(AMEX: MDW, TSXV: MDW) Initiating Coverage …...Midway Gold Corp. (TSXV: MDW) –Initiating...

Investment Analysis for Intelligent Investors

Siddharth Rajeev, B.Tech, MBAAnalyst

Vincent Weber, B.ScResearch Associate-Mining

Yan Lan, BBAResearch Associate

March 3, 2010

2010 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT

Midway Gold Corp. (AMEX: MDW, TSXV: MDW)–Initiating Coverage

Sector/Industry: Junior Exploration/Mining www.midwaygold.com

Market Data (as of March 3, 2010)Current Price C$0.60Fair Value C$1.15Rating* BUYRisk* 5 (Highly Spec)52 Week Range C$0.46 - C$1.09Shares O/S 77.35 mmMarket Cap C$46.41 mmCurrent Yield N/AP/E (forward) N/AP/B 1.08YoY Return -1.64%YoY TSXV 86.9%

*see back of report for rating and risk definitions

Investment Highlights

Midway Gold Corp. (“Midway Gold”, “MDW”, “the company”) is a White Rock, British Columbia based precious metalsexploration company focused on developing the Spring Valleyopen pit gold deposit in Nevada and the Golden Eagle golddeposit in Washington State.

The Spring Valley project has an inferred resource of 87.8 M tonscontaining 1.8 Moz Au.

The Golden Eagle project has an indicated resource of 31.4 Mtons containing 1.7 Moz Au.

The Gold Pan and Midway projects, also located in Nevada,provide additional long term upside potential.

In 2009, the company entered an Exploration, Development andMine Operating Agreement whereby Barrick Gold Corporation(TSX: ABX) has the option to earn up to a 75% interest in theSpring Valley project.

RisksThe value of the company is dependant on gold prices.At this time, the company does not own a producing mineral

property.Access to capital and share dilution.Barring the potential for short-term cash flows from the Golden

Eagle project, all its projects are at least three to four years fromproduction.*All figures are in US dollars unless otherwise noted

Midway Gold Corp. is a precious metals exploration company focused on the creation of value for shareholders byexploring and developing quality precious metal resources in stable mining areas. The company currently has measured,indicated and inferred resources totaling over 4.6 million ounces.

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(C $) 2008 2009 (9mo)Cash and Cash Equivalents 2,416,438 1,566,224Working Capital 1,156,536 1,905,062Mineral Properties 46,971,127 47,868,603Total Assets 50,587,304 50,797,207Net Loss (16,165,394) (2,573,862)

Midway Gold Corp. (TSXV: MDW)–Initiating Coverage



CompanyOverview

CorporateHistory

Midway Gold positions itself as “a precious metals exploration company focused on the creation of value for shareholders by exploring and developing quality precious metalresources in stable mining areas.” True to form, the company currently holds measured,indicated and inferred resources totaling over 4.6 million ounces on properties in Nevada andWashington State, USA. In developing these projects, the company's management has threedistinct strengths:

Management has a history of discovering economic deposits, specifically centered ongold.

In the past, company management has collectively been involved in almost every step ofproject development from discovery to production.

Management has extensive experience and knowledge relating specifically to Nevada.

The company had a very productive 2009, releasing initial or updated resources on theGolden Eagle, Spring Valley, and Pan projects, all of which are discussed in detail below.

In March 2009, the company entered into an Exploration, Development and Mine OperatingAgreement with a subsidiary of Barrick Gold Corporation (“Barrick”), whereby Barrick can earn a 60% interest in the Spring Valley project by spending $30 million by December 31,2013. Barrick also holds an option to earn up to 70% interest. We believe it is somewhatunusual for a major to enter such a joint venture on an early stage project indicating thepotential the deposit holds.

Figure 1 summarizes the company’s current National Instrument43-101 compliantresources:

Figure 1: Current Midway Gold Resources (Source: Midway Gold Corp.)

Midway Gold Corp. was incorporated under the Company Act (British Columbia) on May14, 1996, under the name Neary Resources Corporation. The company’s name was subsequently changed to Red Emerald Resource Corp. on October 8, 1999, and to the currentname of Midway Gold Corp. on July 10, 2002.




Spring Valley

The company became a reporting issuer in the Province of British Columbia on May 16,1997, and was listed on the TSX Venture exchange beginning May 29, 1997. On July 1,2001, the company became a reporting issuer in the Province of Alberta. The company’s shares are currently listed on the NYSE Amex, and Tier 1 of the TSX Venture under thesymbol “MDW.”

The company acquired Pan-Nevada Gold Corporation, and its wholly owned subsidiaryApex Energy (U.S.) Inc, on April 17, 2007.

Overview: The Spring Valley project has the distinct advantage of being under anExploration, Development and Mine Operating Agreement with Barrick Gold Corporation(TSX: ABX). The joint venture will allow Barrick to earn a 60% interest in the property byspending $30 million by December 31, 2013.

The potentially open pitable deposit was originally discovered by Echo Bay Mines Ltd. (nowa subsidiary of Kinross) in 2001; however, the majority of development work has beencompleted by the company since acquiring it in 2003.

Inferred NI 43-101 compliant resources at a 0.006 ounce per ton cut-off are 87.75 M tonsgrading 0.021 ounce per ton gold containing an estimated 1.84 Moz gold. The companybelieves Barrick has a 3 to 5+ million ounce gold goal for the property.

Ownership: Effective March 9, 2009, the company executed an Exploration, Developmentand Mine Operating Agreement with Barrick Gold Exploration Inc. (“Barrick”) a wholly owned subsidiary of Barrick Gold Corporation. The agreement allows Barrick the exclusiveright to earn a 60% interest in the project by spending $30 million on the property over afive-year period ending December 31, 2013. The agreement guaranteed the expenditure of$4 million in the first year ending December 31, 2009, which was met by Barrick. Theschedule also calls for the expenditure of $5 million in 2010, which we anticipateBarrick will meet.

Further to the agreement, after vesting at 60%, Barrick may earn an additional 10% byspending an additional $8 million on or before December 31, 2014. At the company’s election, Barrick may earn a further 5% (to a total of 75% interest) by carrying MDW to aproduction decision and arranging financing for the company’s share of mine construction expenses.

Location/Accessibility/Infrastructure: The property has the advantage of being located inNevada, one of the world’s most mining friendly states. The property is located in theHumboldt Mountains near Lovelock, Nevada in Spring Valley Canyon.




Figure 2: Spring Valley project location in the Humboldt Range.(Source: Midway Gold Corp.)

As is typical of mining projects in Northwestern Nevada, access is adequate and power isavailable nearby. The climate of Nevada means exploration is possible year round and thehistory of mining in the region positively influences an abundance of equipment and skilledpersonnel. Drilling has indicated that ground water is sufficient for exploration and is anavenue to be explored should a decision be made down the road to enter production.

The property sits along trend with the Rochester and Nevada-Packard Silver-Gold Minesowned by Coeur d’Alene Mines Corporation (“Coeur” TSX: CDM) and the Relief Canyon Mine owned by First Gold Corp. (TSX: FGD). The blue line in Figure 2 approximates theBlack Ridge fault which is aligned with the above mines, the Spring Valley deposit andpossibly extents north onto the adjacent Moonlight exploration property owned by TerracoGold Corp. (“Terraco” TSXV: TEN). The Moonlight property hosts the historic Moonlight Mine which produced silver during the 1860’s, and is situated within a similar alluvial basinwith the same host rocks as Spring Valley. Terraco is applying an exploration model similarto that of Midway’s Spring Valley Project.

Exploration: Placer gold was originally discovered in the Spring Valley Canyon in the1880’s with intermittent mining taking place since that time.

Modern exploration began in 1996 with the drilling of four exploratory holes by the owner atthe time. In 2000, Echo Bay Mines Ltd. (now a subsidiary of Kinross; TSX: K) acquired the




property, and in 2001/2002, completed 21 drill holes (19 reverse circulation, and 2 diamonddrill holes) including a discovery hole which intersected 145 feet grading 0.075 oz/t gold.

The company gained control of the property in 2003, and has completed a drillprogram every year since. Up to the end of 2008, 450 holes had been completed on theproperty; all but 25 of which were completed by Midway.

In 2009, during Barrick’s first year of earn-in, 34 drill holes were completed on the property.

Geology Mineralization: Spring Valley Canyon is an intermontane basin on the east flankof the Humboldt Mountains. There is no mineralization outcrop as valley-fill covers thedeposit in depths ranging from 50 to 700 feet thick (15 m to 213 m). As noted above, thedeposit is positioned along the Black Ridge fault which hosts the Rochester and Nevada-Packard Silver-Gold Mines, the Relief Canyon Gold Mine and Moonlight explorationproperty. In 2008, Terraco announced drill results of 2.13 ounces per ton silver over 35 feetincluding a five foot interval grading 6.14 ounces per ton silver.

The Spring Valley project is a porphyry/diatreme hosted system. Gold mineralization ishosted in the apex of, and in the cap rocks above, a hypabyssal felsic intrusion. Goldmineralization is within vein sets or vein stock-works associated with quartz-sericite, ironcarbonate, and argillic alteration and hydrothermal clay formation.

Figure 3: The Spring Valley porphyry deposit remains open to the north and southwest.(Source: Midway Gold Corp.)

Midway defined seven zones of mineralization through their exploration programs includingthe Pond, Sill, Porphyry, North Hill, West Diatreme, Valley Breccia and Big Leap. Newlyidentified untested targets are to be drilled in 2010.




Resource Estimate: The first NI 43-101 compliant resource estimate for the Spring Valleyproject was completed and published on March 25, 2009, by MGC Resources Inc. of Helena,Montana. The estimate is based on a Lerchs-Grossmann optimization shell utilizing $715 asthe price of gold per ounce. MGC Resources Inc. defines A Lerchs-Grossman shell as “an economic test that simulates open pit mining using current mining costs.”

The resources are in the inferred category:

Figure 4: Spring Valley Inferred resource table. (Source: Midway Gold Corp.)Metallurgy: While testing remains ongoing, initial results indicate over 90% recovery inbottle roll testing of both oxide and sulphide bearing materials. Additionally, relativelycourse gold has been noted throughout the deposit and is easily liberated during recovery.

Current Status: In 2010, Barrick is expected to expend $5 million on step out drilling topotentially expand the deposit which remains open in several directions. Testing of threenewly identified targets, North Ridge, New Pipe and Gold Mountain is also anticipated.




Golden Eagle

Figure 5: Additional exploration targets remain at Spring Valley.(Source: Midway Gold Corp.)

Development Timeline: The development of this project is likely to be fast tracked in partby Barrick’s involvement. The advantage of having a major as a development partner is a steady flow of financing for exploration (as evidenced by the terms of the agreement).

Overview: The Golden Eagle property is a disseminated gold mining project situated on100% owned private land in Washington State, USA. The location of the deposit on 100%owned patented claims suggests the company will have a smoother transition through thepermitting process in a state currently considered to be stringent on open pit mining projects.The project currently hosts an NI 43-101 compliant sulphide resource estimate of 31.4 Mtons indicated, grading 0.055 ounce per ton gold, containing 1.74 million ounces. Inferredresources are 5.1 M tons grading 0.038 ounces per ton gold containing 0.19 million ounces.

The project also hosts an oxide deposit which the company believes may total upwards of 2M tons of ore that may potentially represent near term cash flow through toll processing at anearby mill. At a 0.006 opt gold cut-off, 187 surface samples of the oxide deposit averaged0.053 opt Au.

The sulphide portion of the deposit displays refractory characteristics but responds well totypical refractory processing techniques and does not appear to be preg-robbing (preg-




robbing refers to carbonaceous material that preferentially absorbs gold and gold-cyanidecomplexes resulting in reduced gold recovery; Preg-robbing carbon in the processing ofgold-bearing ores; definitions, analytical methodology and characterization, Tretbar, D May5, 2004). Refractory gold is not uncommon, however, it can significantly add to processingcosts. We believe that a pre-feasibility showing reasonable capital and operatingexpenses for processing a low-grade, high tonnage refractory deposit would be the mostimportant development for the project.

Ownership: The project is 100% owned by the company and includes several 100% ownedpatented claims. Management has indicated that the deposit is contained entirely within thepatented claims which will likely prove beneficial in the permitting process as it means onlystate governments need to be appeased.

Location/Accessibility/Infrastructure: The property is located in Ferry County,Washington State, USA and is within the Eureka Mining District. The nearest town isRepublic, which was established during gold rushes around 1900. Spokane, Washington isapproximately 130 miles by road to the Southeast. The property is located one mile west ofthe Knob Hill Mine, which was active in various capacities from 1896 to 1998, producingjust over two million ounces of gold. Access is via paved road from Republic.

Power is available at the nearby Knob Hill Mine, and surface water is potentially sufficientas the main source for water supply.

Historic Exploration/Production: According to the technical report on the Golden Eagleproperty produced by Snowden Mining Industry Consultants (“Snowden”), historic gold production from the Eureka mining district over its 100 year production history isapproximately three million ounces of gold at an average grade of 0.58 opt

The Golden Eagle deposit was discovered in 1988 by Hecla Mining Company (NYSE: HL)who had been performing small vein mining in the area.

A total of 835 drillholes have been completed on the Golden Eagle property totaling 171,163ft completed between 1940 and 2000. The company appears to have been able to acquire asignificant portion of the data collected from this drilling and has applied it to current projectmodels. Developments on the property itself include small open pits and cuts, and theMountain Lion underground mine.




Figure 6: The Eureka district in Washington State has seen significant historicalexploration and production. (Source: Midway Gold Corp.)

Midway Exploration: Since acquiring the property in mid 2008, the company has notperformed any drilling on the property to date. However, surface sampling completed in2009 identified a 750 foot by 700 foot zone of oxidized gold mineralization. The samplingprogram included the collection of 206 samples primarily from road cuts and historic openpits.

Geology Mineralization: Gold deposits in the area that have been historically exploited aregenerally associated with Eocene volcanics (approximately 34 million to 55 million yearsold) in the area. The Golden Eagle deposit, as defined in the resource estimate, is adisseminated deposit hosted within the Eocene aged Sanpoil Formation. The SanpoilFormation consists of volcanics ranging from andesitic flows to volcanoclastics, and air fallpyroclastics with a strong north to northeast plunge. Gold mineralization is primarilyassociated with silicified volcanics which are interpreted to lie just below the sinter cap of ahot springs system.

The whole deposit is overlain by up to 300 feet (91 meters) of unconsolidated, post mineralglacial till. Figure 3 below depicts the interpreted geology of the deposit and overburden.




Figure 7: Cross Section of the Golden Eagle deposit. The disseminated gold depositunderlies a layer of unconsolidated, post mineral glacial till. (Source: Midway Gold Corp.)

As previously mentioned, surface sampling completed in 2009, identified a 750 foot by 700foot zone of oxidized gold mineralization located along the western flank of the disseminateddeposit. At a 0.006 opt gold cut-off, 187 samples averaged 0.053 opt gold.

The company believes that there is significant potential to discovery high grade, gold bearingveins at depth on the Golden Eagle Property. This supposition is based on historicproduction in the area which primarily focused on high grade veins at depth. The KlondikeFormation, which overlies the Sanpoil Formation, and is also composed of EoceneVolcanics, was the primary source of gold in the Knob Hill Mine which lies immediatelyadjacent to the Golden Eagle Property. The Knob Hill Mine produced from high grade veinsat depth which generally ranged in width from 5’ to 15’ (1.5 m to 4.5 m). Results from Hecla Mining Company’s exploration at Knob Hill in 1985, published in the local newspaper, the Spokesman Review (Hecla Mining Finds 2 Gold Veins, Friday May 3, 1985),indicate the excellent grades that have been encountered in the area:

“… The firm (Hecla Mining) said the new Knob Hill veins were found by driving a cross-cut tunnel from the mine’s 11th level. The first vein assayedat 0.3 ounces of gold per ton of ore across a width of 5.7 feet. The secondassayed at 2.4 ounces of gold and 12 ounces of silver per ton across awidth of 12.7 feet.”

Figure 4 below displays the Golden Eagle deposits proximity to other major deposits in thearea.




Figure 8: Historic gold production in the Republic Gold Trend totals 3 million ounces.(Source: Midway Gold Corp.)

Resource Estimate: The resource estimate is based on 204 drill holes historicallycompleted on the property between 1940 and 2000. The model assumes a gold price of$750/oz and recovery of 85%. The cutoff grade for both indicated and inferred resources is0.020 opt Au.

Figure 9: Golden Eagle project resources (Source: Midway Gold Corp.)

The resource estimate was assumed to be sulphide until the recent discovery of the oxidezone. However, the company believes that up to 2 million tons of this resource might beoxide material, and based on historic drilling, extends to a depth ranging from 10 to 130 feet(3 m to 40 m). In addition, the oxide material is situated on the side of a hill such that thereis a low stripping ratio. Evidence from drilling suggests it sits above the water table. Beingelevated above the water table will aid in both permitting and mining. Additional drillingwill be required to delineate the oxide zone.




Gold Pan

It should also be noted that the resource estimate is at a much lower grade than what hashistorically been mined from the area. This is primarily because Golden Eagle is adisseminated deposit while historic mining focused on high grade narrow vein mining.

Metallurgy: The sulphide component of the Golden Eagle Deposit (which currently makesup the bulk of the resource estimate) is refractory. Snowden has noted however that the oredoes not have preg-robbing characteristics. This essentially means that adequate recoveryrates are possible but will require more advanced processing techniques. Many of thesetechniques include the oxidation of sulphides as the first step in processing. Bio-oxidation,and whole ore pressurized oxidation, are common techniques which ultimately allow foradequate final recovery. For stirred tank bio-oxidation, Snowden assumed a final recoveryof 85% gold and 92% for whole ore pressurized oxidation. These techniques have beenproven to work on the deposit but final recovery numbers are still to be determined byfurther testing.

Snowden also assumed a 90% recovery of contained gold using standard flotation intoconcentrate. The concentrate would still require further processing to adequately recover thegold content. The company also plans to test additional technologies including the relativelynew Albion Process employed by Xstrata Plc. (LSE: XTA) to recovery refractory gold.

Current Status: The company is currently gearing up for a 2010 program that will focusimmediately on defining the oxide gold zone in order to jumpstart the potential for near termcash flow. 31 drill holes are planned and will help the company decide if direct shipment ofthe oxide gold ore to nearby facilities is plausible.

Development Timeline: The oxide cap could represent a potential near term cash flowopportunity. The company estimates oxide materials total approximately 2 Mt, which couldbe toll milled at the Kinross mill at a rate of 0.3 million tons per year. The Kinross GoldCorporation’s (“Kinross” TSX: K) Buckhorn mine, and mill are situated approximately 14 miles (22 km) from the Golden Eagle property. The mill is currently running at half capacity(according to discussions with company management). Metallurgical results and grade willultimately determine if Kinross will accept the ore.

Overview: Also part of the company’s portfolio is the Gold Pan project that lies within theBattle Mountain/Eureka gold trend in Nevada. This 28 square mile land package coverssediment-hosted, near surface oxide gold deposits.

The company acquired a 100% interest in the property in 2007 with the acquisition of Pan-Nevada Gold Corporation (“Pan-Nevada”). The property is subject to an advance minimum royalty on the property due to Gold Standard Royalty (Nevada) Inc. The advance royaltiesare creditable against a sliding scale production royalty which is laid out as follows:

Figure 10: Sliding scale production royalty attached to the Pan property.(Source: Midway Gold Corp.)




Exploration: The project, which is located approximately 22 miles southeast of Eureka,Nevada, hosts several key deposits and exploration targets which have already beenidentified. Over 700 holes, primarily reverse circulation or rotary, were completed onthe property prior to Midway’s acquisition.Four oxide deposits were delineated by thisdrilling: North Pan, South Pan, Black Stallion and Syncline. These deposits start at surfaceand have been drilled to an average depth of 1000 feet (~ 300 meters) and are entirely oxide.

Since acquiring the property, the company has identified four new oxide deposits: Boulders,Wendy, Nana and Barite. These deposits are situated along a 2-mile strike length of afaulted anticline and are located next to known resources. The average depth to gold in theseoxide deposits is 120 feet (36 meters).

Three oxide zones are identified in Figure 13 below along with several other explorationtargets.

Figure 11: Pan gold deposits and exploration targets. (Source: Midway Gold Corp.)

Resource Estimate: An updated resource for the project was completed in 2009 with thefollowing results:

The resource is based on 864 exploration holes completed up to July 1, 2009, the majority ofwhich were reverse circulation or rotary drill holes. During 2007/2008, the companycompleted 162 holes on various targets.




Midway

Current Status/Development Timeline: The company has identified numerous newsurface oxide gold targets on the 28 square mile property package. Discussion withmanagement indicates they plan to initiate scoping study work on the Gold Pan resources sothat mine development and permitting can begin in 2010, as well as expand and explore theproject.

In coordination with expanding current resources at Pan, the company is also working todevelop the 100% owned Gold Rock project situated just 8 miles to the southeast.

Figure 12: The Gold Rock project sits just eight miles from the Pan project.(Source: Midway Gold Corp.)

The company’s goal is to define 1 million ounces of gold total between the two deposits.Thirty holes are planned for 2010.

Overview: The Midway project is located on the Round Mountain –Goldfield gold trendand is a low-sulphidation epithermal gold system. The company holds 100% interest in theproperty which it purchased for $0.2 million on August 15, 2005. The property is subjectonly to a sliding scale royalty on an advance Net Smelter Return royalty. The advancepayments began at $0.25 million in 2006, and escalated to $0.3 million in 2008, continuingat that rate until the commencement of production. Should the property go to production, theroyalty will range from 2% at a gold price of $300 per ounce or less, to 7% at a gold price of$700 per ounce or greater.

Bonanza quartz-gold veins occur in a series of parallel northwest trending vein clusterscovering a distance of 1.5 miles. The veins are near-vertical and are hosted by Tertiary agevolcanic rock and sedimentary rock of the Ordivician-age Palmetto Formation. Up to 100feet of sand and gravel covers known gold zones.




Figure 13: Interpreted cross section of high grade veins at the Midway Project.(Source: Midway Gold Corp.)

Over 80 high-grade veins have been intercepted on the property by drilling includingmultiple intercepts of high grade gold in the 2008 drill program. Many of the intercepts in2008 were on previously undiscovered veins. Figure 11 below summarizes 12 veins thecompany drilled at 50 foot centers for a bulk sample test.

Figure 14: Gold grades in veins intercepted to date. Veins highlighted in gold are intendedtargets of a bulk sample. (Source: Midway Gold Corp.)

The company is currently working to obtain permitting that will allow for the developmentof a decline and taking of a bulk sample. Veins highlighted in gold in Figure 11 above areintended targets of the underground bulk sample and are located from approximately 100feet to 400 feet below surface (30 to 120 meters).




Management

Resource Estimate: The property has an NI 43-101 inferred resource estimate of 5.5million tons grading 0.039 opt (1.34 g Au/tonne) for a total of 0.22 million ounces of gold.This resource estimate is based as a small open pit on a portion of the veins and we feel doesnot adequately represent the potential of the property.

This resource estimate is from 2005, and we believe that based on more recent drillresults, there is significant potential to increase this resource in terms of grade andmore so in terms of quantity of gold ounces contained.

Current Status: The company anticipates it will have received permitting and completedthe decline to take the bulk sample by the end of 2011.

Ongoing exploration work is slated to include 35 drill holes with a goal of doubling theresource by delineating high-grade underground resources.

Daniel E. Wolfus–Chairman, Chief Executive Officer, DirectorDaniel Wolfus has over 28 years of investment banking experience, firstly with E.F. Hutton& Co., where Mr. Wolfus rose to become partner and Senior Vice President in charge of theWest Coast Corporate Finance Department, followed by his tenure as Chairman, CEO andchief organizer of Hancock Savings Bank in Los Angeles. During his term with HancockSavings, the bank grew to five branches and $225 million in assets before it was sold in1997. Mr. Wolfus is currently a director of MD Cowan and Co., a manufacturer of oildrilling equipment, and of Platoro West Holdings Inc., a mineral exploration company tradedon the Canadian Trading & Quotation System. Mr. Wolfus also serves in various charitableand non-profit organizations in the United States.

Alan Branham–President, Chief Operating Officer, DirectorMr. Branham earned a Masters of Science Degree in Economic Geology from WashingtonState University, a Bachelor Degree from Stanford University, California, and hasparticipated in successful exploration projects in the Southwestern United States, Mexicoand Central America. Mr. Branham has conducted extensive exploration in the Great Basinarea of Nevada for the past eight years, resulting in several significant mineral discoveries.In addition, he was involved with the discovery of several world-class gold deposits onNevada's well known Carlin Trend while working as a senior geologist with NewmontMining Corp for over 20 years.

Doris Meyer–Chief Financial Officer, Corporate SecretaryMrs. Meyer is a Certified General Accountant and Chief Financial Officer and CorporateSecretary of Midway Gold Corporation. Mrs. Meyer gained her experience in the miningindustry in part by performing the role of Vice President, Finance of Queenstake from 1985to 2003 and Corporate Secretary until 2004. While at Queenstake, she was a part of or lednegotiations of joint venture and acquisition agreements, and equity and debt financings. Shewas a key member of the team that negotiated the acquisition of the Jerritt Canyon mine inNevada. Mrs. Meyer acts as Chief Financial Officer and/or Corporate Secretary of severalpublicly traded mining companies and her company, Golden Oak Corporate Services Ltd.,provides those clients with administrative, accounting and compliance services.




Board ofDirectors

ManagementRating

Don Harris–Vice President of Advanced ProjectsMr. Harris earned a Master's of Science Degree from Northern Arizona University in 1991and a Bachelors of Science Degree from the University of Wyoming in 1987. Mr. Harrisjoined Midway in March 2007 from Newmont Mining Corporation. In November 2007 Mr.Harris was appointed Vice President of Advanced Projects. Mr. Harris is in charge of day today operations of Midway's major projects. His main focus is the expansion of resources atthe Spring Valley and Pan projects and overseeing development of an underground declineand bulk sample at the Midway project. Mr. Harris oversees technical personnel, permitting,and implementation of strategy to achieve project goals. Mr. Harris's expertise over the past17 years was overseeing similar exploration and resource development along the CarlinTrend; at the Gold Quarry, Genesis, Carlin Mines, Emigrant and North Lantern projects. Mr.Harris was also the Chief Geologist of the Mesquite Mine in Southern California whileworking for Newmont.

Bill Neal–Vice President of ExplorationMr. Neal earned a Master's of Science Degree from Washington State University and aBachelor of Science degree from Colorado State University. In November 2007, Mr. Nealwas appointed Vice President of Exploration. Mr. Neal is charged with developing thediscovery process on Midway's Nevada exploration projects. His focus is targeting drillholes, planning exploration expansion work, and identifying new opportunities throughdiscovery and acquisition. Mr. Neal, a geologist for over 30 years, served as a seniorgeologist for Battle Mountain Gold in the Northwestern United States and Vice President ofExploration for Hanover Gold. Mr. Neal was instrumental in four of Midway's discoveries atthe Spring Valley project, Nevada.

Daniel E. Wolfus–Chairman, Chief Executive Officer, Director

Alan Branham–President, Chief Operating Officer, Director

George T. Hawes–Director

Dr. Roger A. Newell–Director

Frank S. Yu - Director

We believe that one of the most important aspects of a junior mining company is itsmanagement. Therefore, we have developed a management rating system as a quantitativeway to rate management based on a number of factors, including technical experience, theability to raise financing, and management’s time commitment to the company. We alsoanalyzed trading records to identify for evidence of unusual trading by management. Ournet rating for Midway (see below) is 3.9 out of 5.0, which we have rated above average.The company has a strong exploration team with significant experience in Nevada.




Strength ofBoard

Outlook onGold

Financials

We believe that the Board of Directors of a company should include independent orunrelated directors who are free of any relationships or business that could materiallyinterfere with the director’s ability to act in the best interest of the company. Anunrelated/independent director can be a shareholder. In this section, we present our strengthof board rating for Midway Gold Corp., which uses information available from thecompany’s annual “Management Information Circular” to ensure that the company has an independent Board of Directors, Audit Committee and Compensation Committee.

Midway’s Board of Directors is made up of five individuals: Daniel Wolfus, Alan Branham, George Hawes, Roger Newell and Frank Yu. None of the directors have filed for personalbankruptcy. All but one of the directors hold shares in the company. The related/non-independent directors are Daniel Wolfus and Alan Branham as they are executive officers ofthe company and receive compensation. The Compensation and Audit Committees are bothcomposed of George Hawes, Daniel Wolfus and Frank Yu.

We expect prices to converge to our long-term (2012+) forecast of US$750/oz, as the USeconomy recovers and investor confidence improves. Both these factors will result in a dropin the investment demand for gold as investors move their capital from ‘capital preservation’ assets to investments with higher expected returns.

At the end of September 2009, the company had C$1.57 million in cash and cashequivalents. Working capital was C$1.91 million. The company posted a net loss of C$2.57million in the first nine months of FY2009 (ended September 2009), compared to C$10.93million in the same period in the previous year. We estimate the company had a burn rate(spending on operating and investing activities) of C$0.43 million per month in the first ninemonths of FY2009, down from C$1.22 million per month in FY2008 (12 month period).The table below shows a summary of the company’s cash and liquidity position.




Valuation

(C $) 2008 2009 (9mo)Cash and Cash Equivalents 2,416,438 1,566,224Working Capital 1,156,536 1,905,062Current Ratio 1.8 4.2Monthly Burn Rate (1,220,176) (430,304)Cash From Financing Activities 8,879,494 2,500,000

Stock options and warrants: We estimate the company has 4.50 million stock optionsoutstanding; of which 1.40 million are currently in the money. The company has nowarrants outstanding.

Conclusion: Our discussions with management indicated the company expects CAPEX ofC$5 million in 2010; which implies the company will have to raise about C$6 million thisyear.

The following table shows a summary of our valuation on Midway.

Valuation Summary

Golden EagleDCF $0.29Real Options $0.40Comparables $1.03

Average $0.57

Spring ValleyDCF $0.19Real Options $0.21Comparables $0.25

Average $0.22

Gold PanDCF $0.27Real Options $0.27Comparables $0.34

Average $0.29

MidwayComparables $0.06

Working Capital - LT Debt $0.01

Fair Value (C$) $1.15

We used three valuation models (Discounted Cash Flow (DCF), real options, andcomparables valuation models) to value the company's three most advanced stage projects -Golden Eagle, Spring Valley and Gold Pan. We used a comparables valuation model for therelatively early stage Midway project. Based on our valuation on the company's four key




projects, we arrived at a fair value estimate of C$1.15 per share on the company.

A summary of our DCF and real options valuation models on the Golden Eagle, SpringValley and Gold Pan projects follow:

Golden Eagle

DCF Valuation SummaryResource (in tons) 33,950,000Average Au Grade (opt) 0.05Contained Gold (in troy oz) 1,840,000Gold Recovery 83.5%Mill Processing (million tpy) 3.86Production Commencement 2015Mine Life (in years) 9Gold Price (in US$/oz) $750Average Operating Costs (US$/t) $18.25Capital Costs (US$) $195,000,000Discount Rate 11.5%C$/US$ 1.15Net Present Value (C$) $22,082,443No. of shares 77,447,997Value per share (C$) $0.29

*Resource estimate - indicated + 50% of inferred; for conservatism, we discounted 50% ofthe inferred resources as we typically do for exploration stage projects

Estd.Value of Minerals if extracted today (C$) $152,265,023Annualized Standard Deviation of Mineral prices 19%Capital Investment (C$) $224,250,000Estd. Mine Life (years) 9Riskfree Rate 3.65%

Stock Price $152,265,023 T.Bond rate 3.65%Strike Price $224,250,000 Variance 0.04Expiration (in years) 9 Annualized div yield 0%

d1 = 0.182N(d1) = 0.572 Value of Option (C$) $30,776,288d2 = -0.388 No of shares 77,447,997N(d2) = 0.349 Value per share (C$) $0.40

Real Options Valuation

Inputs relating to the underlying asset

Output




Spring Valley

DCF Valuation SummaryResource (in tons) 87,800,000Average Au Grade (opt) 0.02Contained Gold (in troy oz) 1,835,000Gold Recovery 73%Mill Processing (million tpy) 6.75Production Commencement 2015Mine Life (in years) 14Gold Price (in US$/oz) - 2012+ $750Average Operating Costs (US$/t) $5.00Capital Costs (US$) - after ABX attains 75% interest $100,000,000Discount Rate 11.5%C$/US$ 1.15Net Present Value (C$) $59,239,957MDW's 25% Interest (C$) $14,809,989No. of shares 77,447,997Value per share (C$) $0.19

*Due to our confidence in the project, we have included 100% of the inferred resources.



d1 = 1.203 Value of Option (C$) $64,064,737N(d1) = 0.885 MDW's 25% Interest (C$) $16,016,184d2 = 0.492 No of shares 77,447,997N(d2) = 0.689 Value per share (C$) $0.21



Output




Gold Pan

DCF Valuation SummaryResource (in tons) 35,450,000Average Au Grade (opt) 0.02Contained Gold (in troy oz) 621,950Gold Recovery 74%Mill Processing (million tpy) 3.96Production Commencement 2014Mine Life (in years) 9Gold Price (in US$/oz) - 2012+ $750Average Operating Costs (US$/t) $5.00Capital Costs (US$) $45,000,000Discount Rate 11.5%C$/US$ 1.15Net Present Value (C$) $20,535,923No. of shares 77,447,997Value per share (C$) $0.27

*Resource estimate - measured, indicated + 50% of inferred



d1 = 0.937N(d1) = 0.826 Value of Option (C$) $20,642,831d2 = 0.367 No of shares 77,447,997N(d2) = 0.643 Value per share (C$) $0.27



Output

Comparables Valuation: We also valued all four projects based on an average enterprisevalue (EV) to resource ratio of C$45/oz for peers (shown in the following table).




Conclusions &Rating

EV /

Resources

1 US Gold Corporation $92.82 NioGold Mining Corporation $82.03 Sona Resources Corp. $67.24 Golden Band Resources Inc. $45.55 Silverado Gold Mines Ltd. $40.36 Garson Gold Corp. $33.17 Harvest Gold Corp. $30.98 Sutter Gold Mining Inc $19.99 Midway Gold Corp. $16.8

10 Rye Patch Gold Corp. $16.3

Average EV / Resources (C$/oz) $44.5

Company

* Resources include measured, indicated, and 50% of inferred resources.

As shown in the chart, Midway is undervalued compared to eight out of the 9 comparableswe used in the analysis. The company is trading at an enterprise value to resource of justC$17/oz, versus the average ratio of C$45/oz.

Sensitivity: The following table shows the sensitivity of our valuation to changes in goldprices.

Gold Price VPS(US$/oz) $1.15

$450 ($0.15)$600 $0.44$750 $1.15$900 $1.94

$1,050 $2.78$1,200 $3.65

We believe the company has four strong projects: Golden Eagle, Spring Valley, GoldPan, and Midway. All four projects, however, will require a significant amount ofcapital to develop (barring the delineation of oxide ore at Golden Eagle that is viablefor toll milling, and thus, offers potential for short term cash flows). The company isvery well positioned with regard to the Spring Valley project, as we believe, it is likelyBarrick Gold would take the project into production. However, it might be challengingfor a junior company such as Midway to raise the significant amount of capital, anddevelop the other three projects simultaneously. This is one of the primary reasons whywe believe the company's shares are trading well below its fair value. In order tounlock the true value of those projects, we believe it might be prudent to sell or jointventure one (or even two) of its projects, and use the proceeds to develop the otherprojects. It will also enable the company to assign all its focus on just one or twoprojects, instead of focusing on three projects - which is the case at this time.




Risks

projects, instead of focusing on three projects - which is the case at this time.

Based on our valuation models, and review of the company's projects, we initiatecoverage on Midway with a BUY rating, and a fair value of C$1.15 per share.

The following risks, though not exhaustive, may cause our estimates to differ from actualresults:

The value of the company is dependent on commodity prices.At this time, the company does not own a producing mineral property.The success of drilling, project development and resource expansion are important long-

term success factors for these early projects.Access to capital and share dilution

We rate the company’s shares a RISK of 5 (Highly Speculative).




Fundamental Research Corp. Equity Rating Scale:Buy–Annual expected rate of return exceeds 12% or the expected return is commensurate with riskHold–Annual expected rate of return is between 5% and 12%Sell–Annual expected rate of return is below 5% or the expected return is not commensurate with riskSuspended or Rating N/A— Coverage and ratings suspended until more information can be obtained from the company regarding recent events.

Fundamental Research Corp. Risk Rating Scale:1 (Low Risk) - The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry.The future outlook is stable or positive for the industry. The company generates positive free cash flow and has a history of profitability. The capital structure isconservative with little or no debt.

2 (Below Average Risk) - The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitiveto systematic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cashflows (though current free cash flow may be negative due to capital investment). The company’s capital structure is conservative with little to modest use of debt.

3 (Average Risk) - The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitiveto economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, andcoverage ratios are sufficient.

4 (Speculative) - The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in aturnaround situation. These companies should be considered speculative.

5 (Highly Speculative) - The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products.Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues, and may rely on external funding.These stocks are considered highly speculative.

Disclaimers and DisclosureThe opinions expressed in this report are the true opinions of the analyst about this company and industry. Any “forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness.There is no guarantee that our forecasts will materialize. Actual results will likely vary. The analyst and Fundamental Research Corp. “FRC” does not own any shares of the subject company, does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subjectcompany. Fees of less than $30,000 have been paid by MDW to FRC. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takessteps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of ProfessionalConduct. Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release ofliability for negative reports are protected contractually. To further ensure independence, MDW has agreed to a minimum coverage term including an initial report andthree updates starting with this report. Coverage cannot be unilaterally terminated. Distribution procedure: our reports are distributed first to our web-basedsubscribers on the date shown on this report then made available to delayed access users through various other channels for a limited time. The performance of FRC’s research is ranked by Investars. Full rankings and are available at www.investars.com.

The distribution of FRC’s ratings are asfollows: BUY (71%), HOLD (9%), SELL (4%), SUSPEND (16%).To subscribe for real-time access to research, visit http://www.researchfrc.com/subscription.htm for subscription options.

This report contains "forward looking" statements. Forward-looking statements regarding the Company and/or stock’s performance inherently involve risks and uncertainties that could cause actual results to differ from such forward-looking statements. Factors that would cause or contribute to such differences include, but arenot limited to, continued acceptance of the Company's products/services in the marketplace; acceptance in the marketplace of the Company's new product lines/services;competitive factors; new product/service introductions by others; technological changes; dependence on suppliers; systematic market risks and other risks discussed inthe Company's periodic report filings, including interim reports, annual reports, and annual information forms filed with the various securities regulators. By makingthese forward looking statements, Fundamental Research Corp. and the analyst/author of this report undertakes no obligation to update these statements for revisions orchanges after the date of this report. A report initiating coverage will most often be updated quarterly while a report issuing a rating may have no further or less frequentupdates because the subject company is likely to be in earlier stages where nothing material may occur quarter to quarter.Fundamental Research Corp DOES NOT MAKE ANY WARRANTIES, EXPRESSED OR IMPLIED, AS TO RESULTS TO BE OBTAINED FROM USING THISINFORMATION AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OR FITNESS FOR A PARTICULAR USE. ANYONE USING THIS REPORTASSUMES FULL RESPONSIBILITY FOR WHATEVER RESULTS THEY OBTAIN FROM WHATEVER USE THE INFORMATION WAS PUT TO. ALWAYSTALK TO YOUR FINANCIAL ADVISOR BEFORE YOU INVEST. WHETHER A STOCK SHOULD BE INCLUDED IN A PORTFOLIO DEPENDS ON ONE’S RISK TOLERANCE, OBJECTIVES, SITUATION, RETURN ON OTHER ASSETS, ETC. ONLY YOUR INVESTMENT ADVISOR WHO KNOWS YOURUNIQUE CIRCUMSTANCES CAN MAKE A PROPER RECOMMENDATION AS TO THE MERIT OF ANY PARTICULAR SECURITY FOR INCLUSION INYOUR PORTFOLIO. This REPORT is solely for informative purposes and is not a solicitation or an offer to buy or sell any security. It is not intended as being acomplete description of the company, industry, securities or developments referred to in the material. Any forecasts contained in this report were independently preparedunless otherwise stated, and HAVE NOT BEEN endorsed by the Management of the company which is the subject of this report. Additional information is availableupon request. THIS REPORT IS COPYRIGHT. YOU MAY NOT REDISTRIBUTE THIS REPORT WITHOUT OUR PERMISSION. Please give proper credit,including citing Fundamental Research Corp and/or the analyst, when quoting information from this report.

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(AMEX: MDW, TSXV: MDW) Initiating Coverage …...Midway Gold Corp. (TSXV: MDW) –Initiating...

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