What Does Barrick See in Midway Gold?

James West submits:

Barrick Gold (ABX), the world’s largest gold mining corporation, has invested over US$12 Million in emerging junior gold company Midway Gold for the multi-million ounce potential of its project portfolio.

The first time I heard about Midway Gold Corp. (MDW) was back in 2002, when I saw a press release announcing a 5 foot drill intercept that assayed better than 2.5 ounces of gold over 2 and a half feet. That caused quite a stir in the markets, because at the time, gold exploration was just coming out of a multi-year low that was a result of years of depressed gold prices.

In fact, the bottom of the gold market had been reached the previous year with gold dipping briefly to almost $250 an ounce before beginning its current secular bull trajectory that is still underway today.

Fast forward to 2009, and Midway’s evolution has taken it from a junior, single-project company with out-sourced geological talent to its current incarnation as a dynamic, multi-project advanced explorer with major mining partnerships, 200 years of combined geological talent, and 1.71million ounces in N.I. 43-101 compliant resources. With a market cap today of CA$41.5 million, that’s pricing Midway’s gold resources at $24 an ounce. Standard industry practice is to value ounces in the ground at roughly 10% of current value, which at today’s price would be $87.50 per ounce.

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