Midway Gold's three Nevada projects each have "company maker" potential, says Stonecap Securities

10:24 am by Deborah Bacal

"Each one of the company’s three projects has the potential to be a company maker all by itself," says Stonecap Securities on Friday


Stonecap Securities initiated coverage Friday on Midway Gold Corp (CVE:MDW), a junior gold explorer focused in Nevada with "not one, not two, but three simple projects" in the state. 

"Each one of the company’s three projects has the potential to be a company maker all by itself," says Stonecap. 

"The fact that the company is in possession of three such assets is what impresses us the most."

The mining analyst behind the research coverage, Brian Szeto, notes that Midway's Pan project in Nevada is "technically simple and economically viable." 

"The Pan project is Midway’s most near-term producing asset where the company is hoping to begin initial production by 2014," he says in the research note. 

The project is envisioned to produce 72,000 oounces per year over a nine-year mine life at an average cash cost of US$537 per ounce. 

In addition to the low capex at US$99 million, Stonecap's Szeto says recent developments on the permitting front indicate that it should be a relatively smooth process.

Meanwhile, Midway's Gold Rock project is just "a stone's throw away" - located only eight kilometres from the Pan asset. 

The miner believes it is similar to Pan, with shallow mineralization, oxide ore, and the fact that it is amenable to open pit/heap leaching. 

The company is hoping to grow the deposit to over a million ounces, and provide investors with a preliminary economic assessment report in the first quarter of next year. 

Szeto also took note of the "free carried on Barrick's aggressive drill program" at Spring Valley, which currently hosts in excess of 4.1 million ounces of gold. Barrick Gold (TSE:ABX) is earning an interest in the asset, and is drilling out the deposit where it has already spent roughly $23 million so far. 

All this has led Stonecap to assign the junior explorer an "outperform" rating on the company, with a target price of $2.50. 

"The company operates in a pro-mining jurisdiction with an established mining code for permitting gold projects, which we believe puts Midway in a class above its junior exploration/development peers," Szeto concludes. 

Shares in Midway rallied almost 2 per cent today on the back of the research note, to $1.60, with its stock up almost 5 per cent in the last 6 months.