GLOSSARY OF TECHNICAL TERMS

Conversion Factors

The following is a glossary of certain terms used in this AIF:

404 Permit / 401 Certification means the Permit or Certification related to Section 404 of the Clean Water Act (CWA) which establishes a program to regulate the discharge of dredged or fill material into waters of the United States, including wetlands.

404 (b)(1) Avoidance and Minimization Alternatives Analysis  refers to the analysis done to comply with Section 404(b)(1) Guidelines of the Clean Water Act, developed by EPA in coordination with the U.S. Army Corps of Engineers and issued in 1980, which establishes substantive environmental criteria which must be met for activities to be permitted under Clean Water Act Section 404.  Mitigation under this section of the Act includes avoiding, minimizing, rectifying, reducing over time, and compensating for impacts. 

Acre or ac means an area of 4,840 square yards or 43,560 square feet or 0.4047 hectares.

Ag means silver.

Arsenopyrite means a mineral composed of iron, arsenic and sulphur (FeAsS)

Assay means, in economic geology, to analyze the proportions of metal in a rock or overburden sample; to test an ore or mineral for composition, purity, weight or other properties of commercial interest.

Au means gold.

CERCLA means Comprehensive Environmental Response, Compensation, and Liability Act, known also as Superfund.

CIM means the Canadian Institute of Mining, Metallurgy and Petroleum.

Deposit means a mineralized body which has been physically delineated by sufficient drilling, trenching, and/or underground work, and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures; such a deposit does not qualify as a commercially mineable ore body or as containing ore reserves, until final legal, technical, and economic factors have been resolved.

Feasibility Study or FS, under CIM standards, is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying Factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study.

g/t Au means grams of gold per tonne of material.

Grade means the amount of valuable metal in each tonne of ore, expressed as grams per tonne (g/t) for precious metals and as percent (%) for antimony.

Host means a rock or mineral that has been intruded by younger rocks or minerals.

IDEQ means the Idaho Department of Environmental Quality and is a state department created by the Idaho Environmental Protection and Health Act to ensure clean air, water, and land in the state and protect Idaho citizens from the adverse health impacts of pollution.

IDWR means the Idaho Department of Water Resources.

Indicated Resource or Indicated Mineral Resource, under CIM standards, is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve

Inferred Resource or Inferred Mineral Resource, under CIM standards, is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

Intrusion means the process of emplacement of magma in a pre-existing rock, and also the igneous rock mass so formed.

IPDES is the Idaho Pollutant Discharge Elimination System, administered by the IDEQ, which manages the discharge of pollutants into waters of the United States in Idaho.

km means kilometre(s).

m means metre(s) (equivalent to 3.281 feet).

M means million.

Measured Resource or Measured Mineral Resource, under CIM standards, is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.

Mineralization means the concentration of metals and their chemical compounds within a body of rock.

Mineral Reserve or mineral reserve, under CIM standards, is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. The reference point at which Mineral Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported. The public disclosure of a Mineral Reserve must be demonstrated by a Pre-Feasibility Study or Feasibility Study.

Mineral Resource or mineral resource, under CIM standards, is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.

NI 43-101 means National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

Ore means a mineral reserve of sufficient value as to quality and quantity to enable it to be mined at a profit.

Ounce or oz means a troy ounce or twenty penny weights or 480 grains and is equivalent to 31.1035 grams.

Oz/t or oz/st means a troy ounce per short ton.

Plan of Restoration and Operations or PRO for a mining project on National Forest Lands is a summary of activities intended proposed to occur on Federal Lands. The plan provides the Forest Service with a list of the proponents contact and legal information, name of mining district or mineralized area, surface disturbance map, description of the type and magnitude of proposed operations, estimated timing of activities, and plans for reclamation of disturbed areas during and following mining related activities.

POx means pressure oxidation.

Preliminary Economic Assessment or PEA as defined in NI 43-101means a study, other than a Pre-Feasibility or Feasibility Study, that includes an economic analysis of the potential viability of mineral resources.

Pre-Feasibility Study or Preliminary Feasibility Study or PFS is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A Pre-Feasibility Study is at a lower confidence level than a Feasibility Study.

PRO means the Plan of Restoration and Operations that was filed by the Corporation with the US Forest Service in September 2016.

Probable Reserves or Probable Mineral Reserves, under CIM standards, is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve.

Proven Reserves or Proven Mineral Reserves, under CIM standards, is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high degree of confidence in the Modifying Factors.

Pyrite means a mineral composed of iron and sulphur (FeS₂).

Qualified Person conforms to that definition under NI 43-101 and means an individual who (a) is an engineer or geoscientist with a university degree, or equivalent accreditation, in an area of geoscience, or engineering, relating to mineral exploration or mining; (b) has at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these, that is relevant to his or her professional degree or area of practice; (c) has experience relevant to the subject matter of the mineral project and the technical report; (d) is in good standing with a professional association; and (e) in the case of a professional association in a foreign jurisdiction, has a membership designation that (i) requires attainment of a position of responsibility in their profession that requires the exercise of independent judgment; and (ii) requires (A) a favourable confidential peer evaluation of the individual’s character, professional judgement, experience, and ethical fitness; or (B) a recommendation for membership by at least two peers, and demonstrated prominence or expertise in the field of mineral exploration or mining.

Quartz means a mineral composed of silicon and oxygen (SiO₂).

RC means reverse circulation.

Sampling means a technique for collecting representative sub-volumes from a larger volume of geological material. The particular sampling method employed depends on the nature of the material being sampled and the kind of information required.

Sb means antimony.

Sediment means a solid material that has settled down from a state of suspension in a liquid. More generally, solid fragmental material transported and deposited by wind, water or ice, chemically precipitated from solution, or secreted by organisms, and that forms in layers in loose unconsolidated form.

Stibnite means a sulphide mineral composed of antimony and sulphur (Sb₂S₃)

Sulphide means a group of minerals in which one or more metals are found in combination with sulphur.

Tonne means a metric unit of mass equivalent to volume multiplied by specific gravity; equivalent to 1.102 tons or 1,000 kilograms (equivalent to 2,204.6 pounds).

Vein means a sheet-like intrusion into a fissure or crack, commonly bearing quartz.

CORPORATE STRUCTURE

Corporate Structure

The Corporation was incorporated under the Business Corporations Act (British Columbia) on February 22, 2011 under the name "Midas Gold Corp.".

The Corporation’s head office and its registered and records office is located at Suite 890, 999 West Hastings Street, Vancouver, British Columbia V6C 2W2.

Organization Chart

The following chart shows the intra-corporate relationships between the Corporation and its subsidiaries:

Midas Gold Idaho, Inc. has no ownership interest in the Stibnite Gold Project, rather it manages the activities on the Project for the owners, Idaho Gold Resources Company, LLC and Stibnite Gold Company.

During 2016, the Corporation completed a reorganisation of its subsidiaries whereby (a) Idaho Gold Resources Company, LLC (formerly Idaho Gold Holding Company) merged with Midas Gold Washington, Inc. and converted to a Limited Liability Company; and (b) Stibnite Gold Company (formerly MGI Acquisition Corporation) merged with Idaho Gold Resources, LLC.

Idaho Gold Resources Company, LLC holds title to the West End deposit and all unpatented exploration claims. Stibnite Gold Company holds title to the Yellow Pine and West End deposits.

Unless the context otherwise indicates, reference to the term the "Corporation" or "Midas Gold" in this AIF includes Midas Gold Corp. and its subsidiaries.

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History and Significant Acquisitions

On March 17, 2016, the Corporation announced that it had completed a strategic investment raising gross proceeds of US$42.5 million (C$55.2 million), which financing was fully backstopped by fund manager Paulson & Co. Inc. (“Paulson”). The financing was comprised of a Canadian dollar denominated 0.05% senior unsecured convertible notes (the “Convertible Notes”) for US$38.5 million (C$50.0 million) and common shares in the aggregate amount of US$4.0 million (C$5.2 million). Paulson, on behalf of the several investment funds and accounts managed by it, acquired US$25.0 million (C$32.5 million) of the Convertible Notes, existing shareholders having taken up their maximum allotment, comprised of the remainder of the Convertible Notes and the common shares. The Convertible Notes, among other terms and conditions, have a term of seven years and may be converted into common shares of Midas Gold at a price of C$0.3541 per share. This financing provided the Corporation with the funds needed to advance permitting for mine development for the Project and towards completion of a feasibility study, as well as for general corporate expenses.

Subsequent to completion of the March 2016 financing, the Corporation increased its level of activities, advancing the preparation of a detailed plan for the restoration and operation of the Project, defining and collecting representative metallurgical samples required for testing for the completion of a feasibility study, advancing geologic modelling to define and prioritize areas for possible drilling where there were accretive opportunities to reduce risk or enhance the net present value of the Project (as defined in the PFS Technical Report) and other optimizations for the Project. In parallel with these activities, Midas Gold engaged in a review process of its plans for the restoration and operation of the site, including third party technical reviews, community engagement, discussions with a variety of stakeholder groups about the designs, concepts and alternatives for the Project, all with the objective of obtaining feedback, improving and optimizing the Project from an environmental, social, technical and economic perspective and ensuring that the plan for restoration and operations properly reflects the values of Idahoans.

In July 2016, the Corporation also announced that it had commenced feasibility level metallurgical testing, a critical path item in advance of preparing a Feasibility Study on the Project. This work was expected to continue through the second quarter of 2017 and was intended to provide sufficient supporting process information to advance the Project through completion of a Feasibility Study. The test program included the collection of approximately a 14-ton bulk sample from existing core material in preparation for metallurgical pilot plant testing. On February 14, 2017, Midas Gold announced results to date for the metallurgical program.

In August 2016, the Corporation further announced that would initiate a drill program for its Stibnite Gold Project. The objective for the drill program was to improve, expand and de-risk the mineral resources defined in the PFS before commencing the Feasibility Study. Positive results could enhance the Project economics in the planned FS. The drill program commenced in September and was scheduled to continue into 2017. Results from the drill holes completed as part of this program were reported in 2016 and 2017.

On September 21, 2016, Midas Gold Idaho, Inc. (“MGII”), on behalf of the Project owners, filed a Plan of Restoration and Operations (the "PRO") with the U.S. Forest Service and Idaho Department of Lands in order to initiate the environmental assessment and permitting process for the Project. Midas Gold expected the U.S. Forest Service and Idaho Department of Lands to commence the public review process of the PRO in accordance with the U.S. National Environmental Policy Act and other requirements.

In conjunction with the filing of the PRO, also in September 2016, the Corporation appointed Laurel Sayer as President and Chief Executive Officer of MGII, Midas Gold’s operating subsidiary in Idaho that operates the Project. In addition, Midas Gold announced the appointment of Michael Bogert to the board of directors of Midas Gold Corp., replacing Ms. Sayer as she stepped down to take on her new role. These appointments reflected Midas Gold's objective of increasing local accountability and local representation in all its activities.

The U.S. Forest Service and Idaho Department of Lands conducted an internal review to determine the PRO's adequacy and completeness. On December 13, 2016, the U.S. Forest Service reported that it has determined that the PRO filed by MGII on September 21, 2016 for the restoration, re-development and operation of the Project in Valley County, Idaho has met the requirements for a plan of operations under U.S. Forest Service regulations. With this determination, the U.S. Forest Service confirmed that Midas Gold had provided sufficient information in the PRO to commence the formal review of the Stibnite Gold Project under the National Environmental Policy Act (“NEPA”).

In February 2017, the Corporation provided an update on the feasibility-level metallurgical testing program being carried out on the Stibnite Gold Project, reporting on the grinding and flotation work completed to date. The results of this work are an important foundation for the planned Feasibility Study for the Project.

Also during February 2017, the Corporation reported the final results from its ongoing mineral resource optimization drill program at the Stibnite Gold Project. These results, along with additional geological, geochemical and assay information collected from prior Midas Gold drill holes and historical information, were incorporated into an updated geological model and mineral resource estimate that was announced in February 2018.

On March 28, 2017, the Corporation announced that the U.S. Forest Service had begun its analysis, under the National Environmental Policy Act, of MGII’s, proposed plan of restoration and operations for the Stibnite Gold Project.

In early April 2017, the Corporation announced that M3 was awarded a contract to lead the Feasibility Study, with additional FS support to be provided by Blue Coast Metallurgy Ltd., Tierra Group International Ltd., SRK Consulting, Kirkham Geosystems Ltd., STRATA, and others, as necessary.

Also during April 2017, the Corporation announced that the United States Forest Service had selected AECOM to assist the agency in evaluating the Stibnite Gold Project.

In May 2017, Trade & Industry Development Magazine announced that MGII received a Corporate Investment and Community Impact (“CiCi”) award in the ‘Community Impact Division’. The nomination for the CiCi award was submitted by the Idaho Department of Commerce and West Central Mountains Economic Development Council (“WCMED”) in recognition of MGII’s robust community engagement programs that include over $230,000 in corporate giving to community programs, schools and sponsorships, and over 1,800 staff volunteer hours since 2013.

On June 5, 2017, the Notice of Intent (“NOI”) to prepare an Environmental Impact Statement (“EIS”) on the proposed Stibnite Gold Project’s PRO was published in the Federal Register by the US Forest Service. The scoping was completed as scheduled in July 2017.

On September 7, 2017, the Corporation provided additional results from its 2017 drilling program at Stibnite.

On September 18, 2017, the Corporation announced that seven federal, state and local agencies entered into an agreement outlining their commitment to work together and coordinate their efforts to permit the Project The U.S. Forest Service (which is the lead permitting agency), U.S. Army Corps of Engineers, U.S. Environmental Protection Agency, Idaho Department of Lands, Idaho Department of Environmental Quality, the Idaho Governor’s Office of Energy and Mineral Resources and Valley County were signatories to the memorandum of understanding for the Project.

In February 2018, the Corporation reported on updated mineral resources and continuing progress in its feasibility-level metallurgical test program for the Project, which test program it expected to complete in the second quarter of 2018.

On February 22, 2018, the Corporation reported that Idaho’s House of Representatives and Senate passed a joint memorial asking the President of the United States, Idaho’s congressional delegation, the Administrator of the Environmental Protection Agency, the Secretary of the Interior and the Secretary of Agriculture to take the steps necessary to approve the Project in a timely and cost-effective manner. The joint memorial was passed with overwhelming support.

On March 21, 2018, the Corporation reported that it had appointed Javier Schiffrin, Senior Vice President, Paulson & Co. Inc., to its board of directors following the resignation of Victor Flores. Mr. Schiffrin was nominated by Paulson & Co. under the investor rights agreement entered into with Midas Gold in relation to the March 2016 financing that was backstopped by Paulson & Co. Mr. Flores had been appointed to the board in 2016 as one of Paulson & Co.’s two nominees under that agreement.

On May 9, 2018, the Corporation announced that it had entered into an agreement with Barrick Gold Corporation (NYSE:ABX / TSX:ABX) (“Barrick”) whereby Barrick would purchase 46,551,731 common shares of Midas Gold in a non-brokered private placement (the “Placement”) at a price of C$1.06 per share for gross proceeds of US$38,065,907. The Placement resulted in Barrick owning 19.9% of the issued and outstanding shares in Midas Gold on a post-transaction basis, and 12.4% assuming conversion of the Notes. The transaction closed on May 16, 2018.

Also during May 2018, the Corporation announced that it had increased the size of its board of directors from seven to eight members and appointed Mark Hill, Chief Investment Officer with Barrick to fill the additional position. The increase in board size was in accordance with the terms of the investor rights agreement entered into with Barrick in conjunction with the Placement.

On August 9, 2018, the Corporation announced that it had appointed Brad Doores to its Board of Directors, replacing Michael Bogert, who stepped down from the Board at the same time in a planned transition to working more closely with the Corporation on permitting-related matters. On August 30, 2018, it was announced that Michael Bogert had been appointed General Counsel for Midas Gold Idaho, Inc., Midas Gold’s wholly owned subsidiary leading the regulatory process for the Project.

On October 10, 2018, the Corporation announced that the Nez Perce Tribal Executive Committee had adopted a resolution formally opposing the Stibnite Gold Project. The Nez Perce Tribe is one of the three tribes being consulted by the U.S. Forest Service (“USFS”) under the National Environmental Policy Act review process. Midas Gold has and will continue to reach out to the Nez Perce Tribe and hopes to address their concerns.

On December 4, 2018, the Corporation announced that it, Midas Gold Idaho, Inc. and seven of the communities closest to the Stibnite Gold Project site officially established a community agreement. Through the creation of the Stibnite Advisory Council, the agreement establishes a collaborative environment for the companies and local communities to work together throughout the life of the project and provides a venue for cities and counties to address concerns and opportunities directly with Midas Gold. It also creates the Stibnite Foundation to support community projects. Subsequent to year end, an eighth community also signed the community agreement, while another community deferred consideration of the agreement until after the draft EIS is published. Midas Gold also withdrew its request for Valley County to join the community agreement due to a perception of a conflict of interest by some members of the community given Valley County’s role as a cooperating agency under NEPA. The Stibnite Advisory Council has been established and is meeting regularly to discuss various matters related to the Project, and the Stibnite Foundation is in the process of being created as of the date of this AIF.

There were several updates to the permitting schedule during the year and again subsequent to year end. On July 3, 2018, the Corporation announced that the USFS had provided its quarterly update to the anticipated permitting schedule for the Project. The USFS, in cooperation with the six other federal, state and local agencies responsible for the permitting schedule, anticipated issuing a draft EIS for public comment in February 2019, with a Final EIS and Draft Record of Decision (“ROD”) by October 2019. This would have allowed for an approved Final ROD in March 2020. On October 1, 2018, the Corporation announced that the USFS had provided its subsequent quarterly update to the anticipated permitting schedule for the Project which anticipated issuing a draft EIS for public comment in May 2019, with a Final EIS and Draft ROD in February 2020, followed by an approved Final ROD in May 2020.

On January 29, 2019, the Corporation announced that it has been advised that the USFS anticipates issuing a draft EIS for public comment in Q3 2019, with a Final EIS and Draft ROD in Q2 2020 and a Final ROD in Q3 2020. This updated schedule accommodates the review and analysis of a considerable amount of additional information requested by the agencies and provided by Midas Gold during the quarter, including information and water modelling related to potential development alternatives such as alternate transportation routes to the Project and alternate tailings storage facility locations, and the integration of consultations required by other agencies to meet their regulatory obligations. The USFS will continue to issue quarterly updates to the anticipated schedule as the process advances.

On January 31, 2019, the Corporation announced that it had appointed Jaimie Donovan to its Board of Directors, replacing Mark Hill, who resigned as Barrick’s representative from the Corporation’s Board.

On March 25, 2019, the Corporation announced that it amended the investor rights agreement dated May 16, 2018 (“IRA”) entered into with Barrick Gold Corporation (“Barrick”) in conjunction with Barrick’s US$38 million investment in Midas Gold completed in May 2018. These amendments were made at Midas Gold’s request and are designed to increase financing flexibility and options for Midas Gold, including a commitment by Barrick to provide a lead order.

On March 12, 2019, the Corporation announced that it filed a preliminary short form base shelf prospectus (the “Shelf Prospectus”) with the securities commissions in each of the provinces of Canada, except Quebec. On April 4, 2019, the Corporation announced that it had filed a final short-form base Shelf Prospectus with the securities commissions in each of the provinces of Canada, except Quebec. The Shelf Prospectus will allow Midas Gold to offer and issue up to C$200 million of common shares, warrants, subscription receipts, units, debt securities, or any combination of such securities (collectively, the “Securities”) during the next 25-months. The Securities may be offered separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of sale, which would be set forth in a subsequently filed prospectus supplement. In connection with the Shelf Prospectus filings, the Corporation also filed an amended technical report entitled “Stibnite Gold Project, Prefeasibility Study Technical Report, Valley County, Idaho” dated effective December 8, 2014 and amended March 28, 2019 (the “PFS”). Amendments to the PFS include changes to clarify that the mineral resource estimate is consistent with the CIM Definition Standards adopted by the CIM Council on May 10, 2014 (with no resulting changes to the mineral resource estimate in the PFS), and to remove the comparison of the 2012 preliminary economic assessment.

On April 16, 2019, the Corporation announced it had provided an initial cash grant of $100,000 and issued 1.5 million common shares in the capital of the Corporation, valued at $877,500, to launch the Stibnite Foundation in Idaho. These grants to the Stibnite Foundation (the “Foundation”) were made in accordance with the Corporation’s ongoing annual and milestone funding obligations pursuant to the terms of the Community Agreement, details of which can be found in the Corporation’s December 4, 2018 news release. The Foundation will support projects that benefit the communities surrounding the Stibnite Gold Project and was created through the establishment of the Community Agreement between Midas Gold Idaho and eight communities and counties throughout the West Central Mountains region of Idaho.

On June 6, 2019, the Corporation announced that it had been advised that the Nez Perce Tribe intended to initiate legal action against the Corporation and its subsidiaries related to alleged water quality impacts related to historical mining activity undertaken prior to Midas Gold’s involvement in the site.

On June 10, 2019, the Corporation entered into an agreement with RBC Capital Markets and BMO Capital Markets (as co-lead underwriters) and Haywood Securities in connection with a bought deal public offering (the “Offering”) of 33,200,000 common shares of the Corporation (the “Common Shares”). The Common Shares were offered at a price of C$0.60 per Common Share for gross proceeds of C$19,920,000. Paulson & Co. Inc participated in the Offering in order to maintain its pro rata partially diluted interest of 29.11% of outstanding Common Shares. Barrick Gold Corporation (“Barrick”) acquired Sufficient Common Shares so as to give Barrick a 19.9% ownership interest of all outstanding Common Shares upon completion of the Offering.

On August 8, 2019, the Nez Perce Tribe followed on from its Notice of Intent to sue (as reported on June 6, 2019) by filing suit in federal court on matters pertaining to water quality in the Stibnite Mining District related to historical mining activity dating back over 80 years and long before the Company acquired any rights to the site. Midas Gold is not, and has never, operated on site and is not responsible for the existing contamination but has proposed the Stibnite Gold Project (“Project”) as a means for providing the much-needed cleanup of historical waste polluting the area today. Since well before the suit was filed, Midas Gold has been working closely with the Idaho Department of Environmental Quality (“IDEQ”) and the United States Environmental Protection Agency (“EPA”) to gain permission under the federal Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) law to take immediate action and learn more about the specific causes of degraded water quality in a number of locations. Midas Gold firmly believes that it is not legally responsible for cleanup of site legacy impacts caused by previous mining companies or directed by government agencies. However, the Company wants to be part of the solution. During the quarter ended December 31, 2019, in the normal progression of such litigation, Midas Gold filed a request for a stay of proceedings based on the progress in respect of ongoing discussions with Federal and State regulators on a path under CERCLA that would provide early cleanup actions and end the litigation, in addition to a request for a dismissal of the suit based on other considerations. Both motions were consolidated for judicial review in mid-December and were ruled on in December and January. Both motions were dismissed, but the federal court invited a new motion to stay the case if the CERCLA order became “imminent”. The litigation is proceeding through discovery and if the case proceeds to trial, it will likely be set for spring, 2021. Independent from its defense of this lawsuit, the Company will continue moving forward with its longstanding work to assess and improve water quality in the area, restore the site and return the site to environmental standards not seen in decades through responsible, modern mining.

Earlier in the year, the Corporation announced that it had been advised that the U.S. Forest Service (“USFS”) anticipated issuing a draft Environmental Impact Statement (“EIS”) for public comment in late Q4 2019, with a Final EIS and Draft Record of Decision (“ROD”) in Q3 2020 and a Final ROD in late Q4 2020. However, on December 4, 2019, Midas Gold reported that the USFS had indicated that the Draft EIS for the Project would be made available for public review in January 2020 and issuing a Final EIS and Draft ROD in Q4 2020 and the Final ROD for the Project in Q1 2021.

Subsequent events

Subsequent to year end, on January 27, 2020, the Corporation announced the USFS and other regulators working on the Project have, following internal reviews, identified a number of recommended improvements to the Draft EIS that is being prepared by the USFS as the lead agency. These recommended improvements to the Draft EIS would ultimately support a complete ROD at the conclusion of the permitting process. The USFS advised that it will update the release date for the Draft EIS in early February 2020 and will provide the revised project schedule in its quarterly Schedule of Proposed Actions update to be published on April 1, 2020.

Also subsequent to year end, on March 17, 2020, the Corporation announced that it had completed a financing for gross proceeds of US$35.0 million (C$47.6 million), with proceeds to be used for continued work on the Stibnite Gold Project and for general working capital purposes. The financing was completed with Paulson & Co. Inc. (“Paulson”), on behalf of the several investment funds and accounts managed by Paulson, whereby Paulson purchased Canadian dollar denominated 0.05% senior unsecured convertible notes (the “2020 Notes”) issued by a wholly-owned subsidiary of the Corporation on a private placement basis. The 2020 Notes are convertible into common shares of the Corporation at a price of C$0.4655.

DESCRIPTION OF THE BUSINESS

Summary of the Business

The Corporation is an exploration development-stage company engaged in acquiring mining properties with the intention of exploring, evaluating and placing them into production, if warranted. Currently, its principal business is the exploration and, if warranted, redevelopment, restoration and operation of the Stibnite Gold Project in Idaho, USA.

Mineral exploration and development are expected to constitute the principal business of the Corporation for the coming years. In the course of realizing its objectives, it is expected the Corporation may enter into various agreements specific to the mining industry, such as purchase or option agreements to purchase mining claims and joint venture agreements.

The Corporation’s principal mineral project is the Stibnite Gold Project, which contains several mineral deposits. The Corporation’s current focus is to explore, evaluate and potentially redevelop three of the deposits known as the Hangar Flats Deposit, West End Deposit and Yellow Pine Deposit, all of which are located within the Stibnite Gold Project as in the location map (Figure 1.1), below, as well as reprocess certain historical tailings located on the Project. These development activities would be undertaken in conjunction with a major restoration program designed to address impacts related to historical activities in the Project area. Such restoration activities are an integral component of the PRO.

Employees

At December 31, 2019, the Corporation had 39 employees. A total of 35 employees were employed in Idaho and were directly related to the mineral exploration and development activities of the Stibnite Gold Project, with the remaining four persons employed in Vancouver in respect of executive management and administrative support. The Corporation also contracts out certain activities, such as drilling, metallurgical testing and feasibility study preparation to specialized service providers. As a result of the seasonal nature of field activities, the number of people on site and in the Corporation’s Donnelly facilities can vary. Typically there could be 20 - 50 or more persons engaged in field activities on site when actively drilling with multiple rigs, and an additional 5 - 10 or more people providing support activities in Donnelly. These numbers are significantly lower when there is no drilling underway. Significant aspects of the exploration and development business require specialized skills and knowledge in areas that include geology, mining, metallurgy, engineering, environmental contamination treatment, permitting and regulatory compliance, as well as environmental and social policy issues. While recent activity within the industry in general has made it more challenging to recruit and retain qualified employees, Midas Gold has been successful to date in recruiting and retaining key personnel necessary to its operating needs.

Competitive Conditions

The gold exploration and mining business is a competitive business. The Corporation competes with numerous other companies possessing much greater financial and technical research resources. Competition is particularly intense with respect to the acquisition of desirable undeveloped gold properties. See “Risk Factors – The Corporation’s Risks”.

Environmental, Social & Governance

Midas Gold Corp. has, since its inception, incorporated the principles of environmental protection, social considerations and good governance into all its actions, in which was formalized in its Environmental, Social and Governance Policy (ESG Policy), approved in February 2019. The intent of the ESG policy is to set out the Corporation’s guiding principles in a coherent, systematic manner to inform stakeholders and interested parties as to those principles.

Guiding Principles

The Corporations activities are guided by certain principles as they relate to responsible mineral development. These principles include, but are not limited to, the following:

Core Values

In order to live up to these principles, Midas Gold has defined certain core values in its ESG Policy that are integral to the Corporation’s DNA:

Conservation Principles

Given the importance of environmental protection in the development, operation and closure of natural resource projects, Midas Gold has adopted the following guiding conservation principles for the Project in order to align it with the Corporation’s core values:

As part of its ESG Policy, the Corporation has adopted at Health & Safety Policy, an Environmental Policy, Sustainability Goals and an approach to Transparency and Sustainability Reporting that can be found in the ESG Policy here: https://midasgoldcorp.com/company/esg/.

In addition, the Corporation’s operations are subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions of spills, releases or emissions of various substances related to mining industry operations, which could result in environmental pollution. A breach of such legislation may result in imposition of fines and penalties Environmental legislation is evolving, which means stricter standards and enforcement, fines and penalties for non-compliance are becoming more stringent. Environmental assessment of proposed projects carries a heightened degree of responsibility for companies and directors, officers and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Corporation’s operations, including its capital expenditures and competitive position.

For Midas Gold’s work in relation to environmental matters at the Stibnite Gold Project, see “Summary of the Stibnite Gold Project – Environmental Studies” and “Summary of the Stibnite Gold Project – Environmental Mitigation and Remediation”. Also see “Risk Factors – Industry Risks”.

Foreign Operations

The Company is incorporated pursuant to the laws of British Columbia, Canada and is a reporting issuer in each of the provinces of Canada, except Quebec. The Company is dependent upon its ownership of the Stibnite Gold Project that is located in Idaho, USA.

Summary of the Stibnite Gold Project 

The following description of the Stibnite Gold Project in Idaho is derived from the summary contained in the PFS Technical Report dated effective December 8, 2014, and amended March 28, 2019, compiled by Richard K. Zimmerman, R.G. , Lee A. Becker, P.E., Garth D. Kirkham, P. Geo, Christopher J. Martin, C. Eng, John M. Marek, P.E. Allen R. Anderson, P.E., Richard C. Kinder, P.E. and Peter E. Kowalewski, P.E. ,all of whom are Qualified Persons. The entire PFS Technical Report is incorporated by reference into this AIF except to the extent that its contents are modified, updated or superseded by a statement contained in this AIF (which does not need to state that such statement has modified, updated or superseded such contents). See the various “Post-PFS” updates below for matters that have changed from the PFS Technical Report summary below. For readers to fully understand the information in this AIF, they should read the PFS Technical Report as amended (available for review under the Corporation’s profile on SEDAR at www.sedar.com, filed on April 4, 2019) in its entirety, including all qualifications, assumptions and exclusions that relate to the information set out in this document which qualifies the technical information set out in the PFS Technical Report. The PFS Technical Report is intended to be read as a whole, and summaries or sections should not be read or relied upon out of context. The technical information in the PFS Technical Report is subject to the assumptions and qualifications contained therein and to the updates provided below.

1.1                 Introduction and Purpose

Redevelopment of the Stibnite Gold Project (the Project) has the potential to clean up an existing brownfield site, one that has been extensively mined for more than 80 years, and which could become one of the largest gold producers in the United States. This billion-dollar Project could create more than 700 jobs in Idaho during the first three years of construction and nearly 1,000 jobs in Idaho during 12 years of Project operations, while generating significant taxes and other benefits to the local, state and federal economies. The preliminary feasibility study (PFS) and related PFS Technical Report provide a comprehensive overview of the Project and includes recommendations for future work programs required to advance the Project to a decision point. The PFS Technical Report defines an economically feasible, technically and environmentally sound Project that minimizes impacts and maximizes benefits.

Key considerations for the Project are as follows:

The PFS Technical Report provides information about the geology, mineralization, exploration potential, Mineral Resources, Mineral Reserves, mining method, process method, infrastructure, social and economic benefits, environmental protection, cleanup and repair of historical impacts, reclamation and closure concepts, capital and operating costs and an economic analysis for the Project.

1.2                Key Results

The Project consists of rehabilitating an existing brownfields site in an area of significant historical mining, including removal and reprocessing of the historic gold-silver-antimony tailings (Historic Tailings), and mining the Yellow Pine, Hangar Flats and West End gold-silver-antimony deposits using conventional open pit methods, conventional processing methods to extract gold, silver and antimony, and on-site production of gold (Au) and silver (Ag) doré and an antimony (Sb) concentrate. Midas Gold's plans for decommissioning the site include progressive and concurrent remediation and reclamation activities, beginning at the start of construction and continuing beyond the operations phase, through Project reclamation and closure.

The Stibnite Gold Project, as contemplated in the PFS Technical Report, comprises:

The economic and technical analyses included in this Report provide only a summary of the potential Project economics based on the assumptions set out herein. There is no guarantee that the Project economics described herein can be achieved.

1.3                Regulatory Information

The PFS Technical Report has been prepared based on the results of a PFS completed for the Project, which is located in the Stibnite-Yellow Pine mining district (District), Idaho. The Project is wholly owned by direct or indirect subsidiaries of Midas Gold Corp. (MGC), a TSX-listed British Columbia company. Unless the context indicates otherwise, references to “Midas Gold” throughout this Report include one or more of the aforementioned subsidiaries of MGC.

The PFS Technical Report has been prepared under the direction of Independent Qualified Persons (QP) and in compliance with the Canadian Securities Administrators (CSA) NI 43-101 standards for reporting mineral properties, Companion Policy 43-101CP, and Form 43-101F1. The PFS Technical Report supersedes and replaces the technical report entitled ‘Preliminary Economic Assessment Technical Report for the Golden Meadows Project, Idaho’ prepared by SRK Consulting (Canada) Inc. and dated September 21, 2012 (PEA) and that report should no longer be relied upon.

1.4                Reliance on Other Experts

Certain sections of the PFS Technical Report rely on reports and statements from legal and technical experts who are not Qualified Persons as defined by NI 43-101. The Qualified Persons responsible for preparation of the PFS Technical Report have reviewed the information and conclusions provided that they are responsible for and determined that they conform to industry standards, are professionally sound, and are acceptable for use in this Report.

1.5                Property Description and Location

The Stibnite Gold Project is located in central Idaho, USA. The Project lies approximately 100 miles (mi) northeast of Boise, Idaho, 38 mi east of McCall, Idaho, and approximately 10 mi east of Yellow Pine, Idaho. Figure 1.1 illustrates the location of the Project.

The Hangar Flats, West End, and Yellow Pine deposits, along with the Historic Tailings, lie within mineral concessions controlled by Midas Gold, as are other exploration prospects and targets identified in this Report. Mineral rights controlled by Midas Gold include patented lode claims, patented mill site claims, unpatented federal lode claims, and unpatented federal mill site claims and encompass approximately 27,104 acres or 42 square miles. The claims are 100% owned, except for 27 patented lode claims that are held under an option to purchase. The Project is subject to a 1.7% NSR Royalty on gold only. There is no royalty on silver or antimony.

1.6                Accessibility, Climate, Local Resources, Infrastructure and Physiography

The Stibnite Gold Project is located approximately 152 road-miles northeast of Boise, Idaho in an area of deeply incised drainage related to the East Fork of the South Fork of the Salmon River (EFSFSR) at an elevation of ~ 6,500 feet (ft) with nearby mountains rising to an elevation of approximately 7,800 to 8,900 ft.

The climate is characterized by moderately cold winters and mild summers. Most precipitation occurs as snowfall in the winter and rain during the spring. The local climate allows for year round operations, as evidenced by historical production over extended periods, and climate information.

Ground access to the Property is currently available by road from the nearby towns of Cascade, Idaho, an 84 mile drive and, during the snow free months, from McCall, Idaho, which is a 63-mi drive. The closest rail is in Cascade, while the closest access for sea transportation is on the west coast of the US and Canada, or via the inland port of Lewiston, ID.

Power-lines would need to be installed/upgraded from the main regional Idaho Power Corporation (IPCo) substation at Lake Fork to the Project site, a distance of 42 mi, along an existing and previously used right-of-way.

Midas Gold has four permanent and three temporary water rights in the District.

The Project is located in a past-producing area near the historical town of Stibnite. Since the late 1920s, gold, silver, antimony, tungsten, and mercury mineralized materials have been mined in the area by both underground and, later, open pit methods, creating numerous open pits, underground workings, large-scale waste rock dumps, heap leach pads, spent heap leach ore piles, tailings depositories, a mill site, three town sites, an airstrip, and other disturbances, some of which still exist today. Antimony-tungsten-gold sulphide milling operations ceased in 1952 as a result of lower metal prices following the end of the Korean War, while mercury operations on the Cinnabar claims continued until 1963. Exploration recommenced in 1974, followed by open pit mining and seasonal on-off heap leaching from 1982 to 1997. Midas Gold commenced its exploration activities in 2009.

Table 1.1 summarizes the approximate historical production for the Project by area; additional details are provided in Section 6.

Table 1.1:      Estimated Historical Metal Production

Note:

(1)   A unit of WO3 (tungsten trioxide) is 1% of a short ton (20 pounds), and WO3 is 79.3% tungsten. A short ton unit of WO3, therefore, equals 20 pounds of WO3 and contains 15.86 pounds of tungsten.

1.8                Geological Setting and Mineralization

The Project area is underlain by pre-Cretaceous “basement” sediments, the Cretaceous-age Idaho Batholith (granitic), Tertiary-age intermediate to felsic intrusions and volcanics, younger unconsolidated sediments derived from erosion of the older sequences and glacial materials.

Large, north-south striking, steeply dipping to vertical structures exhibiting pronounced gouge and multiple stages of brecciation occur in the central and eastern portions of the property and are often associated with east-west and northeast-southwest trending splays and dilatant structures.

Intrusive-hosted precious metals mineralization typically occurs in structurally prepared zones in association with very fine-grained disseminated arsenical pyrite (FeS₂) and, to a lesser extent, arsenopyrite (FeAsS), with gold almost exclusively in solid solution in these minerals.

Antimony mineralization occurs primarily associated with the mineral stibnite (Sb₂S₃). Zones of silver-rich mineralization locally occur with antimony and are related to the presence of pyrargyrite (Ag₃SbS₃), hessite (Ag₂Te) and acanthite (Ag₂S).

Metasediment-hosted mineralization has a similar sulfide suite and similar geochemistry to the intrusive hosted mineralization, but with higher carbonate content in the gangue and a much more diverse suite of late stage minerals.

1.9                Deposit Types

The origin of the wide variety of mineralization occurrences at the Stibnite Gold Project is attributed to deep-seated intrusives and associated high temperature and high pressure processes to shallow lower temperature, lower pressure hydrothermal processes.

1.10                Exploration

The District has been the subject of exploration and development activities for nearly 100 years. Numerous prospects have been discovered through the years using a variety of methods. Some of these prospects were developed into mines and others remain undeveloped; further, new ones may be discovered as the Project advances and the nature of mineralization previously exploited is better understood.

Midas Gold’s analysis of historical data and its exploration since 2009 has identified a number of key exploration opportunities:

Note: There has been insufficient exploration to define Mineral Resources on these prospects and it is uncertain whether further exploration will result in the targets being delineated as either Mineral Resources or Mineral Reserves.

1.11                Drilling

The Project area, including the three main deposits, has been drilled by numerous operators, totaling 773,744 ft in 2,606 drill holes, of which Midas Gold drilled 550 holes, totaling over 326,275 ft, since 2009. Pre-Midas Gold drilling was undertaken by a wide variety of methods and operators while Midas Gold employed a variety of drilling methods including core, Reverse Circulation, auger, and sonic throughout the District, but with the primary method being core. All Midas Gold holes were surveyed and recoveries were generally good to excellent. Industry standard QA/QC procedures were used by Midas Gold, including sample security, blanks, standards and duplicates and these procedures were verified by the Independent QP.

1.12                 Data Verification

Extensive data verification programs have been undertaken by numerous independent consultants for Midas Gold and by Midas Gold personnel, as discussed in previous NI 43-101 technical reports (SRK, 2011; SRK, 2012) and discussed in the PFS Technical Report. These verification programs have been essential in ensuring that the datasets used for the Mineral Resource estimates are validated and verified as adequate for the estimation of Mineral Resources for each of the respective deposits. It is the opinion of the Independent QP responsible for the Mineral Resource estimates that the data used for estimating the Mineral Resources and Mineral Reserves for the Hanger Flats, West End, Yellow Pine and Historic Tailings deposits is adequate for this purpose and may be relied upon to report the Mineral Resources and Mineral Reserves contained in the PFS Technical Report.

1.13                Mineral Processing and Metallurgical Testing

Subsequent to the test work program undertaken for the 2012 PEA and other historical testing undertaken by prior owners and operators, a total of seven flowsheet development composites and 114 variability composites were prepared for metallurgical testing in support of the PFS from the more than 800 samples collected from the Project. Mineralogical work confirmed that the gold is mostly present in both pyrite and (to a much lesser extent) arsenopyrite, at concentrations that are usually high enough to economically justify flotation concentration followed by POX of the sulfides and cyanidation of the released gold. Oxide zones, mostly in the West End Deposit, contained very fine-grained, discrete gold available to direct cyanidation. Antimony occurs as stibnite, which is typically coarse-grained when occurring in higher-grade samples.

After the PEA related testing, grindability testing was conducted on all deposits, including two JK Drop Weight tests, 22 JK SAG mill characterization (SMC) tests, 10 crusher work index and abrasion index tests, 8 rod mill work index, and 24 ball mill work index tests. All composites indicate medium hardness (ball mill work index 13.0 to 14.1 kWh/t) and are amenable to semi-autogenous grinding (SAG) milling, though West End is somewhat more resistant to SAG milling, and Yellow Pine appears to be slightly more resistant to ball milling.

Over 300 metallurgical tests were completed on samples from the Yellow Pine, Hangar Flats, West End and Historic Tailings deposits as part of the PFS; in addition, more than 130 tests were completed for the PEA and numerous test programs were completed by prior owners and operators. Despite some mineralogical differences between the deposits, developmental metallurgical testwork has been able to identify a single, modular flowsheet that proved successful when applied to each of the deposits, making it possible to design a single plant that can process all ores from the Project as they are mined. This plant would, when antimony grades are high enough, float off the stibnite to create a saleable antimony concentrate, and then all ores (whether or not antimony is pre-floated) would be subject to bulk flotation of sulfides to produce an auriferous concentrate. Limited testwork on the Historic Tailings showed that they could be successfully co-processed through either flowsheet with the early production Yellow Pine ores.

At most times, the rougher flotation concentrates are expected to meet the POX sulfur content requirements and not require further cleaning, although West End concentrates require additional processing to reject carbonate-bearing (CO₃) minerals from the gold concentrates to produce a POX friendly concentrate.

Developmental leaching test work was also undertaken on the West End oxide ores, as well as on select flotation tailings produced from partially oxidized mineralization from Hangar Flats and West End. West End oxide leach studies indicate that 96% of the extracted gold leaches in the first six hours, with another 2% leached over the final 18 hours. Leach studies on the flotation tailings from Hangar Flats and West End indicate that any leachable gold in the flotation tailings is also fast leaching and could contribute significantly to gold recovery. Leach studies on the flotation tailings from Yellow Pine suggest little incremental recovery, but leaching them would provide additional assurance against losses of cyanide-soluble gold.

The projected overall recoveries for each deposit are shown on Figure 1.2 and Figure 1.3.

Figure 1.2:       Gold and Silver Recoveries to Doré

Figure 1.3:      Antimony Concentrate Recoveries

1.14                Mineral Resource Estimates

The Mineral Resource estimates for Hangar Flats, West End and Yellow Pine deposits, and the Historic Tailings, were prepared to industry standards and best practices using commercial mine-modeling and geostatistical software by third party consultants and verified by an Independent QP.

The Mineral Resources were initially calculated using a gold price of $1,400/oz and parameters defined in Section 14; based on this, the open pit sulfide cut-off grade was calculated as approximately 0.016 oz/st (0.55 g/t) Au and the open pit oxide cut-off grade calculated as approximately 0.010 oz/st (0.35 g/t) Au. However, Midas Gold elected to report its Mineral Resources at a 0.022 oz/st (0.75 g/t) Au sulfide cut-off grade and 0.013 oz/st (0.45 g/t) Au oxide cut-off grade, which is equivalent to utilizing the cost assumptions stated in Section 14 and a gold selling price of approximately $1,000/oz for sulfides and $1,100/oz for oxides. The consolidated Mineral Resource statement for the Project is shown in Table 1.2.

Table 1.2:      Consolidated Mineral Resource Statement for the Stibnite Gold Project

Notes:

(1)        All Mineral Resources have been estimated in accordance with Canadian Institute of Mining and Metallurgy and Petroleum (“CIM”) definitions, as required under National Instrument 43-101 (“NI43-101”).

(2)       Mineral Resources are reported in relation to a conceptual pit shell in order to demonstrate potential for economic viability, as required under NI43-101; mineralization lying outside of these pit shells is not reported as a Mineral Resource. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. These Mineral Resource estimates include Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. It is reasonably expected that the majority of Inferred mineral resources could be upgraded to Indicated. All figures are rounded to reflect the relative accuracy of the estimate and therefore numbers may not appear to add precisely.

(3)       Open pit sulfide Mineral Resources are reported at a cutoff grade of 0.75 g/t Au and open pit oxide Mineral Resources are reported at a cutoff grade of 0.45 g/t Au.

The Yellow Pine and Hangar Flats deposits contain zones with substantially elevated antimony-silver mineralization, defined as containing greater than 0.1% antimony, relative to the overall Mineral Resource. The existing Historic Tailings Mineral Resource also contains elevated concentrations of antimony. These higher-grade antimony zones are reported separately in Table 1.3. Antimony zones are reported only if they lie within gold Mineral Resource estimates.

Notes:

1.15                Mineral Reserve Estimates

The Qualified Person (QP) for the estimation of the Mineral Reserve was John M. Marek, P.E. of Independent Mining Consultants, Inc. The Mineral Reserves were estimated in conformity with generally accepted Canadian Institute of Mining and Metallurgy (CIM) “Estimation of Mineral Resources and Mineral Reserves Best Practices Guidelines” and are reported in accordance with the Canadian Securities Administrators’ NI 43-101. Mr. Marek has reviewed the risks, opportunities, conclusions and recommendations summarized in Sections 25 and 26, and he is not aware of any unique conditions that would put the Stibnite Gold Mineral Reserve at a higher level of risk than any other North American developing projects.

The Mineral Reserve was developed by allowing only Indicated Mineral Resource blocks to contribute positive economic value, and is a subset of the Mineral Resource comprised of the Probable Mineral Reserve that is planned for processing over the life-of-mine plan, with assumptions summarized in Sections 15 and 16. No economic credit has been applied to Inferred mineralization in the development of the Mineral Reserve; further blocks needed to be economic based on gold content alone before being categorized as a Mineral Reserve. A series of floating cones were developed by varying the gold price from $200/oz to $1,500/oz and then evaluated at a $1,200/oz price for gold without changing the size of the cone; for Yellow Pine, an $800/oz cone was selected as optimal, while $1,100/oz cones were selected for Hangar Flats and West End.

Based on the longer-term nature of the Project, cutoff grades for Mineral Reserves were developed assuming long term metal prices of $1,350/oz gold, $22.50/oz silver, and $4.50/lb antimony for material lying within the cones selected above. Confidence classification was based on gold estimation.

The cut-off grade is defined by a term called ”Net of Process Revenue” (NPR) which takes into account final PFS processing recoveries, processing costs, and smelter terms (see Section 15), with any block with a NPR greater than zero meets the requirement for internal cutoff grade. The processing costs for ore range from $9.07/st for oxides to $17.00/st for high antimony sulfides with an additional $3.40/st of ore for G&A. Therefore the NSR equivalent of the cut-off grade range is: $12.47/st – $20.40/st. The Mineral Reserves are summarized in Table 1.4.

Table 1.4: Stibnite Gold Project Probable Mineral Reserve Estimate (Imperial & Metric Units)

Notes:

(1)       Metal prices used for Mineral Reserves: $1350/oz Au, $22.50/oz Ag, $4.50/lb Sb.

(2)       Block MUST be economical based on gold value only in order to be included as ore in Mineral Reserve.

(3)       Numbers may not add exactly due to rounding.

Mineral Reserves exclude approximately 10.8 Mst with average grades of 0.032 oz/st (1.10 g/t) Au, 0.049 oz/st (1.67 g/t) Ag and 0.05% Sb that are Inferred Mineral Resources that lie within the Mineral Reserve pit limits; conversion of some or all of these tons would increase payable metal and reduce strip ratios. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Inferred Mineral Resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. It is reasonably expected that the majority of Inferred mineral resources could be upgraded to Indicated.

1.16                       Mining

The mine plan developed for the Project incorporates the mining of the three in situ Mineral Deposits: Yellow Pine, Hangar Flats, and West End and their related waste rock, and the re-mining of Historic Tailings along with its cap of spent heap leach ore (SODA). Ore from the three pits would be sent to a centrally located crusher while the Historic Tailings would be fed by slurry into the process plant’s grinding circuit. Waste rock would be sent to four distinct destinations: the tailings storage facility (TSF), the main Waste Rock Storage Facility (Main WRSF), the West End Waste Rock Storage Facility (West End WRSF), and to the Yellow Pine pit as backfill. The general sequence of mining would be the Yellow Pine deposit first, Hangar Flats second, and West End third. This planned sequence is driven by the need to backfill the Yellow Pine pit with waste rock from the West End pit in order to restore the original gradient of the EFSFSR while using environmentally appropriate carbonate-rich material for such backfill. This order generally follows a sequence of mining gold ounces from highest grade to lowest grade, and lowest cost to highest cost. The Historic Tailings, which lie within the footprint of the Main WRSF, would be removed during the first four years of the mine schedule to make the necessary space for the Main WRSF.

Mining at the Stibnite Gold Project would be accomplished using conventional open pit hard rock mining methods. Mining is planned to deliver 8.05 Mst of ore to the crusher per year (22,050 st/d), with stockpiling by ore type (low antimony sulfide, high antimony sulfide and oxide). Batches of oxide and sulfide material would be sent to the crusher; the oxide feed would be vat leached while the sulfide material would be floated to produce up to two concentrates: (1) an antimony concentrate, when there is sufficient antimony to justify recovering it, to be sent offsite and (2) a gold-bearing sulfide concentrate that would be oxidized in an autoclave and then sent to agitated leach tanks for gold-silver leaching.

The PFS mine plan schedules 98.066 Mst of ore to be fed to the processing plant from Yellow Pine, Hangar Flats and West End pits. The mining sequence requires the waste stripping to average 3.5:1 (waste rock: ore) for the first 3 years; then the stripping ratio would grow to 4.2:1 for years 4 through 9 after which it would drop to an average of 2.4:1 for the final 3 years. During the first four years, 3.0 Mst of Historic Tailings would be fed to the processing plant at a stripping ratio of 2.0:1 (SODA:tailings). The life-of-mine (LOM) strip ratio averages 3.5:1.

Figure 1.4 is a graphical depiction of the ore and waste rock movements from the mining phases by period and the contained gold ounces for the potential mine schedule for the Stibnite Gold Project; preproduction material from Year -1 would be processed in Year 1.

Figure 1.4: District Ore and Waste Movements and Ounces of Contained Gold Mined by Year

A summary of the mill feed by deposit is provided on Figure 1.5. This figure represents the Mineral Reserve because the Probable Mineral Reserve corresponds to the total ore processed in the mine.

Figure 1.5: Ore Mining Schedule by Deposit and Phase

A summary of the mill feed statistics by ore type is provided in Table 1.5

Table 1.5: LOM Mill Feed Statistics by Ore Type

Mining would be performed with up to eighteen 200 st class haul trucks loaded by up to four 23.5 cubic yard front end loaders. The trucks would be light-body versions with an actual haulage capacity of 220 st. Blast holes would be 7-7/8” in diameter drilled by up to four drill rigs. An auxiliary fleet comprising dozers, motor graders water trucks and other ancillary equipment is also included in equipment requirements.

The overall gold recoveries to doré are expected to average approximately 90% from Yellow Pine, 87% from Hangar Flats, 86% from West End, and 75% from the Historic Tailings. When processing material containing more than 0.1% Sb, antimony recoveries are expected to average 82% for Hangar Flats and 87% for Yellow Pine, with minor gold and silver contained in the antimony concentrate.

Figure 1.6 is a general overview of the mine site at the end of mine life prior to closure and reclamation.

1.17                       Recovery

The Project’s process plant has been designed to process sulfide, transition and oxide material from the Yellow Pine, Hangar Flats, and West End deposits. The processing facility is designed to treat an average of 22,050 st/d, or 8.05 Mst/y. Additionally, the Historic Tailings would be reprocessed early in the mine life to recover precious metals and antimony, and to provide space for the Main WRSF.

The overall gold recoveries to doré are expected to average approximately 90% from Yellow Pine, 87% from Hangar Flats, 86% from West End, and 75% from the Historic Tailings. When processing material containing more than 0.1% Sb, antimony recoveries are expected to average 82% for Hangar Flats and 87% for Yellow Pine, with minor gold and silver contained in the antimony concentrate.

Figure 1.6: Overall Site Layout

1.18                       Process Operation Components

Run-of-mine (ROM) material would be crushed and milled, then flotation would be used to recover antimony as a stibnite flotation concentrate (with some silver and minor gold) when there is sufficient antimony to justify it. For all sulfide ore, an auriferous bulk sulfide flotation concentrate would be produced and oxidized in an autoclave. The autoclave residue and flotation tailings would be processed through conventional cyanidation and, doré bars produced containing gold and silver. Historic Tailings would be introduced into the ball mill during the first 3 - 4 years of operation. Tailings from the operation would be deposited in a geomembrane-lined TSF. The process operations include the following components:

1.19                       Project Infrastructure

Site Access

The site is currently accessed by the Stibnite Road, National Forest (NF-412), from the village of Yellow Pine, with three alternative routes up to that point. To address a number of shortcomings related to these routes, alternative access via the Burntlog Route was selected over several other possible alternatives because it provides safer year-round access for mining operations, reducing the proximity of roads to streams, creeks and rivers, and this route respects the advice and privacy of community members close to the Project location.

Onsite and Offsite Facilities

In an effort to reduce traffic to and from the Project site and to reduce housing requirements at the site, administrative offices for Project would be located in or near the town of Cascade (the Cascade Complex). The Cascade Complex would include offices for some managers, safety and environmental services, human resources, purchasing, and accounting personnel. The Cascade Complex would also have a small warehouse, a parking area for trucks to check-in and assemble prior to traveling to the Project site and the main assay laboratory.

Midas Gold currently has an on-site facility capable of housing approximately 60 and feeding 125 workers per 12 hour shift. To manage the estimated peak construction workforce of 1,000-persons, the existing exploration camp would be relocated and expanded to provide the necessary accommodations. The operations camp would be developed by upgrading, and downsizing, the construction camp to meet the needs of the operations staff that would peak at over 500 persons.

Power Supply and Transmission

Grid power was selected as the best alternative for the electrical power supply for the Project based on its low operating cost and likely lowest environmental impact. In order provide the necessary power, the existing grid system would need to be upgraded to support the full anticipated 50 megawatt (MW) load of the Project. The upgrades would include an upgrade of approximately 42 mi of 69 kilovolt (kV) lines to 138 kV, new 138 kV substations at Lake Fork, Cascade, and Warm Lake, as well as measures to strengthen the voltages on the IPCo system. In addition, IPCo would re-supply small consumers between Warm Lake and Yellow Pine via a replacement 12.5 kV line. Construction power supply would be provided by three diesel generators that would then be used as emergency backup for the remainder of the operations of the Project.

Water Management and Supply

Water management infrastructure would be needed for surface water and sediment management and to provide water supply for both personnel and the operations. The PFS provides the framework for a comprehensive approach to water management at the Project site, addressing water management objectives for construction, operation, and post-closure. Key elements include segregation of process water, contact water, untreated stormwater, and sanitary waste from the environment, provision for fish passage around and then through the Yellow Pine pit during operations and after closure respectively, clean-up of legacy issues in the Project area, and reclamation and closure of the site to achieve acceptable and sustainable water quality.

Waste Management

Mine waste requiring on-site management includes waste rock from the three open pits, flotation and POX tailings from ore processing, and historic mine waste (spent heap leach ore from SODA and the Hecla heap, as well as historical waste dumps) exposed during construction and mining. The existing Historic Tailings would be reprocessed, and subsequently commingled with the rest of the tailings. A single TSF would be constructed to retain all tailings from the processing of the various ore types. The TSF would consist of a rockfill dam and a geosynthetic-lined impoundment that would be constructed in stages throughout the Project life. A majority of the waste rock would be deposited in the main WRSF located downstream of the TSF dam and would act as a buttress (enhancing dam stability), used as rockfill in TSF construction, or placed as backfill within mined-out areas of the pits to facilitate closure and reclamation. Current test work indicates no need for special handling of any of the waste materials. Spent ore and waste rock from previous on-site operations would be used as a construction material in the TSF. With SODA material included, the TSF dam and WRSF combined would hold 210 Mst of waste rock and overburden. Most of the waste from the West End pit would be used to backfill portions of the West End and Yellow Pine pits, with the remainder placed at the TSF and West End WRSF.

A geochemical characterization program was carried out for mine waste rock materials, including the spent ore on the SODA, which provides a basis for assessment of the potential for metal leaching and acid rock drainage, prediction of contact water quality, and evaluation of options for design, construction, and closure of the mine facilities. The results of the static geochemical test work demonstrate that the bulk of the Project waste rock material is likely to be net neutralizing and presents a low risk for acid generation, while there is still a potential to leach some constituents under the neutral to alkaline conditions (i.e. arsenic and antimony) both of which are currently elevated in ground and surface waters due to the naturally high geochemical background of these metals in the District and impacts from past mining activities. Similarly, bulk flotation tailings are expected to generate neutral pH drainage and require no special disposal considerations to prevent acidic drainage, and POX tailings will be blended with the bulk flotation tailings in order to benefit from their buffering capacity.

1.20                       Market Studies and Contracts

The economic analysis completed for this PFS assumed that gold and silver production in the form of doré with payabilities, refining and transport charges as provided in Table 1.6.

Table 1.6: Doré Payables, Refining and Transportation Assumptions

Table 1.7 summarizes the antimony concentrate payables and transportation charge assumptions for this PFS.

Table 1.7: Antimony Concentrate Payables and Transportation Assumptions

The metal prices selected for the four economic cases in this Report are shown in Table 1.8.

Note:

1.21                       Environmental Studies

The Project area has been mined extensively for tungsten, antimony, mercury, gold, and silver since the early 1900s, providing strategic metals to the United States during war time critical minerals shortages, generating substantial economic benefit to the local counties and the State of Idaho, and providing much needed jobs and support to local businesses for nearly 100 years. These various historic mining efforts have left significant legacy environmental impacts that persist to this day, although multiple cleanup efforts undertaken by federal and state agencies and private entities have mitigated some of those historic impacts. Historic mining impacts have been compounded by extensive forest fires and subsequent damage from soil erosion, landslides and debris flows and resultant sediment transport.

In conjunction with the redevelopment of the Project area outlined in the PFS, Midas Gold has developed a plan to restore much of the site by removing existing barriers to fish migration and re-establishing salmon and steelhead fish passage, removing and reprocessing unconstrained historic tailings, reusing historic spent ore material for construction, restoring stream channels, and implementing sediment control projects such as repairing on Blowout Creek, as well as extensive reforestation of the Project area. Midas Gold has endeavored to minimize the Project’s footprint and related impacts by siting facilities and roads on previously disturbed ground and away from riparian areas, provided for a new access road that avoids rivers and large waterways, and would connect to grid power to minimize fossil fuel consumption and haulage.

Baseline Studies and Existing Conditions

An extensive set of baseline data demonstrating historic and existing conditions exists for the Project site, including those collected by contractors for the US Forest Service (USFS) and the US Environmental Protection Agency (EPA) that determined there were no unacceptable risks to the environment or human health and that there were no populations (fish, wildlife, or human) shown as having a "likely" risk. In 2001, the EPA and the Bureau of Environmental Health and Safety, Division of Health, Idaho Department of Health and Welfare, determined the risk to be too low for listing on the National Priorities List. In 2009 and 2010, contractors to Midas Gold conducted Phase I and Phase II Environmental Site Assessments, as prescribed by ASTM International (ASTM) Standard Practices; these assessments determined that there were no imminent threats to human health or the environment, but that there was a number of pre-existing significant and moderate recognized environmental conditions.

In 2011, Midas Gold retained environmental consulting firms to conduct technical adequacy audits of all existing environmental information and to develop individual work plans to conduct an environmental baseline collection program. These workplans were developed with input from involved state and federal agencies in order to establish the existing environmental conditions, identify and quantify environmental risks and liabilities, and monitor for potential impacts from onsite activities. Work programs commenced in 2011 and will continue into 2015 and beyond to ensure an adequate baseline accurately describe the existing environment at the “brownfield site”, and allow for a "full and fair" discussion of all potentially significant environmental impacts in the event that the Stibnite Gold Project moves forward.

Consent Decrees

Several of the patented lode and mill site claims acquired by Midas Gold are subject to consent decrees entered in the US District Courts involving or pertaining to environmental liability and remediation responsibilities with respect to the affected properties, which provide regulatory agencies access and the right to conduct remediation activities and also require that heirs, successors and assignees refrain from activities that would interfere with or adversely affect the integrity of any remedial measures implemented by government agencies.

Permitting

Should a decision be made to file a Plan of Operations (PoO), approval of any Final PoO / Reclamation Plan for the Project would require an environmental analysis in compliance with the National Environmental Policy Act (NEPA), which requires federal agencies to study and consider the likely environmental impacts of the proposed action before taking whatever federal action is necessary for the Project to proceed. An EIS serves as an "overarching” permit requirement, as well as that for water discharge; waste and tailings placement and endangered species authorization. The EIS Record of Decision (ROD) effectively drives the entire permitting process, since a favorable ROD is required before these important clearances can be obtained. State and local permitting processes would be integrated and proceed concurrent with the EIS, and include air quality, cyanide, land application of water, groundwater, water rights, dam safety, reclamation, building permits, sewer and water systems, etc. Midas Gold believes it will be beneficial to have all permit processes integrated into the Idaho Joint Review Process (IJRP) and that the IJRP would play a key role in increased communication and cooperation between the various involved governmental agencies, and reduced conflict, delay, and costs in the permitting process. Midas Gold’s objective is to make the Project a fully integrated, sustainable, and socially and environmentally responsible operation through open communications and accessibility.

1.22                       Social Impacts

Employment

Populations continue to grow in Valley and Adams Counties, but jobs are not keeping pace; unemployment rates in these counties are some of the highest in Idaho, while wages average only $27,433/year. The Project could do much to improve this situation, with current mining jobs in Idaho averaging $72,500/year and the Project offering an approximate average of some 400 direct and 321 indirect and induced jobs in Idaho generating aggregate annual payrolls of $48 million/year during the 3-year construction period (plus additional out-of-state contractors for specialized construction functions) and an approximate average of some 500 direct and 439 indirect and induced jobs generating aggregate annual payrolls of $56 million/year during the 12-year operating period.

Operations are scheduled for 365 days/year; a breakdown of the annual staffing requirements to operate and maintain the mine, processing plant, and appurtenant facilities and functions for the five functional work areas is provided on Figure 1.7. Whenever possible, the work force was segregated between the mine site and the Cascade Complex to limit the number of personnel at the mine site that require residential support and transportation to and from site.

Figure 1.7: Annual Direct Employment by Department

Taxes

To estimate the potential economic impacts from the Project, an economic impact model known as IMpact analysis for PLANning (IMPLAN) was constructed (Peterson, 2014). The IMPLAN model was used to estimate direct, indirect and induced taxes, that would be paid by other taxpayers (other than Midas Gold), and the tax estimates were combined with the direct federal, state and local taxes that would be paid by Midas Gold (see Section 22 for details on the PFS financial model and tax calculations) to develop an estimate for the overall taxes generated by the Project. Figure 1.8 presents a plot of estimated annual direct, indirect and induced taxes associated with the Project paid by both Midas Gold and other taxpayers to federal, state and local governments.

Taxes that would be paid directly by Midas Gold over the life of the Project, based on the assumptions in the PFS, are estimated at approximately $329 million in federal corporate income taxes, and $86 million in state corporate income and mine license taxes.

Additional indirect and induced taxes that result from Midas Gold’s activities that would be paid by other taxpayers, based on the assumptions in the PFS, are estimated at approximately $177 million in federal taxes (including payroll, excise, income and corporate), and $131 million in state and local taxes (including property, sales, excise, personal, corporate, and other).

Total direct, indirect and induced taxes are therefore estimated at $506 million in federal taxes and $218 million in state and local taxes, representing a significant contribution to the economy during the 15 year construction and operating life of the Project.

Figure 1.8: Chart of Estimated State and Federal Taxes

Environmental Mitigation and Remediation

Midas Gold has made considerable effort to design the Project restoration of the site through the incorporation of specific mitigation and remediation components, including re-establishing fish passage, removal and reprocessing of unconstrained Historic Tailings, removal of unconstrained historical waste rock, reuse of historical spent ore piles for construction, stream channel restoration projects, and sediment control. The mitigation and remediation activities and costs are summarized in Section 20 and Section 21, respectively. Additionally, the Project design team has optimized siting of facilities wherever possible to avoid riparian areas, limit stream crossings, position facilities on previously disturbed ground, move major access routes away from large waterways, minimize the number of people on site to limit traffic, and re-establish historic line power to the site to minimize fuel haulage and reduce greenhouse gas emissions. In some cases, disturbance of albeit already impacted wetlands and streams would be unavoidable, which disturbance Midas Gold intends to address through a mitigation bank or similar entity as well as through onsite replacement and restoration of existing wetlands. Midas Gold would continue to build on its strong record by continuing to proactively evaluate Best Management Practices (BMPs) and Standard Operating Procedures (SOPs) effectiveness, including a post-closure component.

A critical goal for Midas Gold has been the incorporation of fisheries protection and habitat restoration components aimed at achieving a sustainable anadromous fishery, including passage of migrating salmon, steelhead, and trout to the headwaters of the EFSFSR both during and after operations for the first time since 1938. Upon closure, new enhanced wetlands and spawning grounds would be established to assist in the return of fish migration and reestablishment of a health riparian zone along the rebuilt stream channel. Midas Gold has also incorporated efforts to improve water quality by removing historical tailings, spent ore and waste rock and respectively reprocessing, reusing and relocating these materials, as well as developing sediment control features for Blowout Creek, currently a major contributor of sediment, and replanting historically disturbed and forest fire affected areas to reduce sedimentation.

Closure

During construction, operations and once operations cease, extensive reclamation would be completed, creating enhanced surface water systems and suitable fisheries habitat. Midas Gold has identified 17 priority Project conservation components that form the basis of the overall conservation strategy that are summarized in Section 20; Figure 1.9 presents a site-wide illustration of the overall closure strategy. These components include: construction of the new Burntlog Road (which effectively moves the primary transportation route away from the Johnson Creek fishery), backfilling the Yellow Pine pit with environmentally appropriate material to create a stable hydrogeologic gradient suitable to the current conditions, closure of historic mine workings on USFS lands, ongoing wetlands and stream habitat enhancement, permanent restoration of fish passage up the EFSFSR, post-closure wetlands and stream habitat enhancement on top of the Meadow Creek TSF surface and reforestation of the Project area. The conservation commitment to restore the site through implementation of these measures is discussed in greater detail in Section 20, while closure costs are detailed in Section 21.

When operations cease, mobile and salvageable equipment would be removed, and foundations broken up, covered and re-vegetated (Figure 1.9). The objective is for the development of a self-sustaining natural environment that has addressed many of the historical impacts and supports a healthy fish and wildlife population. Post-closure monitoring is planned for an extended period to ensure that these objectives have been met.

Figure 1.9: Conceptual Post Closure Reclamation

1.23                       Economic Analysis

Capital and operating cost estimates were developed based on Q3 2014, un-escalated U.S. dollars. Vendor quotes were obtained for all major equipment. Most costs were developed by first principles, although some were estimated based on factored references and experience with similar projects.

Capital Costs

The estimated capital expenditure or capital costs (CAPEX) for the Project consists of four components: (1) the initial CAPEX to design, permit, pre-strip, construct, and commission the mine, plant facilities, ancillary facilities, utilities, operations camp, and on and off site environmental mitigation; (2) the sustaining CAPEX for facilities expansions, mining equipment replacements, expected replacements of process equipment and ongoing environmental mitigation activities during the operating period; (3) working capital to cover delays in the receipts from sales and payments for accounts payable and financial resources tied up in inventory, and (4) closure CAPEX to cover post operations reclamation costs. Initial and working CAPEX are the two main categories that need to be available to construct the Project. Table 1.9 summarizes the initial, sustaining and closure CAPEX for the Project.

Table 1.9:     Capital Cost Summary

Note:

(1)          Initial mining CAPEX includes environmental remediation costs as discussed in Section 21.

(2)         Contingency included in line items.

Mitigation costs only refer to relocation of a certain portion of the readily identifiable and quantified waste from historical mining activities; other costs related to recovery and reprocessing of Historic Tailings and relocation of unquantified waste rock at West End and Yellow Pine are included in operating costs and are partially offset by recovery of gold and antimony from the Historical Tailings.

Operating and All-In Costs

The cash operating costs include mine operating costs, process plant operating costs, general and administrative (G&A) costs, while total cash costs include smelting and refining charges, transportation charges, and royalties. A detailed breakdown of the summary of the operating costs (OPEX) costs is presented in Table 1.10. The details that comprise the OPEX are provided Section 21. The All-In Sustaining Costs (AISC) are also provided in the table, as well as the All-In Costs (AIC), which include non-sustaining capital and closure and reclamation costs.

Table 1.10:    Operating Cost, AISC and AIC Summary

Notes:

(1)   Defined as non-sustaining reclamation and closure costs in the post-operations period.

(2)   Initial Capital includes capitalized preproduction.

Metal Production

Recovered metal production by deposit is summarized in Table 1.11 and illustrated on an annual basis on Figure 1.10.

Table 1.11:   Recovered Metal Production

Figure 1.10:   Annual Recovered Metals by Deposit

Metals by Year of Operation

Economic Analysis

The economic model described herein is not a true cash flow model as defined by financial accounting standards but rather, a representation of Project economics at a level of detail appropriate for a PFS level of engineering and design. The first year of analysis starts with the decision point of the Project, the completion of the EIS, and preliminary permit approval (Year -3 or three years before the start of commercial production). Taxation was taken into account using current federal, state, and county rates but the overall tax calculation is approximate and uses rudimentary depletion and depreciation estimates.

Four cases were run in the economic model to present a range of economic outcomes using varying metal prices. The metal prices used in the economic model are shown in Table 1.8 and off-site costs and payables used are in Table 1.6 and Table 1.7. There is no guarantee that any of the metal prices used in the four cases are representative of future metals prices. The constant parameters for all cases are shown in Table 1.12.

Table 1.12:   Economic Assumptions used in the Economic Analyses (all Cases)

The results of the economic analyses are shown in Table 1.13. Based on the assumptions made in this PFS, the ATNPV_5% is estimated to be $832 million yielding an after-tax IRR of 19.3%. The ATNPV_5% and IRR increase considerably with the Case C metal prices and decreases with the Case A metal prices. The PTNPV_5% for Case B was estimated to be $1,093 million with an IRR of 22.0%.

Table 1.13:   Economic Results by Case

The contribution to the Project economics, by metal, is about 94% from gold, 5% from antimony, and less than 1% from silver. The undiscounted after-tax cash flow for Case B is presented in Figure 1.11. The payable metal value by year for Case B is summarized on Figure 1.12.

Figure 1.11:   Undiscounted After-Tax Cash Flow for Base Case B

Figure 1.12:   Payable Metal Value by Year for Case B

Mine Life

Using the current Mineral Reserve and the nominal design throughput of 22,050 st/d, the mine plan projects a 12 year production life. Construction is projected to require a three-year period after the permits are obtained and prior to the start of operations. Closure is projected to take at least 10 years post-production, with some reclamation work occurring concurrently with operations, and the bulk of the closure activities and costs incurred in the first 3 years after operations cease. Some closure activities and long-term monitoring are anticipated to continue well after the reclamation period is complete to ensure that the closure designs continue to protect the environment and are performing in accordance with the design parameters.

Sensitivity Analysis

Sensitivity analyses were performed using metal prices, mill head grade, CAPEX, and OPEX as variables. The value of each variable was changed plus and minus 20% independently while all other variables were held constant. The results of the sensitivity analyses are shown in Table 1.14 and Table 1.15.

Table 1.14: Pre-tax NPV_5% Sensitivities by Case

 

					PTNPV5% (M$)
Case		Variable			-20% Variance					0% Variance				20% Variance
Case A		CAPEX				862				662				463
		OPEX				1,017				662				308
		Metal Price or Grade				-27				662				1,352
Case B		CAPEX				1,292				1,093				894
(Base Case)		OPEX				1,447				1,093				739
		Metal Price or Grade				318				1,093				1,869
Case C		CAPEX				1,723				1,524				1,325
		OPEX				1,878				1,524				1,170
		Metal Price or Grade				662				1,524				2,386
Case D		CAPEX				2,154				1,955				1,755
		OPEX				2,309				1,955				1,600
		Metal Price or Grade				1,007				1,955				2,902

 

Table 1.15: After-tax NPV_5% Sensitivities by Case

1.24                       Risks and Opportunities

A number of risks and opportunities have been identified in respect of the Project; aside from industry-wide risks and opportunities (such as changes in capital and operating costs related to inputs like steel and fuel, metal prices, permitting timelines, etc.), high impact Project specific risks and opportunities are summarized below.

Risks, for which additional information is required in order to mitigate:

Opportunities that could improve the economics, and/or permitting schedule of the Project, including a number with potential to increase the NPV_5% by more than $100 million follow:

Opportunities with a medium impact ($10 to $100 million increase in Project NPV_5%) include improved recoveries, secondary processing of antimony concentrates, potential legislative designation of antimony as a critical mineral; steeper pit slopes, onsite quicklime generation, and government funding of off-site infrastructure. A number of lesser impact opportunities also exist.

1.25                       Conclusions And Recommendations

Industry standard mining, processing, construction methods, and economic evaluation practices were used to assess the Project. There was adequate geological and other pertinent data available to generate the PFS.

The financial analysis presented in Section 22 of the PFS Technical Report demonstrates that the Project is financially viable and has the potential to generate positive economic returns based on the assumptions and conditions set out in this Report, while other sections of the PFS demonstrate that the Project is technically and environmentally viable. These conclusions warrant continued work to advance the Project to the next level of study, which is a Feasibility Study (FS), by conducting the work indicated in the recommendations section of this Report. These recommendations form a single phase that will move the Project through to completion of a FS and, if so desired, through the regulatory process for mine development. Total estimated costs for completion of this single phase are $22.3 million. While additional information is required for a complete assessment of the Project, at this point there do not appear to be any fatal flaws. The PFS has achieved its original objective of providing a review of the potential economic viability of the Project to standards appropriate for a PFS.

The QPs of the PFS Technical Report are not aware of any unusual, significant risks or uncertainties that could be expected to affect the reliability or confidence in the Project based on the data and information available to date.

An additional $22.5 million is identified as discretionary expenditures that would target a number of the opportunities identified in Section 25 of the PFS Technical Report that could enhance the PFS case but that are not required in order to complete a FS or permitting.

Table 1.16: Project Development Work Program Budget

Stibnite Gold Project Post-PFS Mineral Resource Update

In February 2018, the Corporation provided an update to its Mineral Resource estimates for the Stibnite Gold Project. The updated estimates incorporate: (1) additional drilling completed since 2014 that was focused on converting mineral resources from the inferred to the indicated category within the limits of mineral reserve limiting pit in the PFS, (2) additional data collected and recovered from pre-Midas Gold activities, and (3) more detailed geological modelling supported by relogging Midas Gold core, rock geochemistry, mapping, alteration modeling and other information.

Highlighted Changes to Post-PFS Mineral Resource Estimates

The principal changes in the 2018 Mineral Resource estimates (relative to the PFS Technical Report consolidated mineral resource statement) are a 2% increase in Measured and Indicated (M&I) gold grade and a 3% increase in M&I gold contained in mineral resources, as well as a 31% increase in Indicated antimony contained in Mineral Resources. These changes are largely driven by a 6% increase in M&I gold grade at Yellow Pine, a 10% increase in Indicated mineralized tonnage in the West End deposit and increased antimony contained in Mineral Resources in both the Yellow Pine and Hangar Flats deposits. Positive changes are slightly offset by a 2% decrease in Indicated gold contained in Mineral Resources at Hangar Flats.

The change in grade at Yellow Pine is the result of additional drilling and a more detailed geological model, which better segregates mineralized and unmineralized materials on the basis of newly identified fault zones defined based on re-logging, oriented core data from the 2016-2017 drilling program and surficial pit mapping from pre-Midas Gold activities. Similarly, increased tonnage in the West End deposit is the result of a more detailed geological model which subdivides metasedimentary formations into individual lithotypes and models stratigraphic offset along post-mineralization faults. Another principal change in the West End model is the definition of more oxide Mineral Resources following a thorough comparison of cyanide recoverable to total gold ratios against distribution of logged oxidation in drill logs.

All models use sub-block or partial-block percentage reporting to accurately report in-situ Mineral Resources, which will allow for quantitative forecasting of mining dilution in the Feasibility Study.

Increases in antimony contained in Mineral Resources at Yellow Pine are due to new drilling in the antimony Mineral Resource area, definition of an antimony grade shell using indicator methods, and re-evaluation of legacy data used in the estimate on the basis of reconciliation against historic production records. Similarly, the increase in antimony contained in Mineral Resources at Hangar Flats is the result of new drilling in the antimony Mineral Resource area and different treatment of legacy drillhole data following assessment of the impact of this data.

Qualified Persons for Post-PFS Mineral Resource Update

The Mineral Resource estimates for Yellow Pine, Hangar Flats and West End were prepared to industry standards and best practices using commercial mine-modeling and geostatistical software. Garth Kirkham, P.Geo. is the Qualified Person responsible for the Yellow Pine and Hangar Flats Mineral Resource estimates for the purposes of NI43-101. Bart Stryhas, C.P.G. and former Chief Geologist of the Stibnite Mine, is the Qualified Person responsible for the West End Mineral Resource estimate and West End geologic model for the purposes of NI43-101. The Yellow Pine and Hangar Flats geologic models and Mineral Resource estimates were completed under the supervision of Midas Gold’s Senior Resource Geologist Austin Zinsser, SME-R.M., and Exploration Manager Chris Dail, C.P.G. Each deposit was segregated into multiple estimation domains based on geologic models with the majority of Mineral Resources estimated using ordinary kriging interpolation of capped composites in multiple estimation passes. Search ellipse orientation and anisotropy were based on structural and geological controls and/or variogram models with first pass major axis search distances generally 40-60m, and subsequent pass distances generally 100-150m.

For complete details, please see the Corporation’s news release dated February 15, 2018.

Stibnite Gold Project Post-PFS Design Studies

Following completion of the PFS, during 2015 through 2019, numerous design optimizations were incorporated into Stibnite Gold Project, with particular focus on enhancing the environmental and permitting aspects of the Project. Provided below is a summary of the key enhancements that were incorporated into the Project:

Additional technical studies completed following the PFS, with the intent of optimizing the Project, that resulted in no material changes to the PFS plan were as follows:

The technical information on the Stibnite Gold Project Post-PFS Design Studies information was reviewed and approved by Stephen P. Quin, P.Geo., President and CEO of Midas Gold Corp., and a Qualified Person.

Stibnite Gold Project Post-PFS Metallurgical Testing and Process Optimization

Since completion of the PFS, metallurgical test work has been conducted at several laboratories and coordinated by Blue Coast Metallurgy Ltd. (Blue Coast) and M3, under the guidance of a team of metallurgical experts working with Midas Gold. Highlights of the results of metallurgical testing since the completion of the PFS were reported in a news release dated February 21, 2018, and should have economic benefits to the Project. Highlights include the following:

In the below table, the overall recoveries of gold achieved from flowsheet development in the FS are compared with those adopted for the PFS. Note that the final recoveries adopted for the FS may differ from those listed below, depending on process engineering and equipment selection currently underway.

Notes: 

The updated metallurgical technical information was reviewed and approved by Stephen P. Quin, P.Geo., President and CEO of Midas Gold Corp., and a Qualified Person. The metallurgical testing program for the Stibnite Gold Project was carried out under the supervision of Christopher Martin, MIMMM, C.Eng., a Qualified Person and Principal Metallurgist for Blue Coast Metallurgy Ltd.

Update on Status of Feasibility Study

Midas Gold’s technical team and consultants continue to advance their work on a Feasibility Study for the Stibnite Gold Project. The timing for completion of the Feasibility Study is tied to the completion of the DEIS since the Feasibility Study should align with the Preferred Alternative Project defined in the DEIS. While substantially all of the work related to mineral resource estimation, metallurgy, geotechnical, infrastructure (including road access, powerline, tunnel design) and other aspects of the Project has been completed, and mine planning is well advanced, finalization of the design and estimating of capital and operating costs are awaiting decisions driven by the permitting process. The Feasibility Study looks to incorporate the results of several Project optimizations, including updated mineral resource estimates (discussed above), results of optimized metallurgy and processing (discussed above), optimized layout and plant design, and other considerations including those discussed above. A number of these optimizations are focused on reducing potential environmental effects and impacts from mine redevelopment, and to enhancing the restoration of the site to ensure a healthy, sustainable ecosystem during and after operations. The extended permitting schedule does provide the opportunity to advance designs of certain Project components further than would be typical for a Feasibility Study and include this more advanced information in the FS. In addition, it also provides the opportunity to undertake certain value engineering exercises, where deemed appropriate, and also include the results of such evaluations in the FS. It is currently anticipated that the FS will be published in 2020.

Update on Stibnite Gold Project Environmental and Permitting Related Activities

Midas Gold filed its Plan of Restoration and Operations (PRO) in September 2016, and the USFS deemed it adequate to proceed with evaluation in December 2016. In 2017, the USFS selected AECOM as the third-party contractor to assist with preparation of the EIS and also identified cooperating and contributing regulatory agencies that would be involved with evaluation of the Project. A Notice of Intent (NOI) was filed on June 5, 2017 to inform the public of the proposed action on the National Forest and internal (agency) and external (public) scoping was initiated. These processes coincided with public meetings that were held to provide the public with Project information and to facilitate public comment. Over the course of 2017, agency and public scoping comments were compiled and environmental resources to be considered in the NEPA analysis were identified. In anticipation of the scoping results, Midas Gold had been collecting baseline environmental resource data for several years, and much of 2017 and 2018 included the compilation and delivery to the USFS of a vast amount baseline data for the following environmental resources:

Steps toward advancing all major permits and approvals for the Stibnite Gold Project (SGP) progressed in 2019 and drew upon the extensive amount of data transfer and compilation that occurred through 2017 and 2018.

With respect to NEPA, draft chapters of the DEIS went through numerous iterations over the course of 2019. The alternatives development and evaluation process that was initiated in Q4 2017 and continued through much of 2018 coalesced into distinct action alternatives that are to be carried forward for analysis in the Draft Environmental Impact Statement (DEIS). Two of the alternatives to Midas Gold’s original Proposed Action were developed by the agencies and the EIS third-party contractor, AECOM. These alternatives centered on fundamental changes to major mine features and included, (1) using the Yellow Pine Route (Johnson Creek Road and Stibnite Road) as the primary mine site access route and (2) moving the location of the tailings storage facility (TSF) to the upper EFSFSR drainage. Midas Gold provided evaluations of these alternatives to assess their technical and economic feasibility; these efforts included preliminary engineering design and cost estimates. Midas Gold also conducted preliminary effects analysis to determine whether the agency-proposed alternatives would provide an environmental benefit. In summary, analyses for these alternatives demonstrated that they were technically feasible, but were far more costly, did not provide an environmental benefit, would cause delays in project implementation of at least two years, would create greater risks to human health and safety and, in the case of the EFSFSR TSF, would preclude Midas Gold from reclaiming one of the most significant legacy features in the Stibnite district, the Spent Ore Disposal Area (SODA). Despite this wealth of information, these agency-proposed EFSFSR TSF and Yellow Pine Mine Access Route alternatives are included in the DEIS as Alternatives 3 and 4, respectively

A third alternative was proposed by Midas Gold and consisted of modifications to several aspects of the PRO that focused on reducing environmental impacts or improving the function of various mine site features. The collection of changes that comprised the Modified PRO (Mod-PRO) were informed primarily by the results of ongoing hydrologic, geochemical and stream temperature modeling. The modifications targeted mitigating environmental effects that surfaced through predictive modeling efforts and resulted in a refined Project with numerous demonstrated benefits over the PRO. In May of 2019, the Mod-PRO was presented to the USFS with abundant demonstration (through supplemental modeling) of the environmental benefits. The Mod-PRO now represents Midas Gold’s preferred alternative and is included in preliminary DEIS as Alternative 2.

Midas Gold was afforded numerous opportunities to review preliminary DEIS chapters 1 and 2 over the course of 2019, culminating in a year-end review of Chapters 1 through 3 of the DEIS.

In summary, the range of alternatives expected to be included in the environmental analysis of the SGP include:

In late December 2019 and early January 2020, following cooperating agency review of the latest draft of the preliminary DEIS, Midas Gold Idaho, Inc. submitted numerous important concerns to the USFS, generally in the following categories: