Midway Gold (MDW.T) will be Nevada's next gold producer at the Pan project which is in the final stages of construction with first production expected by the end of January.
The Pan project is a simple open-pit heap-leach project that has very attractive economics. At $1200 gold the project has a 32% internal rate of return (after tax) and a 2.6 year payback period.
$55 million has been spent at the Pan project so far with an additional $29 million remaining to be spent. First cash flows are expected in March. Investors should take note the 32% IRR and 2.6 year payback period is based on a $99 million dollar CAPEX so these numbers will improve with the new forecast being $84 million.
These economics are among the best of any new mine scheduled to commence production in 2015.
Midway has a strong business plan which involves a bringing a pipeline of projects into production.
The Plan
- Production at the Pan project
- Permitting at the Gold Rock project (production targeted for 2017)
- Spring Valley project joint ventured with Barrick moving to Pre-feasibility stage
Midway's president and chief executive officer, Ken Brunk, stated:
"Our mining contractor at Pan began mining activities in September and is currently building up to a target mining rate of 60,000 tons per day (ore and waste). We expect to begin irrigation of the leach pad in mid-December to achieve our target for a late January gold pour. We believe we are positioned for an exciting 2015 as Midway becomes Nevada's next gold producer."
Midway stock appears to be at an attractive entry point as cash flow begins in a few months. The stock is definitely on my watch list for 2015 and has the potential to be an out performer in my opinion.
Also I would not rule out the stock as a potential takeover candidate. The name that comes to mind is Barrick who is the joint venture partner on the Spring Valley project.
With Midway investors get exposure to three low cost economical projects located in one of the best gold mining jurisdictions in the world.
Symbol: MDW.T
Share price: $0.88
Shares outstanding: 174.92 million
Market cap: $ 153.9 million
Read: Midway Receives First Bank Funds For Pan Gold Project or These Are The Gold Projects You Want To Own In This Environment: Canaccord's Joe Mazumdar
I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.