Midway Gold (MDW.TO, NYSEMKT:MDW) has announced Barrick Gold (ABX.TO, NYSE:ABX) plans to spend $13.3M on the Spring Valley project this year, of which $8.3M will be used for project development and an additional $5M will be used for exploration purposes (which will mainly be spent on in-fill drilling to upgrade the currently known resources). This once again shows how serious Barrick Gold is about developing Spring Valley after it earned an initial 70% interest in the project.
Midway Gold will retain a 25% interest and will be carried to production, so its shareholders are in an excellent position to benefit from Barrick’s efforts and meanwhile with Pan having a very near-term production asset in Nevada.
Additionally, Midway has raised $25M in equity through a bought deal offering at US$0.83/share (with the Royal Bank of Canada and Haywood as lead underwriters) and $55M in debt through the Commonwealth Bank of Australia at very favorable terms. It’s remarkable to see the Commonwealth Bank offering $45M in project debt at an interest rate of just LIBOR +3.5-3.75%, and this deal seems to be very advantageous for Midway Gold. The Pan project is currently under construction, and it looks like Midway will be providing Nevada’s newest gold mine.
Disclosure: The author holds no position in Midway Gold. Please see our disclaimer for current positions.
