Barrick to Joint Venture Spring Valley Project

VANCOUVER, BC - Midway Gold Corp. reported that it has signed a term sheet with Barrick Gold Exploration Inc., a wholly owned subsidiary of Barrick Gold Corporation (ABX - News)(Toronto:ABX.TO - News) for an exploration agreement and option to joint venture Midway's Spring Valley gold project, located in Pershing County, Nevada.
"This agreement represents a milestone in the development of Spring Valley and fulfills our goal to advance the project towards a production decision," said Alan Branham, President and CEO of Midway Gold Corp. "We believe that Barrick has the capability to develop Spring Valley into a producing mine. As evidenced by our recent results from 2008 drilling, the deposit continues to expand. Barrick has been an excellent partner by investing $12.3 million in equity placements in Midway since 2006 and by providing technical advice as we have expanded the discovery. They are currently Midway's largest shareholder at 10.51 per cent. This partnership leverages our $24.0 million investment in the project and will benefit our shareholders through Barrick's extensive Nevada operation expertise in one of the large new Nevada discoveries of recent years."
The parties have settled on terms granting Barrick the exclusive right to earn a 60% interest in the project by spending US$30,000,000 on the property (US$4,000,000 guaranteed in the first year) 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 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 will coordinate geologic and administrative activities during the earn-in period for a negotiated administrative fee.
Spring Valley is a diatreme/porphyry hosted gold system beneath pediment gravels. A Canadian NI 43-101 compliant resource estimate made March 7, 2008 is available on Midway's profile on Sedar. The inferred resource estimate is 50.6 million tons grading 0.0196 ounce per ton gold for a total of 992,152 ounces. The deposit is 3,500 feet long and 3,500 feet wide and has been tested to a depth of 1,400 feet. Midway has expanded drilling beyond this announced resource with an additional 89 holes in 2008 which is currently being compiled and updated. Results for eight holes are pending.
The company's address is 600 Lola Street, Suite 10, Helena, MT 59601, (406) 475-9595, fax: (406) 475-9596, email: [email protected].