Midas Gold (TSX: MAX) CEO Stephen Quin on the Latest Developments at the Stibnite Gold Project: Strong Bipartisan Support from Idaho Legislature & Metallurgical Test Program that Improves Project Economics

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Midas Gold (TSX: MAX)(OCTC: MDRPF), Mr. Stephen Quin. Stephen, how are you?

Stephen Quin: Doing good. Thank you, Gerardo. Thanks for having me on.

Gerardo Del Real: Thanks for coming on again. You know that the last time we spoke, we talked about the fact that you were marching towards the feasibility study and how critical it was to get things right during this stage of the mine plan. And we touched a bit on development. Since then, you've had two overwhelmingly positive pieces of good news. The first, and I'd like to go in order, on February the 21st, you provided an update on the pilot-scale metallurgical testing for the Stibnite Gold Project. Now, you can have the biggest resource in the world and the prettiest rocks, and if you can't recover it, it doesn't matter. You have sand, right? Could you give us an update on the metallurgical testing as you march towards this feasibility study?

Stephen Quin: Sure, I'd be happy to. Yes, we put out that press release and the sort of fundamental point of it is having gone to pilot-scale. Pilot-scale is essentially the closest you can get to actually building a plant, and it's to demonstrate that it operates both on a larger scale but also more on a continuous basis. A lot of metallurgical test work is done on what they call a batch basis, where you just take some, you mix the chemicals you think will work, you test it, you say, "I got this much recovery."

But what happens when you recirculate the solution back into the beginning and you're running it on a more continuous basis? Does the process get better or get worse? The best proof of your process parameters is to take it to pilot-scale. We drilled a lot of core in 2015, well, 2014, 2016, 2017, collected that core, made up about 13 tonnes of sample, which we then processed on a continuous basis, so where we're running the material through as though we had a sort of a small version of a mill, and tested those processes to make sure that you got similar results to what you expected from your batch testing you'd done in the past.

So we did that test work, and I think we were sort of encouraged, the overall results were positive. And they were positive individually. I would characterize none of the items as material, but collectively, when you've got a series of small positives they aggregate up into a significant win. We saw gold recoveries go up 1 or 2%, depending on which deposit. We saw the grind size, we don't have to grind it as fine. Well, grinding less fine takes less energy and it takes less grinding media, which are a big consumable cost, so that should be an economic benefit. Because of the coarser grind, having to grind it less fine, we saw the reagent consumption go down, and reagents cost money. So there's economic benefits there. So there's a series of small changes, not unlike when we talked about resources, where a series of smaller changes cumulatively add up into a win. So, there was that component of it.

And then a second component of it was all the test work assumed that we would, and was based on using lime as a neutralizing agent. You want to have the leaching done in an alkali environment, not an acid environment. So our second biggest consumable on site was to purchase lime. It cost about $300 a tonne to get lime delivered to site, so it's a lot of money. On average to do the study, it's about $16, $17 million a year worth of lime.

Gerardo Del Real: Yeah, that adds up.

Stephen Quin: A pretty significant cost. So, obviously one of the opportunities is are there opportunities to reduce that cost? And one of the opportunities we saw, and we identified it in the PFS as an opportunity but hadn't tested it, is the West End deposit has a lot of limestone. Limestone is just, call it a less refined form of lime, but in many ways has similar chemical properties of being able to neutralize acid and make an alkali solution.

So we drilled and collected some samples from our limestone area in the West End pits. Keep in mind, this is material we're going to mine anyway, and it would be just waste, so we get it for free essentially. We shipped that, and it was run as part of the testing to see could you substitute limestone for lime, and if so, to what extent. The results of it were positive. Yes, we can substitute significant amounts of lime with limestone, so that will be an economic benefit.

But again, just like the other parts of the metallurgy we just talked about, there was also some incremental ancillary gains related to that that. When you use limestone, the solution that's neutralized, instead of being thick like a pea soup is more thin like a minestrone. Not my best analogy, but that thin solution is much easier to manage, to handle, to filter, to mix reagents. So when you're adding the chemicals to recover the gold, you just get a better reaction more easily.

The consequence that we're likely to see coming out of that is that the filtration or the thickening of that material will be much simpler. That will reduce capital cost, it will reduce operating cost, and then less reagents come from that and better recoveries because you get a more efficient reaction. So there's sort of like half a dozen or so individual small-scale wins through this pilot testing. But cumulatively, they'll add up to good financial benefits that we should see coming through in the feasibility study.

Gerardo Del Real: Now, this not only has economic benefits and this applies to both, if I'm not mistaken, Stephen, the gold and the antimony, right?

Stephen Quin: Correct, yes.

Gerardo Del Real: But it also has some environmental benefits that I think are also worth noting.

Stephen Quin: Yes. One of the parts of the process, one of the objectives of the pressure oxidation we're planning to do is that it stabilizes arsenic, which is a byproduct of the ore. It comes with the ore. What you want to do is essentially fix iron and arsenic together in a particular chemical environment and it creates what's called ferric arsenate, or scorodite. That is a very stable arsenic product, and the EPA allows that to be disposed in tailings facilities in Nevada, numerous locations, because it's a very stable product and doesn't break down in the environment. That's really what you want to end up with.

What we found was that the switching from lime to limestone created a much better product. The scorodite was much more stable, the product was much more stable in the environment, and therefore we'll have an environmental win. You've got a very low level of potential leaching of metals that you don't want to leach out of those tails. So yeah, it's a bit of a win-win-win, which is always a good thing.

Gerardo Del Real: Excellent. Now, a testament to the way that you've done business and treated stakeholders in the community in Idaho was news on February the 22nd, where Idaho's House of Representatives and the Senate overwhelmingly supported a joint memorial asking the President of the United States, President Trump, to approve the permit for the Stibnite gold antimony project in a timely and cost-effective manner. It's important to note that this was a bipartisan approval that you got, which is obviously in these times in the United States, Stephen, it's rare to see both sides holding hands and actually agreeing on something. Can you speak to that? Congratulations, because this is a big deal in an era where it's hard to find gold projects that have size, that have scale, and that are in jurisdictions that don't make you wince. Speak to it, and congratulations.

Stephen Quin: Thank you, Gerardo. I would characterize this joint memorial from the Idaho Legislature as the culmination of many years of working in the community, of building relationships and explaining the project, and taking people out there. I think it was three years ago now, we flew a series of legislators out to site and showed them what it was actually like on the ground. The Lieutenant Governor was on that trip and a variety of different people.

We've done that every year for quite a number of years. We found it a very effective way of communicating the reality of the site, because it's easy to sit in ivory towers or distant communities and say, "Oh, I don't like mining. We should leave it all untouched. It's all pristine wilderness," and so on. And then you get out there and you see hundreds and hundreds of acres of disturbance, and a river running through an old pit, and waste rock dumps, and tailings just dumped in valleys and things like that. That's what creates the fundamental understanding of the current situation.

And then once you appreciate the current situation, you have a much more informed audience in which to discuss the options, and the option simply being you leave it as is or you allow Midas to come in and redevelop the site and clean all of this up in parallel with creating economic benefits to the community. That really kind of is what crosses party boundaries. Wherever you sit in the political spectrum, even if you're anti-mining generally or you're not supportive of mining generally, you look at this particular site and you sort of, "Well, in this particular situation, I can accept that this needs to be redeveloped in order to fix all these problems."

We worked many years. Politicians who are in the legislature, they're elected, and they're elected by their communities. Unless the communities are behind the project, those elected representatives are not going to be supportive of the project. To some extent it's the practical demonstration of community support, because you have that broad spectrum of support of people who are going to be up for election in another year, or less than a year, or just beyond that. If they are out there doing things their community doesn't support, they won't get re-elected.

I think it's a practical demonstration of building that support base across the communities, and having people really understand the true situation of the project. We're very appreciative of the vote of confidence that the Legislature had given us, and they specifically mention in their memorial that Midas has demonstrated through its work in the community that they're the right company to do this job. I think that's a significant endorsement politically. And, as you said, this was bipartisan. It was bipartisan in both houses. The leadership of both the House of Representatives and Senate in the Idaho Legislature supported the memorial.

Well, they didn't just vote for it, they co-sponsored it, which is even stepping out further. You're not just saying, "Okay, I'll vote for it." You're actually saying, "I am proposing this legislation or memorial." So we're very encouraged by that, and I think it's a demonstration of the whole philosophy we've taken to the site, which is to build bridges, build relationships, and have that commitment to doing the right thing and developing the project the right way, that not only is it economically focused but it's environmentally focused and restoration focused on cleaning up the impacts that are already there.

Gerardo Del Real: We've joked in the past on site that it's a reclamation project with a gold mine attached to it, right? I'd like to read a statement from the lead sponsor of the memorial.

The statement reads, "The Stibnite Gold Project will be an economic win for Idaho and provide a huge opportunity for many families in my district and across the state. The project will be a $1 billion investment in Idaho and bring hundreds of well-paying jobs to rural communities. These are jobs and this is an industry that people in Idaho welcome."

I think that summarizes it best. And again, I want to congratulate you and Laurel Sayer, who's the CEO of Midas Gold Idaho and the project operator, and the entire team, because you've done a phenomenal job from beginning up until this point. And, of course, we're looking forward to the feasibility study, Stephen.

Stephen Quin: Great, well thank you much, Gerardo. And we thank you for your continued interest in the project and the company.

Gerardo Del Real: Well, I'm looking forward to further developments and having you back on, and thank you for your time today, Stephen.

Stephen Quin: Thank you.