Midas Gold (TSX: MAX) CEO Stephen Quin Provides an Update on the Feasibility Study and Regulatory Permitting Process at the Stibnite Gold Project

April 25, 2017

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me to today is President and CEO of Midas Gold (TSX: MAX)(OTC: MDRPF), Mr. Stephen Quin. Stephen, thank you for joining me this morning.

Stephen Quin: Thank you, Gerardo, good to be on.

Gerardo Del Real: The last time we spoke we went over the results of the very successful 2016-2017 Winter Drill Program. You had some phenomenal results there. And I know a part of that Winter Drill Program was to optimize the resource in preparation for an upcoming feasibility study. And on April the 3rd you actually announced that you had commenced that feasibility study for the Stibnite Gold Project. Could we talk a little bit about the details and what you're hoping to achieve with this new feasibility study?

Stephen Quin: Sure. I'd like to, Gerardo. As we announced at beginning of April we hired a group led by M3, which is a Tucson-based consulting firm, to put together the feasibility study for the project. And the point of the feasibility study is to provide a more definitive design and estimates of costs, caps on operating costs for the project. This builds off the pre-feasibility study we did at the end of 2014. The pre-feasibility study is less tightly defined, but also part of what a pre-feasibility study does is identify what needs to be addressed before the feasibility study gets under way or is part of the feasibility study.

So there was sort of two areas that we identified in the pre-feasibility study, besides the usual updating caps on operating costs type of things that we wanted to focus on. One was metallurgy and improving or optimizing recovery scenarios there. And the second was the resource that was included in the feasibility study. And metallurgy we put a news release out about six weeks ago to detail the progress on that side of it. And we're sort of moving forward, continue to move forward on that to optimize metallurgical performance. And that provided some upside opportunity to reduce consumption, reduce energy costs, and see a bit of a bump in recovery. So all those results were out about six weeks ago.

As you mentioned, we completed the drill program that we announced and talked about last time. And that was really focused on optimizing the resource side of it. And that was where the bigger opportunity was. Because you go back to 2012 and compare the preliminary economic assessment we did then to the pre-feasibility study we did in 2014, there was about a just under $400 million reduction in NPV or net present value of project. And it was primarily related to taking out inferred resources, because you can use those in a PEA but not in a PFS.

Gerardo Del Real: Right.

Stephen Quin: And so there's obviously those million ounces sitting out there, and the drill program is designed to convert them, those inferred or a chunk of those inferred, into indicated resources so we can use them in the feasibility study. So now the feasibility study takes all of that data, whether it’s the metallurgical data, whether it's the new drilling, and we have started putting together a new geologic model that takes all of that data and refines the geologic controls. And then they'll provide the basis of an updated resource estimate, which obviously we should expect to include in current to indicated conversions. So we should see an increase in ounces in that mine plan, assuming everything else stays the same. And then we incorporate that into a new mine plan. And then the mine plan incorporates all the cost information, operating costs, etc. to optimize that mine plan.

So that there's a path you move down. So now we have the drill information, we have metallurgical information. We're able to push down the path of that feasibility study.

Gerardo Del Real: Excellent.

Stephen Quin: The other component, sorry go ahead, Gerardo.

Gerardo Del Real: Oh no, I was going to ask and I think you were headed there, Stephen, is whether or not this feasibility study would incorporate the antimony credits? Because I believe those were left off of the pre-feasibility study. And I know there's an opportunity there.

Stephen Quin: Yes certainly. And part of the reason for the drilling when we saw that sort of $400 million reduction in NPV, a chunk of that was related to removing one of the data sets that drilled in the mine when it was operating, which saw the antimony resource take a hit. And it particularly impacted the first sort of three years of production. So some of the drilling we did was to bring that antimony back into the mine plan. And so there's an antimony credit there, that should be beneficial as well. We believe we've done enough drilling to reincorporate that in the resource. But obviously that's part of the estimation process.

So the feasibility study is underway now. The first steps are to sort of step back and look at all the changes. Because when you compare the plan of restoration operations, the plan we submitted to the regulator for the permit process, it is different to the pre-feasibility study because between 2014 and mid 2017 we also made a number of other changes. Where we put waste truck storage, optimizing different aspects of the project. So there's a number of changes that need to be incorporated and addressed before we start heading down that process.

The other component in the feasibility study as well, is that it essentially has to run in parallel with the permitting process. Because the regulatory process can result in requests for changes in design and move that structure here to there, move that facility or change some aspect of the project. And obviously you need that incorporated in the feasibility. So the feasibility and the permit reflect the same project. So they kind of run hand in hand and they feed into each other, back and forth with feasibility changes might slightly modify the permitting or the permitting might slightly modify the feasibility scenario. It's a fairly integrated process and that's really why it takes the time to get it completed and have it sort of finished in Q3 2018, because they're running hand in hand. Until the projects crystallized from both the regulatory and the feasibility perspective, you can't really finalize the feasibility study.

Gerardo Del Real: Correct. Now Stephen you mentioned the permitting process and obviously you've just made some very important additions to the Midas Gold leadership team. So I was hoping that you could touch on that a bit. And also provide some details. The latest news release, the headline read, US Forest Service Selects AECOM to Evaluate Midas Gold's Proposed Stibnite Gold Project. So all of this kind of ties in together. I was hoping you could touch on that as well.

Stephen Quin: Sure. So the feasibility study essentially runs in parallel with the permitting process. And so a component of the permitting process or a major component of the permitting process, is for the U.S. Forest Service to evaluate the proposal we've provided them. The potential economic, environmental restoration aspects of the project etc. And that on a project of this scale the Forest Service doesn't have the breadth and depth of expertise to analyze all the details related to the project like this. So the very physical approach the Forest Service takes is hires what it calls a third party contractor, somebody who's working not for us and not for them, or is not part of them. And that contractor essentially under the direction of the Forest Service conducts the review of the project. And so they've hired a company called AECOM, which is very large scale consulting company that does this kind of work, both for companies and some situations where they’re working for the company on a project or for the government, where they're working for the government on a project.

So they've been hired and they're now taking on a lot of the technical work. So we're delivering them all of the baseline data we've been collecting for the last several years, so they can analyze that. Obviously they're analyzing the PRO as it was submitted to analyze that project. And then as I mentioned, tying into the feasibility study, one of the obligations they have is to look at alternatives and all the different aspects of the project. Everything has an alternative. Is that alternative commercially, environmentally, socially feasible option? Is that the best option or is there a better one? So they go through an analysis process where they consider different options and ensure the project has the sort of best possible combinations of components. And obviously that then ties to the feasibility study because they decide some components of the project should be different that has to be addressed in the feasibility study. And obviously as I said earlier if anything we come up against in the feasibility process that modifies what's required for the permits then that has to be addressed by them.

So it's again an iterative and interlinked process. And so AECOM is driving that. And they'll move through the steps. And people can go online and look at the presentation on the company and see the various steps. The next step is to announce the initiation of the EIS, an alternative assessment process through public notice and then the public as the opportunity to provide comments to ensure the Forest Service and it's contractors are addressing everything to do with the project that needs to be addressed. That somebody didn't forget something. And make sure those components are taken care of. So that's the next step of the project and moving the project forward. And that will be announced relatively soon we expect. And we'll see that 30 day scoping period commence.

Gerardo Del Real: Excellent. Excellent. I know when we spoke about the final results from the drill program. We talked about possibly there being a Summer Drill program. And that's obviously something that shareholders would get excited about. Because your very last hole I think drilled something over 194 meters of 3.6 grams per tonne gold equivalent, if I'm not mistaken. So I think obviously people are looking forward to possibly another drill program. Is that something that's in the cards for the summer time, Stephen?

Stephen Quin: That's a discussion we still have to have. What we're currently doing is analyzing all the data we've got and then looking at what are the opportunities and what would it take to drill. Practically you can't drill, it's not sensible to drill until late June or July. So there is no immediacy to the decision, we don't have to decide today. So we're taking the time to analyze that data and make sure we've got all the information we require to know where to start and what drilling might make sense. The key is that there is only any point in doing that drilling if it feeds into the feasibility study. If that data comes in too late, then it'll be too late to incorporate into the feasibility study. So there is sort of a short window in the early summer where we could get in and do a small amount of drilling or modest amount of drilling, and still have time to incorporate it into the resource model. But that's a determination we have to make in the near term.

Gerardo Del Real: Excellent, excellent. Well Stephen I want to thank you for your time. I encourage everybody to go to the website. This is truly a world class project. It still has world class exploration potential. The website is midasgoldcorp.com. Stephen, anything else that you'd like to add?

Stephen Quin: You did mention that, maybe just briefly on the new additions to the leadership team on the project. And I didn't answer that part of the question. So we announced a couple of key appointments to our team that's helping with the permitting process. Alan Haslam joined us from Agrium, which is one of the large fertilizer companies that has a number of mines in both Canada and the U.S. But particularly of interest for us, it has phosphate mining down in Southeast Idaho. And Alan led the team that just permitted the last mine permitting in Idaho, The Rasmussen Valley Mine. Which only got its record of decision in January 2017, so that's just three months ago or so. So Alan comes fresh from successfully permitting a large scale, open pit mine in Idaho and has taken over the leadership of the permitting process and taken all the benefit of that experience and moving it forward.

And then Mckinsey Lyon joined us as well. She's been working with us for about five years on building and developing public support for our project over the last five years. And is very well connected with community at the State level, etc. She's really on the side of working with that permitting team to make sure that we're getting the information out there about our project. But also getting the feedback on the project back to our side, so that we can address people’s concerns. We've been doing this say for a number of years, and she's been very integrally involved in that on a consulting basis. But now she's joined us on a full time basis. Both of those are sort of tying into that permitting process and hopefully make it more effective and more inclusive.

Gerardo Del Real: Excellent. Now I think those are very important appointments, Stephen. Both Alan and Mckinsey have experience locally obviously, but as important they have experience with large scale projects. And so I think that having both of those pieces on the board is going to be very, very valuable here in the future. Stephen, anything else?

Stephen Quin: No. I think that covers it, Gerardo.

Gerardo Del Real: Excellent. Well I look forward to having you back on soon. Thank you for your time today and let's see what the summer has in store for us here as far as gold goes.

Stephen Quin: Great. Thanks, Gerardo.

Gerardo Del Real: Thank you. 

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