certain environmental risks, including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from production, may be prohibitively expensive. We may suffer a material adverse effect on our business if we incur losses related to any significant events that are not covered by our insurance policies.


The figures for our resources are estimates based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.


Unless otherwise indicated, mineralization figures presented in this Annual Report and in our filings with securities regulatory authorities, press releases and other public statements that may be made from time to time are based upon estimates made by independent geologists and our internal geologists.  When making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations as to the mineral reserves and grades of mineralization on our properties.  Until ore is actually mined and processed, mineral reserves and grades of mineralization must be considered as estimates only.


Estimates can be imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. We cannot assure you that:


§

these estimates will be accurate;

§

resource or other mineralization estimates will be accurate; or

§

this mineralization can be mined or processed profitably.


Any material changes in mineral resource estimates and grades of mineralization will affect the economic viability of placing a property into production and a property's return on capital.


Because we have not completed feasibility studies on any of our properties and have not commenced actual production, mineralization estimates, including resource estimates, for our properties may require adjustments or downward revisions. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by our feasibility studies and drill results. Minerals recovered in small scale tests may not be duplicated in large scale tests under on-site conditions or in production scale.


The resource estimates contained in this Annual Report have been determined and valued based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in market prices for gold, silver or other commodities may render portions of our mineralization and resource estimates uneconomic and result in reduced reported mineralization or adversely affect the commercial viability determinations we reach. Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material adverse effect on our share price and the value of our properties.


There are differences in U.S. and Canadian practices for reporting reserves and resources.


Our reserve and resource estimates are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally report reserves and resources in accordance with Canadian practices. These practices are different from the practices used to report reserve and resource estimates in reports and other materials 

filed with the SEC. It is Canadian practice to report measured, indicated and inferred resources, which are generally not permitted in disclosure filed with the SEC by United States issuers. In the United States, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves.



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Further, "inferred resources" have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Disclosure of "contained ounces" is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report "resources" as in place tonnage and grade without reference to unit measures.


Accordingly, information concerning descriptions of mineralization, reserves and resources contained in this report, or in the documents incorporated herein by reference, may not be comparable to information made public by other United States companies subject to the reporting and disclosure requirements of the SEC.


Our exploration activities on our properties may not be commercially successful, which could lead us to abandon our plans to develop the property and our investments in exploration.


Our long-term success depends on our ability to identify mineral deposits on our existing properties and other properties we may acquire, if any, that we can then develop into commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate machinery, equipment or labor. The success of gold, silver and other commodity exploration is determined in part by the following factors:


§

the identification of potential mineralization based on surficial analysis;

§

availability of government-granted exploration permits;

§

the quality of our management and our geological and technical expertise; and

§

the capital available for exploration and development work.


Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes to extract metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. We may invest significant capital and resources in exploration activities and abandon such investments if we are unable to identify commercially exploitable mineral reserves. The decision to abandon a project may have an adverse effect on the market value of our securities and the ability to raise future financing.


We may encounter archaeological issues and claims relating to our Midway and Pan properties, which may delay our ability to conduct further exploration or developmental activities or could affect our ability to place the property into commercial production, if warranted.


Our exploration and development activities may be delayed due to the designation of a portion of the Midway and Pan properties as a site of archaeological significance.


A cultural inventory of the Midway project has identified a prehistoric site associated with a dune field in the Ralston Valley, adjacent to the Midway property.  An intensive cultural and geomorphologic inspection was conducted of the project area to determine archaeologically significant areas.  Techniques and methods used during the inventory were sufficient to identify most cultural resources and features in the area.  Should significant surface disturbance be planned at the Midway project, a complete archaeological inventory and evaluation would be required, including the possibility of documenting and curating the site.


Through the area of the Pan project, U.S. Highway 50 was developed over a route known as the Lincoln Highway. A portion of dirt road currently used to access the Pan project site and traversing the south end of the proposed North Pit may have been an alternative route for the Lincoln Highway from 1913-1916 prior to the development of U.S. Highway 50. This has not been confirmed, but will be investigated when archaeological surveys are conducted. The highway as a whole is not eligible for listing on the National Registers of historic places or landmarks, but impacts to it may need to be mitigated.  Carbonari sites, which are burn piles and habitations from Swedish/Italian charcoal producers, have been identified within or near the Pan project area. A survey would need to be conducted to identify, locate and record the findings of Carbonari sites.



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Our Midway property is in close proximity to a municipal water supply, which may delay our ability to conduct further exploration or developmental activities or could affect our ability to place the property into commercial production, if warranted.


The Midway property lies within a basin from which the town of Tonopah obtains its municipal water supply. To date, Midway's exploration activities have not been restricted due to the proximity of the activities to this basin. As Midway's exploration and development activities expand, there is an increased risk that the activities may interfere with the water supply. As part of the mining development work on the Midway property, Midway completed a hydrologic review of the basin and will establish a strategy for preventing exploration and development activities from interfering with the water supply. Any damage to, or contamination of, the water supply caused by Midway's activities could result in Midway incurring significant liability. We cannot predict the magnitude of such liability or the impact of such liability on our business, prospects or financial condition. Midway has applied for water right permits in the Ralston Basin, which is currently under protest by the town of Tonopah. Midway is currently negotiating with the town about any future pumping of water in the basin. Midway is currently reviewing and negotiating dewatering options with the town of Tonopah that would be agreeable and beneficial for both parties. If Midway were not able to secure dewatering rights for the Midway project, the project may be restricted and could affect our ability to place the property into commercial production, if warranted.


Changes in the market price of gold, silver and other metals, which in the past has fluctuated widely, will affect the profitability of our operations and financial condition.


Our long-term viability and future profitability depend, in large part, upon the market price of gold and other metals and minerals produced from our mineral properties. The market price of gold and other metals is volatile and is impacted by numerous factors beyond our control, including:


§

expectations with respect to the rate of inflation;

§

the relative strength of the U.S. dollar and certain other currencies;

§

interest rates;

§

global or regional political or economic conditions;

§

supply and demand for jewelry and industrial products containing metals;

§

sales by central banks and other holders, speculators and producers of gold and other metals in response to any of the above factors; and

§

any executive order curtailing the production or sale of gold.


We cannot predict the effect of these factors on metal prices. Gold prices quoted in US dollars have fluctuated during the last several years. The price of gold (London Fix) has ranged from $1,058 to $1,421 per ounce during calendar 2010, closing at $1,405.50 on December 30, 2010; $810 to $1,212 per ounce during calendar 2009, closing at $1,087 on December 30, 2009; from $712 to $1,011 per ounce during calendar 2008 to close on December 31, 2008.


A decrease in the market price of gold and other metals could affect the commercial viability of our properties and our anticipated development of such properties in the future.  Lower gold prices could also adversely affect our ability to finance exploration and development of our properties.


We do not maintain insurance with respect to certain high-risk activities, which exposes us to significant risk of loss.


Mining operations generally involve a high degree of risk. Hazards such as unusual or unexpected formations or other conditions are often encountered. Midway may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it cannot maintain insurance at commercially reasonable premiums.



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Any significant claim would have a material adverse effect on Midway's financial position and prospects. Midway is not currently covered by any form of environmental liability insurance, or political risk insurance, since insurance against such risks (including liability for pollution) may be prohibitively expensive. Midway may have to suspend operations or take cost interim compliance measures if Midway is unable to fully fund the cost of remedying an environmental problem, if it occurs.


We may not be able to obtain all required permits and licenses to place any of our properties into production.


Our current and future operations, including development activities and commencement of production, if warranted, require permits from governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in property exploration and the development or operation of mines and related facilities generally experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. We cannot predict if all permits which we may require for continued exploration, development or construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms. Costs related to applying for and obtaining permits and licenses may be prohibitive and could delay our planned exploration and development activities. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.


Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on our operations and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.


We are subject to significant governmental regulations, which affect our operations and costs of conducting our business.


Our current and future operations are and will be governed by laws and regulations, including:


§

laws and regulations governing mineral concession acquisition, prospecting, development, mining and production;

§

laws and regulations related to exports, taxes and fees;

§

labor standards and regulations related to occupational health and mine safety;

§

environmental standards and regulations related to waste disposal, toxic substances, land use and environmental protection; and

§

other matters.


Companies engaged in exploration activities often experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. Failure to comply with applicable laws, regulations and permits may result in enforcement actions, including the forfeiture of claims, orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or costly remedial actions. We may be required to compensate those suffering loss or damage by reason of our mineral exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits.


Existing and possible future laws, regulations and permits governing operations and activities of exploration companies, or more stringent implementation, could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in exploration.




20





Our activities are subject to environmental laws and regulations that may increase our costs of doing business and restrict our operations.


All phases of our operations are subject to environmental regulation in the jurisdictions in which we operate. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Compliance with environmental laws and regulations and future changes in these laws and regulations may require significant capital outlays and may cause material changes or delays in our operations and future activities. It is possible that future changes in these laws or regulations could have a significant adverse impact on our properties or some portion of our business, causing us to re-evaluate those activities at that time.


U.S. Federal Laws

The Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA), and comparable state statutes, impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (RCRA), and comparable state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such sites have been completed.

The Clean Air Act, as amended, restricts the emission of air pollutants from many sources, including mining and processing activities. Our mining operations may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring and/or control requirements under the Clean Air Act and state air quality laws. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on our production levels or result in additional capital expenditures in order to comply with the rules.

The National Environmental Policy Act (NEPA) requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions. If a proposed action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental Impact Statement (EIS). The U.S. Environmental Protection Agency, other federal agencies, and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS. This process can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.

The Clean Water Act (CWA), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the Environmental Protection Agency (EPA) or an analogous state agency. The CWA regulates storm water mining facilities and requires a storm water discharge permit for certain activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.



21





The Safe Drinking Water Act (SDWA) and the Underground Injection Control (UIC) program promulgated thereunder, regulate the drilling and operation of subsurface injection wells. EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The program requires that a permit be obtained before drilling a disposal or injection well. Violation of these regulations and/or contamination of groundwater by mining related activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SWDA and state laws. In addition, third party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.

Nevada Laws

At the state level, mining operations in Nevada are also regulated by the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection. Nevada state law requires mine operators to hold Nevada Water Pollution Control Permits, which dictate operating controls and closure and post-closure requirements directed at protecting surface and ground water. In addition, operators required to hold Nevada Reclamation Permits. These permits mandate concurrent and post-mining reclamation of mines and require the posting of reclamation bonds sufficient to guarantee the cost of mine reclamation. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.

 

Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes to these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating constraints, technical criteria, fees or surety requirements.

Legislation has been proposed that would significantly affect the mining industry.

Members of the U.S. Congress have repeatedly introduced bills which would supplant or alter the provisions of the Mining Law of 1872. If enacted, such legislation could change the cost of holding unpatented mining claims and could significantly impact our ability to develop mineralized material on unpatented mining claims. Such bills have proposed, among other things, to either eliminate or greatly limit the right to a mineral patent and to impose a federal royalty on production from unpatented mining claims. Although we cannot predict what legislated royalties might be, the enactment of these proposed bills could adversely affect the potential for development of unpatented mining claims and the economics of existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our financial performance

Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on our business.

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us, our venture partners and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of our operations.



22





Our business is subject to evolving corporate governance and public disclosure regulations that have increased both our compliance costs and the risk of noncompliance, which could have an adverse effect on our stock price.

We are subject to changing rules and regulations promulgated by a number of governmental and self-regulated organizations, including the Securities and Exchange Commission, the NYSE Amex, and the Financial Accounting Standards Board. These rules and regulations continue to evolve in scope and complexity and many new requirements have been created in response to laws enacted by Congress, making compliance more difficult and uncertain. For example, on July 21, 2010, Congress passed the Dodd-Frank Wall Street Reform and Protection Act. Our efforts to comply with the Dodd-Frank Act and other new regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.


Land reclamation requirements for our properties may be burdensome and expensive.


Although variable depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies (as well as companies with mining operations) in order to minimize long term effects of land disturbance.


Reclamation may include requirements to:


§

control dispersion of potentially deleterious effluents;

§

treat ground and surface water to drinking water standards; and

§

reasonably re-establish pre-disturbance land forms and vegetation.


In order to carry out reclamation obligations imposed on us in connection with our potential development activities, we must allocate financial resources that might otherwise be spent on further exploration and development programs. We plan to set up a provision for our reclamation obligations on our properties, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.


Increased competition could adversely affect our ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.


The mining industry is intensely competitive. Significant competition exists for the acquisition of properties producing or capable of producing, gold or other metals. We may be at a competitive disadvantage in acquiring additional mining properties because we must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than us. We may also encounter increasing competition from other mining companies in our efforts to hire experienced mining professionals. Competition for exploration resources at all levels is currently very intense, particularly affecting the availability of manpower, drill rigs, mining equipment and production equipment. Increased competition could adversely affect our ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.


We compete with larger, better capitalized competitors in the mining industry.


The mining industry is competitive in all of its phases, including financing, technical resources, personnel and property acquisition. It requires significant capital, technical resources, personnel and operational experience to effectively compete in the mining industry. Because of the high costs associated with exploration, the expertise required to analyze a project's potential and the capital required to develop a mine, larger companies with significant resources may have a competitive advantage over us. We face strong competition from other mining companies, some with greater financial resources, operational experience and technical capabilities than us. As a result of this competition, we may be unable to maintain or acquire financing, personnel, technical resources or attractive mining properties on terms we consider acceptable or at all.




23





Joint ventures and other partnerships may expose us to risks.

Our Spring Valley property is currently under an option to joint venture and, in the future, we may enter into joint ventures or other partnership arrangements with other parties in relation to the exploration, development and production of certain of the properties in which we have an interest. Joint ventures can often require unanimous approval of the parties to the joint venture or their representatives for certain fundamental decisions such as an increase or reduction of registered capital, merger, division, dissolution, amendments of constating documents, and the pledge of joint venture assets, which means that each joint venture party may have a veto right with respect to such decisions which could lead to a deadlock in the operations of the joint venture or partnership. Further, we may be unable to exert control over strategic decisions made in respect of such properties. Any failure of such other companies to meet their obligations to us or to third parties, or any disputes with respect to the parties' respective rights and obligations, could have a material adverse effect on the joint ventures or their properties and therefore could have a material adverse effect on our results of operations, financial performance, cash flows and the price of the common shares.


Our directors and officers may have conflicts of interest as a result of their relationships with other companies.


Certain of our officers and directors are also directors, officers or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploiting natural resource properties. For example, Daniel Wolfus, our Chairman, Chief Executive Officer and Director, also serves as a director for Melkior Resources Inc. and EMC Metals Corp.; Doris Meyer, our Chief Financial Officer and Corporate Secretary, also serves as Chief Financial Officer and Corporate Secretary of Crescent Resources Corp., Kalimantan Gold Corporation Limited, Miranda Gold Corp., Regency Gold Corp., Renaissance Gold Corp., Sunridge Gold Corp. and Tournigan Energy Ltd. and in addition is also a director of Kalimantan Gold Corporation Limited, Regency Gold Corp. and Sunridge Gold Corp.; and George Hawes, our Director, also serves as a director for American Vanadium Corp. (formerly Rocky Mountain Resources Corp.). Consequently, there is a possibility that our directors and/or officers may be in a position of conflict in the future.


We may experience difficulty attracting and retaining qualified management to meet the needs of our anticipated growth, and the failure to manage our growth effectively could have a material adverse effect on our business and financial condition.


We are dependent on a relatively small number of key employees, including our Chairman and Chief Executive Officer, and our President and Chief Operating Officer. The loss of either officer could have an adverse effect on Midway. Midway does not have any key person insurance with respect to any of its key employees.


Our results of operations could be affected by currency fluctuations


We arrange our equity funding and pay most of our administrative costs in Canadian dollars. However our properties are all located in the United States and most costs associated with these properties are paid in U.S. dollars.  There can be significant swings in the exchange rate between the U.S. and Canadian dollar. There are no plans at this time to hedge against any exchange fluctuations in currencies.


Title to our properties may be subject to other claims, which could affect our property rights and claims.


There are risks that title to our properties may be challenged or impugned. Most of our properties are located in Nevada and may be subject to prior unrecorded agreements or transfers or native land claims and title may be affected by undetected defects. There may be valid challenges to the title of our properties which, if successful, could impair development and/or operations. This is particularly the case in respect of those portions of the our properties in which we hold our interest solely through a lease with the claim holders, as such interest is substantially based on contract and has been subject to a number of assignments (as opposed to a direct interest in the property).


Several of the mineral rights to our properties consist of "unpatented" mining claims created and maintained in accordance with the U.S. General Mining Law. Unpatented mining claims are unique property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations under the U.S. General Mining Law. Also, unpatented mining claims are always subject to possible challenges by third parties or validity contests by the federal government. The validity of an unpatented mining or mill site claim, in terms of both its location and its maintenance, is dependent on strict compliance with a complex body of U.S. federal and state statutory and decisional law. In addition, there are few public records that definitively determine the issues of validity and ownership of unpatented mining claims. Should the federal government impose a royalty or additional tax burdens on the properties that lie within public lands, the resulting mining operations could be seriously impacted, depending upon the type and amount of the burden.



24





 


Risks Related to Midway's Securities


We believe that we may be a "passive foreign investment company" for the current taxable year which would likely result in materially adverse United States federal income tax consequences for United States investors.

 

We generally will be designated as a "passive foreign investment company" under the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended (a "PFIC") if, for a tax year, (a) 75% or more of our gross income for such year is "passive income" (generally, dividends, interest, rents, royalties, and gains from the disposition of assets producing passive income) or (b) if at least 50% or more of the value of our assets produce, or are held for the production of, passive income, based on the quarterly average of the far market value of such assets.  United States shareholders should be aware that we believes we were classified as a PFIC during its tax year ended December 31, 2009, and based on current business plans and financial expectations, believe that we may be a PFIC for the current and future taxable years.  If we are a PFIC for any taxable year during which a United States person holds our securities, it would likely result in materially adverse United States federal income tax consequences for such United States person. The potential consequences include, but are not limited to, re-characterization of gain from the sale of our securities as ordinary income and the imposition of an interest charge on such gain and on certain distributions received on our common shares.  Certain elections may be available under U.S. tax rules to mitigate some of the adverse consequences of holding shares in a PFIC.  


We do not currently intend to pay cash dividends.


We have never declared or paid cash dividends on Midway's common shares. We currently intend to retain future earnings to finance the operation, development and expansion of our business. We do not anticipate paying cash dividends on Midway's common shares in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of Midway's board of directors and will depend on Midway's financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that our board of directors considers relevant. Accordingly, investors will only see a return on their investment if the value of Midway's securities appreciates.


The market for our common shares has been volatile in the past, and may be subject to fluctuations in the future.


The market price of Midway's common shares has ranged from a high of $0.95 and a low of $0.38 during the twelve month period ended December 31, 2010, as quoted on the NYSE Amex.  We cannot assure you that the market price of our common shares will not significantly fluctuate from its current level. The market price of our common shares may be subject to wide fluctuations in response to quarterly variations in operating results, changes in financial estimates by securities analysts, or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations for a number of reasons, including the failure of the operating results of certain companies to meet market expectations that have particularly affected the market prices of equity securities of many exploration companies that have often been unrelated to the operating performance of such companies. These broad market fluctuations, or any industry-specific market fluctuations, may adversely affect the market price of our common shares. In the past, following periods of volatility in the market price of a company's securities, class action securities litigation has been instituted against such a company. Such litigation, whether with or without merit, could result in substantial costs and a diversion of management's attention and resources, which would have a material adverse affect on our business, operating results and financial condition.  




25





If we raise additional funding through equity financings, then our current shareholders will suffer dilution.


We believe the only realistic source of future funds presently available to us is through the sale of equity capital. Any sale of equity capital will result in dilution to existing shareholders. The only other alternative for the financing of further exploration would be the offering by us of an interest in our properties to be earned by another party or parties carrying out further exploration thereof.


ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 2.   DESCRIPTION OF PROPERTIES

Nevada Properties

Map of properties

The map below shows the location of Midway's properties located in Nevada, USA.  These properties are described in further detail below.


MAP OF MIDWAY NEVADA PROPERTIES, 2010

Source: Midway Gold Corp., 2010



26







Spring Valley Project


Location, means of access and state of property


The Spring Valley property is located in the Spring Valley Mining District, Pershing County, Nevada, approximately 20 miles northeast of the town of Lovelock.  The property is accessed from Nevada State Highway 50, which extends eastward from US Interstate 80 and is paved to the Rochester turn-off; thereafter it is a dirt road.  Water is readily available from two water wells drilled on the property under a temporary grant of water rights. Power availability from three power lines that cross the property has not been determined.


Agreement with Barrick Gold


On March 10, 2009, Midway, through its wholly-owned subsidiary MGC Resources Inc., executed an Exploration, Development and Mine Operating Agreement, effective March 9, 2009 (the "EDM Agreement"), with Barrick Gold Exploration Inc. ("Barrick"), a wholly-owned subsidiary of Barrick Gold Corporation, regarding the exploration, development and possible joint venture of Midway's Spring Valley Project.

 

Exploration Period

 

Under the terms of the EDM Agreement, MGC granted to Barrick the exclusive right to explore and develop the Spring Valley Project. During this exploration period, Barrick has the exclusive right to earn a 60% interest in the Spring Valley Project by spending US$30,000,000 on the property over a five-year period ending December 31, 2013. During this five-year period Barrick has the sole right to determine the nature, scope, extent and method of all operations in relation to the property, without having to consult or gain the approval of the Midway. Barrick is required to provide Midway with certain information and reports and access to the Spring Valley Project to conduct inspections of operations during this period.

 

After vesting at 60%, Barrick may increase its interest by 10% (70% total) by spending an additional US$8,000,000 on or before December 31, 2014.   At Midway's election, Barrick may also earn an additional 5% (75% total) by carrying Midway to a production decision and arranging financing for Midway's share of mine construction expenses with the carrying and financing costs plus interest to be recouped by Barrick once production has been established.

 

Midway is coordinating certain geologic and administrative activities during the earn-in period for a negotiated administrative fee.

 

Joint Venture

 

Under the terms of the EDM Agreement, Midway shall have a period of 120 days from the last of the following events to occur to elect to enter into a joint venture agreement with Barrick with respect to the Spring Valley Project: (i) upon receipt of notice from Barrick that it has not elected to earn the additional 10% interest by spending an additional US$8,000,000; (ii) upon receipt of notice from Barrick that it has timely incurred the additional US$8,000,000 expenditure on the Spring Valley Project to earn the additional 10% interest; (iii) upon receipt of notice from Barrick that it has elected but failed to timely incur the additional US$8,000,000 expenditure on the Spring Valley Project. If Midway fails to notify Barrick within the 120-day period, Midway will be deemed to have elected to enter into the joint venture with Barrick.

 

If Midway elects or is deemed to have elected to enter into the joint venture agreement with Barrick, initial capital accounts will be established in accordance with Barrick's earned interest in the Spring Valley Project and Barrick will be the manager of the joint venture.

 

If Midway elects not to enter into the joint venture, then either: (i) within 365 days of Midway's notice electing not to enter into the joint venture, Barrick will exercise its option to purchase Midway's interest in the Spring Valley Project for US$40,000,000 and a 2% net smelter royalty return (NSR) on production from the Spring Valley Project; or (ii) Barrick will elect not to exercise its option to purchase Midway's interest in the Spring Valley Project and the joint venture will be formed with Midway being deemed to have elected the carry option and any operations costs incurred by Barrick in the 365-day election period will be treated as Midway's development costs.



27





 

 

The EDM Agreement also provides for the adjustment of a party's participating interest in the joint venture upon default in making agreed-upon contributions to adopted programs and budgets or upon contributing less to a program and budget than a percentage equal to the party's participating interest.

 

Further, the EDM Agreement provides that if Midway's participation interest falls below 10%, Midway shall be deemed to have withdrawn from the joint venture and all of Midway's participating interests will be assigned to Barrick, with Midway reserving a 2% NSR.

 

Under the EDM Agreement, a party's whose recalculated participating interest is reduced to 10% shall be deemed to have withdrawn from the joint venture and shall relinquish its entire participating interest. Such relinquished participating interest shall be deemed to have accrued automatically to the other party. The reduced party shall have the right to receive 10% of net proceeds, if any, to a maximum amount of 75% percent of the reduced party's equity account balance as of the effective date of the withdrawal. Upon receipt of such amount, the reduced party shall thereafter have no further right, title, or interest in the Spring Valley Project or under the EDM Agreement.

 

Barrick conducted and funded exploration in 2009 on the Spring Valley Project at the required level of US$4,000,000 and in 2010 at the required program of US$5,000,000.  Barrick has informed Midway that it intends to conduct and fund the 2011 required program of US$7,000,000 to maintain the EDM Agreement.


Title


Midway has controlled the property since 2003 through direct ownership of unpatented lode mining claims administered by the Bureau of Land Management ("BLM") and through mining leases. Unpatented mining claims are kept active through payment of a maintenance fee due to the BLM and each county the claims are located in on 31 August of each year.    Certain areas of the Spring Valley project are subject to Net Smelter Return ("NSR") royalties ranging from 1% to 7% on different claim groups within the project package. Midway's land position encompasses a gross area of approximately 11,022.5 acres containing federal lode and placer mining claims and patented fee properties.


The Company has prepared a summary table shown below that identifies the nature of our ownership or interest in the property, describes our interest in the properties, describes the type,  names, number, unique identifying numbers and the approximate size in acres of each ownership areas.


Ownership

Agreement Date

Expiry

Owner (source)

Claims

Land Type

Name/Series

Claim #

Serial Numbers

Gold Royalty

Approx. Acreage*

Optioned

10/30/2006

10/30/2016

Dale Chabino and Diana Chabino

2

Federal Lode - BLM

FREEDOM

1

NMC785920

3% NSR

41.3

Federal Placer - BLM

FREEDOM

2

NMC780754

Optioned

6/10/2007

6/10/2017

George D. Duffy

2

Federal Lode - BLM

DUFFY

1-2

NMC811224-NMC811225

-

41.3

Optioned

4/25/2006

4/25/2016

Lamonte J. Duffy

12

Federal Lode - BLM

SV

315-318

NMC925188-NMC925191

3% NSR

247.9

Federal Lode - BLM

SV

337-340

NMC925210-NMC925213

Federal Lode - BLM

DUFFY

5-8

NMC965332-NMC965335

Optioned

7/17/2006

7/17/2016

David Rowe and Randall

Stoeberl

46

Federal Lode - BLM

PS

1-22

NMC930781-NMC930802

3% NSR

950.4

Federal Lode - BLM

PS

28-32

NMC930808-NMC930812

Federal Lode - BLM

PS

34-40

NMC930814-NMC930820

Federal Lode - BLM

PS

43-48

NMC930823-NMC930828

Federal Lode - BLM

PS

58-63

NMC930838-NMC930843

Owned

9/10/2003

-

MGC Resources Inc. (Echo Bay)

28

Federal Lode - BLM

SV

51-54

NMC825454-NMC825457

2% NSR

578.5

Federal Lode - BLM

SV

60-83

NMC832254-NMC832277

Owned

11/27/2007

-

MGC Resources Inc. (TGC)

3

Federal Lode - BLM

DRY

1-3

NMC954162-NMC954164

-

62.0

Owned

1/25/2006

-

MGC Resources Inc. (Coeur)

101

Federal Lode - BLM

HMS

4-6

NMC140862-NMC140864

3% NSR

2,086.8

Federal Lode - BLM

HMS

84-87

NMC140941-NMC140944

Federal Lode - BLM

SDB

1-8

NMC349508-NMC349515

Federal Lode - BLM

IDA

12-25

NMC364282-NMC364295

Federal Lode - BLM

SHO

3-59

NMC364363-NMC364419

Federal Lode - BLM

PORCUPINE

1-11

NMC371072-NMC371082

Federal Lode - BLM

CROWN HILLS

7-10

NMC39574-NMC39595

Federal Lode - BLM

PORCUPINE

28

NMC662873

 

28



 

Ownership

Agreement Date

Expiry

Owner (source)

Claims

Land Type

Name/Series

Claim #

Serial Numbers

Gold Royalty

Approx. Acreage*

Owned

-

-

MGC Resources Inc. [SSV set]

20

Federal Lode - BLM

SSV

142-144, 370-387

NMC954582-NMC954601

-

413.2

Owned

7/3/2003, amended 8/15/2003

-

MGC Resources Inc. (Schmidt)

44

Federal Lode - BLM

SV

8-20 (even)

NMC748203-748215 (odd)

2-7% NSR; 1% NSR over-ride on claims within 1/2 mile

909.1

Federal Lode - BLM

SV

27

NMC748222

Federal Lode - BLM

SV

29-44

NMC748224-NMC748239

Federal Lode - BLM

SV

1-7, 9-21 (odd), 22-28

NMC817628-817647

Owned

-

-

MGC Resources Inc. [SV 45-78 set]

34

Federal Lode - BLM

SV

45-78

NMC860702-NMC860735

-

702.5

Owned

-

-

MGC Resources Inc. [SV 84-357 set]

249

Federal Lode - BLM

SV

84-99

NMC872357-NMC872372

-

5,144.6

Federal Lode - BLM

SV

100-125

NMC887449-NMC887474

Federal Lode - BLM

SV

126-135

NMC889143-NMC889152

Federal Placer - BLM

SV

136-139

NMC906957-NMC906960

Federal Lode - BLM

SV

146-213

NMC925039-NMC925106

Federal Lode - BLM

SV

215-261

NMC925108-NMC925154

Federal Lode - BLM

SV

277-278, 285-314

NMC925156-NMC925187

Federal Lode - BLM

SV

319-336

NMC925192-NMC925209

Federal Lode - BLM

SV

341-357

NMC925214-NMC925230

Federal Lode - BLM

SV

266-276

NMC929379-929389

Federal Lode - BLM

SV

283-284

NMC929394-NMC929395

Federal Lode - BLM

SV

262

NMC954602

Federal Lode - BLM

SV

214

NMC977866

Owned

-

-

MGC Resources Inc. [SVP set]

40

Federal Placer - BLM

SVP

1-40

NMC906917-NMC906956

-

826.4

Owned

-

-

MGC Resources Inc. [SVR set]

16

Federal Lode - BLM

SVR

1-16

NMC987526-NMC987541

-

330.6

Owned

-

-

MGC Resources Inc. [SVB set]

13

Federal Lode - BLM

SVB

13

NMC1011089

-

247.9

Federal Lode - BLM

SVB

1-12

NMC1023658-NMC1023669

-

Owned

-

-

MGC Resources Inc. [2010 set]

8

Federal Lode - BLM

SHO

60-65

NMC1034792-NMC1034797

-

185.9

SHO

4A-5A

NMC1034798-NMC1034799

-

HMS

4A

NMC1034800

-

 

 

 

29



 

 

 

Ownership

Agreement Date

Expiry

Owner (source)

Land

Land Type

Name/Lot

Location

Mineral Survey/Patent Numbers

Gold Royalty

Approx. Acreage*

Owned

5/5/2006

-

MGC Resources Inc. (Seymork)

fee

Patented - Fee

E½, N½NW¼, SE¼NW¼, E½NE¼SW¼, E½SE¼SW¼

T 29 N, R 34 E, M.D.M., Sec. 25

P 203

3% NSR

0/480/360

SE¼, SE¼SW¼

T 29 N, R 34 E, M.D.M., Sec. 27

P 203

200.0

E½NE¼

T 29 N, R 34 E, M.D.M., Sec. 27

P 203

0/80/60

W½NW¼, SE¼NW¼

T 29 N, R 34 E, M.D.M., Sec. 35

P 203

120.0

NE¼NW¼

T 29 N, R 34 E, M.D.M., Sec. 35

P 203

0/40/30

Owned

9/7/2005

-

MGC Resources Inc. (NLRC)

fee

Patented - Fee (surface)

Lots 3,4,5,6,7,8,9,10,11,12, E½ of 15, Lot 16, NE¼SE¼, E½NW¼SE¼, N½SE¼SE¼, NE¼SW¼SE¼

T 28 N, R 34 E, M.D.M., Sec. 3

P 944731, P 1010632

-

544.2/0/0

 

 

 

30



 

 


Ownership

Agreement Date

Expiry

Owner (source)

Land

Land Type

Name/Lot

Location

Mineral Survey/Patent Numbers

Gold Royalty

Approx. Acreage*

Owned

8/29/2006

-

MGC Resources Inc. (Sentman)

fee

Patented - Fee

NE¼NW¼

T 29 N, R 34 E, M.D.M., Sec. 35

P 203

-

40/40/10

Leased

12/2/2010

12/2/2016

Barrick Agreement with Third Party

Fee

Patented - Fee (mineral)

Lots 3,4,5,6,7,8,9,10,11,12, E½ of 15, Lot 16, NE¼SE¼, E½NW¼SE¼, N½SE¼SE¼, NE¼SW¼SE¼


Lot 1, N½ Lot 8, W½ Lot 7, Lot 6, N½ Lot 13

T 28 N, R 34 E, M.D.M., Sec. 3


T 28 N, R 34 E, M.D.M., Sec 1

P 944731, P 1010632


P 944731, P 1010633, P 948967, P997571

3% NSR

0/544.2


0/0/120.7

Optioned

9/15/2010

9/15/2014

Barrick Agreement with Third Party

Fee

Patented - Fee (surface)

Lots 1, 2

T 28 N, R 34 E, M.D.M., Sec. 3

P 944731

-

76.4/0/0


In 2010, Barrick, on behalf of the Company, paid the following lease payments to maintain certain mineral leases in the Spring Valley project:


·

On April 25, 2010, Barrick paid Midway's annual payment of US$36,000 to Lamonte J. Duffy to maintain its option to purchase 12 unpatented lode mining claims.  The owner retained a 3% NSR Royalty. Alternatively, Midway can purchase these claims for US$600,000 with any payments already paid credited against the total.


·

On July 1, 2010 Barrick paid Midway's US$1,000 a month option payment totaling US$12,000 to George D. Duffy to maintain its option to purchase 2 unpatented lode mining claims.  Alternatively Midway can purchase these claims for US$500,000 with any payments already paid credited against the total.


·

On July 18, 2010 Barrick paid Midway's annual payment of US$20,000 to Dave Rowe and Randall Stoeberl to maintain its option to purchase 97 unpatented mining claims.  Alternatively Midway can purchase these claims for US$600,000 with any payments already paid credited against the total. Mr. Rowe and Mr. Stoeberl retained a 3% NSR royalty from commercial production on these claims.




31





·

On October 30, 2010 Barrick paid Midway's annual payment of US$6,000 to Dale and Diana Chabino to maintain its option to purchase 2 unpatented lode mining claims. Alternatively Midway can purchase these claims for US$100,000 with any payments already paid credited against the total. Mr. Chabino and Mrs. Chabino retained a 3% NSR royalty from commercial production on these claims.  


In 2010, Barrick, on behalf of the Company, entered into two new agreements within the area of interest of the EDM Agreement:

·

On September 15, 2010 Barrick signed an option agreement with a third party for surface and mineral rights.  Option payments totalling US$150,000 are payable over five years of which Barrick paid the first and last year's lease payments totaling US$56,250.


·

On December 2, 2010 Barrick entered into a sub-lease and option agreement with a third party for mineral rights underlying the surface rights acquired by the Company in 2006.  The agreement requires Barrick to spend a cumulative amount of US$2,000,000 in work expenditures on the ground leased over a period of six years, and to make advance royalty payments in the amount of US$100,000 per year thereafter, up to a cap of US$2,500,000.  The advance royalty payments may be credited against a 3% NSR royalty payable from production on the area of ground leased.  


Over the years Midway has staked additional claims and purchased rights to additional claims outright within and adjacent to the Spring Valley property. 


Geology


The Spring Valley gold deposit is hosted in Permo-Triassic Koipato Group rocks made up of rhyolite flows, breccias, and volcaniclastic sediments. These volcanics were intruded by fine grained feldspar porphyry. Hydrothermal alteration includes quartz-sericite + pyrite alteration associated with gold, argillic alteration in hydrothermal breccias, and lesser secondary potassium feldspar, iron carbonate, and hematite-quartz alteration.

Gold mineralization occurs in sheeted quartz veins, hydrothermal breccias, and open fractures. The gold is distributed along the top of the intrusion, and in overlying volcanic rocks, commonly at stratigraphic contacts, fracture zones, and in the remains of a diatreme breccia. Gold is found as grains of free gold up to 3 mm across, and has been observed along the edges of sulfide grains, indicating gold deposition is later than the sulfides.  


Exploration completed by Midway


During 2004-2005, Midway evaluated previous drill results by Kennecott and Echo Bay to generate new targets. These were subsequently tested by drilling 90 RC holes totaling 44,965 feet and 21 diamond drill holes totaling 10,008.7 feet resulting in discovery of the Porphyry and Sill zones.  At the end of the program, the mineralized zone covered an area 3,200 feet long by 1,600 feet wide with mineralization to a depth of 984 feet. Based on drill results through January 2006, Midway commissioned AMEC E&C Services, Inc. ("AMEC") to develop a mineral resource estimate conforming to NI 43-101 that was reported in May 2006.  


In 2006, Midway completed 66,616 feet of drilling in 90 holes to expand the resource to the north and west, as well as to test a much larger porphyry gold target at depth. At the end of the program, the mineralized zone covered an area 4,500 feet long by 3,000 feet wide that is mineralized to a depth of 1,400 feet.   Surface exploration including a 3,000 soil sample grid survey, gravity and self-potential geophysical surveys, geologic mapping and rock chip sampling over the 17 square miles of claim holdings resulting in the identification of 12 new targets for follow up work.


In 2007, the Company drilled 102,000 feet to expand the west and north zones and to test the deep porphyry potential.  Limited infill drilling was completed.  An additional 10,850 feet was drilled on the Limerick, American Canyon, King David and Golden Gate satellite targets.  In August 2007, the Company completed the purchase of the key Schmidt lease in Spring Valley by paying the final US$3,000,000 due.  This payment was the final advance royalty payment for the first 500,000 ounces of gold to be produced from the Schmidt claim package.



32





 


Based on drilling results through 2007, an updated inferred resource estimate was made by AMEC and reported in January, 2008. The resource model showed a large number of grade blocks outside of the L-G optimization shell that were not included in the resource.


In 2008, the Company completed 87 holes including 63,565 feet of RC and 8,985 feet of core drilling.  The drilling identified a coherent gold mineralization zone 5,200 feet long by 3,500 feet wide that extended to a depth of 1,400 feet.  Two outlying targets, the Fitting and Limerick areas, were tested with a total of 22 exploration drill holes with no significant results.    


By January 1, 2009, a total of 318,510 feet of drilling from 450 holes has been completed in six drilling campaigns in the Spring Valley resource area.  Based on these results, the Company completed an in-house resource update that was reported in March 2009.


Cautionary Note to U.S. Investors - In this Annual Report we use the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", which are geological and mining terms as defined in accordance with NI 43-101 under the guidelines adopted by CIM, as CIM Standards in Mineral Resources and Reserve Definition and Guidelines adopted by the CIM. US investors in particular are advised to read carefully the definitions of these terms as well as the "Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates" above.


Exploration completed by Barrick


In 2009, Barrick drilled 34 holes totaling 29,002 feet of RC drilling and 8,738 feet of core drilling.  Barrick's drilling focused on confirmation of previous drill results, infilling defined mineralized areas and initial metallurgical test work.


Barrick completed a scoping level metallurgical study on 13 composites from drill core. Results indicated no significant difference in recovery between oxide and sulfide material.  Bottle roll test results ranged from 86% to 98% gold recoveries from oxide, sulfide and transition composites. Column leach tests indicated a 60% to 90% gold recovery over an average 260-day leach period.  Gravity separation tests showed gold recoveries of 91% to 50.6% of the calculated head grade. The majority of gravity recoverable gold was released with the coarsest grind and gravity tails were found to be amenable to leaching of the remaining gold.


In 2010 Barrick completed 30,565 feet of RC drilling in 15 holes and 20 pre-collars and 21,760 feet of core drilling in 19 holes. A hydrology study to assess de-watering requirements determined that pump rates would be in the 650-1,100 gallon per minute range.


2011 Exploration Program


Barrick has informed Midway that it intends to conduct and fund the 2011 minimum required program of US$7,000,000 to maintain the EDM Agreement.  


The Company has commissioned an independent resource update to assess potential additions to the resource as a result of Barrick's 2009 and 2010 drilling.


To date the Company has incurred total costs of $20,071,977 relating to the exploration of the Spring Valley project.


The Spring Valley project is without known reserves, as defined under SEC Guide 7, and the proposed program for the property is exploratory in nature.




33





Pan Project


Location and means of access


The Pan property is located at the northern end of the Pancake mountain range in western White Pine County, Nevada, approximately 22 miles southeast of Eureka, Nevada, and 50 miles west of Ely, Nevada.  Access is via a seven mile dirt road running south-southeast from US Highway 50, at a point about 17 miles southeast of Eureka, Nevada. Eureka has a population of about 2,000. Water is readily available from wells west of the property. Power availability is currently being assessed from existing power lines north of the property.


Title


Midway has controlled the property since April 2007 through direct ownership of unpatented lode mining claims administered by the BLM and through mining leases. Midway's land position encompasses a gross area of approximately 9,794.5 acres containing federal lode mining claims.


Midway acquired its interest in the January 7, 2003 mineral lease agreement with Newark Valley Mining Corp. ("NVMC") formerly Gold Standard Royalty Corporation and formerly the Lyle Campbell Trust as a result of its acquisition of Pan-Nevada Gold Corporation on April 13, 2007.  On or before January 5 of each year Midway must pay an advance minimum royalty of the greater of US$60,000 or the US dollar equivalent of 174 ounces of gold valued by the average of the London afternoon fixing for the third calendar quarter preceding January 1 of the year in which the payment is due.  The minimum advance royalties will be creditable against a sliding scale NSR production royalty of between 2.5% and 4%.  Midway must incur a minimum of US$65,000 year work expenditures, including claim maintenance fees, during the term of the mining lease.  On January 1, 2010 the Company paid $174,702 (US$167,040).  Subsequent to the year end the Company paid US$213,455 on January 1, 2011.


Midway staked additional claims adjacent to the Pan property some of which fall within the one mile area of interest of the NVMC mining lease and will be subject to the NSR royalty to NVMC. Midway has staked additional claims around the project, increasing the land holdings to over 13 square miles. Midway's land position encompasses a gross area of approximately 9,794.5 acres containing federal lode and placer mining claims and patented fee properties.


The Company has prepared a summary table shown below that identifies the nature of our ownership or interest in the property, describes our interest in the properties, describes the type,  names, number, unique identifying numbers and the approximate size in acres of each ownership areas.

 

 

 

34




Ownership

Agreement Date

Expiry

Owner (source)

Claims

Land Type

Name/Series

Claim #

Serial Numbers

Gold Royalty

Approx. Acreage*

Leased

1/7/2003, amended 1/1/2009, ratified 10/14/2010

1/7/2023

Newark Valley Mining Corp.

410

Federal Lode - BLM

PAN

119

NMC205565

2.5-4% Gross

7711.6

Federal Lode - BLM

PAN

37-38

NMC37169-NMC37170

Federal Lode - BLM

PAN

63-69 (odd)

NMC37172-NMC37175

Federal Lode - BLM

PE

50-54 (even)

NMC427129-NMC427133 (odd)

Federal Lode - BLM

PAN

71-74

NMC57946-NMC57949

Federal Lode - BLM

PAN

22-28

NMC61102-NMC61108

Federal Lode - BLM

PAN

34-36

NMC61114-NMC61116

Federal Lode - BLM

PA

8A, 10, 12-18

NMC630283-NMC630291

2.5-4% Gross + 1% NSR

Federal Lode - BLM

PA

49A

NMC630323

Federal Lode - BLM

LAT

9-38, 40, 42, 44, 46, 48-60, 47, 61-65

NMC815131-NMC815183

2.5-4% Gross

Federal Lode - BLM

NC

30-52

NMC958546-NMC958568

Federal Lode - BLM

NC

59-72

NMC958575-NMC958588

Federal Lode - BLM

NC

94-121, 124-130, 133-139, 142-146, 149-154, 157-162, 165-170

NMC958610-NMC958674

Federal Lode - BLM

CT

30-51

NMC980710-NMC980727

Federal Lode - BLM

PETER

1-51

NMC980728-NMC980778

Federal Lode - BLM

BSW

38-45, 1-37, 46-47

NMC980787-NMC980825

Federal Lode - BLM

PA

19, 21, 44, 46, 48

NMC980826-NMC980830

Federal Lode - BLM

PE

56

NMC980831

Federal Lode - BLM

NP

1-41

NMC980832-NMC980872

Federal Lode - BLM

ET

1-41

NMC980873-NMC980913

Federal Lode - BLM

GWEN

17-18

NMC984635-NMC984636

Federal Lode - BLM

PAN

111-112, 114, 120-122

NMC984637-NMC984642

Federal Lode - BLM

PR

1-9

NMC1031802-NMC1031810

Owned

-

-

MGC Resources Inc.

113

Federal Lode - BLM

NC

1-29

NMC958517-NMC958545

-

2,334.7

Federal Lode - BLM

NC

53-58

NMC958569-NMC958574

Federal Lode - BLM

NC

73-93

NMC958589-NMC958609

Federal Lode - BLM

GWEN

1-10

NMC965337-NMC965346

Federal Lode - BLM

GWEN

19-48

NMC984556-NMC984585

Federal Lode - BLM

GWEN

49-51

NMC977345-NMC977347

Federal Lode - BLM

GWEN

54-55, 58-65

NMC977350-NMC977359

Federal Lode - BLM

REE

81-82

NMC973536-NMC973537

 

 


35



 

Mineral Resources


On July 20, 2010, Midway announced the results of a preliminary economic assessment ("PEA") for the Pan gold project.  The PEA included an independent audit of an updated mineral resource estimate prepared by Midway.  The updated resource estimates are shown in the table below.  The PEA assumes the Pan gold deposit will be developed as an open pit mine and heap leach operation.  The forecast mine life was 9 years with a total of 327,000 ounces of gold recovered and produced for sale.  Initial project capital costs, as evaluated in the PEA, are estimated at US$45,000,000 plus working capital of US$5,000,000 and a 20% contingency totaling US$9,000,000.  The PEA was prepared under the supervision of William J. Crowl, Donald Hulse, and Terre Lane of Gustavson Associates, LLC, each of whom is independent of Midway and is a "qualified person" under NI 43-101. For further information on this project, please see the PEA entitled "NI 43-101 Preliminary Economic Assessment of the Pan Gold Project, White Pine County, Nevada", dated July 20, 2010, which is available under Midway's company profile at www.sedar.com.


Measured Resource

Cut-Off Grade

(opt gold)

Short Tons (Millions)

Gold Grade (opt)

Contained Gold

(ounces)

0.006

3.22

0.019

62,100

0.010

2.71

0.021

58,100

0.020

1.17

0.031

36,500

0.030

0.44

0.043

19,000


Indicated Resource

Cut-Off Grade

(opt gold)

Short Tons (Millions)

Gold Grade (opt)

Contained Gold

(ounces)

0.006

34.43

0.017

546,600

0.010

25.08

0.020

495,800

0.020

8.03

0.030

240,000

0.030

2.64

0.042

110,900

 

 


Measured plus Indicated Resource

Cut-Off Grade

(opt gold)

Short Tons (Millions)

Gold Grade (opt)

Contained Gold

(ounces)

0.006

34.65

0.018

608,700

0.010

27.79

0.020

553,900

0.020

9.20

0.030

276,500

0.030

3.08

0.042

129,900


Inferred Resource

Cut-Off Grade

(opt gold)

Short Tons (Millions)

Gold Grade (opt)

Contained Gold

(ounces)

0.006

1.60

0.017

26,500

0.010

1.29

0.019

24,000

0.020

0.37

0.030

11,200

0.030

0.14

0.040

5,500


Cautionary Note to U.S. Investors - In this Annual Report we use the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", which are geological and mining terms as defined in accordance with NI 43-101 under the guidelines adopted by CIM, as CIM Standards in Mineral Resources and Reserve Definition and Guidelines adopted by the CIM. US investors in particular are advised to read carefully the definitions of these terms as well as the "Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates" above.

 

 

36



 

Geology


The Pan project is a sediment-hosted gold deposit on the prolific Battle Mountain-Eureka gold trend in Nevada. It is an oxide deposit exposed on the surface. Host rocks are Devonian-Mississippian marine siltstone and limestone of the Pilot Formation and the Devils Gate Formation. Breccias developed along the Pan fault are the primary host of gold mineralization. Argillic alteration and silicification are the dominant alteration types associated with gold. At North Pan gold mineralization is primarily hosted by silicified breccia in the Pilot Formation. At South Pan, gold occurs primarily in argillic altered breccia in the Devils Gate Formation. Gold occurs as stratabound mineralization outside of the breccias particularly in the Wendy zone adjacent to South Pan.


Exploration


The Pan mineralization was discovered in 1978 and over 860 holes have been drilled by 10 different exploration companies. These include: Amselco, Hecla, Echo Bay, Alta Gold, Pan Nevada Gold, and a number of other junior exploration companies.


In 2007, the Company drilled 35,510 feet in 113 exploration holes outside of the known resource. Drill results at Boulders extended gold north for 1,300 feet under volcanic outcrop at North Pan. Drill results at Barite and Wendy extended gold at South Pan by 400 feet south and 300 feet east respectively.  The Nana zone, 4,000 feet northwest of North Pan, represents a new exploration opportunity. A large scale soil survey identified four previously unknown gold-arsenic anomalies with no previous exploration drilling.


In 2008, Midway completed 26,245 feet of drilling in 49 RC holes.  Fourteen new holes in the resource area were drilled to verify results from previous operators. Most intercepted higher grades and greater thicknesses than previously reported (Press Release July 9, 2008). Preliminary investigations suggest that assay techniques used by a previous operator may have under-estimated gold values in some of the holes. A higher-grade gold zone was found at North Pan with true widths of 10 to 25 feet and grades from 0.07 to 0.51 opt gold over 800 feet in length. Additional near surface oxide gold was discovered at South Pan where the Wendy zone was expanded to the east under volcanic cover. Three targets outside the resource were tested with no significant results.


In 2009, an internal mineral resource update was completed by Midway and announced in November 2009.  


In 2010, Midway commissioned the PEA that included an independent review of the resource. Results of the PEA encouraged Midway to move the project toward production at an accelerated pace. A total of 5,764 feet of core in 14 holes was completed to obtain samples for additional metallurgical testing, geotechnical studies of potential pit walls, and waste rock characterization studies. The gold grades in these core holes were higher than expected based on previous analyses from nearby holes. Insights into the geology and alteration based on the core holes resulted in reassessing the geological constraints of the deposit. Engineering studies were initiated in support of a pre-feasibility study planned for 2011. Environmental base line studies were initiated to support submitting a mining permit, planned for 2011.




37





2011 Exploration Program


Midway plans additional drilling to expand the resource and confirm the new geological interpretations. A portion of the 2011 drilling will test for undiscovered mineralization beneath proposed mine facilities. Engineering and design work will continue with the intention to complete a feasibility study on the Pan project in 2011.


To date Midway has incurred total costs of $6,625,094 relating to the exploration of the Pan project.  We have budgeted approximately $4.5 million for the 2011 exploration program.


The Pan project is without known reserves, as defined under SEC Guide 7, and the proposed program for the property is exploratory in nature.


Midway Project


Location and means of access


The Midway property is located in Nye County, Nevada, approximately 15 miles northeast of the town of Tonopah, 210 miles northwest of Las Vegas and 236 miles southeast of Reno.  The property is over the northeastern flank of the San Antonio Mountains and in the Ralston Valley. Water is readily available from water wells drilled on the property under a temporary grant of water rights and power may be accessible as a power line crosses the property.


The Midway project is located at the intersection of the well-known Round Mountain/Goldfield trend and the Walker Lane. It is a low-sulfidation epithermal gold system with near-vertical quartz-adularia-gold veins. Bonanza gold veins occur in a series of en echelon vein clusters along a 1.5 mile northwest-trending band of mineralization. The best previously reported gold intercept was 2.5 feet of 119 opt gold in 17 feet that averaged 34.7 opt gold in core hole MW210 from the Midway vein.


Title


Midway has controlled the property since 2001.  Through a series of agreements, amendments and payments the Company has the option to acquire a 100% interest in the Midway property subject only to a sliding scale royalty on NSR royalty from any commercial production of between 2% to 7%, based on changes in gold prices.  To maintain the option the Company must pay an advance minimum royalty, recoverable from commercial production, of US$300,000 per year on each August 15.  On September 29, 2009 the optionors agreed to waive the US$300,000 payment that would have otherwise been due on August 15, 2010.  


In addition, the surface rights to 560 acres in Section 32 are held by the Town of Tonopah. The remaining 80 acres of surface rights in Section 32 are held as two 40-acre parcels by two owners. We hold federal mineral rights for the entirety of Section 32 in unpatented claims.


The Company has prepared a summary table shown below that identifies the nature of our ownership or interest in the property, describes our interest in the properties, describes the type,  names, number, unique identifying numbers and the approximate size in acres of each ownership areas.

 

 

 

38



 


Ownership

Agreement Date

Expiry

Owner (source)

Claims

Land Type

Name/Series

Claim #

Serial Numbers

Gold Royalty

Approx. Acreage*

Owned

7/2/2001, extended 5/31/2002, amended 10/1/2002, amended 11/2/2004, amended 10/1/2009

-

MGC Resources Inc. (Schmidt/Patton)

228

Federal Lode - BLM

SP

1-9

NMC387816-NMC387824

2-7% NSR

4,382.8

Federal Lode - BLM

SP

11-15 (odd)

NMC387826-NMC387830 (even)

Federal Lode - BLM

SP

17-18

NMC387832-NMC387833

Federal Lode - BLM

SP

21-32

NMC387836-NMC387847

Federal Lode - BLM

SP

65-84

NMC390502-NMC470127

Federal Lode - BLM

SP

95-98

NMC470138-NMC470141

Federal Lode - BLM

SP

105-108

NMC470148-NMC470151

Federal Lode - BLM

SP

115-119

NMC470158-NMC470162

Federal Lode - BLM

SP

123-127

NMC470166-NMC470170

Federal Lode - BLM

SP

281-286

NMC502125-NMC502130

Federal Lode - BLM

SP

300-302

NMC502144-NMC502146

Federal Lode - BLM

SP

320-322

NMC502164-NMC502166

Federal Lode - BLM

SP

340-351

NMC513285-NMC513296

Federal Lode - BLM

SP

358-360

NMC513303-NMC513305

Federal Lode - BLM

SP

366-368

NMC513309-NMC513311

Federal Lode - BLM

SP

374-376

NMC513317-NMC513319

Federal Lode - BLM

SP

382

NMC513325

Federal Lode - BLM

SP

4, 6, 8, 10, 12, 14, 16, 280, 352-357

NMC679116-NMC679129

Federal Lode - BLM

RV

29-41 (odd)

NMC688327-NMC688339 (odd)

Federal Lode - BLM

RD

08

NMC830749

Federal Lode - BLM

RD

12

NMC830753

Federal Lode - BLM

RD

16

NMC830757

Federal Lode - BLM

RD

20

NMC830761

Federal Lode - BLM

RD

24

NMC830764

Federal Lode - BLM

RD

25-29 (odd)

NMC831839-NMC831843 (odd)

Federal Lode - BLM

RD

50-60 (even)

NMC831864-NMC831874 (even)

Federal Lode - BLM

RD

69-84

NMC831883-NMC831898

6/8/2004

-

MGC Resources Inc. (Newmont)

Federal Lode - BLM

MWAY

67-68

NMC835175-NMC835176

-

Federal Lode - BLM

MWAY

117-119

NMC835225-NMC835227

Federal Lode - BLM

MWAY

147-150

NMC835255-NMC835258

Federal Lode - BLM

MWAY

396

NMC835504

Federal Lode - BLM

WAY

1-29

NMC838228-NMC838256

Federal Lode - BLM

MWAY

649-655 (odd)

NMC845408-NMC845414 (even)

7/2/2001 and amended as above

-

MGC Resources Inc. (Schmidt/Patton)

Federal Lode - BLM

RD

85-100, 103-104, 101-102, 105-106

NMC984613-NMC984634

2-7% NSR


Geology


The Midway project is located at the intersection of the Round Mountain/Goldfield gold trend and the Walker Lane. It is a low-sulfidation epithermal gold system with near-vertical quartz-adularia-gold veins. Host rocks are Ordovician black argillite of the Palmetto Formation and unconformably overlying Tertiary rhyolitic volcanics. Bonanza gold veins occur in a series of en echelon clusters along a 1.5 mile northwest-trending band of mineralization.


The veins are best defined in the Discovery zone with 132 holes. The veins occur in sub-parallel clusters, 10 to 20 feet apart, with an average width of 6 feet. Veins hosted in the argillite form well-defined veins and hydrothermal breccias.  Where the veins pass upward into the volcanics, they splay out to form numerous thinner sub-parallel veins in a braided stockwork zone.  Visible gold is common in the veins with higher-grade gold in an apparent boiling horizon at the unconformity between argillite and volcanics.


Exploration


Veins in the Discovery zone were discovered by Kennecott in 1992. Prior to this the property was explored by Houston Oil and Minerals, Coeur d'Alene Mines, and Rio Algom. Tombstone Exploration and Golconda Resources explored the property after Kennecott.


In 2002, we completed 26,689.5 feet of core drilling in 69 holes. Intercepts such as 2.5 feet of 119 opt gold in 17 feet that averaged 34.7 opt gold in the Midway vein encouraged Newmont to enter into a joint venture on the property in September 2002. Newmont completed an extensive regional exploration programs including airborne magnetic, EM, and radiometric surveys and ground radiometric, gravity and CSAMT surveys. From 2002 to 2003 the Newmont/Midway joint venture drilled a total of 67,703.5 feet in 121 holes in the greater Discovery area and other targets.


From 2003 to 2004, the joint venture drilled 10,195 feet in 7 RC holes and 5,847 feet in 16 core holes. Five holes were drilled in the 121 Zone and the others in a largely untested area south of the Discovery zone. Newmont terminated the joint venture in June 2004.


In 2005, we drilled 8,987 feet in 16 RC holes to test for extensions adjacent to the known resource areas.  The program resulted in the discovery of the Dauntless Zone with hole MW399 which encountered 175 feet of 0.349 opt gold including a vein assaying 15 feet of 3.163 opt gold. An independent resource estimate was completed based on a model of disseminated, strataform mineralization in the Tertiary volcanics using open pit mining methods. The Company no longer believes this business case is optimal for this property and is evaluating a model that would support underground mine development.



39





 


In 2006, the Company drilled 26,450 feet in 56 holes. The Dauntless zone was extended 650 feet along strike with true width varying from 23 to 66 feet. Grades vary from 0.029 to 1.16 ounces per ton starting within 165 feet of the surface.  Drilling identified 58 veins with at least one intercept greater than 0.15 ounces of gold per ton that are not yet defined. Plans were proposed for a decline that would allow bulk sampling of the Discovery and Dauntless gold zones for metallurgical testing and allow better access for exploration of the gold bearing quartz veins. Fourteen monitor wells were installed to study the dewatering costs for the decline. Four of the monitor holes encountered new gold mineralization.


In 2007, pump tests from a 450-foot water well in the Discovery area were conducted to determine dewatering needs for a decline. This program estimated the need to pump 2,000 gallons per minute to dewater the decline and mine workings. Engineering was initiated for a decline to provide access 200 feet below high grade portions of certain veins and to then take a 50,000 ton bulk sample.  


In 2008, the Company drilled 1,234 feet in 12 RC holes and 2,321 feet in 9 core holes for hydrology and geotechnical testing along the planned route of the decline. Two new vein intercepts were discovered (Press Release May 14, 2008).  No gold was noted in five holes drilled to test proposed waste rock storage sites. A preliminary mining plan was submitted to the BLM and NDEP for an underground decline.


Metallurgical testing by SGS Lakefield Research Limited (Canada) showed up to 94% gold recovery using gravity and cyanide from a 73-lb. composite sample of Discovery vein material grading 0.188 opt gold.  Further work by Gekko Systems Metallurgical Laboratory (Australia) showed that gravity and flotation could achieve 86.7% gold recovery and 66.3% silver recovery without using cyanide, based on a 242-lb composite sample, grading 0.662 opt gold and 0.475 opt silver.


In 2009, the Company worked with the Town of Tonopah, Nevada to negotiate a plan to properly dispose of mine water to the standards required by the State Water Engineer. In early 2011 we signed a memorandum of understanding with the Town of Tonopah for continued cooperation with regards to development of the Midway project nearby to Tonopah's municipal water well fields. The memorandum of understanding provides for mutual information sharing between the Company and Tonopah's engineers for baseline studies and designs, development of water rights for the benefit of Tonopah, and cooperation to reduce redundant facilities.  


2011 Exploration Program


In 2011, Midway plans to drill core holes in the Discovery zone to define the true width and continuity of gold grade of the known veins and to test extensions along strike. The angle holes will be sited so that additional veins to the east and west may be tested by the same holes. Additional metallurgical testing and engineering studies are planned, where warranted. A new resource estimate based on underground mining of high angle veins is planned in 2011.


To date Midway has incurred total costs of $8,665,767 relating to the exploration of the Midway project. We have budgeted approximately $2.5 million for the 2011 exploration program.  


The Midway project is without known reserves, as defined under SEC Guide 7, and the proposed program for the property is exploratory in nature.




40





Gold Rock Project


Location and means of access


The Gold Rock property is situated in the eastern Pancake Range in western White Pine County, Nevada.  The property is 8 miles southeast of the Company's Pan project. Access is via the Green Springs road from US Highway 50 approximately 65 miles from Ely, Nevada. Water is readily available from wells in the region. Power would be available by extending power lines from the Pan property.


Title


Midway has controlled the property since April 13, 2007 through direct ownership of unpatented lode and placer mining claims administered by the BLM and through mining leases. Midway's land position encompasses a gross area of approximately 8,929.5 acres containing federal lode and placer mining claims.


We acquired our interest in the March 20, 2006 mineral lease agreement with NVMC as a result of our acquisition of Pan-Nevada Gold Corporation on April 13, 2007.  On or before January 5 of each year Midway must pay an advance minimum royalty of the greater of US$60,000  or the US dollar equivalent of  108.05 ounces of gold valued by the average of the London afternoon fixing for the third calendar quarter preceding January 1 of the year in which the payment is due.  The minimum advance royalties will be creditable against a sliding scale NSR production royalty of between 2.5% and 4%.  Midway must incur a minimum of US$75,000 year work expenditures, including claim maintenance fees, during the term of the mining lease.  On January 1, 2010 Midway paid $108,486 (US$103,728).  Subsequent to the year end we paid US$132,550 on January 1, 2011.


Midway has entered into or acquired four additional agreements for claims adjacent to and contiguous with the NVMC claims:


·

On or before January 15, 2010, we paid the annual advance royalty payment of US$20,000 to Anchor Minerals, Inc. to maintain its mineral lease for 80 unpatented lode mining claims.  The owner holds a 3.5% gross production royalty.


·

On or before January 24, 2010, Midway paid the annual option payment of US$50,000 to Brian Peart to maintain its option to purchase 13 unpatented lode and placer mining claims.  Alternatively Midway can purchase these claims for US$5,000,000 with any payments already paid credited against the total. Mr. Peart holds a sliding scale royalty of between 2 and 6% NSR from commercial production on these claims.


·

On or before February 13, 2010, Midway paid the annual option payment of US$7,750 to Jerry Pankow to maintain its option to purchase 2 unpatented lode mining claims.  Alternatively we can purchase these claims for US$775,000 with any payments already paid credited against the total. Mr. Pankow holds a sliding scale royalty of between 2 and 5% NSR from commercial production on these claims.


·

On or before February 15, 2010, Midway paid the annual payment of US$15,000 to Ronald "Ronny" Jordan to maintain its option to purchase 10 unpatented lode mining claims.  Alternatively we can purchase these claims for US$2,500,000 with any payments already paid credited against the total. Mr. Jordan holds a 2.5% NSR from commercial production on these claims.  The assignor of this lease agreement to Midway also holds a 0.5% NSR.


Over the years the Company has staked additional claims outright adjacent to and contiguous with the Gold Rock property, which are outside of any area of interest.


The Company has prepared a summary table shown below that identifies the nature of our ownership or interest in the property, describes our interest in the properties, describes the type,  names, number, unique identifying numbers and the approximate size in acres of each ownership area.




41





 

 

 

Ownership

Agreement Date

Expiry

Owner (source)

Claims

Land Type

Name/Series

Claim #

Serial Numbers

Gold Royalty

Approx. Acreage*

Leased

1/15/2007, amended 1/26/2008

1/15/2017

Anchor Minerals, Inc.

80

Federal Lode - BLM

ROC 1-21

1-21

NMC929929-NMC929949

3.5% Gross

1,652.9

Federal Lode - BLM

ROC 22-45

22-45

NMC950080-NMC950103

Federal Lode - BLM

MT

24-41

NMC977619-NMC977636

Federal Lode - BLM

MT

301-317

NMC984539-NMC984555

Optioned

1/24/2008

1/14/2023

Brian Peart

13

Federal Lode - BLM

LITTLE RICHARD

1-6, 7, 9-10, 12-13

NMC822700-NMC822710

2-6% NSR

207.3

Federal Placer - BLM

LITTLE RICHARD

15, 22

NMC822711-NMC822712

Leased

3/20/2006, amended 1/1/2009

3/20/2016

Gold Standard Royalty (Nevada) Inc.

297

Federal Lode - BLM

MONTE

1-10

NMC325321-NMC325330

2.5-4% Gross

6,136.4

Federal Lode - BLM

MONTE

20

NMC325340

Federal Lode - BLM

MONTE

22-34

NMC325342-NMC325354

Federal Lode - BLM

MONTE

36-47

NMC325356-NMC325367

Federal Lode - BLM

MONTE

49-55

NMC325369-NMC325375

Federal Lode - BLM

MONTE

61-67

NMC325381-NMC325387

Federal Lode - BLM

MONTE

72-85

NMC325392-NMC325405

Federal Lode - BLM

MONTE

90-94

NMC325410-NMC325414

Federal Lode - BLM

MONTE

97

NMC325417

Federal Lode - BLM

MONTE

98-102

NMC408429-NMC408433

Federal Lode - BLM

MONTE

137-142

NMC408468-NMC408473

Federal Lode - BLM

MONTE

144-150

NMC408475-NMC408481

Federal Lode - BLM

ECHO

52-55

NMC420382-NMC420385

Federal Lode - BLM

ECHO

142

NMC420469

Federal Lode - BLM

MONTE

160

NMC477661

Federal Lode - BLM

MT

126-200, 202-218, 220-227, 42-90, 94-96, 101-104, 111-124

NMC977427-NMC977594

Federal Lode - BLM

MONTE

222

NMC977595

Federal Lode - BLM

MONTE

201-207, 209-212, 215-221

NMC980693-NMC980709

Federal Lode - BLM

MONTE

48, 56, 58, 60, 143, 145, 168-173

NMC980914-NMC980925

Federal Lode - BLM

MT

345-351

NMC984643-NMC984649

 




42



 

 

 

 

 

Ownership

Agreement Date

Expiry

Owner (source)

Claims

Land Type

Name/Series

Claim #

Serial Numbers

Gold Royalty

Approx. Acreage*

Optioned

2/13/2008

2/13/2023

Jerry Pankow

2

Federal Lode - BLM

LITTLE RICHARD

25-26

NMC863772-NMC863773

2-5% NSR

41.3

Owned

-

-

MGC Resources Inc.

67

Federal Lode - BLM

MT

178, 189, 201, 125

NMC977423-NMC977426

-

1,384.3

Federal Lode - BLM

MT

1-23

NMC977596-NMC977618

Federal Lode - BLM

MT

91-93, 97-100, 100-110

NMC977639-NMC977649

Federal Lode - BLM

MT

318-344

NMC984586-NMC984612

Optioned

2/15/2004, assigned to MGC 2/13/2008

-

Ronald W. ("Ronny") Jordan

10

Federal Lode - BLM

BIG JR

9-12

NMC826346-NMC826349

2.5% NSR

206.6

Federal Lode - BLM

JJ NO

1-4

NMC849888-NMC849891

Federal Lode - BLM

DG NO

5-6

NMC849892-NMC849893


Geology


Gold Rock is a sediment-hosted gold system in highly prospective host rocks within a 14 square mile land position along the Battle Mountain-Eureka gold trend. Gold was mined at the Easy Junior pit from Mississippian marine siltstone and limestone of the Joanna and Chainman Formations. Additional gold anomalies occur in the Devonian-Mississippian Pilot and Devils Gate Formations, the same host rocks as found at the nearby Pan project. These potential host rocks are exposed for 6 miles of strike length and may have been repeated by east verging thrust faulting. Exposures in the Easy Junior pit wall show mineralization is associated with the crest of a tight anticline cut by a high angle reverse fault. Gold is associated with silicification and argillic alteration of the host rocks along the structure. Historic drill data suggests additional folds and thrust faulting around and along strike of the pit.



 

 


43





Exploration


The Easy Junior Mine, in the center of the Gold Rock property, reportedly produced 2.9 million tons of 0.026 opt gold (74,945 ounces gold contained) during operations by Alta Gold and the Alta Bay joint venture (Alta Gold-Echo Bay). The mine was shut down in 1994, due to low gold prices. A historic database of 794 holes containing 269,446 feet of drilling was acquired in 2008. Analysis of this drill data by Midway outlined a gold zone in the walls of the pit and along strike extending south into the Decker Flat area. The gold zone is defined by 300 holes and extends for 9,200 feet along the strike of the Easy Junior anticline. This zone appears to be oxide, above the water table, and open in all directions.


Exploration work by Midway to date has primarily been data compilation and surface exploration.  Data compilation has included drill hole data, rock and soil geochemical data, geologic mapping, and geophysical surveys generated by previous exploration companies. Midway has generated new geology and alteration mapping and additional rock and soil sampling. A gravity survey was conducted over the property position. The new and old data are being evaluated to generate exploration targets for future drilling.


In 2008, Midway drilled 3,525 feet in 11 RC holes on the Anchor target at the south end of the property. The target was gold bearing Pilot shale. Five holes found strongly anomalous gold in the Pilot formation, a regionally favorable host rock. Several targets were not tested due to large voids in the rock above the targets. The drill rig in use at that time was not equipped to get past these areas. Follow up drilling is planned when appropriate equipment is available.


2011 Exploration Program


Midway plans to initially focus its efforts on the Easy Junior-Decker Flats gold zone in 2011. A first round of drilling is designed to confirm the historic data, verify locations and grades, and test for expansion potential.  This will be followed by a second round of drilling to convert the indicated historic gold zone to a NI43-101 compliant resource. A surface exploration program is on-going to identify additional targets that may be tested in a third round of drilling either in 2011 or 2012.


To date Midway has incurred total costs of $747,530 relating to the exploration of the Gold Rock project.  We have budgeted approximately $2.6 million for the 2011 exploration program.


The Gold Rock project is without known reserves, as defined under SEC Guide 7, and the proposed program for the property is exploratory in nature.


Other Nevada Properties


The Company's Thunder Mountain and Burnt Canyon projects are exploration projects that Midway does not consider to be material properties of Midway at this time.  The Company abandoned the Roberts Gold property in fiscal 2010.  These projects are without known reserves, as defined under SEC Guide 7.


Thunder Mountain is a gold and silver rich epithermal vein and disseminated gold system hosted in rhyolite tuffs and flow dome complexes located six miles southeast of the Midway project in Nye County, Nevada.  From August 2008 to May 2009, Kinross Gold USA funded the project under an exploration and option to joint venture agreement. Kinross conducted a first pass drill program but did not encounter any significant results.  

Burnt Canyon is a volcanic hosted epithermal system with gold identified in numerous rock and soil samples.  The project lies between high grade veins in the Seven Troughs district to the south and the Wildcat disseminated gold deposit to the north in Pershing County, Nevada.  The Company plans a first pass drill program in 2011 on this project.


Roberts Gold, located on the Battle Mountain/Eureka gold trend in Nevada, was abandoned and the Company wrote off $119,980 of deferred acquisition costs in the year ended December 31, 2010.




44





Washington Property


The map below shows the location of Midway's property located in Washington, USA.  This property is described in further detail below.



Golden Eagle Project


Location and means of access


The Golden Eagle property is located on private land in the Eureka (Republic) mining district in Ferry County, Washington.  The property is two miles northwest of the town of Republic, Washington and is accessed by the Knob Hill county road. Power is available at the nearby (< 1 mile) Knob Hill Mine. Water availability has not yet been determined.


Title


On August 1, 2008 the Company issued 600,000 common shares at US$2.50 per common share for proceeds of US$1,500,000 by way of a private placement to Kinross Gold USA Inc. ("Kinross") and concurrently purchased a 75% interest in the Golden Eagle project from Kinross at a cost of US$1,500,000 ($1,537,950).  The Company then purchased a 25% interest in the Golden Eagle project from Hecla Limited at a cost of US$483,333 ($500,200). Kinross retained a 2% net smelter returns royalty and was granted a first right of refusal to toll mill ore from the Golden Eagle property at their Kettle River Mill.  Midway completed the acquisition of the Golden Eagle property through a wholly-owned subsidiary created to hold the property.  


In the year ended December 31, 2009, the Company staked additional claims and purchased two additional blocks of land at a cost of $177,393 to expand its Golden Eagle land property package.  


Midway's land position encompasses a gross area of approximately 339.5 acres containing federal lode mining claims and patented lode mining claim and fee properties.




45





The Company has prepared a summary table shown below that identifies the nature of our ownership or interest in the property, describes our interest in the properties, describes the type,  names, number, unique identifying numbers and the approximate size in acres of each ownership areas.



Ownership

Agreement Date

Expiry

Owner (source)

Claims

Land Type

Name/Series

Claim #

Serial Numbers

Gold Royalty

Approx. Acreage*

Owned

-

-

Golden Eagle Holding Inc.

3

Federal Lode - BLM

GEH

1-3

ORMC164710-ORMC164712

-

5.4


Ownership

Agreement Date

Owner (source)

Land

Land Type

Name/Lot

Location

Mineral Survey/Patent Numbers

Gold Royalty

Approx. Acreage*

Owned

75% - 5/28/2008; 25% - 7/28/2008

Golden Eagle Holding Inc. (Echo Bay/Hecla)

fee

Patented Lode - Fee

Mountain Lion

T 37 N, R 32 E, W.M., Sec. 27

M.S. 402-A

0-0.75% Gross + 2% NSR on 75% of Production

20.7

 

 

 

Patented Lode - Fee

Flat Iron

T 37 N, R 32 E, W.M., Sec. 27

M.S. 402-A

7.6

 

 

 

Patented Lode - Fee

Last Chance

T 37 N, R 32 E, W.M., Sec. 27

M.S. 402-A

20.7

 

 

 

Patented Mill Site - Fee

Mountain Lion

T 37 N, R 32 E, W.M., Sec. 27

M.S. 402-B

5.0

 

 

 

Patented Lode - Fee

Gopher

T 37 N, R 32 E, W.M., Sec. 27

M.S. 509

19.7

 

 

 

Patented - Fee

Government Lot 1

T 37 N, R 32 E, W.M., Sec. 27

-

41.1

 

 

 

Patented - Fee

Government Lot 2

T 37 N, R 32 E, W.M., Sec. 27

-

6.8

 

 

 

Patented - Fee

Government Lot 3

T 37 N, R 32 E, W.M., Sec. 27

-

0.5

 

 

 

Patented - Fee

Government Lot 4, less Tax Lot 4

T 37 N, R 32 E, W.M., Sec. 27

-

7.3

 

 

 

Patented - Fee

N½NE¼, less Tax Lot 12-02

T 37 N, R 32 E, W.M., Sec. 27

-

77.4

 

5/26/2009

Golden Eagle Holding Inc. (Vaagen)

Patented - Fee

Government Lot 12

T 37 N, R 32 E, W.M., Sec. 27

-

-

8.8

 

5/28/2008

Golden Eagle Holding Inc. (Echo Bay)

Patented - Fee

Government Lot 1

T 37 N, R 32 E, W.M., Sec. 28

-

2% NSR

36.0

 

4/22/2009

Golden Eagle Holding Inc. (Bowe)

Patented Lode - Fee

South Penn, less Tax Lot 8

T 37 N, R 32 E, W.M., Sec. 28

M.S. 664

-

12.9

 

Patented Lode - Fee

South Penn Fraction

T 37 N, R 32 E, W.M., Sec. 28

M.S. 664

3.3

 

Patented - Fee

Government Lot 4, less Tax Lot 9

T 37 N, R 32 E, W.M., Sec. 28

-

10.9

 

5/26/2009

Golden Eagle Holding Inc. (Vaagen)

Patented - Fee

Tax Lot 5

T 37 N, R 32 E, W.M., Sec. 28

-

-

2.6/0/0

 

Patented Lode - Fee

Vulcan No. 2

T 37 N, R 32 E, W.M., Sec. 28

M.S. 606

19.5/0/0

 

Patented - Fee

Tax Lot 8

T 37 N, R 32 E, W.M., Sec. 28

-

2.5

 

Patented - Fee

Tax Lot 9

T 37 N, R 32 E, W.M., Sec. 28

-

3.3

 

Patented Lode - Fee

Mormon Lode

T 37 N, R 32 E, W.M., Sec. 28

M.S. 584

13.4

 

Patented - Fee

Government Lot 5

T 37 N, R 32 E, W.M., Sec. 28

-

13.9


Mineral Resources


On June 25, 2009, the Company announced an indicated resource estimate of 31,400,000 tons at a grade of 0.055 opt containing 1,744,000 ounces of gold based on drilling by previous operators.  There is an additional inferred resource estimate of 5,100,000 tons at a grade of 0.038 opt containing 192,000 ounces of gold. Both estimates are reported at a cut off grade of 0.02 opt gold and constrained within a Lerchs-Grossman pit shell using a $750 per ounce gold price and 85% gold recovery.  The estimated metal content does not include consideration of any other mining, mineral processing, or metallurgical recoveries. The most likely cut-off grade for this deposit is not known at this time and must be confirmed by the appropriate economic studies. Mineral reserves have not been estimated.  The report was prepared under the supervision of Eric Chapman and Dr. Thom Seal both of whom are independent of the Company and are "qualified persons" under NI 43-101. For further information on this project, please see the report entitled "Golden Eagle Project, Washington State, USA, Technical Report" dated effective July, 2009, which is available under the Company's profile at www.sedar.com.



46





 


Cautionary Note to U.S. Investors - In this Annual Report we use the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", which are geological and mining terms as defined in accordance with NI 43-101 under the guidelines adopted by CIM, as CIM Standards in Mineral Resources and Reserve Definition and Guidelines. US investors in particular are advised to read carefully the definitions of these terms as well as the "Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates" above.


Geology


The Golden Eagle is a volcanic hosted, epithermal gold system with gold in quartz veins and disseminated in extensive breccia bodies. The host rocks are andesite flows and volcaniclastics of the Eocene age Sanpoil Formation along the western margin of the Republic Graben. Gold occurs primarily in silicified and argillized hydrothermal breccia that is 2,500 feet long and 1,000 feet wide. The gold zone is roughly east-west. It is exposed at the surface at the historic Mountain Lion mine to the west and plunges to the northeast. Locally the breccia is cut by quartz veins carrying higher grades of gold. Gold and silver mineralization is often found in solid solution with sulfide minerals and is considered refractory. Historical underground mining extracted gold and silver rich quartz veins adjacent to and beneath Golden Eagle.


Exploration


Exploration was conducted on the property from 1940 to 2000 by Knob Hill Mining, Day Mines, Hecla, Santa Fe Pacific Gold, and Echo Bay. Hecla and Santa Fe Gold defined a large gold resource on the property and conducted pre-feasibility studies including numerous metallurgical tests. After Santa Fe Gold was acquired by Newmont, the property was traded to Echo Bay during a time of low gold prices. Kinross acquired Echo Bay and focused their efforts elsewhere.


In 2008, The Company acquired Golden Eagle and began compiling and reviewing the historic database of 835 drill holes containing 165,775 feet of mostly core drilling. Many of the older shallow holes could not be verified, leaving 126,591 feet in 164 holes that could be verified for use in creating a new gold model. Dr Thom Seal was contracted to review the numerous metallurgical reports and summarize the results for the Company. Company geologists mapped the historic pits and sampled pit walls and dumps.


In 2009, the Company contracted Snowden Mining Industry Consultants to produce an independent NI43-101 compliant resource estimate.  


2011 Exploration Program


Issues related to processing sulfide mineralization and permitting will be assessed in 2011.  The Company has commissioned a preliminary economic assessment to evaluate the economics of different mining options at current higher gold prices.


To date Midway has incurred total costs of $249,433 relating to the exploration of the Golden Eagle project. The Company has budgeted approximately $0.2 million for 2011.


The Golden Eagle project is without known reserves, as defined under SEC Guide 7, and the proposed program for the property is exploratory in nature.



47





ITEM 3.   LEGAL PROCEEDINGS

Other than as set forth in this item, we are not aware of any material pending or threatened litigation or of any proceedings known to be contemplated by governmental authorities which are, or would be, likely to have a material adverse effect upon us or our operations, taken as a whole.  There are no material proceedings pursuant to which any of our directors, officers or affiliates or any owner of record or beneficial owner of more than 5% of our securities or any associate of any such director, officer or security holder is a party adverse to us or has a material interest adverse to us.


A civil complaint filed in federal court in Nevada against the Company on May 9, 2009.  On December 29, 2009 the federal court issued an order dismissing the negligence and unjust enrichment claims against the Company with prejudice and the wrongful attachment claim was dismissed without prejudice.  ING Novex Insurance Company of Canada did not amend its claim against the Company and the statute of limitations has expired.  


On January 27, 2011 the Company was delivered a summons that it is being sued in the state of Nevada by Redcor Drilling, Inc. ("Redcor") for non-payment of the balance of a drilling invoice that is under dispute by the Company.    Redcor is demanding the Company pay US$241,477.24 together with interest at the rate of 4% per annum from September 18, 2010.  The Company has filed for an extension of time to respond to the summons and intends to continue to protest payment of the amount demanded on the basis of non-performance of services.  The Company has recorded the full amount as an accrued liability without accruing interest as the amount of the liability can be estimated and it is likely the Company may be required to pay some portion of the disputed amount.


Redcor placed a mechanic's lien on a portion of the Pan project that the Company leases from NVMC.  Subsequently, the Company posted a surety bond for the disputed amount that will allow the lien to be removed shortly.   

ITEM 4.   [REMOVED AND RESERVED]



48





PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common shares began trading on the NYSE Amex on January 3, 2008 under the trading symbol "MDW." Our common shares also trade on the TSX Venture Exchange (the "TSX.V") under the trading symbol "MDW." As of March 15, 2011, 101,038,746 common shares were issued and outstanding, and we had approximately 103 shareholders of record.  In many cases, shares are registered through intermediaries, making the precise number of shareholders difficult to obtain.


As of March 15, 2011, the closing price per share for our common shares as reported by the NYSE Amex was US$1.69 and as reported by the TSX .V was Cdn.$1.63.

 

The following table sets out the market price range of Midway common shares on the TSX.V for the periods indicated.

 

 

 

 

 

 

Period

High Cdn$

Low Cdn$


2009

 

   

 

 

 

First Quarter

 

$0.93

 

$0.30

 

Second Quarter

 

$0.95

 

$0.46

 

Third Quarter

 

$1.05

 

$0.61

 

Fourth Quarter

 

$1.09

 

$0.63

 


2010

 

   

 

 

 

First Quarter

 

$0.91

 

$0.60

 

Second Quarter

 

$0.80

 

$0.49

 

Third Quarter

 

$0.64

 

$0.38

 

Fourth Quarter

 

$0.95

 

$0.52

 

 

 

 

 

 

 

2011

 

 

 

 

 

First Quarter (through March 15, 2011)

 

$2.28

 

$0.80

 


The following table sets out the market price range of Midway common shares on the NYSE Amex for the periods indicated.

 

 

 

 

 

 

Period

High US$

Low US$


2009

 

   

 

 

 

First Quarter

 

$0.75

 

$0.35

 

Second Quarter

 

$0.93

 

$0.80

 

Third Quarter

 

$1.00

 

$0.56

 

Fourth Quarter

 

$1.04

 

$0.57

 


2010

 

   

 

 

 

First Quarter

 

$0.92

 

$0.58

 

Second Quarter

 

$0.82

 

$0.44

 

Third Quarter

 

$0.64

 

$0.38

 

Fourth Quarter

 

$0.95

 

$0.55

 

 

 

 

 

 

 

2011

 

 

 

 

 

First Quarter (through March 15, 2011)

 

$2.39

 

$0.80

 


 

 

49




 

Dividend Policy


We have not declared or paid cash dividends on our common shares since our inception and we expect for the foreseeable future to retain all of our earnings from operations for use in expanding and developing our business. Future dividend decisions will consider our then current business results, cash requirements and financial condition.


Repurchase of Securities


During 2010, neither the Company nor any affiliate of the Company repurchased common shares of the Company registered under Section 12 of the Securities Exchange Act of 1934, as amended.


Equity Compensation Plan Information


As of December 31, 2010, we had one equity compensation plan under which our common shares have been authorized for issuance to our officers, directors, employees and consultants, namely our Stock Option Plan adopted by the Board of Directors on May 6, 2003 as amended on May 12, 2008 (the "Stock Option Plan").  The Stock Option Plan has been approved by our shareholders.


The following summary information is presented for the Stock Option Plan as of December 31, 2010.







Number of Securities to
be Issued Upon Exercise
of Outstanding Options

Weighted Average
Exercise Price of
Outstanding Options,

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)

Plan Category

(a)

(b)

(c)

Equity Compensation
Plans Approved By
Security Holders

6,460,000

$1.10

3,183,950

Equity Compensation
Plans Not Approved By
Security Holders

Not Applicable

Not Applicable

Not Applicable


Stock Option Plan Information


The following is a summary of important Stock Option Plan provisions.  It is not a comprehensive discussion of all of the terms and conditions of the Stock Option Plan.  The information provided below may be modified or altered by some provisions in the Stock Option Plan.  Readers are advised to review the full text of the Stock Option Plan to fully understand all terms and conditions of the Stock Option Plan.    


Purpose

The purpose of the Stock Option Plan is to advance the interests of the Company and its shareholders by enhancing the ability of the Company to attract and retain the best available talent and to encourage the highest level of performance by senior officers, key employees, directors and consultants of the Company and of its subsidiaries through ownership of common shares in the Company.



50






Persons Eligible

The Stock Option Plan provides for the issuance of stock options to any director, senior officer, employee, company that is wholly-owned by a director, senior officer or, subject to applicable laws and the policies of any exchanges on which the Company's common shares are listed, a consultant, as the board of directors of the Company may from time to time designate as a participant under the Stock Option Plan.  


Administration


The Stock Option Plan is administered by the Board which has authority to (a) grant options priced in accordance with the Stock Option Plan; (b) to prescribe the form of certificate evidencing grants of options to participants and any other instruments required under the Stock Option Plan and to change such forms from time to time; (c) subject to the limitations specified in the Stock Option Plan, to adopt, amend and rescind rules and regulations for the administration of the Stock Option Plan; (d) to interpret and administer the Stock Option Plan and to decide all questions and settle all controversies that may arise in connection with the Stock Option Plan; (e) to determine who is eligible to receive options pursuant to the eligibility criteria set forth in the Stock Option Plan; and (f) to make all other determinations necessary or advisable for the administration of the Stock Option Plan. The grant and exercise of any options under the Stock Option Plan is subject to compliance with the applicable requirements of each stock exchange on which the shares are or become listed and of any governmental authority or regulatory body to which the Company is subject.


Shares Available under the Stock Option Plan


Options granted under the Stock Option Plan give the holder thereof the right to buy a specified number of common shares at a fixed price before a specified date in the future.  Depending upon the successful financial performance of the Company, such common shares will hopefully provide the holder thereof an opportunity to buy common shares at a price below the prevailing market price.  


Each option granted to participants will be subject to individual terms specified by the Board in the participant's option agreement.  


In order to comply with all applicable federal, provincial or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a participant, are withheld or collected from such participant.  


The Board of Directors amended the Stock Option Plan on May 12, 2008 to add an appendix called the Stock Incentive Plan for United States Resident Employees (the "U.S. Plan") to supplement and be a part of the Stock Option Plan.  The purpose of the U.S. Plan is to enable the Company to grant Incentive Stock Options, as that term is used in Section 422 of the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder to qualifying employees who are citizens or residents of the United States of America. This does not change the aggregate number of options that can be granted pursuant to the Stock Option Plan. The purpose of the Stock Option Plan is to allow the Company to grant options to directors, officers, employees and consultants, as additional compensation, and as an opportunity to participate in the success of the Company. The granting of such options is intended to align the interests of such persons and those of the shareholders. Options will be exercisable over periods of up to 10 years as determined by the Board of Directors of the Company and are required to have an exercise price no less than the market price prevailing on the date the option is granted less applicable discount, if any, permitted by the policies of the TSX Venture Exchange and approved by the Board of Directors. Market price means the last closing price per share on the TSX Venture Exchange on the trading day immediately precedent the day on which the Company announces the grant of the option or, if the grant is not announced, on the date of grant.

51





 

Pursuant to the Stock Option Plan, the Board of Directors may from time to time authorize the issue of options to directors, officers, employees and consultants of the Company and its subsidiaries or employees or companies providing management or consulting services to the Company or its subsidiaries. The principal features of the Stock Option Plan are as follows:

1.

The maximum number of common shares to be issued pursuant to the Stock Option Plan shall not exceed 10% of the issued and outstanding shares of the Company at the time of the stock option grant.

2.

Subject to adjustment as provided in the U.S. Plan appended to and forming part of the Stock Option Plan, the aggregate number of common shares that may be issued under the U.S. Plan shall be 3,000,000; provided , however , that the aggregate number of common shares authorized under the U.S. Plan for use in granting Incentive Stock Options shall, at all times, be a part of and subject to the limitations set forth in the Stock Option Plan, and shall be adjusted proportionately to reflect any adjustments to the number of shares authorized under the Stock Option Plan.  

3.

The maximum number of shares under option to the benefit of one person under the Stock Option Plan may not exceed 5%, on an annual basis, of the total of the issued and outstanding shares of the Company (on an undiluted basis) at the time of grant (in the case of a consultant, the annual maximum is 2%).

4.

If the holder of the option is engaged in investor relation activities for the Company, the total number of shares under option may not exceed 2% of the total of the issued and outstanding share capital of the Company (on an undiluted basis) at the time of grant.

5.

The options granted will have a maximum term of ten years from the date of grant. The option is non-assignable and non-transferable.

6.

If an optionee ceases to be employed by the Company (other than as a result of termination with cause) or ceases to act as director or officer of the Company, any option held by such optionee may be exercised within 90 days after the date that such optionee ceases to be employed by the Company or ceases to act as director or officer of the Company, as the case may be, or within 30 days if the optionee is engaged in investor relation activities and ceases to be employed to provide investor relation activities.

7.

In the event of death of an optionee, the optionee's heirs or administrators may exercise any portion of that outstanding option up to a period of one year from the date of the optionee's death for the termination date of the option, whichever is earlier.

8.

Any common shares subject to an option which for any reason are cancelled or terminated without having been exercised shall again be available for grant under the Stock Option Plan.


In the event of a stock split, consolidation or reclassification or other change in the Company's capital, other than an issue of common shares or by way of stock dividend, the number and exercise price of options will be adjusted by the Board to preserve the rights of the participants substantially proportionate to those existing prior to such event.


Shares issuable upon exercise of stock options have been registered under the U.S. Securities Act of 1933, as amended, pursuant to the Company's Registration Statement on Form S-8, filed with the Securities and Exchange Commission on January 22, 2008.


Terms and Conditions of Stock Options


Option Agreement.  All options shall be granted under the Stock Option Plan by means of an option agreement between the Company and each participant in the form as may be approved by the Board, such approval to be conclusively evidenced by the execution of the option agreement by any one director or officer of the Company.




52





Vesting and Term.  With the exception of any options granted to a consultant who performs Investor Relations Activities (as defined in the Stock Option Plan), all options granted to each participant under the Stock Option Plan will become vested on the grant date, or at such other time as may be established by the Board at the time of the grant in compliance with the policies of any exchange on which the common shares are traded.  The Board will, at the time of grant, determine the vesting date or dates of any options granted to a consultant who performs Investor Relations Activities (as defined in the Stock Option Plan) provided that such options must vest in stages over 12 months with no more than ¼ of the options vesting in any three-month period.  Pursuant to the Stock Option Plan, the term of any option granted shall not exceed ten (10) years, or five (5) years if the Company ceases to be a Tier 1 issuer on the TSX Venture Exchange at the time of grant.


Exercise Price.  The exercise price to each participant for each common share shall be as determined by the Board, but shall in no event be less than (a) the last closing price of the shares on the TSX Venture Exchange on the last business day before the date on which the option is granted or, if no common shares are traded on such day, then the minimum exercise price shall be the last closing price prior thereto less (b) a discount, which shall not exceed the amount set forth below, subject to a minimum price of Cdn$0.10:


Closing Price

Discount

up to Cdn$0.50

25%

$0.51 to $2.00

20%

Above $2.00

15%



Non-Assignable.  Options granted under the Stock Option Plan shall not be transferable or assignable by a participant other than by will or pursuant to the laws of succession.  


Third Party Transactions.  In the event of a consolidation or merger in which the Company is not the surviving company, or in the event its outstanding common shares are converted into securities of another entity or exchanged for other consideration, or in the event of an offer for common shares being made by a third party that constitutes a take-over bid as that term is defined in the Securities Act (British Columbia) or would constitute a take-over bid as that term is defined in the Securities Act (British Columbia) but for the fact that the offeree is not in British Columbia, all outstanding options will immediately vest and all options granted to the participant under the Stock Option Plan and held by the participant will continue to be exercisable after the Company has sent notice to each of the participants to exercise the options only for a period of 30 days from the date of such notice or until the expiration of the option, if earlier.  After such time, the options will terminate; provided, however, that if such transaction does not close, all such options will be deemed not to have vested nor expired.


Exercise of Stock Options


Any exercise of an option must be in writing, signed by the participant and delivered or mailed to the Company with payment in full by cash or certified cheque, payable to the Company, for the number of common shares for which the option is exercised.


Upon any such exercise of an option, the Company shall cause the transfer agent and registrar of the common shares to promptly deliver to such participant or the legal representative of such participant, as the case may be, a share certificate in the name of such participant or the legal representative of such participant, as the case may be, representing the number of common shares specified in the notice.


Common shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such common shares shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, and any applicable United States federal or state laws, Canadian laws, and such rules and regulations thereunder as the Company or the Board deems applicable.  The inability of the Company to obtain from any regulatory body the authority deemed by the Company to be necessary for the lawful issuance and sale of any common shares under the Stock Option Plan, or the unavailability of an exemption from registration for the issuance and sale of any common shares under the Stock Option Plan, shall relieve the Company from any liability with respect to the non-issuance or sale of such common shares and any purchase price paid to the Company will be returned to the participant.



53






Termination, Retirement, Resignation or Death of Participant


If any participant ceases to be eligible for a grant of options under the Stock Option Plan for any reason (a "Termination"), except the death of a participant or by reason of retirement pursuant to an established retirement policy of the Board or dismissal from employment or service for cause, all options granted to the participant under the Stock Option Plan and then held by the participant will, to the extent such options were vested and exercisable immediately prior to Termination, continue to be exercisable by the Participant for a period of 90 days following Termination or until the expiration date of the option if earlier.


If Termination is by reason of retirement pursuant to an established retirement policy of the Board, all options held by the retiring participant will become vested and exercisable, to the extent not already vested and exercisable immediately prior to retirement, and they continue to be exercisable until their original expiration date.


Any options granted to a participant who is engaged in Investor Relations Activities (as defined in the Stock Option Plan) will expire within 30 days after such participant ceases to be employed to provide Investor Relations Activities (as defined in the Stock Option Plan).


In the event of the death of a Participant, all options granted to the participant under the Stock Option Plan and held by the participant immediately before death will, to the extent such options were vested and exercisable at that time, continue to be exercisable by the legal representative of the participant for a period of one (1) year following the death of the participant or until the expiration date of the option if earlier.


Amendment of the Plan


The Board reserves the right, in its absolute discretion, to amend, modify or terminate the Stock Option Plan at any time.  The Stock Option Plan and any amendments thereto, are subject to the prior approval of the TSX Venture Exchange, the NYSE Amex and any other stock exchange or regulatory body having jurisdiction over the securities of the Company and ratification by the shareholders of the Company at each annual general meeting of the Company.  


Recent Sales of Unregistered Securities


Our unregistered sales of equity securities during the year ended December 31, 2010, have previously been reported on Current Reports on Form 8-K.


Stock Performance Graph


The performance graph below shows Midway Gold Corp.'s cumulative total return based on an initial investment of $100 in Midway common stock, as compared with the NYSE Amex Composite Index and the NYSE Amex Gold Miners Index.  The chart shows performance marks as of the last trading day during each of the last five years.  This performance chart assumes:  (1) $100 was invested on December 31, 2005 in Midway common stock at a price of $1.33 the NYSE Amex Composite Index and the NYSE Amex Gold Miners Index; and (2) all dividends are reinvested.  




54






 

31-Dec-2005

30-Dec-2006

29-Dec-2007

31-Dec-2008

31-Dec-2009

31-Dec

2010

Midway Gold Corp.

$100.00

$197.75

$292.49

$34.59


$65.42


$63.14

NYSE Amex Composite Index

$100.00

$116.81

$136.87

$79.38


$103.66


$125.44

NYSE Amex Gold Miners Index

$100.00

$121.84

$142.38

$104.24


$143.12


$191.69


Exchange Controls

Canada has no system of exchange controls.  There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors.  There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties or other payments to non-resident holders of common shares, except as described under "Taxation".

Taxation

Dividends paid or credited or deemed under the Income Tax Act (Canada) to be paid or credited by Midway on its common shares to a shareholder that is not resident in Canada for purposes of the Income Tax Act (Canada) will generally be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividend, subject to any reduction in the rate of withholding to which the shareholder is entitled under any applicable income tax convention between Canada and the country in which such shareholder is resident.  For example, where such shareholder is a resident of the United States, is fully entitled to the benefits under the Canada-United States Income Tax Convention (1980) and is the beneficial owner of the dividends, the applicable rate of Canadian withholding tax is generally reduced to 15% (or 5% in circumstances where such shareholder is also a company that is the beneficial owner of at least 10% of the voting stock of the Company).

ITEM 6.   SELECTED FINANCIAL DATA

Not Applicable.



55





ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this Annual Report.  This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.  See "Cautionary Note Regarding Forward-Looking Statements."  Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under "Risk Factors and Uncertainties" and elsewhere in this Annual Report.


Company Overview


Midway is an exploration stage company engaged in the acquisition, exploration, and, if warranted, development of gold and silver mineral properties in North America. Our mineral properties are located in Nevada and Washington. The Midway, Spring Valley, Pan, Gold Rock, and Golden Eagle gold properties are exploratory stage projects and have identified gold mineralization and the Thunder Mountain and Burnt Canyon projects are earlier stage gold and silver exploration projects. The Company is currently transitioning itself from an exploration company to a gold production company with plans to advance the Pan gold deposit located in White Pine County, Nevada through to production by as early as 2013.

 

Spring Valley Project


Barrick has the exclusive right to earn a 60% interest in the Spring Valley project by spending US$30,000,000 on the property over five years. Barrick may increase its interest by 10% (70% total) by spending an additional US$8,000,000 in the year immediately after vesting at 60%. At the Company's election, Barrick may also earn an additional 5% (75% total) by carrying the Company to a production decision and arranging financing for the Company's share of mine construction expenses with the carrying and financing costs plus interest to be recouped by Barrick once production has been established.


Barrick conducted and funded exploration in 2010 on the Spring Valley project to meet its minimum level of US$5,000,000.  


See "Item 2. Description of Properties - Spring Valley Project" for a more detailed description of the agreement with Barrick and the 2010 exploration program.


Pan Project


The most significant result of 2010 was the commissioning of the July 20, 2010 PEA (preliminary economic assessment) for the Pan gold project. 


See "Item 2. Description of Properties - Pan Project" for a more detailed description of the 2010 exploration program.


Midway Project


The most significant result of 2010 was co-operating with the Town of Tonopah to negotiate a plan to properly dispose of waste water from a future mine at the Midway project to the standards required by the State Water Engineer.   


See "Item 2. Description of Properties - Midway Project" for a more detailed description of the 2010 exploration program.


Gold Rock Project


The most significant result of 2010 was data compilation and surface exploration. 



56






See "Item 2. Description of Properties - Gold Rock Project" for a more detailed description of the 2010 exploration program.


Golden Eagle Project


Efforts in 2010 were limited to assembling a data package of previously developed technical information to be delivered to a third party consultant to provide a review and complete a scoping study on Midway's behalf and to aid in planning future development, if warranted.


See "Item 2. Description of Properties - Golden Eagle Project" for a more detailed description of the 2010 exploration program.


Exploration projects:


The Company maintained its interests in the Thunder Mountain and Burnt Canyon projects and returned the Roberts Gold project to its owners.

 

Results of operations for the year ended December 31, 2010 compared to the years ended December 31, 2009 and 2008


The net loss for the year ended December 31, 2010 was $5,826,972 (2009 -$2,642,176; 2008 - $16,165,394).  


Significant differences in costs between the years are as follows:


Exploration expenses in the year ended December 31, 2010 were $3,578,717 (2009 - $1,041,425; 2008 - $9,085,990).  The details of the expenses in each year may be found in the schedule to the audited consolidated annual financial statements, but are summarized here:  


 

 

Fiscal Year

 

 

 

2010

 

2009

 

2008

 

 

 

 

 

 

 

 

 

Midway project

 

$

187,847

 

$

382,461

 

$

1,632,453

 

Spring Valley project

 

$

106,253

 

$

123, 933

 

$

5,012,151

 

Pan project

 

$

3,046,300

 

$

196,082

 

$

1,685,881

 

Golden Eagle project

 

$

44,312

 

$

162,099

 

$

43,022

 

Gold Rock project

 

$

173,765

 

$

103,915

 

$

399,622

 

Burnt Canyon project

 

$

14,480

 

$

24,428

 

$

73,418

 

Property investigations and abandoned properties

 

$

2,657

 

$

1,863

 

$

43,081

 

Total

 

$

3,578,717

 

$

1,041,425

 

$

9,085,990

 


Exploration levels are determined by the success of previous exploration programs on each project and in part by available cash to fund additional programs.   As discussed earlier Barrick has been funding the Spring Valley project since the beginning of 2009 and the expenses reported by the Company related to activities not funded by Barrick. Exploration salaries and labor allocated to all the projects totaled $433,729 (2009 - $275,326; 2008 - $1,233,587) include the non-cash estimated fair value of stock based compensation for stock options granted to technical employees in the period of $48,775 (2009 - $197,169; 2008 - $258,158).


Included in consulting fees was $96,750 (2009 - $115,000; 2008 - $90,000) paid to Golden Oak Corporate Services, a company wholly owned by Doris Meyer, the Company's Chief Financial Officer and Corporate secretary for financial reporting and corporate compliance services.  Consulting fees in 2008 included a $100,000 fee paid to an investment banker for advice in the failed business combination with Golden Predator Mines Inc.




57





Investor relations and travel costs combined were $339,346 (2009 - $182,270; 2008 - $259,458).  Management travelled to and participated in several investor shows in North America.  In 2010, the Company focused its investor relations efforts on increasing the market's awareness of the Company by travelling to meet potential investors for one-on-one meetings and attending fewer retail investor conferences.  


Professional fees paid to lawyers and auditors in the year ended December 31, 2010 was $268,087 (2009 - $493,568; 2008 - $610,497).  In 2009 the Company incurred significant legal and auditing costs as it investigated and evaluated business opportunities. In 2008 the Company incurred significant legal and auditing costs related to a failed business transaction with Golden Predator Mines Inc.  


Salaries and benefits charged to administration totalled $1,668,094 (2009 - $1,693,147; 2008 - $1,076,408) which includes the non-cash component of stock based compensation of $789,826 (2009 - $955,069; 2008 - $242,870).  


Transfer agent and filing fees were $114,536 (2009 - $91,053; 2008 - $129,524) have increased from the previous year as the stock exchange listing fees are based on market capitalization which has increased.


Decreases in interest income in the current year are a result of the decreased interest rates and lower levels of cash on deposit.  The income tax recovery of $911,000 (2009 - $483,163; 2008 - $1,777,000) and an unrealized foreign exchange loss (gain) of ($469,035) (2009 - $(1,023,349); 2008 - $1,669,594) which is included within the foreign exchange loss (gain) of ($320,623 (2009 - $(832,783); 2008 - $1,473,709) relate to the US dollar denominated future income tax liability recorded upon the acquisition of Pan-Nevada and the Midway and Spring Valley projects.


ASC US GAAP requires the value of share purchase warrants issued with an exercise price denominated in a currency other than the Company's Canadian dollar functional currency to be considered as a liability and this liability is stated at fair value each reporting period.  On November 22, 2010 the share purchase warrants included in the public offering of units has an exercise price of US$0.90.  At November 22, 2010 the fair value of the warrant and the resulting warrant liability was $918,870 and at December 31, 2010 the fair value of the warrant and the warrant liability was $1,562,544 with the difference of $643,674 recorded as a loss on warrant liability.  Midway subsequently accelerated the expiry date of these warrants and by March 14, 2011 2,650,000 of the US $0.90 share purchase warrants had been exercised and 680,000 expired unexercised.   The liability will be eliminated in the first quarter 2011 interim financial statements.


Results of operations for the quarter ended December 31, 2010 compared to the quarter ended December 31, 2009


The net loss for the three months ended December 31, 2010 was $2,095,726 (2009 - $68,314).  


Significant differences in costs between the quarters are as follows:   


Exploration expenses in the three months ended December 31, 2010 was $1,162,373 (2009 - $135,422).  In the three months ended December 31, 2010 $36,234 (2009 - $100,788) was spent at the Midway Project, $76,075 (2009 - $8,864) at the Spring Valley Project, $979,085 (2009 - $9,951) at the Pan Project and $70,979 (2009 - $15,819) combined at the Company's other exploration projects and property investigations.  Exploration levels are determined by the success of previous exploration programs on each project and available cash to fund additional programs. Salaries and benefits included in mineral property exploration expenditures included $48,775 (2009 - $27,615) of non-cash component of stock based compensation.



Including in consulting fees was $29,250 (2009 - $22,500) paid to Golden Oak Corporate Services, a company wholly owned by Doris Meyer, the Company's Chief Financial Officer and Corporate secretary for financial reporting and corporate compliance services for the three months ended December 31, 2010.


Investor relations and travel costs combined were $99,008 for the three months ended December 31, 2010 (2009 - $46,297).  Management travelled to and participated in several investor shows in North America.  Midway has focused its investor relations efforts on increasing the market's awareness of Midway by travelling to meet potential investors and reducing the number of retail investor shows it attends.  



58





 


Professional fees paid to lawyers and auditors increased in the three months ended December 31, 2010 of $112,505 (2009 - $24,878) are significantly higher than the fourth quarter of 2009 due to increased activities including contract negotiations, governmental affairs and lobbying, and permitting efforts.


Salaries and benefits charged to administration totalled $305,125 in the three months ended December 31, 2010 (2009 - $170,837) which includes the non-cash component of stock based compensation of $137,903 (2009 - $15,619).  


Interest income in the three months ended December 31, 2010 was $2,571 (2009 - $8,093).


In the three months ended December 31, 2010, the income tax recovery of $164,000 (2009 - $423,263) and an unrealized foreign exchange (gain) loss of $(141,143) (2009 - $(32,483)) relate to the US dollar denominated future income tax liability recorded with the acquisition of Pan-Nevada and the Midway and Spring Valley projects.


The $643,674 loss on liability of warrants that occurred in the fourth quarter of 2010 was discussed in the prior section.  


Summary of Quarterly Results (Unaudited)

 

 

 

2010 Quarter Ended In

 

2009 Quarter Ended In

 

 

 

Dec

 

Sept

 

June

 

March

 

Dec

 

Sept

 

June

 

March

 

 

 

($ in thousands, except per share and total cash cost per ounce data)

 

Revenue from the sale of minerals

 

$

Nil-

 

$

Nil

 

$

Nil

 

$

Nil

 

$

Nil-

 

$

Nil

 

$

Nil

 

$

Nil

 

Net loss

 

 

2,096

 

 

1,527

 

 

1,812

 

 

392

 

 

68

 

 

836

 

 

491

 

 

1,247

 

Net loss per share, basic and diluted

 

 

0.02

 

 

0.02

 

 

0.02

 

 

0.00

 

 

0.00

 

 

0.01

 

 

0.01

 

 

0.02

 

  

Notes and Factors Affecting Comparability of Quarters:


(1)

The Company is a mineral exploration company at the exploration stage and has no operating revenues.

(2)

Stock based compensation costs are a non-cash expense and represent an estimate of the fair value of stock options granted.  These expenses are often the largest item included in the Statement of Operations and they represent a significant source of variation in loss from quarter to quarter.  Stock based compensation is allocated between salaries and benefits and mineral exploration expenditures.

(3)

Costs for the June 30 quarter tend to be higher due to printing and mailing of shareholder material for the Company's annual general meeting and costs of conducting this meeting.

(4)

Costs for the December 31 quarter also tend to be higher due to accruals for the annual audit.  Administratively, management tends to critically review all exploration projects in detail at this time of year and makes decisions about which projects it wishes to continue and which projects it will abandon.  




59





Financial Condition and Liquidity


The Company began the year with cash on hand of $1,740,322.  During 2010 the Company expended $5,376,845 on operations, invested a total of $609,667 in mineral property and equipment net of proceeds on sale of surplus equipment, the recovery of reclamation deposits and proceeds on sale of investments and raised $10,309,006 from one private placement, two public offerings and the exercise of share purchase warrants for cash to end at December 31, 2010 with cash on hand of $6,062,816.


The Company has not generated revenues from operations.  The consolidated financial statements are prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business in the foreseeable future.  Management believes that the Company's cash on hand at December 31, 2010 combined with amounts received from the issuance of shares subsequent to December 31, 2010 (Note 17 to the audited consolidated financial statements) is sufficient to finance exploration activities and operations through the next twelve months.  The Company's ability to continue on a going concern basis beyond the next twelve months depends on its ability to successfully raise additional financing for the substantial capital expenditures required to achieve planned principal operations.  While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company.  

  

These financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate.


In 2010, the Company issued a total of 19,084,499 common shares pursuant to one private placement, two public offerings and the exercise of share purchase warrants for cash proceeds, net of issue costs, of $10,309,006.   


Subsequent to December 31, 2010 the Company issued a total of 4,599,250 common shares pursuant to the exercise of share purchase warrants for cash proceeds of approximately $3,944,400.


As of March 15, 2011, there are 7,200,000 stock options at prices ranging from $0.56 to $3.36.  While it is probable that some of these options will be exercised, it is not possible to predict the timing or the amount of funds which might be received.  


As at March 15, 2011, there are 5,569,756 share purchase warrants that are "in-the-money" which if exercised will raise a total of $4,455,805.



Midway plans to raise capital in 2011 to fund its continued exploration and development.


Contractual Obligations

 

There are no contractual obligations other than those described in the notes to the audited consolidated financial statements.


Off-balance sheet arrangements


There are no off balance sheet arrangements.


Inflation


We do not believe that inflation has had a significant impact on our consolidated results of operations or financial condition.


Environmental Compliance

 

Our current and future exploration and development activities, as well as our future mining and processing operations, are subject to various federal, state and local laws and regulations in the countries in which we conduct our activities. These laws and regulations govern the protection of the environment, prospecting, development, production, taxes, labor standards, occupational health, mine safety, toxic substances and other matters. We expect to be able to comply with those laws and do not believe that compliance will have a material adverse effect on our competitive position. We intend to obtain all licenses and permits required by all applicable regulatory agencies in connection with our mining operations and exploration activities. We intend to maintain standards of environmental compliance consistent with regulatory requirements.

 



60





Midway has an obligation to reclaim its properties after the surface has been disturbed by exploration methods at the site. As of December 31, 2010, we have accrued $41,445 (US$41,670) related to reclamation and other closure requirements at our properties, compared to $41,872 at December 31, 2009. These liabilities are covered by a combination of surety bonds and restricted cash totaling $260,087 (US$261,499) at December 31, 2010 (2009 - $279,126). We have accrued as a current liability what management believes is the present value of our best estimate of the liabilities as of December 31, 2010; however, it is possible that our obligations may change in the near or long term depending on a number of factors.


Critical accounting policies


Critical accounting estimates used in the preparation of the financial statements include our estimate of recoverable value on our property, plant and equipment, site reclamation and rehabilitation as well as the value assigned to stock-based compensation expense and the estimates of future income tax liabilities. These estimates involve considerable judgment and are, or could be, affected by significant factors that are out of our control.


The factors affecting stock-based compensation include estimates of when stock options might be exercised and the stock price volatility. The timing for exercise of options is out of our control and will depend, among other things, upon a variety of factors including the market value of Midway common shares and financial objectives of the holders of the options. We used historical data to determine volatility in accordance with Black-Scholes modeling, however the future volatility is inherently uncertain and the model has its limitations. While these estimates can have a material impact on the stock-based compensation expense and hence results of operations, there is no impact on our financial condition.


Midway's recoverability evaluation of its mineral properties and equipment is based on market conditions for minerals, underlying mineral resources associated with the assets and future costs that may be required for ultimate realization through mining operations or by sale. Midway is in an industry that is exposed to a number of risks and uncertainties, including exploration risk, development risk, commodity price risk, operating risk, ownership and political risk, funding and currency risk, as well as environmental risk. Bearing these risks in mind, Midway has assumed recent world commodity prices will be achievable. We have considered the mineral resource reports by independent engineers on the Midway, Spring Valley, Pan, Gold Rock and Golden Eagle projects in considering the recoverability of the carrying costs of the mineral properties.  All of these assumptions are potentially subject to change, out of our control, however such changes are not determinable. Accordingly, there is always the potential for a material adjustment to the value assigned to mineral properties and equipment.


Midway has an obligation to reclaim its properties after the surface has been disturbed by exploration methods at the site. As a result Midway has recorded a liability for the fair value of the reclamation costs it expects to incur. The Company estimated applicable inflation and credit-adjusted risk-free rates as well as expected reclamation time frames. To the extent that the estimated reclamation costs change, such changes will impact future reclamation expense recorded.


Recent United States Accounting Pronouncements:


In June 2009, the Financial Accounting Standards Board ("FASB") issued new accounting standards to address the elimination of the concept of a qualifying special purpose entity which also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity. The new standard became effective for the Company's fiscal year beginning January 1, 2010. The adoption of this standard did not have a material effect on the Company's financial statements.



61





 


In January 2010, FASB issued an accounting standards update for fair value measurements and disclosure. This update requires additional disclosures related to transfers in and out of level 1 and 2 fair value measurements and enhanced detail in the level 3 reconciliation.  The guidance was amended to clarify the level of disaggregation required for assets and liabilities and the disclosures required for inputs and valuation techniques used to measure the fair value of assets and liabilities that fall in either level 2 or level 3.  The updated guidance became effective for the Company's fiscal year beginning January 1, 2010 with the exception of the level of disaggregation which becomes effective for the Company's fiscal year beginning January 1, 2011.  The adoption of the updated guidance did not have a material effect on the Company's financial statements.


In January 2010, FASB issued an accounting standards update for the deconsolidation of a subsidiary or de-recognition of a group of assets. This update requires additional disclosure related to the valuation techniques used to measure the fair value of any retained investment in the former subsidiary or group of assets, the nature of the continuing involvement with the subsidiary or entity acquiring the group of assets and whether the transaction was with a related party or whether the former subsidiary or entity acquiring the group of assets will become a related party.  This amendment clarifies but does not change the scope of current US GAAP. The updated guidance became effective for the Company's fiscal year beginning January 1, 2010. The adoption of the updated guidance did not have a material effect on the Company's financial statements.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not Applicable.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following Consolidated Financial Statements of Midway Gold Corp., Report of Independent Registered Chartered Accountants are filed as part of this Item 8 and are included in this Annual Report filed on Form 10-K.

 

 

 

Page

Report of Independent Registered Chartered Accountants

 

 

F-2

Consolidated Balance Sheets as of December 31, 2010 and 2009

 

 

F-3

Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008

 

 

F-4

Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008

 

 

F-5

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2010, 2009 and 2008

 

 

F-6

Consolidated Statements of Stockholders' Equity

 

 

F-6

Notes to the Consolidated Financial Statements

 

 

F-11


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no disagreements with KPMG LLP, our independent registered chartered accountants, regarding any matter of accounting principles or practices or financial statement disclosure.

ITEM 9A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures


At the end of the period covered by this Annual Report on Form 10-K for the fiscal year ended December 31, 2010, an evaluation was carried out under the supervision of and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation the CEO and the CFO have concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures were ineffective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.



62





 


Management's Report on Internal Control over Financial Reporting


The management of Midway is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that:


·

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

·

provide reasonable assurance regarding prevention or timely detections of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.


The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2010. In making this assessment, it used the criteria set forth in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management concluded that, as of December 31, 2010, the Company's internal control over financial reporting is ineffective based on those criteria and one material weakness was identified as outlined below.


The Company's internal control over financial reporting is determined as ineffective as one material weakness is not remedied. The Company's accounting personnel have limited expertise in US generally accepted accounting principles relating to in depth analysis and review of complex accounting transactions and implementation of new standards that may be material to the Company's financial statements. This control deficiency, which is pervasive in impact, did not and has not resulted in a misstatement to the financial statements; however, there is a reasonable possibility that a material misstatement of the interim or annual consolidated financial statements would not have been prevented or detected on a timely basis.

This Annual Report does not include an attestation report of KMPG LLP, an independent registered public accounting firm that audited the Company's annual financial statements included in this Annual Report, regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permit the Company, as a smaller reporting company, to provide only management's report in this Annual Report.

Changes in Internal Control over Financial Reporting  

During the period covered by this report, there were no changes to internal control over financial reporting that materially affected or are reasonably likely to materially affect our internal control over financial reporting.




63





Remediation plans


The Company has employed an Assistant CFO and US Controller in its Denver, Colorado office to further increase exposure to US GAAP knowledge and application.

 

ITEM 9B.  OTHER INFORMATION

None

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding directors of the Company is incorporated by reference in this Annual Report on Form 10-K to the sections entitled "Information on the Board of Directors and Executive Officers", ("Corporate Governance", "Board Committees" and "Other Governance Matters" in our definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2011 annual meeting of shareholders (the "Proxy Statement").

ITEM 11.   EXECUTIVE COMPENSATION

Reference is made to the information set forth under the section entitled "Executive Compensation" in the Proxy Statement, which information is incorporated by reference in this Annual Report on Form 10-K.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERS

Reference is made to the information set forth under the section entitled "Beneficial Ownership Table" in the Proxy Statement, which information is incorporated by reference in this Annual Report on Form 10-K.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Reference is made to the information contained under the section entitled "Interests of Insiders and Others in Material Transactions" contained in the Proxy Statement, which information is incorporated by reference in this Annual Report on Form 10-K.

ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES

Reference is made to the information contained under the section entitled "Principal Accountant Fees and Services" contained in the Proxy Statement, which information is incorporated by reference in this Annual Report on Form 10-K.

PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Documents filed as part of this Annual Report on Form 10-K or incorporated by reference:

 

(1)

The consolidated financial statements are listed on the "Index to Financial Statements" on Page F-1 to this report.

 

(2)

Financial Statement Schedules (omitted because they are either not required, are not applicable, or the required information is disclosed in the Notes to the Consolidated Financial Statements or related notes).

 

(3)

Reference is made to the Exhibit Index that follows the signature pages on this report.



64





SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



 

MIDWAY GOLD CORP.


March 15, 2011


By:  /s/ Daniel E. Wolfus

       Daniel E. Wolfus

       Chairman, Chief Executive Officer and Director

     (Principal Executive Officer)



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



 

 

 

 

 

Name

 

Title

 

Date

 

 

 

 

 

/s/ Daniel E. Wolfus

 Daniel E. Wolfus

 

Chairman, Chief Executive Officer and Director (Principal Executive Officer)

 

March 15, 2011

 

 

 

 

 

/s/ Kenneth A. Brunk

 Kenneth A. Brunk

 

President, Chief Operating Officer and Director

 

March 15, 2011

 

 

 

 

 

/s/ George T. Hawes

 George T. Hawes

 

Director

 

March 15, 2011

 

 

 

 

 

/s/ Roger Newell

 Roger Newell

 

Director

 

March 15, 2011

 

 

 

 

 

/s/ Frank Yu

Frank Yu

 

Director

 

March 15, 2011

 

 

 

 

 

/s/ Doris A. Meyer

Doris A. Meyer

 

Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer)

 

March 15, 2011


 



65





 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Registered Chartered Accountants

 

F-2

 

Consolidated Balance Sheets as of December 31, 2010 and 2009

 

F-3

 

Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008

 

F-4

 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008

 

F-5

 

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2010, 2009 and 2008

 

F-6

 

Consolidated Statements of Stockholders' Equity

 

F-7

 

Notes to the Consolidated Financial Statements

 

F-12

 




66





 INDEX TO EXHIBITS

 

Exhibit Number

Description

2.1

Amended and Restated Arrangement Agreement between Midway Gold Corp. and Pan-Nevada Gold Corporation, dated February 26, 2007, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

3.1

Notice of Articles, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

3.2

Articles, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

4.1

Form of Stock Certificate, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

4.2

Form of Warrant Certificate issued in connection with the November 2006 Private Placement, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

4.3

Form of Subscription Agreement for May 2006 Private Placement, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

4.4

Form of Subscription Agreement for November 2006 Private Placement, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

4.5

Common share purchase warrant indenture providing for the issue of up to 5,539,333 common share purchase warrants dated June 10, 2010 between Midway Gold Corp. and Computershare Trust Company of Canada.

4.6

Common share purchase warrant indenture providing for the issue of up to 3,330,000 common share purchase warrants dated November 22, 2010 between Midway Gold Corp. and Computershare Trust Company of Canada.

10.1

Mineral Lease Agreement between the Lyle Campbell Trust and Pan-Nevada Gold Corporation dated January 7, 2003, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

10.2

Stock Option Plan of Midway Gold Corp., previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

10.3

Stock Option Plan of Midway Gold Corp. - Form of Stock Option Agreement, previously filed with Amendment No.1 to the initial registration statement on Form S-1/A filed with the Securities and Exchange Commission on September 27, 2007 and incorporated herein by reference.

10.4

Contracting Agreement between Doris Meyer, Golden Oak Corporate Services Ltd. and Midway Gold Corp. dated December 1, 2006, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

10.5

Consulting Agreement between Kelly Hyslop and Midway, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

 

 

67



 

10.6

Consulting Agreement between John Watson, previously filed with the initial registration statement on Form S-1 filed with the Securities and Exchange Commission on August 6, 2007 and incorporated herein by reference.

10.7

Assignment agreement with Martin H. Webster, Donald H. Jones, Michael C. Agran, Virginia Genest, Wallace Stephens, and Sandra Newmark dated June 25, 2008, previously filed on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008.

10.8

Letter of Intent with Kinross dated May 28, 2008, previously filed on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2008

10.9

Letter of Intent with Hecla dated May 28, 2008, previously filed on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2008

10.10

Term Sheet between MGC and Barrick Gold dated October 17, 2008, previously filed on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2008

10.11

2008 Stock Option Plan, previously filed on Form 8-K filed with the Securities and Exchange Commission on January 15, 2009

10.12

Exploration, Development and Mine Operating Agreement dated effective March 10, 2009, previously filed on Form 8-K, filed with the Securities and Exchange Commission on March 16, 2009

10.13

Agency Agreement dated June 10, 2010 between the Company and Haywood Securities Inc., previously filed on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2010

10.14

Agency Agreement dated November 12, 2010 between the Company and Haywood Securities Inc., previously filed on Form 8-K, filed with the Securities and Exchange Commission on November 12, 2010

21

Subsidiaries of the Company

23.1

Consent of KPMG LLP

23.2

Consent of William Crowl

23.3

Consent of Donald Hulse

23.4

Consent of Terre Lane

23.5

Consent of Gustavson Associates

23.6

Consent of Eric Chapman, Snowden Mining Industry Consultants Inc.

23.7

Consent of Thom Seal, Differential Engineering Inc.

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-15(f) of the Exchange Act

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-15(f) of the Exchange Act

32.1

Certification of Chief Executive Officer pursuant to Rule 13a or 15(d) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to Rule 13a or 15(d) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

68



 

 

 

EXHIBIT 21




Subsidiaries of Midway Gold Corp.



A 100% interest in MGC Resources Inc. a Nevada corporation


A 100% interest in MGC Properties Inc., a Nevada corporation


A 100% interest in Pan-Nevada Gold Corporation, a British Columbia corporation which in turn owns 100% of Apex Energy (U.S.) Inc. a dormant Nevada corporation


A 100% interest in GEH (B.C.) Holding Inc. a British Columbia corporation which in turn owns 100% of GEH (U.S.) Holding Inc. a Nevada corporation which in turn owns 100% of Golden Eagle Holding Inc. a Washington corporation


 

 

 

 

 

 

 

 

 

 

 

 

 

 


69






 

 

 

 

KPMG LLP

Chartered Accountants

PO Box 10426  777 Dunsmuir Street

Vancouver  BC  V7Y 1K3

Canada

 

Telephone

(604) 691-3000

Fax

(604) 691-3031

Internet

www.kpmg.ca


EXHIBIT 23.1




CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors

Midway Gold Corp.



We consent to the incorporation by reference in the registration statements on Form S-3 (Nos. 333-172009 and 333-165842) and on Form S-8 (No. 333-148796)of Midway Gold Corp. of our reports dated March 15, 2011, with respect to the consolidated balance sheets of Midway Gold Corp. as of December 31, 2010 and 2009, and the related consolidated statements of operations, cash flows, comprehensive loss, and stockholders' equity for each of the years in the three-year period ended December 31, 2010, which report appears in the December 31, 2010 annual report on Form 10-K of Midway Gold Corp.



(Signed) KPMG LLP


Vancouver, Canada

March 15, 2011




KPMG LLP, a Canadian limited liability partnership is the Canadian
member firm of KPMG International, a Swiss cooperative.



70





EXHIBIT 23.2


Consent of William J. Crowl


Reference is made to the Annual Report of Midway Gold Corp. (the "Company") on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011 (the "Annual Report").


I hereby consent to the references to my name under the heading "Description of Properties - Pan property" and to the summary of the technical report entitled "NI 43-101 Preliminary Economic Assessment of the Pan Gold Project, White Pine County, Nevada, dated July 20, 2010" in the Annual Report which the Company used, or directly quoted from, in preparing summaries concerning the Company's mineral resources which appear in such Annual Report and the incorporation therein of such references to the Company's registration statements on Form S-3 (Nos. 333-172009 and 333-165842) and on Form S-8 (No. 333-148796) on Form S-8 (File No. 333-148796).



/s/ "William J. Crowl, R.G."

William J. Crowl, R.G.


March 17, 2011



 

 

 

 

 

 

 

 

 

 

 

71





EXHIBIT 23.3


Consent of Donald E. Hulse, P.E.


Reference is made to the Annual Report of Midway Gold Corp. (the "Company") on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011 (the "Annual Report").


I hereby consent to the references to my name under the heading "Description of Properties - Pan property" and to the summary of the technical report entitled "NI 43-101 Preliminary Economic Assessment of the Pan Gold Project, White Pine County, Nevada, dated July 20, 2010" in the Annual Report which the Company used, or directly quoted from, in preparing summaries concerning the Company's mineral resources which appear in such Annual Report and the incorporation therein of such references to the Company's registration statements on Form S-3 (Nos. 333-172009 and 333-165842) and on Form S-8 (No. 333-148796) on Form S-8 (File No. 333-148796).



/s/ "Daniel E. Hulse, P.E."

Donald E. Hulse, P.E.


March 17, 2011




 

 

 

 

 

 

 

 

 

 

 

72





EXHIBIT 23.4


Consent of Terre A. Lane


Reference is made to the Annual Report of Midway Gold Corp. (the "Company") on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011 (the "Annual Report").


I hereby consent to the references to my name under the heading "Description of Properties - Pan property" and to the summary of the technical report entitled "NI 43-101 Preliminary Economic Assessment of the Pan Gold Project, White Pine County, Nevada, dated July 20, 2010" in the Annual Report which the Company used, or directly quoted from, in preparing summaries concerning the Company's mineral resources which appear in such Annual Report and the incorporation therein of such references to the Company's registration statements on Form S-3 (Nos. 333-172009 and 333-165842) and on Form S-8 (No. 333-148796) on Form S-8 (File No. 333-148796).



/s/ "Terre A. Lane."

Terre A. Lane


March 17, 2011


 

 

 

 

 

 

 

 

 

 

 

 

 


73






EXHIBIT 23.5


Consent of Gustavson Associates


Reference is made to the Annual Report of Midway Gold Corp. (the "Company") on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011 (the "Annual Report").


I hereby consent to the references to my name under the heading "Description of Properties - Pan property" and to the summary of the technical report entitled "NI 43-101 Preliminary Economic Assessment of the Pan Gold Project, White Pine County, Nevada, dated July 20, 2010" in the Annual Report which the Company used, or directly quoted from, in preparing summaries concerning the Company's mineral resources which appear in such Annual Report and the incorporation therein of such references to the Company's registration statements on Form S-3 (Nos. 333-172009 and 333-165842) and on Form S-8 (No. 333-148796) on Form S-8 (File No. 333-148796).



/s/ "William Crowl."

Gustavson Associates


March 17, 2011




 

 

 

 

 

 

 

 

 

 

 

74





EXHIBIT 23.6


Consent of Eric Chapman


Reference is made to the Annual Report of Midway Gold Corp. (the "Company") on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011 (the "Annual Report").


I hereby consent to the references to my name under the heading Description of Properties - Golden Eagle Property - Mineral Resources" in the Annual Report which the Company used, or directly quoted from, in preparing summaries concerning the Company's mineral resources which appear in such Annual Report and the incorporation therein of such references to the Company's registration statements on Form S-3 (Nos. 333-172009 and 333-165842) and on Form S-8 (No. 333-148796) on Form S-8 (File No. 333-148796).



/s/ "Eric Chapman"

Eric Chapman

Snowden Mining Industry Consultants Inc.


March 17, 2011



 

 

 

 

 

 

 

 

 

 

 


75







EXHIBIT 23.7


Consent of Thom Seal


Reference is made to the Annual Report of Midway Gold Corp. (the "Company") on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011 (the "Annual Report").


I hereby consent to the references to my name under the heading Description of Properties - Golden Eagle Property - Mineral Resources" in the Annual Report which the Company used, or directly quoted from, in preparing summaries concerning the Company's mineral resources which appear in such Annual Report and the incorporation therein of such references to the Company's registration statements on Form S-3 (Nos. 333-172009 and 333-165842) and on Form S-8 (No. 333-148796) on Form S-8 (File No. 333-148796).




/s/ "Thom Seal"

Thom Seal

Differential Engineering Inc.


March 17, 2011



 

 

 

 

 

 

 

 

 

76





 

EXHIBIT 31.1

CERTIFICATIONS


I, Daniel E. Wolfus, certify that:


1.

I have reviewed this annual report on Form 10-K of Midway Gold Corp.:


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


  a.  

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

       

  b.  

Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

       

  c.  

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

       

  d.  

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


  a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

       

  b.  

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date:


March 17, 2011

/s/ Daniel E. Wolfus

Daniel E. Wolfus

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

 


 

 

 

 

 

 


77






  EXHIBIT 31.2

CERTIFICATIONS


I, Doris A. Meyer, certify that:


1.

I have reviewed this annual report on Form 10-K of Midway Gold Corp.:


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


  a.  

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

       

  b.  

Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

       

  c.  

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

       

  d.  

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


  a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

       

  b.  

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date:


March 17, 2011

/s/ Doris A. Meyer

Doris A. Meyer

Chief Financial Officer and Corporate Secretary (Principal Accounting and Financial Officer)



 

 

78





EXHIBIT 32.1


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350


AS ADOPTED PURSUANT TO


SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Midway Gold Corp. (the "Company") does hereby certify with respect to the Annual Report of the Company on Form 10-K for the period ended December 31, 2010 (the "Report") that:


  1.  

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  2.  

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date:


March 17, 2011

/s/ Daniel E. Wolfus

Daniel E. Wolfus

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)



The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.


 

 

 

 

 

 

 

 

 

 

 


79





EXHIBIT 32.2


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350


AS ADOPTED PURSUANT TO


SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Midway Gold Corp. (the "Company") does hereby certify with respect to the Annual Report of the Company on Form 10-K for the period ended December 31, 2010 (the "Report") that:


  1.  

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  2.  

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date:

March 17, 2011

/s/ Doris A. Meyer

Doris A. Meyer

Chief Financial Officer and Corporate Secretary (Principal Accounting and Financial Officer)


 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.






80



 







MIDWAY GOLD CORP.


(an exploration stage company)


CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars)




Years ended December 31, 2010, 2009 and 2008







 

 

 

 

KPMG LLP

Chartered Accountants

PO Box 10426  777 Dunsmuir Street

Vancouver  BC  V7Y 1K3

Canada

 

 

Telephone

(604) 691-3000

Fax

(604) 691-3031

Internet

www.kpmg.ca

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Midway Gold Corp.

We have audited the accompanying consolidated balance sheets of Midway Gold Corp. as at December 31, 2010 and 2009 and the consolidated statements of operations, cash flows, comprehensive loss and stockholders' equity for each of the years in the three-year period ended December 31, 2010.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our audit opinions.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and 2009 and the results of its operations and its cash flows for each of the years in the three-year in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.


[financials004.gif]


Chartered Accountants

Vancouver, Canada

March 15, 2011

 

 

 

 

 

 

 

 

KPMG LLP, a Canadian limited liability partnership is the Canadian

member firm of KPMG International, a Swiss cooperative.

 

 

 

 

F-2



MIDWAY GOLD CORP.

 (an exploration stage company)

CONSOLIDATED BALANCE SHEETS

 (Expressed in Canadian dollars)

 

 

 

 

December 31, 2010

 

December 31, 2009

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

       6,062,816

$

       1,740,322

 

Amounts receivable (note 6 (b))

 

             91,710

 

          120,735

 

Prepaid expenses

 

          134,981

 

            14,088

 

 

 

       6,289,507

 

       1,875,145

Investments (notes 3 and 4)

 

             80,687

 

                    -

Reclamation deposit (note 7)

 

          260,087

 

          279,126

Equipment (note 5)

 

          197,224

 

            86,985

Mineral properties (note 6)

 

     49,571,061

 

     49,251,838

 

 

$

     56,398,566

$

     51,493,094

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

$

          711,091

$

          403,018

 

 

 

 

 

 

Warrant liability (note 8)

 

       1,562,544

 

                    -

 

 

 

 

 

 

Future income tax liability

 

       6,951,570

 

       8,331,605

 

 

 

 

 

 

Stockholders' equity (note 8)

 

 

 

 

 

Common stock authorized - unlimited, no par value

 

 

 

 

 

Issued - 96,439,496 (2009 - 77,354,997)

 

  100,062,385

 

     92,670,965

 

Additional paid in capital

 

       9,192,426

 

       6,355,109

 

Accumulated other comprehensive income

 

             13,125

 

                    -

 

Deficit accumulated during the exploration stage

 

   (62,094,575)

 

    (56,267,603)

 

 

 

     47,173,361

 

     42,758,471

 

 

$

     56,398,566

$

     51,493,094

 

 

 

 

 

 

Nature and continuance of operations  (note 1)

 

 

 

 

Contingencies (note 10)

 

 

 

 

Commitments (note 11)

 

 

 

 

Subsequent events (notes 6, 10 and 17)

 

 

 

 


Approved on behalf of the Board:


"George Hawes" Director

"Dan Wolfus" Director


 

The accompanying notes are an integral part of these consolidated financial statements.


 

F-3



MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

 (Expressed in Canadian dollars)

 

 

 

Year ended December
31, 2010

 

Year ended December
31, 2009

 

Year ended December
31, 2008

 

Cumulative period from inception (Mar 14, 1996) to December
31, 2010

 

 

 

 

 

 

 

 

 

(unaudited)

Expenses

 

 

 

 

 

 

 

 

 

Consulting

$

       128,676

$

         100,756

$

         223,518

$

               752,865

 

Depreciation

 

          79,302

 

         118,916

 

         126,399

 

               688,586

 

Gain on sale of subsidiary

 

                   -

 

                   -

 

                   -

 

          (2,806,312)

 

Interest and bank charges

 

            5,670

 

           28,500

 

           40,256

 

               891,753

 

Investor relations

 

       138,257

 

           72,166

 

         123,027

 

            1,236,007

 

Legal, audit and accounting

 

       268,087

 

         493,568

 

         610,497

 

            2,612,442

 

Management fees

 

        (19,141)

 

          (29,271)

 

                   -

 

               216,588

 

Mineral exploration expenditures (schedule)

 

    3,578,717

 

      1,041,425

 

      9,085,990

 

          47,480,938

 

Mineral property interests written off (note 6)

 

       119,980

 

                   -

 

      4,246,565

 

            4,391,734

 

Mineral property interests recovered (note 6)

 

        (60,120)

 

                   -

 

                   -

 

               (60,120)

 

Office and administration (note 12)

 

       209,767

 

         203,361

 

         184,189

 

            1,512,507

 

Salaries and benefits

 

    1,668,094

 

      1,693,147

 

      1,076,408

 

            9,314,064

 

Transfer agent and filing fees

 

       114,536

 

           91,503

 

         129,524

 

               599,312

 

Travel

 

       201,089

 

         110,104

 

         136,431

 

               979,735

Operating loss

 

    6,432,914

$

      3,924,175

$

    15,982,804

 

          67,810,099

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

       320,623

 

         832,783

 

     (1,473,709)

 

               985,993

 

Loss on change in liability of warrants

      (643,674)

 

                   -

 

                   -

 

             (643,674)

 

Interest and investment income

 

          10,453

 

           15,260

 

         117,886

 

               853,325

 

Gain (loss) on sale of equipment

 

                  38

 

            (3,057)

 

            (1,769)

 

                 (5,903)

 

Gain (loss) on sale of investments (note 4)

 

                   -

 

           53,850

 

            (9,773)

 

                 44,077

 

Investment write down (note 4)

 

                   -

 

        (100,000)

 

                   -

 

             (130,000)

 

Unrealized gain (loss) on investments (note 4)

 

            7,442

 

                   -

 

        (592,225)

 

             (584,783)

 

Other income

 

                  60

 

                   -

 

                   -

 

                 87,281

 

 

 

      (305,058)

$

         798,836

$

     (1,959,590)

 

               606,316

Net loss before income tax

 

    6,737,972

 

      3,125,339

 

    17,942,394

 

          67,203,783

 

Future income tax recovery (note 15)

       911,000

 

         483,163

 

      1,777,000

 

            5,109,208

Net loss

$

    5,826,972

$

      2,642,176

$

    16,165,394

$

          62,094,575

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share

$

              0.07

$

               0.04

$

               0.31

 

 

Weighted average number of shares 

     outstanding

 

  85,133,343

 

    73,050,522

 

    52,791,751

   


The accompanying notes are an integral part of these consolidated financial statements.



 

F-4

 

 



MIDWAY GOLD CORP.

(An exploration stage company)  

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Expressed in Canadian dollars)  

 

 

 

 

Year ended December
31, 2010

 

Year ended December
31, 2009

 

Year ended December
31, 2008

 

Cumulative period from inception (Mar 14, 1996) to December 31, 2010

Cash provided by (used in):

 

 

 

 

 

 

 

(unaudited)

Operating activities:

 

 

 

 

 

 

 

 

 

Net loss

$

    (5,826,972)

$

       (2,642,176)

$

     (16,165,394)

$

     (62,094,575)

 

Items not involving cash:

 

 

 

 

 

 

 

 

 

 

Depreciation

 

            79,302

 

           118,916

 

           126,399

 

            688,586

 

 

Stock-based compensation (note 8(c))

 

         838,601

 

        1,152,238

 

           501,028

 

         6,974,732

 

 

Unrealized foreign exchange loss (gain)

 

        (469,035)

 

       (1,023,349)

 

        1,669,594

 

       (1,329,010)

 

 

Investment write down

 

                     -

 

           100,000

 

                     -

 

            130,000

 

 

Unrealized (gain) loss on investment

 

            (7,442)

 

                     -

 

           592,225

 

            584,783

 

 

Non-cash interest expense

 

                     -

 

                     -

 

                     -

 

            234,765

 

 

Loss on change in liability of warrants

 

         643,674

 

 

 

 

 

            643,674

 

 

Future income tax recovery

 

        (911,000)

 

          (483,163)

 

       (1,777,000)

 

       (5,109,208)

 

 

Gain on sale of subsidiary

 

                     -

 

                     -

 

                     -

 

       (2,806,312)

 

 

Loss (gain) on sale of equipment

 

                  (38)

 

               3,057

 

               1,769

 

                5,903

 

 

Loss (gain) on sale of investments

 

                     -

 

            (53,850)

 

               9,773

 

            (44,077)

 

 

Mineral property interests written off

 

         119,980

 

                     -

 

        4,246,565

 

         4,391,734

 

 

Mineral property interest recovery

 

          (60,120)

 

                     -

 

                     -

 

            (60,120)

 

Change in non-cash working capital items:

 

 

 

 

 

 

 

 

 

 

Amounts receivable

 

            29,025

 

            (32,501)

 

             21,913

 

            (73,423)

 

 

Prepaid expenses

 

        (120,893)

 

             16,489

 

             58,885

 

          (155,023)

 

 

Accounts payable and accrued liabilities

         308,073

 

             34,006

 

          (149,412)

 

            806,096

 

 

Accrued interest payable

 

                     -

 

              (7,918)

 

               7,918

 

                      -

 

 

 

 

    (5,376,845)

 

       (2,818,251)

 

     (10,855,737)

 

     (57,211,475)

 

 

 

 

 

 

 

 

 

 

 

Investment activities:

 

 

 

 

 

 

 

 

 

Proceeds on sale of subsidiary

 

                     -

 

                     -

 

                     -

 

            254,366

 

Proceeds on sale of equipment

 

              3,321

 

             17,886

 

                  919

 

              22,820

 

Proceeds on sale of mineral property

 

                     -

 

                     -

 

                     -

 

            233,459

 

Proceeds on sale of investments

 

                     -

 

           300,525

 

             21,327

 

            321,852

 

Mineral property acquisitions

 

        (439,203)

 

          (926,210)

 

       (3,676,287)

 

     (21,276,224)

 

Deferred acquisition costs

 

                     -

 

                     -

 

                     -

 

            (23,316)

 

Purchase of equipment

 

        (192,824)

 

            (10,302)

 

          (110,086)

 

       (1,899,819)

 

Reclamation deposit

 

            19,039

 

           238,585

 

          (168,472)

 

          (675,470)

 

 

 

 

        (609,667)

 

          (379,516)

$

       (3,932,599)

$

     (23,042,332)

 

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

Advance from Red Emerald Ltd.

 

                     -

 

                     -

 

                     -

 

       12,010,075

 

Common stock issued, net of issue costs

 

    10,309,006

 

        3,521,651

 

        7,879,494

 

       67,981,943

 

Promissory note

 

                     -

 

                     -

 

        2,000,000

 

         2,000,000

 

Repayment of promissory note

 

                     -

 

       (1,000,000)

 

       (1,000,000)

 

       (2,000,000)

 

Convertible debenture

 

                     -

 

                     -

 

                     -

 

         6,324,605

 

 

 

 

    10,309,006

 

        2,521,651

 

        8,879,494

 

       86,316,623

 

 

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

      4,322,494

 

          (676,116)

 

       (5,908,842)

 

         6,062,816

Cash and cash equivalents, beginning of year

 

      1,740,322

 

        2,416,438

 

        8,325,280

 

                      -

Cash and cash equivalents, end of year

$

      6,062,816

$

        1,740,322

$

        2,416,438

$

         6,062,816

 

 

 

 

 

 

 

 

 

 

 

Supplementary information - note 14

 

 

 

 

 

 

 

 

 

 


The accompanying notes are an integral part of these consolidated financial statements.


 

F-5



MIDWAY GOLD CORP.

(An exploration stage company)  

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

 (Expressed in Canadian dollars)  

 

 

 

 

 

 

 

 

 

Year ended December
31, 2010

 

Year ended December
31, 2009

 

Year ended December
31, 2008

 

 

 

 

 

 

 

 

Net loss for the year before other comprehensive loss

$

  5,826,972

$

    2,642,176

$

    16,165,394

 

Unrealized (gain) loss on investment

 

      (13,125)

 

        (53,850)

 

         502,225

 

Realized gain on sale of investments

 

                 -

 

         53,850

 

                   -

 

Investment write-down

 

                 -

 

                 - 

 

        (622,225)

Comprehensive loss

$

  5,813,847

$

    2,642,176

$

    16,045,394



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

 

F-6

 

 

 


MIDWAY GOLD CORP.

(An exploration stage company)  

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 (Expressed in Canadian dollars)  


 

 

  Number of shares  

 Common stock

 Additional paid-in capital

 Accumulated other comprehensive loss

Accumulated deficit during the exploration stage

 Total stockholders' equity

Balance, May 14, 1996 (date of inception)

                           -   

 $                        -   

 $                        -   

 $                        -   

 $                        -   

 $                        -   

Shares issued:

 

 

 

 

 

 

 

Private placements

                  700,000

                  168,722

                           -   

                           -   

                           -   

                  168,722

Net loss

                           -   

                           -   

                           -   

                           -   

                (114,800)

                (114,800)

Balance, December 31, 1996

                  700,000

                  168,722

                           -   

                           -   

                (114,800)

                    53,922

Shares issued:

 

 

 

 

 

 

 

Initial public offering

               2,025,000

                  590,570

                           -   

                           -   

                           -   

                  590,570

 

Principal shares

                  750,000

                      7,500

                           -   

                           -   

                           -   

                      7,500

 

Private placement

               1,000,000

               1,932,554

                  321,239

                           -   

                           -   

               2,253,793

 

Exercise of share purchase warrants

               1,000,000

               2,803,205

                           -   

                           -   

                           -   

               2,803,205

 

Acquisition of mineral property interest

               1,000,000

               2,065,500

                           -   

                           -   

                           -   

               2,065,500

 

Finders fee

                  150,000

                  309,825

                           -   

                           -   

                           -   

                  309,825

Net loss

                           -   

                           -   

                           -   

                           -   

             (2,027,672)

             (2,027,672)

Balance, December 31, 1997

               6,625,000

               7,877,876

                  321,239

                           -   

             (2,142,472)

               6,056,643

Shares issued:

 

 

 

 

 

 

 

Exercise of share purchase warrants

                  100,000

                  332,124

                  (32,124)

                           -   

                           -   

                  300,000

 

Acquisition of mineral property interest

                  200,000

                  246,000

                           -   

                           -   

                           -   

                  246,000

 

Finders fee

                  150,000

                  224,250

                           -   

                           -   

                           -   

                  224,250

Net loss

                           -   

                           -   

                           -   

                           -   

             (1,943,674)

             (1,943,674)

Balance, December 31, 1998

               7,075,000

               8,680,250

                  289,115

                           -   

             (4,086,146)

               4,883,219

Consolidation of shares on a two for one new basis

             (3,537,500)

                           -   

                           -   

                           -   

                           -   

                           -   

Net loss

                           -   

                           -   

                           -   

                           -   

             (2,378,063)

             (2,378,063)

Balance, December 31, 1999

               3,537,500

               8,680,250

                  289,115

                           -   

             (6,464,209)

               2,505,156

Net loss

                           -   

                           -   

                           -   

                           -   

             (4,718,044)

             (4,718,044)

Balance, December 31, 2000

               3,537,500

               8,680,250

                  289,115

                           -   

           (11,182,253)

             (2,212,888)

Net earnings

                           -   

                           -   

                           -   

                           -   

               2,427,256

               2,427,256

Balance, December 31, 2001

               3,537,500

               8,680,250

                  289,115

                           -   

             (8,754,997)

                  214,368

Shares issued:

 

 

 

 

 

 

 

Private placement

               4,824,500

               2,133,786

                  246,839

                           -   

                           -   

               2,380,625

 

Exercise of share purchase warrants

               4,028,000

               1,007,000

                           -   

                           -   

                           -   

               1,007,000

 

Exercise of stock options

                    32,000

                    12,800

                           -   

                           -   

                           -   

                    12,800

 

Financing shares issued

                    31,250

                    35,000

                           -   

                           -   

                           -   

                    35,000

 

Acquisition of mineral property interest

               4,500,000

               3,600,000

                           -   

                           -   

                           -   

               3,600,000

 

Share issue costs

                           -   

                (544,260)

                           -   

                           -   

                           -   

                (544,260)

Stock based compensation

                           -   

                           -   

                    27,000

                           -   

                           -   

                    27,000

Net loss

                           -   

                           -   

                           -   

                           -   

             (1,657,651)

             (1,657,651)

Balance, December 31, 2002

             16,953,250

             14,924,576

                  562,954

                           -   

           (10,412,648)

               5,074,882

Shares issued:

 

 

 

 

 

 

 

Private placement

                  700,000

                  638,838

                  201,162

                           -   

                           -   

                  840,000

 

Exercise of share purchase warrants

                  294,500

                    73,625

                           -   

                           -   

                           -   

                    73,625

 

Share issue costs

                           -   

                  (19,932)

                           -   

                           -   

                           -   

                  (19,932)

Stock based compensation

                           -   

                           -   

                  531,000

                           -   

                           -   

                  531,000

Net loss

                           -   

                           -   

                           -   

                           -   

             (1,352,679)

             (1,352,679)

Balance, December 31, 2003

             17,947,750

             15,617,107

               1,295,116

                           -   

           (11,765,327)

               5,146,896

Shares issued:

 

 

 

 

 

 

 

Private placement

               2,234,400

               2,122,269

                  175,407

                           -   

                           -   

               2,297,676

 

Exercise of share purchase warrants

                  213,500

                  300,892

                  (46,267)

                           -   

                           -   

                  254,625

 

Exercise of stock options

                  250,000

                  157,000

                  (27,000)

                           -   

                           -   

                  130,000

 

Share issue costs

                           -   

                (183,512)

                           -   

                           -   

                           -   

                (183,512)

Stock based compensation

                           -   

                           -   

                  941,478

                           -