S-1

As filed with the Securities and Exchange Commission on August 2, 2007.

Registration Statement No. 0001319009

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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Midway Gold Corp.
(Exact name of Registrant as specified in its charter)

British Columbia
(State or jurisdiction of
incorporation or
organization) 1040
(Primary Standard
Industrial Classification
Code Number) 98-0459178
(I.R.S. Employee
Identification No.)

Unit 1 – 15782 Marine Drive White Rock, British Columbia, Canada V4B 1E6
(Address of principal executive offices)
(604) 536-2711 (Registrant’s telephone number, including area code)

Dorsey & Whitney LLP
Republic Plaza, Suite 4700
370 Seventeenth St. Denver, CO 80202

(303) 629-3400
(Name, address and telephone number of agent for service)

_________________

Copy to:

Kenneth G. Sam, Esq.
Dorsey & Whitney LLP
Republic Plaza, Suite 4700
370 Seventeenth St. Denver, CO 80202
(303) 629-3445

Approximate date of proposed sale to the public: From time to time after the effective date of this registration statement.

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If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box.   ý

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If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

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If  this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

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If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

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CALCULATION OF REGISTRATION FEE

Title of Shares to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Share	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Common stock to be offered for resale by the selling shareholders	7,450,000	$2.79(1)	$20,785,500(1)	$639
Common stock acquirable upon exercise of warrants to be offered for resale by the selling shareholders (2)	1,000,000	$2.89(2)	$2,890,000	$89
TOTAL	8,450,000		$23,675,500	$728

(1)

Estimated pursuant to Rule 457(c) under the U.S. Securities Act of 1933, as amended, solely for purposes of calculating amount of registration fee, based on an average of the high and low sales prices equal to Cdn$2.89 of the Registrant’s common stock on July 24, 2007, as quoted on the TSX Venture Exchange.  Based on a Cdn$  to US$ conversion rate of Cdn$1.0372 as of July 24, 2007, based on the noon buying rate in New York City for cable transfers payable in Canadian Dollars and certified for customs purposes by the Federal Reserve Bank of New York.

(2)

Consisting of 1,000,000 shares of common stock issuable upon the exercise of warrants issued on November 10, 2006, with each whole warrant exercisable into one common share for a period of 12 months from the date of issue at an exercise price of Cdn$3.00 per share.  Estimated pursuant to Rule 457(g) under the U.S. Securities Act of 1933, as amended, solely for the purposes of calculating the registration fee, based on an exercise price of Cdn$3.00 per share, the highest exercise price for the warrants over the term of the warrants.  Based on a Cdn$  to US$ conversion rate of Cdn$1.0372 as of July 24, 2007, based on the noon buying rate in New York City for cable transfers payable in Canadian Dollars and certified for customs purposes by the Federal Reserve Bank of New York.

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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended (the “Securities Act”), or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information contained in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these shares, and the selling shareholders are not soliciting an offer to buy these shares in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

Subject To Completion: Dated July 24, 2007

8,450,000 Shares of Common Stock

This is a public offering up to 8,450,000 shares of the common stock, no par value, of Midway Gold Corp. All of the shares being offered, when sold, will be sold by selling shareholders as listed in this prospectus on page 18 of this prospectus. The price at which the selling shareholders may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions.

The shares of common stock registered for resale under this registration statement include:

·

7,450,000 shares of common stock held by selling shareholders; and

·

1,000,000 shares of common stock issuable upon the exercise of 1,000,000 warrants issued on November 10, 2006, with each whole warrant exercisable for one share of common stock for a period of 12 months from the issue date at an exercise price of $3.00 per share.

We will not receive any proceeds from the sale or distribution of the common stock by the selling shareholders.

Our common stock is quoted on the TSX Venture Exchange (the “TSX.V”) under the symbol “MDW”. On July 24, 2007, the closing sale price for our common stock was $2.89 on the TSX.V.

Investing in our common stock involves risks. See “Risk Factors and Uncertainties” beginning on page 11 of this prospectus.

These securities have not been approved or disapproved by the Securities Exchange Commission or any state securities commission nor has the Securities Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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TABLE OF CONTENTS

THE SEC’S POSITION ON INDEMNIFICATION FORSECURITIES ACT LIABILITIES

172

172

172

174

180

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You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the information contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of when this prospectus is delivered or when any sale of our common stock occurs.

SUMMARY INFORMATION

THE OFFERING

This is an offering of up to 8,450,000 shares of our common stock by certain selling shareholders.

Shares Offered By the Selling Shareholders	8,450,000 shares of common stock, no par value
Offering Price	Determined at the time of sale by the selling shareholders
Common Stock Outstanding as of July 24, 2007	46,221,281 shares(1)
Use of Proceeds	We will not receive any of the proceeds of the shares offered by the selling shareholders.  We intend to use the proceeds from the exercise of warrants, if any, for general working capital purposes.
Dividend Policy	We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends on our common stock.
TSX Venture Exchange Symbol	MDW

(1)

Outstanding common stock excludes shares of common stock acquirable upon exercise of the following convertible securities issued and outstanding as of July 24, 2007:

·

2,911,000 shares of common stock acquirable upon exercise of options at exercise prices ranging from $0.80 to $3.20 per share; and

·

1,346,501 shares of common stock acquirable upon exercise of warrants at exercise prices ranging from  $1.42856 to $3.00 per share.

FINANCIAL INFORMATION AND ACCOUNTING PRINCIPLES

In this prospectus all references to “US$” means the U.S. dollar.  All references to “Cdn$” or “$” refers to the Canadian dollar, and unless otherwise indicated all currency amounts in this prospectus are stated in Canadian dollars.  All Midway financial statements have been prepared in accordance with accounting principles generally accepted in the United States and are reported in Canadian dollars.  All Pan-Nevada financial statements have been prepared in accordance with accounting principles generally accepted in Canada and are reported in Canadian dollars.

SELECTED FINANCIAL DATA

The selected financial data of Midway for the years ended December 31, 2006, 2005 and 2004, and the three months ended March 31, 2007 and 2006 and Pan-Nevada for the fiscal years ended April 30, 2006 and 2005, and the nine-month period ended January 31, 2007, reflected in the following table, have been derived from the audited consolidated financial statements of Midway and Pan-Nevada and the interim unaudited financial statements for Midway and Pan-Nevada, which are included elsewhere in this prospectus.  The consolidated financial

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statements of Midway, which have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP), the application of which, in the case of Midway, conforms in all material respects for the periods presented with Canadian GAAP.

The selected financial data should be read in conjunction with the consolidated financial statements and other financial information included elsewhere in this prospectus.

Midway has not declared any dividends on its common shares since incorporation and does not anticipate that it will do so in the foreseeable future.  The present policy of Midway is to retain future earnings for use in its operations and the expansion of its business.

Selected Financial Data

(Canadian $ in 000s, except per share data)

	Midway Gold Corp.					Pan-Nevada Gold Corporation
	Three Months Ended March 31		Year Ended December 31			Year Ended April 30		Nine Months Ended January 31
	2007	2006	2006	2005	2004	2006	2005	2007	2006
Statement Of Operations And Deficit
Operating Revenues	nil	nil	nil	nil	nil	nil	nil	nil	nil
Interest Income	77	18	197	42	9	6	3	19	1
Net Loss for the Period
Canadian GAAP	1,385	1,424	7,241	4,403	2,995	464	1,024	505	352
U.S. GAAP	1,385	1,424	7,241	4,403	2,995	1,385	1,268	2,145	1,017
Basic & Diluted Loss per common share
Canadian GAAP	0.04	0.05	0.23	0.18	0.16	0.02	0.07	0.02	0.02
U.S. GAAP	0.04	0.05	0.23	0.18	0.16	0.07	0.08	0.09	0.05
Dividends Declared	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Balance Sheet
Total Assets, U.S.GAAP	15,654	9,308	16,695	8,143	5,950	3,192	1,573	5,265	3,242
Working Capital (deficit) U.S. GAAP	6,951	2,090	8,127	1,094	357	551	(110)	766	987
Mineral Properties
Canadian GAAP	7,679	6,689	7,679	6,601	6,031	2,502	1,523	4,370	2,187
U.S. GAAP	7,679	6,689	7,679	6,601	6,031	170	111	397	111
Net Assets
Canadian GAAP	15,226	8,517	16,088	7,164	5,593	3,105	1,458	5,188	3,217
U.S. GAAP	15,226	8,517	16,088	7,164	5,593	773	47	1,215	1,140
Shareholders’ Equity
Canadian GAAP	15,226	8,517	16,088	7,164	5,593	3,105	1,458	5,188	3,217
U.S. GAAP	15,226	8,517	16,088	7,164	5,593	773	47	1,215	1,140
Weighted Average Number of Shares Outstanding 000’s	36,999	28,051	32,000	24,064	19,037	19,320	15,579	24,678	18,805

In this prospectus, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars.  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

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MIDWAY SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following selected unaudited pro forma consolidated financial information for Midway is based on the assumptions described in the respective notes to the Midway unaudited pro forma consolidated financial statements as at March 31, 2007, attached to this prospectus.  These pro forma consolidated financial statements have been prepared based on the assumption, among other things, that the acquisition of Pan-Nevada had occurred on January 1, 2006.  The unaudited pro forma consolidated financial statements are not necessarily indicative of Midway’s consolidated financial position and results from operations if the events reflected therein had been in effect on March 31, 2007, nor do they purport to project Midway’s consolidated financial position or results from operations for any future periods.

The pro forma consolidated financial statements are based on certain assumptions and adjustments, including the non-recurring expenditures related to the Arrangement.  The selected unaudited pro forma consolidated financial information given below should be read in conjunction with the description of the Arrangement contained in this prospectus, the unaudited pro forma consolidated financial statements contained in this prospectus and the audited and unaudited financial statements of Pan-Nevada and Midway incorporated by reference into this prospectus.

	As at March 31, 2007
Statement Of Operations And Deficit
Operating Revenues	$nil
Interest Income	$84,503
Net Loss for the Period
Canadian GAAP	$1,910,370
U.S. GAAP	$1,910,370
Basic & Diluted Loss per common share
Canadian GAAP	$(0.04)
U.S. GAAP	$(0.04)
Dividends Declared	$nil
Balance Sheet
Total Assets	$52,813,487
Working Capital	$7,625,203
Mineral Properties	$44,315,324
Net Assets
Canadian GAAP	$42,254,440
U.S. GAAP	$42,254,440
Shareholders’ Equity
Canadian GAAP	$42,254,440
U.S. GAAP	$42,254,440
Weighted Average Number of Shares Outstanding 000’s	44,356,935

EXCHANGE RATE INFORMATION

The table below sets forth the average rate of exchange for the Canadian Dollar at the end of the five most recent calendar years ended December 31^st.  The table also sets forth the high and low rate of exchange for the Canadian Dollar at the end of the six most recent months.  For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the

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Federal Reserve Bank of New York.  The table sets forth the number of Canadian dollars required under that formula to buy one U.S. Dollar.  The average rate means the average of the exchange rates on the last day of each month during the period.

Canadian Dollar / US Dollar

		Year Ended December 31
	2006		2005	2004	2003	2002
Average for Period	1.13		1.21	1.30	1.39	1.57

	June 30, 2007	May 31, 2007	April 30, 2007	March 31, 2007	February 28, 2007	January 31, 2007
High for Period	1.07	1.11	1.15	1.18	1.19	1.18
Low for Period	1.06	1.06	1.10	1.15	1.16	1.17

The noon rate of exchange on July 24, 2007 as reported by the United States Federal Reserve Bank of New York for the conversion of Canadian dollars into United States dollars was $0.96 (US$1.00 = CDN$1.0372).  

METRIC CONVERSION TABLE

For ease of reference, the following conversion factors are provided:

Metric Unit	U.S. Measure	U.S. Measure	Metric Unit
1 hectare	2.471 acres	1 acre	0.4047 hectares
1 metre	3.2881 feet	1 foot	0.3048 metres
1 kilometre	0.621 miles	1 mile	1.609 kilometres
1 gram	0.032 troy oz.	1 troy ounce	31.1 grams
1 kilogram	2.205 pounds	1 pound	0.4541 kilograms
1 tonne	1.102 short tons	1 short ton	0.907 tonnes
1 gram/tonne	0.029 troy ozs./ton	1 troy ounce/ton	34.28 grams/tonne

GLOSSARY OF MINING TERMS

S.E.C Industry Guide	National Instrument 43-101
Reserve: That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The United States Securities and Exchange Commission requires a final or full Feasibility Study to support either Proven or Probable Reserves and does not recognize other classifications of mineralized deposits.	Mineral Reserve: The economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility study.  This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

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Proven (Measured) Reserves: Reserves for which a quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well established.

Proven Mineral Reserve: The economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

Probable (Indicated) Reserves: For which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced.  The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.

Probable Mineral Reserve: The economically mineable part of an indicated, and in some circumstances, a Measured Mineral Resource, demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

Information concerning the properties and operations of Pan-Nevada and Midway has been prepared in accordance with Canadian standards, and may not be comparable to similar information for United States companies.  National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”) provides guidelines for use of the terms “Mineral Resource” and “ Mineral Reserve” which are Canadian mining terms defined in accordance with under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resources and Mineral Reserves Definitions and guidelines adopted by the CIM.  

While the terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” are recognized and required by Canadian regulations, they are not defined terms under standards in the United States.  As such, certain of the information contained in this prospectus concerning descriptions of mineralization and resources under Canadian standards is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the United States Securities and Exchange Commission (the “SEC”).  “Indicated Mineral Resource” and “Inferred Mineral Resource” have a great amount of uncertainty as to their existence and a great uncertainty as to their economic and legal feasibility.  It can not be assumed that all or any part of an “Indicated Mineral Resource
48; or “Inferred Mineral Resource” will ever be upgraded to a higher category.  Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

In addition, the prospectus contains information about certain historical resources and reserves on Pan-Nevada's Pan Gold project.  These historical estimates were made prior to the inception of NI 43-101 and have not been verified as Mineral Resources or Mineral Reservespursuant to NI 43-101, are not being treated as current Mineral Resources or Mineral Reserves as defined in NI 43-101 and should not be relied upon.  While Pan-Nevada considers these estimates to be relevant, it has not verified the estimates in accordance with NI 43-101 and therefore cannot confirm that the estimations of the resources or reserves are reliable.  

The historic resources and reserves described in this prospectus are also not defined terms under standards in the United States.  As such, this information concerning descriptions of mineralization is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.  

It can not be assumed that all or any part of an historical resource or reserve will ever be current NI 43-101 resources or reserves or ever be upgraded to a higher category.  Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

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SUMMARY OF OUR BUSINESS

Midway Gold Corp. (“Midway”, “we”, “us”) was incorporated under the Company Act (British Columbia) on May 14, 1996, under the name Neary Resources Corporation. On October 8, 1999, Midway changed its name to Red Emerald Resource Corp. On July 10, 2002, it changed its name to Midway Gold Corp. Midway became a reporting issuer in the Province of British Columbia upon the issuance of a receipt for a prospectus on May 16, 1997. The common shares were listed on the Vancouver Stock Exchange (a predecessor of the TSX Venture Exchange) on May 29, 1997. On July 1, 2001, Midway became a reporting issuer in the Province of Alberta pursuant to Alberta BOR#51-501.  Midway’s shares are currently listed on the TSX.V under the symbol “MDW.”

Midway is an exploration stage company engaged in the acquisition, exploration, and development of gold and silver mineral properties in North America. It is our objective to identify mineral prospects of merit, conduct preliminary exploration work, and if results are positive, conduct advanced exploration and development work. Our mineral properties are all located in Nevada. The Midway and Spring Valley gold properties are advanced stage projects and have developing gold resources and the Thunder Mountain project is an earlier stage gold and silver exploration project.  On April 13, 2007, we completed the acquisition of Pan-Nevada Gold Corporation thereby acquiring its advanced stage Pan gold project and the Monte, Afghan, KDK, Maggie Creek and Jessup earlier stage gold exploration projects.   

The corporate organization chart for Midway as of the date of this prospectus is as follows:

This prospectus provides information regarding Midway.   

The registered office of Midway is located at Suite 2800, 666 Burrard Street, Vancouver, British Columbia, V6C 2Z1; the corporate office of Midway is located at Unit 1 - 15782 Marine Drive, White Rock, B.C. V4B 1E6; and the operations office is located at 2778 Spokane Creek, East Helena, Montana, 59635, USA.  We maintain a website at www.midwaygold.com.  Information contained on our website is not part of this prospectus.

RISK FACTORS AND UNCERTAINTIES

RISKS RELATED TO MIDWAY’S BUSINESS

In addition to the other information contained in this prospectus, the following factors should be considered carefully when considering risks related to Midway.

Risks Inherent in the Business of Exploration for Minerals and Mining

The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. At present, there are no known bodies of commercial ore on the mineral properties in which Midway has an interest and the proposed exploration programs are an exploratory

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search for ore.  There is no guarantee that mineralized materials will be found or that if they are found that they will be found in commercially mineable quantities.  Delays in obtaining government approvals, inability to obtain financing or other factors could cause delays in present exploration and development of mineral properties.  Unusual or unexpected formations, formation pressures, fires, power outages, labour disruptions, flooding, environmental hazards, cave-ins, landslides, explosions and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the conduct of exploration programs. Midway has limited experience in the development and operation of mines and has relied on and may continue to rely upon consultants and others for exploration and operating expertise.

No Assurance Midway will Obtain Additional Financing to Fund Exploration and Development

Midway has not commenced commercial production on any mineral property and has no history of earnings. Midway will not achieve profitability until such time as one or more of its mineral prospects can be developed into profitable operations. Midway has paid no dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future. The only present source of funds available to Midway is through the sale of its equity shares. Even if the results of exploration are encouraging, Midway may not have sufficient funds to conduct the further exploration that may be necessary to determine whether or not a commercially mineable deposit exists on its properties. There is no assurance that Midway will be successful in obtaining additional financing when required.  Failure to obtain additional financing on a timely basis could cause Midway to curtail, delay or terminate planned exploration and developmen t activities.

Figures for mineral resources upon which Midway relies are estimates.

The figures for mineral resources contained in this prospectus about Midway’s mineral prospects are estimates only and no assurance can be given that the anticipated tonnages and grades will be achieved, that the indicated level of recovery will be realized or that any ore will be mined or processed profitably. There are numerous uncertainties inherent in estimating mineral resources, including many factors beyond Midway’s control. Such estimation is largely a subjective process, and the accuracy of any resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation.  There can be no assurance that metal recoveries in small-scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production.  Fluctuations in metal prices, results in drilling, metallurgical testin g and production and the evaluation of mine plans subsequent to the date of any estimate may require revision of such estimate.

The resources described in the prospectus are not defined terms under standards in the United States.  As such information concerning descriptions of mineralization is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.

Titles to Properties

The mining claims on the properties described herein have not been surveyed and accordingly the precise location of the boundaries of the claims and ownership of mineral rights on specific tracts of land comprising the claims may be in doubt. Such claims have not been converted to lease and tenure, and are, accordingly, subject to regular compliance with claim maintenance requirements.  Other parties may dispute Midway’s title to its mining properties.  Midway has conducted its own due diligence with respect to title of the properties, however this should not be construed as a guarantee of title.  As well, the properties may be subject to prior unregistered agreements or transfers, and title may be affected by undetected defects.

Midway believes it is a passive foreign investment company for United States federal income tax purposes.

Midway believes it is a passive foreign investment company for United States Federal income tax purposes and will continue to be so until it generates sufficient revenue from its mineral exploration and extraction activities.  If Midway is a passive foreign investment company, any gain recognized by a U.S. holder of common shares of Midway upon a sale or other disposition of common shares of Midway may be ordinary (rather than capital), and any resulting United States federal income tax may be increased by an interest charge. Rules similar to those applicable to dispositions generally will apply to certain excess distributions in respect of a common share of

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Midway.  A United States person generally may take steps to avoid these unfavourable United States federal income tax consequences.

Archaeological Issues Relating to the Midway Property

Midway's exploration and development activities may be delayed due to the designation of a portion of the Discovery Zone at the Midway property as a site of archaeological significance.  A cultural inventory of the Midway project has identified a prehistoric site associated with a dune field in the Ralston Valley, adjacent to the Discovery Zone.  An intensive cultural and geomorphological inspection was conducted of the project area to determine archaeologically significant areas.  Techniques and methods used during the inventory were sufficient to identify most cultural resources and features in the area.  Should sufficient mineral resources be identified on the Midway property, a complete archaeological inventory and evaluation would be required, including the possibility of curating the site.

Proximity of Municipal Water Supply to the Midway Property

The Midway Property lies within a basin from which the town of Tonopah obtains its municipal water supply.  To date, Midway's exploration activities have not been restricted due to the proximity of the activities to this basin.  As Midway's exploration and development activities expand, there is an increased risk that the activities may interfere with the water supply.  As part of the mining development work on the Midway Property, Midway may need to complete a hydrologic review of the basin and establish a strategy for preventing exploration and development activities from interfering with the water supply.  Any damage to or contamination of the water supply caused by Midway's activities could result in Midway incurring significant liability.  No assurance can be given as to the extent of such liability or the impact of such liability on the business, prospects and financial condition of Midway.   If it is established that the same aquifer which provides Tonopah with its municipal water supply also underlies the Midway Property, Midway's planned exploration and development activities may be restricted which in turn may have a material adverse effect on Midway's business, prospects and financial condition.

Marketability of Natural Resources Acquired or Discovered by Midway

Resource exploration and development is a speculative business and involves a high degree of risk. The marketability of natural resources which may be acquired or discovered by Midway will be affected by numerous factors beyond the control of Midway. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted but the combination of these factors may result in Midway not receiving an adequate return on invested capital.

Lack of Insurance with respect to High-Risk Activities

Mining operations generally involve a high degree of risk. Hazards such as unusual or unexpected formations or other conditions are often encountered. Midway may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it cannot maintain insurance at commercially reasonable premiums.   Such liabilities may have a material adverse effect on Midway's financial position and prospects. Midway is not currently covered by any form of environmental liability insurance, or political risk insurance, since insurance against such risks (including liability for pollution) is prohibitively expensive. The payment of any such liabilities would reduce the funds available to Midway. Midway may have to suspend operations or take cost interim compliance measures if Midway is unable to fully fund the cost of remedying an environmental problem, if it occurs.     

Permits and Licenses Required by Midway

The current or future operations of Midway, including development activities and commencement of production, if warranted, require permits from governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development or operation of mines and related facilities generally

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experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. There can be no assurance, however, that all permits which Midway may require for construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on any mining project which Midway might undertake. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and m ay have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on Midway and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties. To the best of Midway's knowledge, Midway is operating in compliance with all applicable permitting requirements and environmental and other applicable regulations.

Risks Associated with Seymork Property Interest held by Midway’s Subsidiary, MGC Resources Inc.

In May 2006 our wholly-owned Nevada subsidiary MGC Resources Inc. purchased additional property from Seymork Investments Ltd. for US$200,000 to expand the Spring Valley project in Nevada. The acquired property represents about 4% of the surface area of the Spring Valley project.  In 1997 as a part of a loan arrangement, Emma Wagner transferred title of the acquired property to Seymork.  Seymork alleges it was a sale, Wagner alleges it was collateral for a loan.  In 1998 the parties entered into another loan arrangement whereby this time Wagner lent Seymork funds, using title to the acquired property as security for the loan.  Later, Wagner assigned the rights to the loan to a group represented by Wallace D. Stephens.   The loan was not repaid and in March 2006 Stephens sought to foreclose its interest against Seymork. In June 2006 Wagner brough t a cross claim in the lawsuit against Seymork alleging that Wagner was the rightful owner of the Disputed Area.  We joined the lawsuit in order to protect our interests in the Disputed Area.  If the court determines that Wagner was the rightful owner of the property then we will lose title to the property purchased from Seymork and will write off the purchase price.

We believe that we have a credible basis for maintaining our title to the acquired property, and we have requested access to the documents supporting Wagner's position.

Risks Relating to Governmental Regulation

The current and future operations of Midway will be governed by laws and regulations governing mineral concession acquisition, prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.  Companies engaged in exploration activities often experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits.  Although Midway intends to apply for all necessary permits for the exploration work it intends to conduct, issuance of such permits is, as a practical matter, subject to the discretion of government authorities and there can be no assurance that Midway will be successful in obtaining or maintaining such permits.  Further, there can be no assurance that all permits which Midway may require for future exploration or development will be obtainable on reasonable terms or on a timely basis, or that such laws and regulations would not have an adverse effect on any project which Midway may undertake.

Failure to comply with applicable laws, regulations and permits may result in enforcement actions thereunder, including the forfeiture of claims, orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or costly remedial actions.  Midway may be required to compensate those suffering loss or damage by reason of its mineral exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits.  Midway is not currently covered by any form of environmental liability insurance.

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Existing and possible future laws, regulations and permits governing operations and activities of exploration companies, or more stringent implementation thereof, could have a material adverse impact on Midway and cause increases in capital expenditures or require abandonment or delays in exploration. Any exploration operations carried on by Midway will be subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labour standards.

Volatility of Market for Precious and Base Metals

The profitability of any mining prospect is affected by the market for precious and base metals which is influenced by many factors that are beyond the control of Midway, including changing production costs, the supply and demand for precious metals, the rate of inflation, the inventory of precious metal-producing corporations, the political environment and changes in international investment patterns beyond the control of Midway.

Environmental Regulation

All phases of Midway's operations are subject to environmental regulation in the jurisdictions in which it operates. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that the requirements under existing environmental regulations or future changes in environmental regulations, will not adversely affect Midway's operations.

The Prices of Precious and Base Metals Fluctuate and Affect Profitability

Midway’s revenues, if any, are expected to be derived in large part from the extraction and sale of precious and base metals.  The prices of these commodities have fluctuated widely, particularly in recent years, and therefore the economic viability of any of Midway’s exploration projects cannot be accurately predicted.  There is no assurance that even if commercial quantities of mineralized material are discovered, a profitable market may exist for the sale of product from that mineralized material.

Competition from other Resource Companies

The resource industry is intensely competitive in all of its phases, and Midway competes for properties and personnel with many companies possessing greater financial resources and technical facilities than itself.  Competition could adversely affect Midway's ability to acquire suitable properties for exploration in the future.

Midway may enter into Joint Venture and Option Agreements with other Parties

Midway may, in the future, be unable to meet its share of costs incurred under option or joint venture agreements to which it is a party and Midway may have its interest in the properties subject to such agreements reduced or terminated as a result. Furthermore, if other parties to such agreements do not meet their share of such costs, Midway may be unable to finance the cost required to complete recommended programs.

Conflicts of Interest

Certain directors or proposed directors of Midway are also directors, officers or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploiting natural resource properties. Such associations may give rise to conflicts of interest from time to time. The directors of Midway are required by law to act honestly and in good faith with a view to the best interests of Midway and to disclose any interest which they may have in any project or opportunity of Midway. If a conflict of interest arises at a meeting of the board of directors, any director in a conflict will disclose his interest and abstain from voting on such matter. In determining whether or not Midway will participate in any project or opportunity, the directors will primarily consider the degree of risk to which Midway may be exposed and its financial position at that time.

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Dependence on Key Personnel

Midway is dependent on a relatively small number of key employees, the loss of any one of whom could have an adverse effect on Midway. Midway does not have any key person insurance with respect to any of its key employees.

Currency Fluctuations

Midway arranges its equity funding and pays most of its administrative costs in Canadian dollars. However our properties are all located in Nevada and most costs associated with these properties are paid in U.S. dollars. There can be significant swings in the exchange rate between the U.S. and Canadian dollar. There are no plans at this time to hedge against any exchange fluctuations in currencies.

RISKS RELATED TO MIDWAY’S SECURITIES AND THIS OFFERING

We have never declared or paid cash dividends on Midway’s common stock. We currently intend to retain future earnings to finance the operation, development and expansion of our business.

We do not anticipate paying cash dividends on Midway’s common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of Midway’s board of directors and will depend on Midway’s financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that our board of directors considers relevant.

Accordingly, investors will only see a return on their investment if the value of Midway’s securities appreciates.

The market for our common shares has been volatile in the past, and may be subject to fluctuations in the future.

The market price of Midway’s common stock has ranged from a high of $3.74 and a low of $2.21 during the twelve month period ended June 30, 2007. See “Market for Common Equity and Related Shareholder Matters” on page 51 of this prospectus.  We cannot assure you that the market price of our common stock will not significantly fluctuate from its current level. The market price of our common stock may be subject to wide fluctuations in response to quarterly variations in operating results, changes in financial estimates by securities analysts, or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations for a number of reasons, including the failure of the operating results of certain companies to meet market expectations that have particularly affected the market prices of equity securities of many exploration companies that have often been unrelated to the operating performance of such companies. These broad market fluctuations, or any industry-specific market fluctuations, may adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, class action securities litigation has been instituted against such a company. Such litigation, whether with or without merit, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse affect on our business, operating results and financial condition.

Legislation, including the Sarbanes-Oxley Act of 2002, may make it difficult for us to retain or attract officers and directors.

We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly-held companies. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the Securities and Exchange Commission that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles.

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FORWARD-LOOKING STATEMENTS

Statements contained in this prospectus that are not historical facts are forward-looking statements that involve risks and uncertainties.  Forward-looking statements include, but are not limited to, statements with respect to the future price of metals; the estimation of mineral reserves and resources, the realization of mineral reserve estimates; the timing and amount of estimated future production, costs of production, and capital expenditures; costs and timing of the development of new deposits; success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and the timing and possible outcome of pending litigation.  In certain cases, forward-looking statements can be identi fied by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”.  Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Pan-Nevada or Midway, post-Arrangement, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.  Such risks and other factors include, among others, risks related to the integration of acquisitions; risks relate d to operations; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of metals; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the sections entitled “Risk Factors and Uncertainties” in this prospectus.  Although Midway has attempted to identify important factors that could affect Midway and may cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipa ted, estimated or intended.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, readers should not place undue reliance on forward-looking statements.  The forward-looking statements in this prospectus speak only as of the date hereof.  Midway does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.

Forward-looking statements and other information contained herein concerning the mining industry and our general expectations concerning the mining industry are based on estimates prepared by us using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which we believe to be reasonable.  However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics.  While we are not aware of any misstatements regarding any industry data presented herein, the industries involve risks and uncertainties and are subject to change based on various factors.

USE OF PROCEEDS

We will not receive any proceeds from the sale of shares by the selling shareholders.  We intend to use the proceeds from the exercise of warrants, if any, for general working capital purposes.

SELLING SECURITY HOLDERS

This prospectus covers the offering of up to 8,450,000 shares of our common stock by selling shareholders.  The shares issued to the selling shareholders are “restricted” shares under applicable federal and state securities laws and are being registered to give the selling shareholders the opportunity to sell their shares. The registration of such shares does not necessarily mean, however, that any of these shares will be offered or sold by the selling shareholders. The selling shareholders may from time to time offer and sell all or a portion of their shares in the over-the-counter market, in negotiated transactions, through the TSX.V or otherwise, at market prices prevailing at the time of sale or at negotiated prices.

17

The registered shares may be sold directly or through brokers or dealers, or in a distribution by one or more underwriters on a firm commitment or best efforts basis. To the extent required, the names of any agent or broker-dealer and applicable commissions or discounts and any other required information with respect to any particular offer will be set forth in an accompanying prospectus supplement. See “Plan of Distribution” beginning on page 21 of this prospectus. Each of the selling shareholders reserves the sole right to accept or reject, in whole or in part, any proposed purchase of the registered shares to be made directly or through agents. The selling shareholders and any agents or broker-dealers that participate with the selling shareholders in the distribution of their registered shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, and a ny commissions received by them and any profit on the resale of the registered shares may be deemed to be underwriting commissions or discounts under the Securities Act.

We will receive no proceeds from the sale of the registered shares, and we have agreed to bear the expenses of registration of the shares, other than commissions and discounts of agents or broker-dealers and transfer taxes, if any.  We intend to use the proceeds from the exercise of warrants, if any, for general working capital purposes.

SELLING SECURITY HOLDERS INFORMATION

The following is a list of the selling shareholders who own an aggregate of 8,450,000 shares of our common stock covered in this prospectus. The selling shareholders acquired the shares of common stock in our private placement of units. See “Transactions with Selling Shareholders” beginning on page 81 of this prospectus for further details. At July 24, 2007, we had 46,221,381 shares of common stock issued and outstanding.

	Before Offering				After Offering
Name	Total Number of Shares Beneficially Owned		Percentage of Shares Owned(a)		Number of Shares Offered	Shares Owned After Offering(b)(c)	Percentage of Shares owned After Offering
Barrick Gold Corporation	4,500,000	(1)	9.63	%	4,500,000	0	0.00	%
Brian McAlister	306,000	(2)	0.66	%	60,000	246,000	0.53	%
Cristina Hawes Mohr	37,500	(3)	0.08	%	37,500	0	0.00	%
Daniel S. Perkins	22,500	(4)	0.05	%	22,500	0	0.00	%
David H. Potter	37,500	(5)	0.08	%	37,500	0	0.00	%
David M. Cole	37,500	(6)	0.08	%	37,500	0	0.00	%
Dennis Lavalle	75,000	(7)	0.16	%	75,000	0	0.00	%
Douglas Silverberg	52,500	(8)	0.11	%	15,000	37,500	0.08	%
Elizabeth M. Bishop	37,500	(9)	0.08	%	37,500	0	0.00	%
George T. Hawes**	3,747,300	(10)	8.02	%	75,000	3,672,300	7.54	%
Gold Arrow Global Mining Fund	75,000	(11)	0.16	%	75,000	0	0.00	%
Halcorp Capital Ltd.	30,000	(12)	0.06	%	30,000	0	0.00	%
James E. Currie	85,000		0.18	%	25,000	60,000	0.13	%
JB Partners LLP	115,000	(13)	0.25	%	75,000	40,000	0.09	%
Jerry Bulman	15,000	(14)	0.04	%	10,000	5,000	0.01	%
Jon Woolstencroft	15,000	(15)	0.03	%	15,000	0	0.00	%
Kudu Partners	20,000	(16)	0.03	%	20,000	0	0.00	%
Libra Fund LP	170,100	(17)	0.37	%	170,100	0	0.00	%
Libra Offshore Ltd.	39,900	(18)	0.09	%	39,900	0	0.00	%
Mark D. Johnson	627,300		1.36	%	625,000	2,300	0.00	%
Martin Broberg	37,500	(19)	0.08	%	37,500	0	0.00	%
Maya C. Likar	37,500		0.08	%	37,500	0	0.00	%
Michael A. Berry	52,500		0.11	%	37,500	15,000	0.03	%
Michael Mandl	52,500	(20)	0.17	%	15,000	62,000	0.13	%
Patrice M Perkins	15,000	(21)	0.03	%	15,000	0	0.00	%
Peter Chapman	97,500	(22)	0.29	%	60,000	37,500	0.16	%
Pyramid Partners LP	125,000	(23)	0.27	%	75,000	50,000	0.11	%
Richard Droster	135,000	(24)	0.29	%	45,000	90,000	0.19	%
Richard W. Perkins	62,500	(25)	0.14	%	37,500	25,000	0.05	%
Sonny Manraj Janda	187,500		0.41	%	187,500	0	0.00	%
Sprott Asset Management Inc.	1,500,000	(26)	3.25	%	1,500,000	0	0.00	%

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Stephen F. Witort	157,500	(27)	0.34	%	67,500	90,000	0.19	%
Steve McKee	174,800	(28)	0.38	%	165,000	9,800	0.02	%
Thomas Magne	60,000	(29)	0.13	%	60,000	0	0.00	%
W. William Bednarczyck TR	150,000	(30)	0.49	%	75,000	75,000	0.32	%
Walter Nassichuk	15,000	(31)	0.03	%	15,000	0	0.00	%
William M. Sheriff	2,855,818		6.16	%	37,500	2,818,318	6.10	%
Total	15,895,818		32.42	%	8,450,000	7,445,818	16.11	%

*

Less than 1%

(a)     All percentages are based on  46,221,381 shares of common stock issued and outstanding on July 24, 2007.  

(b)    This table assumes that each shareholder will sell all of its shares available for sale during the effectiveness of the registration statement that includes this prospectus.  Shareholders are not required to sell their shares.  See “Plan of Distribution” beginning on page 21 of this prospectus.  

(c)    Assumes that all warrants held by the selling shareholders have been exercised and all shares of common stock registered for resale by this prospectus have been sold.  

(1)    Gregory Wilkins, as the principal of Barrick Gold Corporation, has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 4,000,000 shares of common stock held by Barrick Gold Corporation and 500,000 shares of common stock issuable upon the exercise of 500,000 warrants within 60 days of May 31, 2007.  

(2)

Includes 186,000 shares of common stock , 150,000 shares of common stock issuable upon the exercise of options within 60 days of May 31, 2007 and 20,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(3)

Includes 25,000 shares of common stock and 12,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(4)

Includes 15,000 shares of common stock and 7,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(5)

Includes 25,000 shares of common stock and 12,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(6)

Includes 25,000 shares of common stock and 12,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(7)

Includes 50,000 shares of common stock and 25,00 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(8)

Includes 10,000 shares of common stock and 5,00 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(9)

Includes 25,000 shares of common stock and 12,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(10)

Includes 3,259,800 shares of common stock , 450,000 shares of common stock issuable upon the exercise of options within 60 days of May 31, 2007 and 25,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(11)

Kjeld Thygesen, as the Portfolio Manager of Gold Arrow Global Mining Fund, has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 50,000 shares of common stock and 25,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(12)

Michael Halvorson, as the President of Halcorp Capital Ltd., has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 20,000 shares of common stock and 10,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(13)

Jeffrey Brooks, as the President of JB Partners LLP, has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 90,000 shares of common stock and 25,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(14)

Includes 10,556 shares of common stock and 4,444 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(15)

Includes 10,000 shares of common stock and 5,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(16)

Brian P. Lupien, as the Chief Financial Officer of Kudu Partners, has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 13,333 shares of common stock and 6,667 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

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(17)

Ranjan Tandon, as the Managing Member of its General Partner Libra Associates, LLC of Libra Fund LP, has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 113,400 shares of common stock and 56,700 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(18)

Ranjan Tandon, as the Director of Libra Offshore Ltd., has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 26,600 shares of common stock and 13,300 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(19)

Includes 25,000 shares of common stock and 12,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.  

(20)

Includes 48,500 shares of common stock and 5,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(21)

Includes 10,000 shares of common stock and 5,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(22)

Includes 77,500 shares of common stock and 20,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(23)

Richard W. Perkins as the President of its General Partner Perkins Capital Management, Inc. of  Pyramid Partners LP, has the ultimate voting power and control over these shares and control over the disposition of such shares.  Includes 100,000 shares of common stock and 25,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(24)

Includes 120,000 shares of common stock and 15,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(25)

Includes 50,000 shares of common stock and 12,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(26)

Eric Sprott the Chairman and Chief Executive Officer of  Sprott Asset Management Inc., has the ultimate voting power and control over these shares and control over the disposition of such shares.

(27)

Includes 135,000 shares of common stock and 22,500 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(28)

Includes 119,800 shares of common stock and 55,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(29)

Includes 40,000 shares of common stock and 20,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(30)

Includes 125,000 shares of common stock and 25,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

(31)

Includes 10,000 shares of common stock and 5,000 shares of common stock issuable upon the exercise of warrants within 60 days of May 31, 2007.

Based on information provided to us, except as noted above, none of the selling shareholders are affiliated or have been affiliated with any broker-dealer in the United States. Except as otherwise provided in this prospectus, none of the selling shareholders are affiliated or have been affiliated with us, any of our predecessors or affiliates during the past three years.

TRANSACTIONS WITH SELLING SHAREHOLDERS

In May 2006, we issued 3,725,000 units at $1.80 per unit for proceeds of $6,705,000 by way of a private placement.  The Company issued 3,725,000 common shares and 1,862,500 nontransferable share purchase warrants that entitled the holder to purchase one additional common share at $2.70 per share until May 16, 2007 subject to our right to call the warrants, on 30 days' notice in the event the 15 consecutive day trading average of the common shares exceeds $3.25.  We incurred $65,216 in issue costs.  A total of 1,725,000 share purchase warrants were exercised prior to expiry.

In November 2006, we issued 2,000,000 units at $2.50 per unit for proceeds of $5,000,000 by way of a private placement. The Company issued 2,000,000 common shares and 1,000,000 nontransferable share purchase warrants that entitle the holder to purchase one additional common share at $3.00 per share until November 10, 2007.  We paid $88,750 in finders' fees and incurred $94,546 in issue costs for this private placement.

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PLAN OF DISTRIBUTION

We are registering the shares of common stock on behalf of the selling shareholders. When we refer to selling shareholders, we intend to include donees and pledgees selling shares received from a named selling shareholder after the date of this prospectus. All costs, expenses and fees in connection with this registration of the shares offered under this registration statement will be borne by us. Brokerage commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling shareholders. Once the registration statement in which this prospectus forms a part is effective, sales of shares may be effected by the selling shareholders from time to time in one or more types of transactions (which may include block transactions) on the over-the-counter market, in negotiated transactions, through put or call options transactions relating to the shares, through short sales of shares, through the TSX.V or a combination of such methods of sale, at market prices prevailing at the time of sale, or at negotiated prices. Such transactions may or may not involve brokers or dealers. The selling shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling shareholders.

The selling shareholders may effect such transactions by selling shares directly to purchasers or through broker-dealers, which may act as agents or principals. Such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the selling shareholders and/or purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions).

The selling shareholders and any broker-dealers that act in connection with the sale of shares might be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act, and any commissions received by such broker-dealers and any profit on the resale of shares sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. The selling shareholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares against some liabilities arising under the Securities Act.

Because the selling shareholders may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act, the selling shareholders will be subject to the prospectus delivery requirements of the Securities Act. We have informed the selling shareholders that the anti-manipulative provisions of Regulation M promulgated under the Exchange Act may apply to their sales in the market.

In the event that the registration statement is no longer effective, the selling shareholders may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided they meet the criteria and conform to the requirements of such Rule, including the minimum one year holding period.

Upon being notified by any selling shareholder that any material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, under Rule 424(b) of the Act, disclosing:

·

the name of each selling shareholder(s) and of the participating broker-dealer(s),

·

the number of shares involved,

·

the price at which the shares were sold,

·

the commissions paid or discounts or concessions allowed to the broker-dealer(s), where applicable,

·

that the broker-dealer(s) did not conduct any investigation to verify information set out or incorporated by reference in this prospectus; and

·

other facts material to the transaction.

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DESCRIPTION OF SECURITIES

COMMON STOCK

The authorized capital of Midway consists of an unlimited number of common shares without par value.  Holders of common stock of Midway are entitled to one vote per share at all meetings of the Midway shareholders.  Holders of common stock of Midway are entitled to receive a pro rata share of the assets of Midway available for distribution to holders of Midway common shares in the event of liquidation, dissolution or winding-up of Midway.  All Midway common shares rank pari passu, each with the other, as to all benefits which might accrue to the holders of Midway common shares.

Our common stock is quoted on the TSX.V under the trading symbol “MDW.”

OPTIONS

Midway's shareholder-approved stock option plan (the “Plan”) provides for the granting of incentive stock options to its officers, directors, employees and consultants not exceeding 10% of the outstanding shares of Midway at the time of grant (maximum of 5% to any individual and 2% to any consultant).  2,911,000 Midway options are outstanding as at July 24, 2007, which number includes 245,000 options remaining from those issued to option holders of Pan-Nevada Gold Corporation on April 13, 2007.

WARRANTS

As of July 24, 2007, Midway has an aggregate of 1,346,501 share purchase warrants outstanding consisting of 1,000,000 share purchase warrants which entitle the holder to purchase one Midway common share at a price of $3.00 per share until November 10, 2007and 346,501 share purchase warrants which entitle the holder to purchase one Midway common share at a price of $1.42856 until May 23, 2008.

PRIOR SALES

In May 2006, we issued 3,725,000 units at $1.80 per unit for proceeds of $6,705,000 by way of a private placement.  The Company issued 3,725,000 common shares and 1,862,500 nontransferable share purchase warrants that entitled the holder to purchase one additional common share at $2.70 per share until May 16, 2007 subject to our  right to call the warrants, on 30 days' notice in the event the 15 consecutive day trading average of the common shares exceeds $3.25.  We incurred $65,216 in issue costs.  A total of 1,725,000 share purchase warrants were exercised prior to expiry.

In November 2006, we issued 2,000,000 units at $2.50 per unit for proceeds of $5,000,000 by way of a private placement. The Company issued 2,000,000 common shares and 1,000,000 nontransferable share purchase warrants that entitle the holder to purchase one additional common share at $3.00 per share until November 10, 2007.  We paid $88,750 in finders' fees and incurred $94,546 in issue costs for this private placement.

U.S. FEDERAL INCOME TAX CONSIDERATIONS

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE OWNERSHIP OF MIDWAY SHARES

The following discussion of the treatment of future distributions from Midway, and the sale or exchange of Midway shares, is subject to the PFIC rules discussed below.  It is expected that Midway will be treated as a PFIC for its most recent fiscal year.

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Definition of a PFIC

Code Section 1297 defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (i) 75% or more of its gross income is “passive income”, or (ii) the average percentage, by fair market value, of its assets that produce or that are held for the production of “passive income” is at least 50%.  For this purpose, “passive income” includes interest, dividends, certain rents and royalties, and other similar types of income.  The tax rules generally applicable to a PFIC are very complex and, in some cases, uncertain.  Each “United States person”  who holds Midway shares (“U.S. Holder”) as capital assets within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”) is strongly urged to consult his, her or its own tax advisor with respect to such rules.

Status of Midway as PFIC

Midway believes that it qualified as a PFIC for its most recent fiscal year ended on or prior to April 13, 2007, qualified as a PFIC in earlier fiscal years and will qualify as a PFIC for its current fiscal year.  There can be no assurances that unanticipated events will not cause Midway to qualify or fail to qualify as a PFIC or that any determination concerning Midway's current or expected PFIC status will not be challenged by the IRS.  See “Taxation under the PFIC Rules” on page 23 of this prospectus.

If a foreign corporation is a PFIC at any time during a U.S. Holder's holding period (and was not a qualified electing fund (“QEF”) as described below), the U.S. Holder will generally continue to be subject to the rules regarding excess distributions and dispositions of PFIC stock discussed below, even if the foreign corporation ceases to be a PFIC, unless certain gain recognition elections are made to eliminate or “purge” the PFIC taint.

Taxation under the PFIC Rules

There are three separate taxation regimes under the PFIC rules: the QEF regime; the mark-to-market regime; and the excess distribution regime (which is the default regime).  A U.S. Holder who holds (actually or constructively) marketable or unmarketable stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to United States federal income taxation under one of these three regimes.  The impact of the PFIC rules on a U.S. Holder will depend upon which of these regimes applies to such U.S. Holder.

The QEF Regime

If a U.S. Holder so elects (an “Electing U.S. Holder”), and the PFIC agrees to annually supply certain information to the U.S. Holder, the Electing U.S. Holder's shares in the PFIC may be treated as an investment in a QEF.  Under the QEF regime, the Electing U.S. Holder is treated as receiving an annual distribution of his, her or its pro rata share of: (i) the PFIC's “net capital gain” (the excess of net long-term capital gain for a taxable year over net short-term capital loss for such year); and (ii) the PFIC's “ordinary earnings” (the excess of earnings and profits for such taxable year over net capital gain for such year).  An Electing U.S. Holder's pro rata share of a PFIC's net capital gains or ordinary earnings is the amount that would have been distributed with respect to the Electing U.S Holder's stock if, on each day during the taxable year, the PFIC had distributed to each of its shareholders a pro rata share of that day's ratable share of the PFIC's ordinary earnings and net capital gain for that year.  For the Electing U.S. Holder's taxable year in which (or with which) the PFIC's taxable year ends, the amount treated as a distribution to the Electing U.S. Holder of net capital gain will be taxable to the Electing U.S. Holder as long-term capital gain, and the amount treated as a distribution to the Electing U.S. Holder of ordinary earnings will be taxable to the Electing U.S. Holder as ordinary income.  These amounts are taxable to the Electing U.S. Holder regardless of whether such amounts are actually distributed.  The adjusted tax basis of the Electing U.S. Holder in the shares of a PFIC with respect to which a QEF election is in effect is increased by any amount included in the Electing U.S. Holder's income under the QEF rules and decreased by any amount distributed with respect to the PFIC shares that is not includible in income because it has been previous ly taxed under the QEF rules noted above.

The timely QEF election also allows the Electing U.S. Holder to: (i) generally treat any gain realized on the disposition of his, her or its shares of the PFIC (or deemed to be realized on the pledge of their shares) as capital gain; (ii) treat his, her or its share of the PFIC's net capital gain, if any, as long-term capital gain instead of ordinary income; and (iii) either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his, her or its share of PFIC's annual realized net

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capital gain and ordinary earnings subject, however, to an interest charge.  If the Electing U.S. Holder is not a corporation, such an interest charge would be treated as “personal interest” that is not deductible.

The tax reporting requirements with respect to which a U.S. Holder must comply will depend upon whether the QEF election is made for the first taxable year of a corporation beginning after 1986 that such corporation was a PFIC and that includes any portion of the U.S. Holder's holding period of the PFIC shares.  If the U.S. Holder makes a QEF election in such first year (i.e., a timely QEF election), then the U.S. Holder may make the QEF election by filing the appropriate documents at the time the U.S. Holder timely files a tax return for such first year and must recognize the amounts of income noted above.  If, however, the U.S. Holder makes the QEF election subsequent to such first year, then in addition to complying with the reporting and recognition rules of the QEF regime, the U.S. Holder must also report and recognize income pursuant to the excess distribution regime (discussed in “The Excess Distribution R egime” below).  In such circumstances, the U.S. Holder may consider making an additional election for the taxable year for which the QEF election is made to recognize any gain that he, she or it would otherwise recognize if the U.S. Holder had sold the PFIC shares on the qualification date.  The “qualification date” is the first day of the PFIC's first tax year in which it qualified as a QEF with respect to such U.S. Holder.  This additional election can only be made if such U.S. Holder's holding period for the PFIC shares includes the qualification date.  By making such additional election and recognizing such gain, the U.S. Holder will be deemed to have made a timely QEF election and will have prevented the application of the excess distribution regime.

If a corporation that was previously a PFIC no longer qualifies as a PFIC in a subsequent year, a timely QEF election will remain in effect, although not applicable, during those years that such corporation is not a PFIC.  Consequently, during those years that the corporation is not a PFIC, the Electing U.S. Holder will not be required to include in its income its pro rata share of net capital gains and ordinary earnings of the PFIC or satisfy the reporting requirements of that election for that year.  If such corporation subsequently requalifies as a PFIC, the QEF election previously made is still valid, and the Electing U.S. Holder will be required to satisfy the reporting requirements of that election.

Because of the complexity of these rules, U.S. Holders are urged to consult a tax advisor regarding the availability of and procedure for making a QEF election and regarding the recognition of gain or earnings and profits under these rules.

The Mark-to-Market Regime

Under the mark-to-market regime, a U.S. Holder who holds (actually or constructively) marketable stock of a foreign corporation that qualifies as a PFIC, may annually elect to mark such stock to the market (a “mark-to-market election”).  PFIC stock generally is marketable if: (1) it is regularly traded on a national securities exchange that is registered with the Securities Exchange Commission or on the national market system established under Section 11A of the Securities and Exchange Act of 1934; or (2) it is regularly traded on any exchange or market that the Treasury Department determines to have rules sufficient to ensure that the market price accurately represents the fair market value of the stock.  If such an election is made, such U.S. Holder will not be subject to the special taxation rules of Code Section 1291 described below for the taxable year for which the mark-to-market election is made.

A U.S. Holder who makes a mark-to-market election includes in income each taxable year an amount equal to the excess, if any, of the fair market value of the PFIC shares at the close of the taxable year over such U.S. Holder's adjusted tax basis in such shares.  Similarly, the U.S. Holder deducts in each taxable year an amount equal to the lesser of (i) the excess, if any, of such U.S. Holder's adjusted tax basis in the PFIC shares over the fair market value of such shares as of the close of the taxable year, or (ii) the excess, if any, of (A) the mark-to-market gains for the PFIC shares previously included in income by such U.S. Holder for prior tax years, over (B) the mark-to-market losses for the PFIC shares that were previously allowed as deductions for prior tax years.  A U.S. Holder's adjusted tax basis in the PFIC shares will be increased to reflect any amounts included in income, and decreased to reflect any a mounts deducted, as a result of a mark-to-market election.  A mark-to-market election only applies for the taxable year in which the election was made, and for each subsequent taxable year, unless the PFIC shares ceased to be marketable or the IRS consents to the revocation of the election.

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Because of the complexity of these rules, U.S. Holders are urged to consult a tax advisor regarding the availability of and procedure for making a mark-to-market election and regarding the recognition of income and deductions under these rules.

The Excess Distribution Regime

If a U.S. Holder does not make a timely QEF election or a mark-to-market election during a year in which the U.S. Holder holds (actually or constructively) shares of a PFIC (a “Non-electing U.S. Holder”), then special taxation rules under Code Section 1291, generally referred to as the excess distribution regime, will apply.  Under this regime, tax liability arises only when an actual distribution is made by a PFIC, or when the Non-electing U.S. Holder directly or indirectly disposes of shares of the PFIC.

A Non-electing U.S. Holder will be taxed on any excess distributions.  An “excess distribution” can arise either from (i) gains realized on the disposition (or deemed to be realized by reasons of a pledge) by the Non-electing U.S. Holder of his, her or its PFIC shares, or (ii) certain portions of any actual distribution made by the PFIC to the Non-electing U.S. Holder (as specifically defined in the Code, that portion of the actual distribution made during a taxable year that exceeds 125% of the average of actual distributions received in the three preceding taxable years; any amount not in excess of 125% of the average of actual distributions received in the three preceding taxable years will generally be subject to taxation as a dividend as described in “Taxation of Dividends” below).

Once the total amount of the excess distribution has been determined, it is allocated ratably to all days in the holding period of the Non-electing U.S. Holder for his, her or its PFIC Shares.  This allocation can result in excess distributions allocated to three types of periods: (i) those amounts allocated to days in prior taxable years for which the corporation was not a PFIC (or, to days in taxable years prior to January 1, 1987) (the “pre-PFIC period”); (ii) those amounts allocated to days in prior taxable years for which the corporation was a PFIC (the “prior-year PFIC period”); and (iii) those amounts allocated to days in the current taxable year (the “current-year PFIC period”).  Those amounts allocated to days in the pre-PFIC period and the current-year PFIC period are totaled and included in the Non-electing U.S. Holder's income in the current taxable year as ordinary income. &n bsp;Those amounts allocated to days in the prior-year PFIC period are not included in the Non-electing U.S. Holder's income.  Instead, those amounts are subject to taxation at the highest applicable tax rate for any prior year to which an amount is allocated, and the amount allocated to a prior year is also subject to an interest charge as if the amount were an underpayment of taxes for the year in question.

If a corporation is a PFIC for any taxable year during which a Non-electing U.S. Holder holds shares of such PFIC, then the corporation will continue to be treated as a PFIC with respect to such shares, even if it no longer meets the definition of a PFIC.  A Non-electing U.S. Holder may terminate this deemed PFIC status by electing to recognize a gain (which will be taxed under the rules discussed above for Non-electing U.S. Holders) as if such shares had been sold on the last day of the last taxable year for which the corporation was a PFIC; this election has the effect of eliminating or purging the PFIC taint.

General Provisions – Not Specific to Taxing Regime

Because Midway is expected to be a PFIC for its current taxable year and for one or more of its future taxable years, each U.S. Holder is urged to consult a tax advisor with respect to how the PFIC rules affect their tax situation, including any ability to make, and the tax consequences of making, a QEF election or a mark-to-market election.

In addition, certain special, generally adverse, rules will apply with respect to the shares of a corporation while such corporation is a PFIC, whether or not the U.S. Holder has elected to treat the corporation as a QEF.  For example, under Code Section 1298(b)(6), a U.S. Holder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.

Furthermore, for any periods of time during which Midway is a PFIC, each U.S. Holder will be required annually to file an IRS Form 8621 (Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) with such U.S. Holder's timely filed income tax return (or directly with the IRS if the U.S. Holder is

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not required to file an income tax return).  A U.S. Holder choosing to make a QEF election also must include with its income tax return a shareholder election statement and the PFIC annual information statement that Midway will provide.

Taxation of Dividends

Subject to the PFIC rules, for U.S. federal income tax purposes, the gross amount of a distribution made to a U.S. Holder by Midway in respect of Midway shares owned by such U.S. Holder, including any amounts of Canadian tax withheld on the distribution, will be treated as dividend income to such U.S. Holder to the extent paid out of Midway's current or accumulated earnings and profits, as determined for U.S. federal income tax purposes.  That dividend income will not be eligible for the dividends received deduction generally allowed to corporations under Code Section 243.  Further, the dividend income received by an individual will not be eligible for the preferential tax rates that are generally applicable to certain dividend income of an individual, estate or trust.  Code Section 1(h)(11) generally allows dividend income received during the taxable year from U.S. corporations and certain foreign corporations ( but not from PFICs) to be taxed at the same preferential tax rate that applies to long-term capital gains of individuals, estates or trusts.

To the extent a distribution made to a U.S. Holder by Midway in respect of Midway shares owned by such U.S. Holder exceeds the U.S. Holder's allocable share of Midway's current and accumulated earnings and profits, the excess will be applied first to reduce the U.S. Holder's adjusted tax basis in his, her or its Midway shares, and any remaining excess will constitute gain from the deemed sale or exchange of such shares.  

Dividends paid by Midway in Canadian dollars will be included in the income of a U.S. Holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt thereof by the depositary, regardless of whether the payment is in fact converted into U.S. dollars.  If the dividends paid in Canadian dollars are converted into U.S. dollars on the date of receipt, U.S. Holders generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.

If the U.S. Holder establishes that an amount actually distributed by a PFIC with respect to which a QEF election is in effect is paid out of earnings and profits of the PFIC that were previously included in the U.S. Holder's income under the QEF rules, such amount is treated as a distribution that is not a dividend.  Accordingly, such amounts are not included in the gross income of the U.S. Holder.

For U.S. federal income tax purposes, a U.S. Holder may generally elect to treat Canadian withholding taxes as either a deduction from gross income or, subject to certain limitations, a credit against the U.S. federal income tax liability of that U.S. Holder.  The maximum foreign tax credit allowable generally is equal to the U.S. Holder's U.S. federal income tax liability for the taxable year multiplied by a fraction, the numerator of which is the U.S. Holder's taxable income from sources outside the United States and the denominator of which is the U.S. Holder's taxable income from all sources for the taxable year.  That foreign tax credit limitation is applied separately to different “baskets” of income.  For purposes of applying the foreign tax credit limitation, dividends generally are included in the “passive income” basket or, if received by certain holders and certain other conditions are met, the “financial services income” basket for taxable years beginning on or before December 31, 2006 or the “general category” basket for taxable years beginning after December 31, 2006.

DESCRIPTION OF THE BUSINESS

OVERVIEW

Name and Incorporation

Midway was incorporated under the Company Act (British Columbia) on May 14, 1996, under the name Neary Resources Corporation. On October 8, 1999, Midway changed its name to Red Emerald Resource Corp. On July 10, 2002, it changed its name to Midway Gold Corp. Midway became a reporting issuer in the Province of British Columbia upon the issuance of a receipt for a prospectus on May 16, 1997. The common shares were listed on the Vancouver Stock Exchange (a predecessor of the TSX Venture Exchange) on May 29, 1997. On July 1, 2001,

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Midway became a reporting issuer in the Province of Alberta pursuant to Alberta BOR#51-501.  Midway's shares are currently listed on Tier 1 of  the TSX.V under the symbol “MDW”.

As of the date of this prospectus, the authorized share capital of Midway consists of an unlimited number of common shares without par value.

The registered office of Midway is located at Suite 2800, 666 Burrard Street, Vancouver, British Columbia, V6C 2Z1; the corporate office of Midway is located at Unit 1 - 15782 Marine Drive, White Rock, B.C. V4B 1E6; and the operations office is located at 2778 Spokane Creek, East Helena, Montana, 59635, USA.  

Intercorporate Relationships

The corporate organization chart for Midway as of the date of this prospectus is as follows:

History and Description of Business – three year history

Midway is an exploration stage company engaged in the acquisition, exploration, and development of gold and silver mineral properties in North America. It is our objective to identify mineral prospects of merit, conduct preliminary exploration work, and if results are positive, conduct advanced exploration and development work. Our mineral exploration properties are all located in Nevada. The Midway, Spring Valley and Pan properties are advanced stage projects and have developing gold resources and the Thunder Mountain, Jessup, Afghan, KDK, Maggie Creek and Monte projects are earlier stage precious metal projects.  

Mineral property interests

During 2001 Midway entered into an option agreement with Rex Exploration Corp. (“Rex”) to earn a 65% interest in a group of mining claims commonly referred to as the Midway property located in Nye County, Nevada .  Rex had an underlying option agreement with the owners of the Midway property whereby Rex could earn a 100% interest in the property.   On October 30, 2002 Midway acquired all of the issued and outstanding shares of Rex for 4.5 million common shares of Midway.  Effective December 31, 2004, Rex was dissolved by way of a voluntary dissolution and its assets and liabilities were transferred to Midway.

On August 15, 2003 Midway entered into an option agreement with Mr. Paul G. Schmidt to acquire an option to earn a 100% interest in 44 unpatented mining claims located in Pershing County, Nevada to form the beginning of the Spring Valley property claim group.  On September 1, 2003 Midway entered into an option agreement with Echo Bay Exploration Inc. to acquire 28 unpatented mining claims. On September 7, 2005 we entered into a purchase and sale agreement with Nevada Land and Resource Company LLC to buy 544 acres of surface land adjacent to the Spring Valley property.   On January 25, 2006 Midway entered into a purchase and sale agreement to acquire 101 federal mining claims from Coeur Rochester, Inc. adjoining the Spring Valley property.    

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On April 25, 2006 Midway entered into a mineral lease agreement and option to purchase 12 unpatented lode mining claims with Lamonte J. Duffy.  On May 5, 2006 Midway completed a purchase of land and mineral rights with Seymork Investments Ltd. to acquire 920 gross acres, 320 acres net surface, 770 acres net mineral.  On July 18, 2006 Midway entered into a mineral lease agreement and option to purchase 97 unpatented mining claims with Dave Rowe and Randall Stoebert.  On September 1, 2006 we purchased from the Sentman Family Trust, Barry Sentman and Kerry S. Pilot co-trustees a 40 acre parcel. On October 25, 2006 Midway entered into a mineral lease agreement and option with Lamonte J. Duffy to purchase 6 unpatented lode mining claims. On October 30, 2006 Midway entered into a mineral lease agreement and option to purchase 2 unpatented lode mining claims from Dale and Diana Chabino.  On June 1, 2007 Midway entered into a mineral lease agr eement and option with George D. Duffy to purchase 2 unpatented lode mining claims.   

On December 12, 2006, Pan-Nevada Gold Corporation and Midway entered into a letter agreement whereby Midway would acquire, through a series of transactions, all of the issued and outstanding common shares in the capital of Pan-Nevada on the basis of one common share of Midway for every 3.5714 common shares of Pan-Nevada (or 0.28 of a Midway share for each Pan-Nevada share) pursuant to a plan of arrangement between Pan-Nevada and Midway.  On April 13, 2007 the plan of arrangement was closed and Midway acquired all the issued and outstanding Pan-Nevada common shares for 7,764,109 common shares of Midway thereby becoming a wholly owned subsidiary of Midway and the shares of Pan-Nevada have been de-listed from the TSX.V.  Immediately after the issue of these shares the Pan-Nevada shareholders held 17.8% of Midway common stock issued and outstanding.  Pan-Nevada option holders were issued 308,000 stock options of Midway and the Pan-Nevada share purchase warrant holders were issued 870,323 share purchase warrants of Midway.  

Significant acquisitions and significant dispositions

During 2004 and 2005 Midway held the Pioche mineral property in the Pioche District, Lincoln County Nevada and three adjacent properties known as the Mineral Mountain properties in the Goldstrike District, Washington County, Utah under option.  In addition Midway held the Black Prince property in Lincoln County, Nevada and the Gray Hills property located in Lyon County, Nevada under option.  All of these properties were explored prior to terminating the leases in the same fiscal year they were optioned.  

Financings

During the past three years Midway has raised all of its funding by way of private placements.  We offered and sold the following securities outside the United States to non-U.S. persons in off-shore transactions pursuant to the exclusion from registration available under Regulation S of the Securities Act and in the United States in private transactions not involving a public offering pursuant to exemptions available under Rule 506 of Regulation D and Section 4(2) of the Securities Act.

On August 26, 2004 Midway closed a $765,000 non-brokered private placement of 1,020,000 units at $0.75 per unit with each unit comprised of one common share and one non-transferable share purchase warrant.  All of the 1,020,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $0.80 per share for a period of six months were subsequently exercised.  A finders’ fee of 55,650 common shares was issued in connection with this transaction.

On December 21, 2004 Midway closed a $595,000 non-brokered private placement of 700,000 units at $0.85 per unit with each unit comprised of one common share and one non-transferable share purchase warrant.  All of the 700,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.00 per share for a period of one year were subsequently exercised.  A finders’ fee of 18,750 common shares was issued in connection with this transaction.

On February 16, 2005 Midway closed a $2,125,000 non-brokered private placement of 2,500,000 units at $0.85 per unit with each unit comprised of one common share and one non-transferable share purchase warrant.  All of the 2,500,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.00

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per share for a period of one year were subsequently exercised.  A finders’ fee of $69,700 was paid and 75,800 common shares were issued in connection with this transaction.

On July 27, 2005 Midway closed a $1,150,000 non-brokered private placement of 1,000,000 units at $1.15 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  All of the 500,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.15 per share for a period of one year were subsequently exercised.

On August 22, 2005 Midway closed a $700,000 non-brokered private placement of 500,000 units at $1.40 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  All of the 250,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.45 per share for a period of one year were subsequently exercised.

In January 2006 Midway issued 40,000 common shares at a value of $88,000 pursuant to a purchase and sale agreement to purchase mining claims for the Spring Valley project.

 On May 16, 2006 Midway closed a $6,705,000 non-brokered private placement of 3,725,000 units at $1.80 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  The Company issued 1,862,500 share purchase warrants that entitled the holder to purchase one additional share at a price of $2.70 per share for a period of one year of which 1,725,000 were subsequently exercised.

On November 10, 2006 Midway closed a $5,000,000 non-brokered private placement of 2,000,000 units at $2.50 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  The 1,000,000 share purchase warrant entitles the holder to purchase one additional share at a price of $3.00 per share until November 10, 2007.   

PROPERTIES

Midway Property, Nye County, Nevada

Location and means of access

The Midway property is located in Nye County, Nevada, approximately 24 kilometers northeast of the town of Tonopah, 335 kilometers northwest of Las Vegas and 380 kilometers southeast of Reno.  The property consists of [450] unpatented mining claims, covering an approximate [3,628] hectare area over the northeastern flank of the San Antonio Mountains and in the Ralston Valley. It is centered at 38° 18’ North latitude, 117° 03’ West longitude on Henry’s Well and Thunder Mountain US Geological Survey 7½ minute map sheets.

The property is accessed from Tonopah by following State Highway 6 east for eight kilometers, then north on paved State Highway 376 for 20 kilometers to the Belmont county road junction. The main areas of interest are located within a 1,800 meter radius of this junction.

Title

US Department of Interior, Bureau of Land Management (“BLM”) administers the lands in the Midway district under the Federal Land Policy and Management Act of 1976. The Midway property consists of 250 unpatented mining claims in two contiguous claim blocks within Nye County, Nevada. The claims are located within Townships 3, 4, 5 and 6 North and Ranges 43, 44 and 45 East. Lands within the unpatented claim block that are not controlled by us include fee ground in the NW ½ of the NE ¼ and the NE ½ of the NW ¼ of Section 5, T4N and R44E. In addition, the surface rights to 560 acres in Section 32, which lies to the south of the Discovery Zone, are held by the Town of Tonopah. The remaining 80 acres of surface rights in Section 32 are held as two 40-acre parcels by two owners, each of whom lives on their parcel. We hold the federal mineral rights of the entirety of Section 32 through their unpatented claims.

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During 2001 Midway entered into an option agreement with Rex Exploration Corp. to earn a 65% interest in the Midway property.  Rex had an underlying option agreement with the Paul Schmidt and Mary Ann Schmidt and Thomas C. Patton and Linda Sue Patton, (the “Owners”) of the Midway mineral property whereby Rex could earn a 100% interest in the Midway mineral property, subject to a sliding scale royalty of between 2% and 7% of net smelter returns (NSR), by making option payments totaling US$275,000 over the period to August 2003 and by making an option exercise payment of US$3,000,000 on August 15, 2004. This option exercise payment date was subsequently extended to August 15, 2005. In order for us to earn a 65% interest in the property, we agreed to make the US$275,000 option payments to the owners required pursuant to the agreement, incur an additional US$925,000 on exploration and development expenditures on the our property by August 15, 2 004, and pay Rex’s 65% share of the US$3,000,000 option exercise payment due August 15, 2004. Effective October 30, 2002, Midway acquired all of the issued and outstanding shares of Rex in exchange for 4,500,000 common shares of Midway.

On November 2, 2004, the agreement with the Owners was amended whereby Midway has the option to acquire a 100% interest in the property by further payments totaling US$200,000 on or before August 15, 2005 (paid), subject only to a sliding scale royalty on NSR from any commercial production of between 2% to 7%, based on changes in gold prices.  In addition, the original option exercise payment of US$3,000,000 due August 15, 2005 was replaced with a series of annual payments as advances upon the royalty payable from commercial production as follows:

Option payment US$	Dates
250,000	On or before August 15, 2006 (paid)
250,000	On or before August 15, 2007
300,000	On or before August 15, 2008 and annually thereafter

History of exploration by previous operators

The Tonopah district has a long mining history dating back to the discovery of silver ore in 1900. Mining began in Tonopah in 1901 and continued to 1961, with a total of 1,861,200 ounces of gold and 174,152,628 ounces of silver recovered from mines in the area based on historical reports. The Divide district, eight kilometers south of Tonopah, was also active during this period with recorded production of 3 million ounces silver and 30,000 ounces gold. Fifty kilometers north of the Midway property, gold was discovered in veins at Round Mountain in 1901. It has been reported that production from lode veins in the Round Mountain district continued intermittently until 1969, with a total of 346,376 ounces of gold and 362,355 ounces of silver recovered from 936,962 tons of ore based on historical reports. The potential of large tonnage, low-grade ore was exploited beginning in 1977, when reserves of 12 million tons grading 0.062 oz Au/ton (2.126 g Au/t) were identified. As of 1999, approximately 5,398,000 ounces of gold and 3,681,000 ounces of silver have been recovered from bulk tonnage mining at Round Mountain. It has been reported that the Round Mountain mine has produced over 7.9 million ounces since 1977 based on historical reports.

There is no known historical production from the Midway (locally called Rye Patch) district, but evidence of exploration activities and perhaps very minor production of copper-silver ore is shown by the presence of numerous pits and a shaft.

Houston Oil and Minerals held the property from the 1970’s through 1984. In 1986, the present claim owners, Thomas Patton and Paul Schmidt, staked claims to cover the Midway prospects and other mineralization located to the north and east. Numerous companies conducted property reviews and sampled the showings in the area, which locally returned anomalous concentrations of gold.

Felmont drilled 96 RC holes in the Thunder Mountain target area in 1981, which lies to the southeast of the main Midway target area. Although little is known of this program, the assay results from all but four of the holes are included in the Midway project database. In 1988, the Midway property was optioned to Coeur d’Alene Mines

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Corporation, who conducted preliminary geological, geochemical, and geophysical surveys throughout the Midway property. Coeur d’Alene undertook a three-hole reverse circulation drill program to test targets developed from this work; results were inconclusive and Coeur d’Alene dropped their option. Rio Algom Ltd. optioned the property in 1989 and conducted a 42-hole RC drill program in the SP prospect area. Results of this drill program were also inconclusive and Rio Algom dropped the option.

In 1992, Kennecott optioned the Midway property and conducted extensive exploration of the known prospect areas and elsewhere on the property. Detailed geophysical programs, including airborne, gravity, and CSAMT surveys, were completed. A total of 136 drill holes, including four core holes, were completed by the end of 1996 and resulted in discovery of gold mineralization in what is referred to as the Discovery zone. Tombstone Exploration entered into a joint venture with Kennecott and completed a 14-hole RC drill program on various prospects on the Midway property in 1997. Golconda Resources drilled nine RC holes in the Thunder Mountain area in 1996 and 1997. Kennecott dropped their option on the Midway property in the fall of 1997 and the property was returned to the vendors.

Mr. Jay W. Hammitt conducted a polygonal resource estimate for the Midway project in August 1996 for Kennecott. The resource estimate provided by Hammitt does not account for structural, stratigraphic or geologic controls in gold distribution and does not classify the resources. The Hammitt resource estimate is incomplete and therefore was not considered by Midway to be a CIM-compliant resource estimate for the purposes of that report.

In 2001, Red Emerald, the predecessor to Midway, entered into an option agreement with Rex, which had secured a right to acquire a 100% interest in the Midway project; Midway subsequently acquired Rex. Midway began exploration in May 2002 and by September 2002 had completed 8,136 meters (26,689.5 feet) of drilling in 69 holes. Newmont entered into a joint venture with Midway on the Midway property in September 2002 and undertook extensive regional exploration before terminating the joint venture in June 2004. The Newmont/Midway Gold joint venture drilled 121 holes for a total of 20,636 meters (67,703.5 feet). These work programs are described in greater detail in the next section.

Exploration completed by Midway

Drilling

Between May 1 and September 5, 2002, Midway completed 8,136 meters (26,689.5 feet) of drilling in 69 holes, mostly HQ core. Newmont entered into a joint venture on the Midway property in September 2002 and undertook extensive regional exploration programs including numerous regional and detailed geophysical surveys, including EM, airborne magnetic and radiometric surveys, and ground radiometric, gravity and CSAMT surveys. Newmont also mapped the Northwest and Thunder Mountain areas and completed rock and stream sediment geochemical surveys. The Newmont/Midway joint venture drilled a total of 20,636 meters (67,703.5 feet) in 121 holes in the greater Discovery area, the Thunder Mountain target area, and in the northwestern portion of the property.

The Newmont/Midway joint venture drilled 23 angle holes for a total of 4,890 meters (16,042 feet), including one hole that was abandoned at a depth of seven meters. Seven of the holes were drilled by reverse circulation methods, while the remainder was HQ core holes with reverse circulation pre-collars; a total of 3,107 meters of Reverse circulation and 1,782 meters of core were drilled. Of the 22 holes that were completed, five were drilled in the 121 zone and 17 were drilled in largely untested areas in the greater Discovery area to the south of the Discovery zone.

The five holes drilled in the 121 zone were primarily designed to test for high-grade zones of restricted widths deep in the Palmetto Formation, lying below similar zones intercepted by previous operators; results of this deeper testing did not prove up continuity and geometry although intercepts of 6 to 64.7 grams gold per tonne over lengths of 0.4 to 1.5 meters were intersected in three of the holes.  Of the remaining holes, three returned intercepts exceeding 3 grams gold per tonne.

The Mine Development Associates report dated February 24, 2005 reported on the exploration data base developed to the date of that report which included the following:

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Number of drill holes	488
Total drill hole meters	68,105
Average drill hole length (m)	139.6
Holes With Down-Hole Surveys	79
Drill Hole Gold Assays	28,593
Meters Sampled & Assayed For Gold	43,312
Meters With No Gold Assays	24,766
Drill Hole Silver Assays	5,739
Meters Sampled & Assayed For Silver	8,939
Meters With No Silver Assays	59,166

 Since then Midway has conducted additional drilling and exploration programs.

In 2005 Midway drilled 8,987 feet in 16 reverse circulation holes to test for high-grade extensions adjacent to the known resource areas.  The program resulted in the discovery of a new high-grade zone named the Dauntless Zone that could be a potential feeder zone for the main Discovery Zone. Hole MW399 encountered  175 feet of 11.93 grams gold per tonne (0.349 ounces gold per ton) in drill hole MW399, which include a high-grade vein assaying 15 feet of 108 grams gold per tonne (3.163 ounces gold per ton), and 135 feet of 2.0 grams gold per tonne (0.058 ounces gold per ton) in MW402.

In 2006 we drilled 26,450 feet in 56 reverse circulation and core holes. The program tested six gold zones and gold was intersected in all six zones.  In this phase, the Dauntless zone was extended 650 feet along strike.  The zone appears to vary from 23 to 66 feet in true width and is composed of two to three distinct southwest dipping sub-parallel zones. The veins vary in grade from .029 to 1.16 ounces per ton gold starting within 165 feet of the surface and are open along strike to the north and south.  The Enterprise and Cross zones have each been tested by at least five drill holes that have encountered veins with grades up to 0.61 to 0.87 ounces per ton gold. Limited gold was also encountered in the Hornet and Nautilus and the 121 South zones.

Following drilling, we developed three-dimensional vein models of the Midway high-grade gold zones.  Twelve veins were identified in the Discovery and Dauntless zones.  Drill testing of these zones has been adequate to design an underground exploration bulk sample test. An additional 58 high-grade (>0.15 ounces of gold per ton) veins have been identified in the project, by drilling but are not fully explored.

During the third quarter of 2006, we hired a mining engineer from the Colorado School of Mines to develop plans for an underground exploration decline that could then be used to bulk sample the Discovery and Dauntless gold zones that will allow metallurgical testing and allow better access to the exploration of the very high-grade gold zones encountered at Midway.

In December 2006 we were drilling and installing a series of 14 monitor wells to study the dewatering costs for the underground decline when four of the holes encountered gold. The best intercept was an extension of the Dauntless zone with 10 feet of 0.31 ounces of gold per ton.  The vein is estimated to be four feet true width and is approximately 130 feet south of the Dauntless zone.  These tests indicate that gold persists in vein zones peripheral to the Discovery zone.  The hydrology holes will determine water characterization for planning and permitting of an underground exploration decline into the Discovery and Dauntless deposits.

In 2007, we plan to complete the design and permitting of the underground exploration decline that will allow us to take and process a bulk sample from veins in Discovery and Dauntless vein area when constructed.  This exploration bulk sample will be taken from oxidized high-grade veins that vary in grade from 0.3 to 1.2 ounces of gold per ton.  This decline can then be used as a mining and exploration resource conversion platform for future expansions at Midway. A 450 foot water well was completed in April 2007 and pumping tests are pending.

A 10 to 12 hole geotechnical drill program will be conducted for stope design, mine access, and ventilation engineering purposes as well as waste rock and tailing sites in 2007.

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Geochemistry

An extensive rock sampling program was conducted in the fall of 2002. A total of 1,706 rock samples were collected during the prospecting activities and along a grid on the Thunder Mountain prospect. A total of 226 rock samples were collected in the northern portion of the property, 100 from the greater Discovery area (including the SP zone), 27 from the Rye Patch prospect, and 1,353 samples from the Thunder Mountain area. At Thunder Mountain, a grid with stations located at 50-m intervals along lines spaced 100-m apart was established to assist with the collection of rock samples and geological mapping.  In addition 203 rock chip samples were collected in 2005 in the Midway Hills area.

A total of 122 stream sediment samples were collected from drainages throughout the northern portion of the property. Samples were screened on site to produce approximately five kilograms of –10 mesh material. Sample locations were determined by GPS and marked in the field with metal tags indicating the sample number.

Geophysical surveys

Significant amounts of geophysical data were collected from the Midway property between September 2002 and January 2003, during the Newmont/Midway joint venture. An airborne survey was flown over a 10 kilometer by 25 kilometer area in September 2002. A second, more detailed airborne survey was flown in December 2002. The first survey utilized the airborne EM/magnetics (NEWTEM) system. This survey was flown at 100-meter line spacing with a nominal terrain clearance of the transmitter of 40 meters. A total of approximately 1,200 line-kilometers of survey were flown. The second airborne survey covered the original surveyed area once again, but at a line spacing of 50 meters with a drape of 30 meters above ground. This high resolution, helicopter-supported magnetic/radiometric survey covered approximately 3,950 line-kilometers of the Midway property. In both surveys, flight lines were approximately 10 kilometers long oriented at an azimuth of 045 degrees.

Selected EM resistive features were followed up by CSAMT surveys. Gravity measurements were collected from throughout the property. Details of the various surveys are provided in a summary report prepared by Bob Anderson (2003).

Zonge Geophysics was contracted to conduct an induced polarization (IP) survey on three lines within the Discovery zone where Zonge had previously completed CSAMT surveys for Kennecott. The purpose of this test was to establish which geophysical technique was more effective at detecting resistive bodies. Due to the greater definition and depth penetration capabilities of CSAMT, this survey method was chosen for follow-up ground target definition. A total of 38.9 line kilometers of CSAMT data were collected by Zonge from 21 grid lines established over six selected EM resistive features located throughout the property. The data previously collected for Kennecott were reprocessed and a detailed gravity survey was conducted over the main areas of interest on the Midway property. Jim Wright of Newmont collected approximately 1,300 gravity points, which were added to the 277 points collected by Kennecott to produce a refined gravity image of the Midway property .

A ground radiometrics survey was completed over the Thunder Mountain grid. Rick Roe of Global Geological collected data along 58.4 line-kilometers of grid using a handheld spectrometer. Two lines of self potential (SP) were collected near the Discovery zone by Jim Wright to determine its usefulness, but the survey was found to be too small to be diagnostic.

Regional geology

The Midway property is underlain by northwest-striking, east-dipping chert and argillite of the Ordovician Palmetto Formation. The Midway Hills to the west, north, and south of the property are composed of Miocene Red Mountain trachyandesite flows. The eastern portion of the property is covered by Quaternary fan and pediment alluvial deposits with mixed playadune deposits locally. The southern portion of the Midway property was mapped in 1979 as part of a regional mapping program of the Tonopah, Lone Mountain, Klondike and Northern Mud Lakes Quadrangles. Bonham and Garside describe the Midway area as lying to the east of a major structural zone that separates the Sierra Nevada batholith from the Basin and Range province. The Walker Lane, a prominent zone of parallel and sub-parallel right lateral strike slip faults, lies along this structural break. Minor east-northeast-trending faults with minimal displacements are mapped in the area.

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Northwest-trending, subvertical rhyolite porphyry dikes of upper Cretaceous age intrude the Palmetto Formation at Midway. The dikes are pervasively propylitized with local sericitic and phyllic hydrothermal alteration and small amounts of pyrite and chalcopyrite.

Local geology

In the vicinity of the Midway property, the Palmetto Formation consists predominantly of slate and argillite with lesser amounts of chert and minor sandy limestone. These rocks are gently to tightly folded and are cut by numerous low-angle shear zones and breccias. Generally vertically dipping quartz porphyritic rhyolite dikes, ranging in width from 1 to 20 meters, intrude the Palmetto sedimentary rocks and form northwest-trending swarms.

Tonopah Formation rhyolitic rocks of Tertiary age, which overlie the Palmetto Formation sedimentary rocks, are the main mineralized host rocks at the Midway property. The Tonopah Formation is exposed in one small outcrop in a central wash on the Midway property, but has been intersected in drilling throughout the greater Discovery area. The Tonopah Formation rocks in the greater Discovery area consist primarily of rhyolitic flows, volcaniclastic and clastic rocks. The clastic sequence consists of interlayered siltstone and fine-to medium-grained sandstone with local zones of agglomerate; clastic units are more common in the eastern portions of the greater Discovery area, while volcanic and volcaniclastic units prevail to the west. The Tertiary rocks are locally hydrothermally altered, with an argillic core and outer propylitic zone. The argillic core zones may exhibit silica replacement with secondary quartz, calcite, and adularia. Sanidine from the Disco very outcrop, representative of tuffaceous rocks that host mineralization in the Discovery area, was age dated at 23 to 24 Ma by the University of Nevada, Las Vegas for Newmont.

The Miocene Red Mountain trachyandesite flows overlie nearly the entire Midway Hills portion of the San Antonio Mountains. The lava flows have an average thickness of three to four meters and accumulate to as much as 300 m in thickness. The rock is porphyritic, contains phenocrysts of plagioclase, olivine, and pyroxene in a medium-grained matrix, and has been age dated at 16 to 18 Ma.  

Numerous structures are interpreted to cut the Paleozoic and Tertiary rocks in the greater Discovery area on the basis of drill hole logging and interpretations from geophysical data generated by Kennecott and Newmont. Northwest-trending structures dominate, with northeast- and northtrending structures also being important.

Quaternary deposits at the Midway property, which cover the above-mentioned rocks over large areas of the property, include a variety of alluvial, colluvial, eolian, and playa deposits. Fan and pediment deposits are the most extensive units east of the Midway Hills. These deposits are generally found in the upland areas on the eastern slope of the San Antonio Mountains and are of low to medium gradient. Mixed dune-playa deposits occur in the central and eastern portion of the Midway property. These deposits form in the lowest areas of the valley floor and are transitional with the playa deposits. The sand dunes are generally small, being tens of meters long and three to four meters high, and are mostly stabilized by vegetation.  Twenty to fifty feet of sand dunes and basalt gravels cover the known gold deposits.

Deposit types

Key components of the low sulfidation volcanic-hosted deposit type include quartz-adularia carbonatesericite alteration of calc-alkalic host rocks, typically rhyolite. Vein textures characteristic of low-sulfur systems include open-space filling, colloform banding, crustiform features, and comb structures.

Mineralization

The Midway project includes the greater Discovery area in the central portion of the property, as well as the Thunder Mountain zone to the southeast. Gold mineralization in the greater Discovery area is hosted within the Tonopah Formation rhyolitic rocks and the underlying Palmetto Formation sedimentary rocks, as well as by felsic dikes and sills that intrude these units. The mineralization is often concentrated at or near the Tertiary volcanic/Palmetto contact. Mineralization styles include disseminated, roughly stratiform zones, typically in the Tertiary units, and higher-grade vein/fault zones of restricted widths within both the Tertiary volcanic rocks and the

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Palmetto Formation. Higher gold grades are often associated with banded chalcedonic veins and veinlets, with quartz replacement of coarse, tabular calcite crystals being a commonly observed texture. Newmont submitted adularia from Discovery zone mineralization and altered rocks from the Thunder Mountain target area to the University of Nevada, Las Vegas, for dating, and both samples returned an age of 18 Ma. This date presumably represents the age of the Midway gold mineralization.

Mineral Resources & Reserves

The following technical disclosure is based upon the technical report titled “Updated Summary Report Midway Gold Prospect, Nye County, Nevada” which we refer to as the “Midway Technical Report” prepared February 24, 2005 by Michael M. Gustin, R.P. Geo and Steven Ristorcelli, R.P. Geo. of Mine Development Associates, a “qualified person(s)” for the purposes of NI 43-101.  

In the Midway Technical Report, Mine Development Associates explains that Midway previously contracted KRJA Systems Inc./Maptek (Maptek) to conduct a resource estimate. Maptek completed a simple resource estimate for an Inferred classification, although this resource classification could be upgraded with more rigid controls and procedures. Low-grade and high-grade shells were used to control grade estimation using inverse distance methodology. From this model Maptek estimated an Inferred Resource at a cutoff of 0.01 ounces gold per ton (0.343 grams gold per tonne) of 5,526,000 tons grading 0.039 ounces gold per ton (1.34 grams gold per tonne) for a total of 215,500 ounces of gold. These resources lie in the Discovery, 121, and 63-77 zones.  

Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101, commonly referred to as NI 43-101. The definitions given in NI 43-101 are adopted from those given by the Canadian Institute of Mining Metallurgy and Petroleum.

Cautionary Note to US Investors concerning estimates of Inferred Mineral Resources:  The discussion set forth above uses the terms “Inferred” mineral resources.  Inferred” mineral resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  We advise US investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.  In accordance with Canadian rules, estimates of inferred mineral resources cannot form the basis of feasibility or other economic studies.  U.S. investors are cautioned not to assume that any part or all of the inferred mineral resource exists or is economically or legally mineable.

Midway is currently re-evaluating the eight gold deposits and focusing on the development of the higher grade (>0.15 opt) gold intercepts. These higher grade veins appear to form in north striking and northwest striking high-angle quartz adularia veins ranging from 1 to 22 feet in width. These veins average about 5 feet in width and have grades averaging over multiple intercepts from 0.18 to over 1 ounce gold per ton. To date 71 veins have been identified.  Only 13 of those veins have been drilled at a sufficient drill density to accurately define the veins for bulk sampling. Midway is currently planning an underground decline to cross cut at least 12 of the better defined shallower (<250 ft depth) veins and bulk sample three of the veins. Once the continuity, width, and grade of the best defined veins are defined by the exploration decline and bulk sample, then a program to convert the remaining 58 veins will be planned.

Mining Operations

Midway currently has no mining operations at the Midway project.

Spring Valley Property, Pershing County, Nevada

Location and means of access

The Spring Valley property is located in Pershing County, Nevada, 20 miles northeast of the town of Lovelock.  The property is situated in the Spring Valley Mining District, three miles north of Coeur d’Alene Mines Corporation’s Rochester Mine and is accessed on Nevada State Highway 50, which extends eastward from US Interstate 80.

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The Spring Valley Property is located on the USGS Lovelock 1:100,000 scale topographic map and the USGS Rochester and Fitting 1:24,000 scale, 7.5 minute series quadrangle maps.  It is centered at latitude 40° 20’ North and longitude 118° 08’ West.  Mineralization at Spring Valley is located within the southern half of Sections 34 and 35, Township 29 North, Range 34 East (T29N, R34E) Mount Diablo Base and Meridian (MDBM).  

Title

Midway has controlled the property since 2003 through direct ownership of claims and through mining leases.

The Spring Valley property encompasses an area of approximately 11,700 acres.  The Property consists of 502 contiguous, active unpatented lode mining claims covering portions of Sections 25, 26, 27, 28, 33, 34, 35 and 36, T29N, R34E and portions of Sections 1, 2, 3 and 4, Township 28 North, Range 34 East (T28N, R34E) MDBM.  Unpatented mining claims are kept active through payment of a maintenance fee due on 31 August of each year.  

In addition, Midway owns the surface rights on 544.2 acres of fee ground in Section 3, T28N, R34E MDBM.  Newmont Mining Company (Newmont) holds the mineral rights to this ground at a depth of 200 feet.  This ground is part of the Santa Fe checkerboard land package Newmont acquired in 1997.

On August 15, 2003 Midway entered into an option agreement with Mr. Paul G. Schmidt to acquire an option to earn a 100% interest in 44 unpatented mining claims located in Pershing County, Nevada (the “Spring Valley Claims”).  To earn a 100% interest Midway is required to maintain the mineral claims in good standing and incur minimum annual exploration expenditures of US$450,000 up to August 15, 2006 which it has done.  In addition Midway has paid Mr. Schmidt US$475,000 and is required to make one final option payment on August 15, 2007 of US$3,000,000.  Mr. Schmidt has retained a royalty on NSR from commercial production over 500,000 ounces on these claims. The royalty is on a sliding scale increasing from 2% to 7% based on changes in gold prices. In addition, Mr. Schmidt is entitled to a 1% overriding royalty on NSR from commercial production on all lands owned by Midway located outside, but within a one half (1/2) mile perimeter of the Spring Valley Claims.

 On September 1, 2003 Midway entered into an option agreement with Echo Bay Exploration Inc.  to acquire 28 unpatented mining claims called the SV claims contiguous to the Spring Valley Claims.  We have been required to make annual option payments totaling US$200,000 to September 1, 2006 and are required to make annual payments of US$100,000 by each September 1 of 2007, 2008 and 2009.  Echo Bay retained a 2% royalty on NSR from commercial production on these claims.

On January 25, 2006 Midway entered into a purchase and sale agreement to acquire 101 federal mining claims from Coeur Rochester, Inc. adjoining the Spring Valley property for the price of 40,000 common shares of Midway at a value of $2.20 per share.  Coeur retained a 3% royalty on NSR from commercial production on these claims.

On April 25, 2006 Midway entered into a mineral lease agreement and option to purchase 12 unpatented lode mining claims with Lamonte J. Duffy.  Midway has paid Mr. Duffy US$36,000 to April 25, 2007 and must continue to pay Mr. Duffy US$36,000 on April 25 of each year to maintain the option.  Alternatively Midway can purchase these claims for US$600,000 with any payments already paid credited against the total.

On May 5, 2006 Midway completed a purchase of land and mineral rights with Seymork Investments Ltd. to acquire 920 gross acres, 320 acres net surface, 770 acres net mineral for US$200,000.  Seymork retained a 3% royalty on NSR from commercial production on these claims.  

On July 18, 2006 Midway entered into a mineral lease agreement and option to purchase 97 unpatented mining claims from Dave Rowe and Randall Stoebert for US$10,000 down and US$15,000 on or before July 18, 2007 and US$20,000 on or before July 18 of each year thereafter. Alternatively Midway can purchase these claims for US$600,000 with any payments already paid credited against the total. Mr. Rowe and Mr. Stoebert retained a 3% royalty on NSR from commercial production on these claims.

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On September 1, 2006 we purchased from the Sentman Family Trust, Barry Sentman and Kerry S. Pilot co-trustees a 40 acre parcel located near the Spring Valley diatreme for US$30,000.

On October 25, 2006 Midway entered into a mineral lease agreement and option with Lamonte J. Duffy to purchase 6 unpatented lode mining claims for US$6,000 down, US$12,000 on or before October 26, 2007, US$20,000 on or before October 26, 2008 and US$25,000 on or before October 25 of each year thereafter. Alternatively Midway can purchase these claims for US$100,000 with any payments already paid credited against the total.  Mr. Duffy retained a 3% royalty on NSR from commercial production on these claims.  

On October 30, 2006 Midway entered into a mineral lease agreement and option to purchase 2 unpatented lode mining claims from Dale and Diana Chabino for US$2,000 down, US$4,000 on or before October 30, 2007, US$5,000 on or before October 30, 2008 and US$6,000 on or before October 30 of each year thereafter. Alternatively Midway can purchase these claims for US$100,000 with any payments already paid credited against the total. Mr. Chabino and Mrs. Chabino retained a 3% royalty on NSR from commercial production on these claims.  

On June 1, 2007 Midway entered into a mineral lease agreement and option to purchase 2 unpatented lode mining claims from George D. Duffy for US$1,000 per month, US$25,000 on or before June 1, 2009, US $150,000 on or before June 1, 2012, US $150,000 on or before June 1, 2014 and US$55,000 on or before June 1, 2017.  Alternatively Midway can purchase these claims for US$500,000 with any payments already paid credited against the total.

History of exploration by previous operators

Gold, silver, lead, mercury, copper, antimony, and sericite-pyrophyllite have been produced from the Spring Valley Mining District since its discovery in 1868.  Placer gold was discovered in 1875 and worked extensively during the period 1880-1890.  The placers are said to be the most productive in Nevada: placer production from Spring Valley and American Canyons estimated at $10 million.  The gravel deposits were up to 100 feet in depth or more and the gold recovered from them was generally coarse, though fine-grained gold was present and likely more abundant.

The Wabash lead-silver mine, located on the eastern margin of the Spring Valley property, was worked during the period 1935 to 1938.  Production recorded for 1938 was 170 tons of ore containing 1 ounce gold, 6,774 ounces silver, 651 pounds copper, and 9,514 pounds lead.  Mineralization at the Wabash mine consists of argentiferous galena and sphalerite in the matrix of intensely brecciated rocks in a fault zone.  

Current resource estimates for the Spring Valley gold placers and the Wabash mine are not available and these areas are not incorporated into the current Spring Valley resource model.  The Rochester mine, located three miles south of the Spring Valley property, is the largest current mining operation in the area.  Over its 17 year mine life, Rochester has produced over 107 million ounces of silver and in excess of one million ounces of gold.

Modern exploration of Spring Valley began with Kennecott.  Kennecott drilled four reverse circulation holes, totaling 2,220 feet, spread widely throughout the basin in an effort to discover the source of the placer gold in Spring Valley Canyon.  Hole KSV-2 intersected 40 feet grading 0.023 ounces gold per ton at the southeast edge of what is now known as the Pond Zone.  

Echo Bay picked up the property in 2000 and drilled the Pond Zone discovery hole in 2001, ESV-2, intersecting 145 feet grading 0.075 ounces gold per ton.  Subsequent drilling by Echo Bay focused on step-out drilling from ESV-2, coring the mineralized zone intersected by RC hole ESV-2, and drilling of exploration targets to the northwest.  During the 2001-2002 drill campaign, Echo Bay completed 19 RC holes totaling 10,940 feet and 2 diamond drill (DD) holes totaling 1,653 feet.

Midway acquired the property in 2003 after Kinross dropped the project following the acquisition of Echo Bay.  MDA (2003) produced a report for Midway in August 2003 that reviewed the status of the project up to and including the Echo Bay drilling.

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Global Geologic Services Inc. operated the project for Midway in 2003 and focused on expanding the area of mineralization in the Pond Zone.  During the 2003 drill campaign, Midway completed 26 RC holes totaling 21,530 feet and 2 DD holes totaling 1,769 feet.

Mine Development Associates produced a follow-up report for Midway in September 2004 following Midway’s 2003 drill campaign.  Pitard reviewed Midway’s sampling practices and as a result, Midway incorporated many of Pitard’s recommendations in their protocol.

Exploration completed by Midway

Midway staff geologists took over the execution of the exploration program from GGS in late 2004 and discovered the Porphyry and Sill zones in 2005.  During the 2004-2005 drill campaign, Midway drilled 90 RC holes totaling 44,965 feet and 21 DD holes totaling 10,008.7 feet.  Midway focused on definition of the Sill and Porphyry zones and drilling of exploration targets in the east and west margins of the Property, including the West Diatreme and Ring Zone targets.  All core holes from this campaign were drilled in the resource area (Pond, Sill and Porphyry zones) as were 65 of the 90 RC holes.

In December 2005, samples from two RC and two PQ diameter DD holes were delivered to McClelland Laboratories in Reno, Nevada for preliminary metallurgical testwork.  The results of this work were not available for inclusion in the Technical Report.  This work is currently ongoing.

In January 2006, Midway commissioned AMEC to review exploration work completed on the Property and to develop a mineral resource estimate conforming to NI43-101. This work is the subject of the Spring Valley Technical Report.  No previous published resource estimates have been generated for the Spring Valley project and no production has occurred.

As of January 2006, 93,165.7 feet of drilling in 164 holes had been completed on the Spring Valley project.  On June 9, 2006 we filed AMEC’S report that is compliant with Canada’s NI43-101 entitled “Technical Report Spring Valley Property, Pershing County, Nevada” on Midway’s company profile on SEDAR at www.sedar.com.

In 2006 we completed 66,616 feet of drilling in 90 holes with 88 of the holes drilled outside the defined resource expanding it to the north (North Hill and Porphyry deposits) and the West (West Diatreme and Valley Breccia deposits). The 2006 exploration program was designed to step out from the current resource around the edge of the diatreme to expand the known resource as well as testing for a much larger porphyry gold target at deeper levels.   At the time of the AMEC’s resource estimation the deposit covered a mineralized zone of 0.6 miles long by 0.3 miles wide that was continuous to a depth of 984 feet. Exploration in 2006 has expanded the gold zones to an area of almost 1 mile long by 0.6 miles wide that is continuous mineralized to a depth of 1,400 feet.  The mineral resources have not yet been re-estimated to include the results of the 2006 drilling.  Additional project work included a 3000 soil sample grid survey, detai led stream sediment sampling, gravity and SP geophysical surveys, mapping and rock chip sampling of 17 square miles of claim holdings all directed towards expanding the potential size of this growing resource.

Exploration to date has identified distinct gold zones at Spring Valley:  the North Hill, West Diatreme, Porphyry, Pond, Sill, Valley Breccia and Limerick Hagen zones.  Surface exploration programs in 2006 have identified more than 12 new targets for follow up work in 2007.

In 2006 all except two deep core test holes were drilled outside the reported resource.  Most of the drilling focused around Spring Valley diatreme.  Of the 88 holes drilled outside the current resource, 57 encountered new gold.  The two new gold discovery zones are in the West Diatreme and North Hill area. In the West Diatreme area, 8 of 9 exploration holes in a 400 foot by 400 foot grid, encountered gold approximately 1,500 to 2,500 feet west of the current resource.  In the North Hill area, 14 of 18 exploration holes drilled on a 200 by 400 foot grid encountered gold north and northeast of the known resource.

We drilled 20 holes in the Limerick Basin, located 1.8 miles west of Spring Valley.  Narrow but high-grade gold was intercepted in several of the Limerick Basin holes with the highest intercept of 5 feet averaging 1.98 ounces per ton gold. Metallic screen check assays on this same hole identified 5 feet of 0.048 ounces per ton and 15

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feet of 0.017 ounces per ton gold. The difference was likely due to coarse nugget gold which is difficult to reproduce in assay results. Results from the Limerick Basin tests are especially encouraging since this represents a geologically similar zone to the high-grade Sill zone in which gold is present as quartz-tourmaline stock work veins hosted in rhyolite porphyry sill. The Limerick Hagen zone starts at the surface, varies from 40 to 150 feet thickness, and dips to the southwest. The zone was identified by soil and rock chip anomalies. The zone is open in all directions. A permit for an additional 30 holes has been submitted to the Bureau of Land Management for additional exploration in the second and third quarters of 2007.

The West Diatreme zone continues to expand. Gold occurs along the edges of porphyry dikes and sills, within high-angle faults, and along volcanic contacts along the west edge of the Spring Valley diatreme. The intrusive rocks occur along a splay of the Black Ridge Fault that controls a portion of the Rochester silver-gold deposit, three kilometers to the south. Native gold is associated with stock works and quartz veins. The current West Diatreme zone is 700 feet wide by 1,000 feet long. Of the 17 holes drilled in the area 14 of them encountered gold, defining the zone, which is open to the northwest, southwest and at depth.

Drilling on the North Hill and Porphyry area continues to identify new high-grade gold intercepts that are open to the north and northwest. Additional drilling will be necessary to delineate the orientation and extent of these zones. Gold is hosted in rhyolite porphyries.

Update on the Spring Valley Project

At July 31, 2007 Midway has five drill rigs active on the Spring Valley project in attempts to expand the Spring Valley diatreme mineral resource and explore twelve other gold targets identified on the 17 square mile land package.

Geochemistry

Midway performed limited rock and soil sampling, predominantly in the hills on the margins the property area.  Midway reports that samples have returned anomalous to ore grade gold values.  No new surface geochemistry has been compiled on the property since that time.

Geophysics

In 2003, Midway contracted Zonge Geosciences of Reno, Nevada to conduct a 14 line CSAMT survey over the property.  Several anomalous features were interpreted to represent silicified bodies at depth.

In 2004 and 2005, ground magnetic surveys were conducted by Geophysical and Geodetic Services of Reno, Nevada and interpreted by J L Wright Geophysics.  The resource area at Spring Valley is interpreted to lie within a weak magnetic low feature at the edge of a large, high-relief magnetic feature interpreted to be a mafic volcanic unit.  The magnetic low is interpreted to be the result of magnetite destruction related to hydrothermal alteration.  Two areas, one to the northeast and one to the west, show the same weak magnetic low feature and are also interpreted to be areas of hydrothermal alteration.

Regional geology

The structural setting of the Spring Valley area is typical of the western Basin and Range province.  The Property is located in the Humboldt Range, which represents a north-south oriented, upthrown fault block (horst) bounded on the west by the Humboldt River valley and on the east by the Buena Vista Valley.

The regional geology of the central Humboldt Range consists of a thick sequence of Permo Triassic intermediate to felsic volcanic rocks, locally intruded by Cretaceous intermediate igneous rocks, and in fault contact with Triassic carbonate rocks on the flanks of the range. Quaternary alluvial deposits fill the intermontane basins and alluvial valleys.  

The oldest rocks exposed in the central Humboldt Range are Permo-Triassic volcanic and metavolcanic rocks of the Koipato Group. These include, from oldest to youngest, the Limerick Greenstone, the Rochester

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Rhyolite, the Weaver Rhyolite, and their intrusive equivalents.  This group of rocks is in fault contact with the Triassic Natchez Pass and Prida Limestones on the eastern flank of the range.  Cretaceous granodiorite locally intrudes the Permo-Triassic units.  Quaternary alluvial and colluvial deposits unconformably overlie all of the older units.  North-south, north-northwest, and north-northeast normal faults are the dominant structural features in the region.

Mineralization in the central Humboldt Range occurs as base and precious metal vein and vein-stockwork related to Cretaceous intrusive activity and Tertiary sediment-hosted gold deposits.  Examples of Cretaceous intrusive related mineralization include Spring Valley, Rochester, Nevada Packard, the Unionville district and the Dun Glen district.  Examples of Tertiary sediment-hosted gold mineralization in the region include Florida Canyon, Relief Canyon, Standard, and Willard.

Local geology

Gold mineralization is developed along a northeast trending volcanic vent that developed within a much larger diatreme.  Successive layers of volcanic and volcanoclastic rocks fill the vent and are underlain by breccia/conglomerate rocks that are interpreted to represent a diatreme.  Feldspar porphyry intrusive rocks intrude the volcanic rock.  The Spring Valley resource area (Pond, Sill and Porphyry zones) is completely covered by between 50 and 375 feet of Quaternary alluvium, consisting mainly of valley fill gravels and mud flow deposits.  These rocks unconformably overlie all other units at Spring Valley and are interpreted to have been deposited after the mineralizing event(s).  Andesitic volcanic and volcanoclastic rocks (also referred to as greenstone) of the Limerick Formation crop out on the western boundary of the Property and are stratigraphically overlain by rhyolitic volcanic rocks of the Rochester Formation, which cr op out in the central and eastern parts of the Property.  The Spring Valley fault has down-dropped Rochester Formation against Limerick Formation in the western margin of the Property.  Limestone and dolostone of the Natchez Pass Formation crop out on the eastern margin of the Property, in fault contact with Rochester Formation rocks.  Monzonite and diorite intrusive bodies crop out in the eastern part of the property.  Brecciated rocks (mapped as breccia pipes) crop out at the Wabash Mine and in isolated locations in the southeast part of the Property.

Modeling of the deposit in cross-section by Midway after the 2004-2005 drill campaign increased the understanding of the subsurface geology and mineralization within the resource area.  

Structure in the resource area is inferred from geophysics, mapping in the hills surrounding the basin, and logging of the available drill core and cuttings.

The Spring Valley fault juxtaposes Limerick Formation against Rochester Formation.  The trajectory of the Spring Valley fault is mapped from drill holes and indirectly through geophysical data.  Most of its course is beneath alluvial gravels.  Controlled Source Audio-Magnetotelluric (CSAMT) data indicate that the Spring Valley fault has a northeast strike beneath the gravel and is offset by multiple northwest structures not identified in outcrop.  Exposures on the margins of the basin reveal a complex fault zone.  On the south, a northeast-striking branch of the fault is displaced northward by three north-south striking faults, one marked by a 50 foot wide zone of silicified breccia cutting rhyolite.  On the north, the Spring Valley fault strikes north-south with subparallel faults to the east and several northeast-striking cross faults.  

Deposit types

Gold is hosted in a near surface volcanic diatreme phyolite porphyry flowdome model.

Gold in the Pond Zone is hosted in rhyolite, volcanogenic sediments, welded tuff, rhyolite porphyry and breccia conglomerate – essentially the entire stratigraphic package.  Gold in the Sill and Porphry zones is hosted in rhyolite porphyry and surrounding sericite-altered greenstone.  Mineralization is most often associated with quartz veining, quartz-tourmaline veining and quartz-sericite-pyrite alteration.  The breccia conglomerate unit hosts gold quartz veins and this is overprinted by the gold event.  Quartz-tourmaline veins are suggestive of a possible connection to a porphyry system.

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Mineralization is broadly similar to the Rochester deposit to the south.  There, mineralization is believed to be Cretaceous in age and related to granitic intrusions at depth.  The deposit carries 1.6 oz/t silver and 0.012 oz/t gold along with significant enrichments in lead and zinc.  The host Rochester and Weaver rhyolites are extensively altered to quartz-sericite and intensely fractured.  Mineralization occurs as through-going thin quartz-sulfide veins and as quartz stockworks.  Grade trends north to north-northeast and roughly parallels the major, district-scale Black Ridge fault.  Spring Valley is roughly situated along the Black Ridge fault at the intersection of the Spring Valley placer gold train.

However mineralization at Spring Valley is different from Rochester in several important ways.  Mineralization at Spring Valley is hosted lower in the stratigraphic sequence and contains very little silver or base metal mineralization.  The silver-gold ratio of Spring Valley mineralization is very low, in contrast to the Rochester mineralization.  No significant variation in silver or base metal content has been reported between the Pond, Sill, and Porphyry zones.

Mineralization

Alteration

Three types of alteration have been observed at Spring Valley.  Tourmaline alteration occurs as disseminated needles, as fine grained alteration along veinlets, and as massive to selective replacements.  Fine grained tourmaline replacement has not been confirmed by petrographic studies. Tourmaline is erratically distributed in all rock types.

Quartz-sericite alteration with locally abundant pyrite occurs with quartz veins along northeast trending fault zones.  Quartz-sericite alteration forms wide selvages around quartz and quartz-tourmaline-pyrite veins. In some areas of strong alteration, only minor veinlets were observed.  Mineralized zones in rhyolite, welded tuff, breccia conglomerate, and feldspar porphyry are always associated with quartz-sericite alteration.  Welded tuff is strongly bleached by quartz-sericite alteration, suggesting that the tourmaline is earlier and is destroyed by the later alteration.  Rhyolite porphyry sills cutting the Limerick Formation commonly have varying degrees of quartz-sericite alteration.

Carbonate alteration in the form of ankerite and calcite replacement or late calcite development is common in the breccia conglomerate and portions of the Limerick Fm.  At this time, there is no direct correlation of carbonate alteration with gold mineralization.

Mineralization

The highest gold grades at Spring Valley occur within stockwork quartz-tourmaline vein zones with strong sericite alteration, with or without disseminated limonite after pyrite.  Coarse gold has been identified on the property.  Spring Valley mineralization contains little silver, lead, zinc, copper or other trace metals.

Mineral Resources & Reserves

The following technical disclosure is based upon a technical report entitled “Technical Report Spring Valley Property, Pershing County, Nevada” which we refer to as the “Spring Valley Technical Report” effective June 9, 2006 by Todd Wakefield, M.S.c., MAusIMM and Gordon Seibel, MAusIMM of AMEC E&C Services, Mining & Metals, “qualified person(s)” for the purposes of NI 43-101.  

Mineral Resource Classification

Spring Valley Resources were classified into Measured Indicated and Inferred resource categories using logic consistent with the CIM definitions referred to in NI 43-101. In the Spring Valley deposit, a multiple criteria approach was used for resource classification as follows:

·

Resources must lie within the economic envelopes defined by the probability indicators.

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·

In order to be estimated, all resource blocks must use a minimum of four composites from at least two different drill holes.

·

Distances to the composites used in the estimation must be less than the distances defined in the search range parameter file. Measured and Indicated resources must lie within a search ellipsoid with major, intermediate and minor axes of 140 x 140 x 100 feet and 160 x 80 x 50 feet for Domains 1 and 2 respectively. The search ranges were derived from a combination of variography, distances to nearest drill holes and visual inspections to estimate the maximum distance where the mineralization appears to be continuous. Search ranges were expanded two-fold for Inferred.

·

A probability threshold greater than 0.7 was used to delineate Measured from Indicated resources. The higher probability statistically predicts a higher confidence in continuity and was selected visually. Measured resources are generally located towards the middle of the Indicated resources.

·

All resources must lie within a Lerchs-Grossmann pit to show a reasonable expectation of being economic. The Lerchs-Grossmann optimization was performed on all resources, a $450 gold price, 45° highwall angles and economics characteristic of open pit mines.

Mineralization for Spring Valley Deposit at 0.001 oz/t Cutoff Grade

Classification	Tons (Short) X 1000	Au Grade oz/ton	Au Troy Ounces
Measured	2,083	0.032	67,500
Indicated	7,946	0.022	171,643
Measured plus Indicated	10,030	0.024	239,143
Inferred	7,753	0.025	195,375

Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101, commonly referred to as NI 43-101. The definitions given in NI 43-101 are adopted from those given by the Canadian Institute of Mining Metallurgy and Petroleum.

Cautionary Note to US Investors concerning estimates of Measured and Indicated Mineral Resources:  The table set forth above uses the terms “Measured” mineral resources and “Indicated” mineral resources.  We advise US investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them.  “Inferred” mineral resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.  In accordance with Canadian rules, estimates of inferred mineral resources cannot form the basis of feasibility or other economic studies.  U.S. investors are cautioned not to assume that any part or all of the inferred mineral resource exists or is economically or legally mineable.

Mining Operations

There are no mining operations currently being conducted at the Spring Valley project.

PAN-NEVADA PROPERTIES

Pan Gold Project

Location and means of access

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The Pan Gold property is located at the northern end of the Pancake mountain range in western White Pine County, Nevada, approximately 22 miles southeast of Eureka, Nevada, and 50 miles west of Ely, Nevada.  

Access to the Pan Gold  property is via a seven mile dirt road that heads south-southeast from US Highway 50, at a point about 17 miles southeast of Eureka, Nevada. Eureka has a population of about 2,000.

The Pan Gold property is situated within the high desert of the Basin and Range physiographic province. Elevations in the immediate project area range from about 6,450 ft to a high of 7,400 ft above sea level. Climatologic records are not available for immediate Pan Gold area, but the town of Eureka averages about 12 inches of precipitation per year, with average temperatures ranging from 28° F in the winter months to 70° F in the summer months. Daytime temperatures exceeding 90° F during July and August are not uncommon. Sagebrush is the dominant vegetation at the site, with juniper and pinon pine occurring at some of the higher elevations.

There is no electrical power at the site; the nearest power line is adjacent to US Highway 50 approximately five miles to the north. Water to support exploration drilling is available from a well used for watering livestock that is in close proximity to the Pan Gold property. It is expected that exploration can generally be conducted year-round.

Title

The Pan Gold property consists of 451 unpatented mining claims located on public lands and administered by the US Department of the Interior, Bureau of Land Management.  Of these, 98 claims are under lease to Pan-Nevada by the Lyle Campbell Trust and 146 claims are currently owned by Pan-Nevada, but are subject to the lease agreement and will be deeded to the Lyle Campbell Trust.  The total area covered by the unpatented mining claims is approximately 4,816 acres (more than 13 square miles).   In May 2007, Midway staked an additional 158 claims of which 102 will be subject to the lease agreement with the Lyle Campbell Trust.

Except for eight claims, all of the Lyle Campbell Trust and Pan-Nevada claims form a contiguous claim block.  The area of interest to which the lease agreement applies includes a one mile radius around the perimeter of the Lyle Campbell Trust Pan-Nevada claim group.

The minimum annual work expenditures required by the lease agreement have been satisfied.  Pan-Nevada is also obligated to pay production royalties to the Lyle Campbell Trust, the amount of which is based on gold prices: 2.5% of gross revenue if gold prices are less than US$340/oz; 3.0% of gross revenue if gold prices are between US$340/oz and US$450/oz; and 4.0% of gross revenue if gold prices are in excess of US$450/oz.  Pan-Nevada is also responsible for annual lease payments to the Lyle Campbell Trust.    

History of exploration by previous operators

The Pan Gold property is situated in the loosely-defined Pancake district of east-central Nevada. The district was first organized in 1870, when silver ore was discovered in the area around the historic town of Pogue’s Station, approximately 10 miles southwest from the Pan Gold property. Historical reports reported that occurrences of lignite near Pancake Summit were explored, with minor production from 1872 to 1877. Also during the 1870’s, sandstone was quarried from at least two localities in the Pancake district for use as furnace lining at Eureka and Ely. The Pan Gold property was undoubtedly prospected during the late 1800’s, but there is no evidence of mining.

Mr. Lyle Campbell first prospected the northern end of the Pancake range in 1978, when he discovered gold mineralization in jasperoid outcroppings in the area presently referred to as North Pan. Mr. Campbell staked 147 unpatented mining claims over the area that includes the present-day North Pan portion of the property. Ownership of the claims was transferred to the Lyle Campbell Trust in 1986. Mr. Campbell passed away in 1998 and the Lyle Campbell Trust continues to manage the Pan Gold property. Since 1978, numerous claims have been added and dropped from the Pan Gold claim block; The Lyle Campbell Trust currently controls 98 unpatented mining claims, and the additional 146 claims staked by Castleworth (predecessor to Pan Nevada) in 2003 and 2004 will be deeded to the Lyle Campbell Trust, in accordance with the lease agreement between Castleworth and the Lyle Campbell Trust.

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Several exploration/mining companies have explored, or participated in exploration joint ventures to explore, the Pan property since 1978 through lease agreements with Campbell or the Lyle Campbell Trust. These companies include Amselco, Hecla, Echo Bay, Alta Gold, Latitude, Degerstrom, and currently, Pan-Nevada.

Amselco

Amselco leased the Pan Gold claims from Campbell in 1978. The Lyle Campbell Trust reports that Amselco drilled 85 primarily shallow reverse circulation (RC) holes and conventional rotary holes between 1978 and 1985, although the current Pan-Nevada database contains records for only 79 drill holes. The majority of Amselco’s drilling was done in the North Pan Gold area, where several zones of gold mineralization were identified. Specifics regarding the termination of the Amselco-Lyle Campbell Trust lease agreement are unknown.

Hecla

Hecla drilled eight RC holes in the central portion of the Pan Gold property in 1986. While there are several references to these eight drill holes in the Lyle Campbell Trust files, data from only seven of the drill holes could be located for inclusion in the Pan-Nevada database. None of the drill holes intersected significant mineralization and Hecla dropped the lease.

Echo Bay

Echo Bay leased the Pan Gold claims from the Lyle Campbell Trust in 1987 and drilled 79 RC holes in 1987 and 29 RC holes in 1988. Echo Bay is credited with discovering gold mineralization at South Pan, about one and one- half miles south of North Pan, during this drill campaign. Echo Bay staked additional claims in the South Pan area as a result of the discovery. Echo Bay completed a preliminary metallurgical evaluation, including size fraction analyses, bottle roll tests, and column leach tests. Echo Bay also drilled five diamond core holes in North Pan in 1987 for metallurgical test work; these holes are not included in the database.

Alta Bay Venture

From mid-1988 to 1991, the Pan Gold property was explored by the Alta Bay Venture, an exploration joint venture between Alta Gold, the operator and Echo Bay. Alta Bay drilled 211 RC holes in the North, Middle, and South Pan areas, staked additional claims, conducted geologic mapping and geochemical sampling, and commissioned an induced polarization-resistivity geophysical survey.

Alta Bay initiated studies in support of developing the Pan Gold property, including an archeological survey of the area, continuing metallurgical test work, and preliminary internal reserve calculations and pit designs. The Lyle Campbell Trust reports that Alta Bay planned to begin mining of the Pan deposit upon completion of mining at Alta Gold’s Easy Junior property. The Alta Bay joint venture dissolved in mid-1991.

Alta Gold

After the dissolution of the Alta Bay joint venture, Alta Gold continued to lease the Pan Gold property from the Lyle Campbell Trust until the end of 1992. During this time, Alta Gold drilled ten RC holes as twins to preexisting RC holes and also drilled seven PQ-size (3.345 inch) core holes in the North and South Pan areas for metallurgical test work. None of these holes are in the Pan-Nevada database. Three of the core holes were abandoned at 50 feet or less due to loss of drill fluid circulation. Alta Gold terminated their lease before completing any metallurgical tests on the core and the Lyle Campbell Trust took ownership of the drill core. Alta Gold also passed the ownership of the claims staked by Echo Bay and Alta Bay to the Lyle Campbell Trust via quit-claim deed.

Latitude

Latitude leased the Pan Gold property from the Lyle Campbell Trust in 1999 and commissioned the construction of a digital database of the Pan Gold drill data and estimate of the mineral resources. Also in 1999, Latitude staked an additional 60 unpatented mining claims adjacent to the existing Pan Gold claim block.

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From 1999 to 2001, Latitude explored the Pan Gold property as part of a joint venture with Degerstrom. Latitude and Degerstrom conducted geologic mapping and soil and outcrop sampling, drilled 49 RC holes and 5 rotary holes, and completed metallurgical test work on a portion of the PQ-core drilled in 1992 by Alta Gold. The majority of drilling done by Latitude and Degerstrom was concentrated on close-spaced delineation and infilling of previously identified mineralized zones, although they also identified new areas of mineralization in the Middle Pan area and west of the known North Pan mineralization (Syncline area). Latitude and Degerstrom ended their joint venture in mid-2001.

For a brief period in the second half of 2001, Latitude joint-ventured the Pan Gold lease with Metallica.  Metallica commissioned a thermal imagery and lineament study of satellite data of the Pan Gold area to help identify areas of hydrothermal alteration and prospective structural zones and intersections. The joint venture ended at the end of 2001, with only limited surface work completed. The Lyle Campbell Trust terminated the Pan Gold lease with Latitude in 2002 citing Latitude’s inability to meet the financial obligations as required by their lease agreement with the Lyle Campbell Trust. The claims staked and filed by Latitude were quit-claim deeded to the Lyle Campbell Trust, who continued to maintain the claims.

A summary of drilling completed at the Pan Gold property for which there is documentation is below.  Pan-Nevada drilling totals are also included for comparison.

Company	Year(s)	Number of Drill Holes	Footage	Drilled Drill Type
Amselco	1978 – 1985	79	20,249	RC / Rotary
Hecla	1986	7	1,415	RC
Echo Bay	1987-1988	108	21,050	RC
		51	825	Core(Met samples)
Alta Bay JV	1988 – 1991	211	66,795	RC / Rotary
Alta Gold	1991 - 1992	101	2,645	RC (Twin Holes)
	958	71		Core (Met Samples)
Latitude/Degerstrom JV	1999 – 2001	54	16,143	RC / Rotary
Pre-Pan-Nevada Subtotal	1978 – 2001	476	130,080
Pan-Nevada	2003-2004	85	27,325	RC
	2004	6	1,289	Core
Pan-Nevada Subtotal	2003 – 2004	91	28,614
Total	1978 – 2004	567	158,694

Regional Geology

The Pan Gold property is situated in the Pancake Mountains of east-central Nevada, in the Basin and Range physiographic province, which is typified by a series of northward-trending elongate mountain ranges separated by alluvial valleys. Rocks exposed in the region are dominated by thick sequences of folded Devonian to Pennsylvanian carbonate and clastic sedimentary rocks, with lesser occurrences of Tertiary volcanic rocks.

Sedimentation in eastern Nevada consisted of a build-up of shelf carbonate rocks prior to the late Devonian / early Mississippian Antler orogeny that resulted in the Antler highland, a north-northeast trending topographic high. Basins developed along the flanks of the Antler highland received accumulations of detritus that was shed from the highland to the west and east.

The Devil’s Gate Limestone is a shelf carbonate unit that was deposited prior to the Antler orogeny; the White Pine Group, which includes the Pilot Shale, Joana Limestone, and Chainman Shale, were deposited in the Antler foreland basin. Deposition of the Ely Limestone marked the end of the Antler orogenic event, when carbonate shelf deposition became dominant again. The regional folding and weak metamorphism of the Paleozoic strata is attributed to the late Triassic Sevier orogeny. Cenozoic volcanism in the region was dominated by calc-alkali tuffs that were deposited unconformably on the folded Paleozoic strata.

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The following descriptions of the regional stratigraphic units, from oldest to youngest, are summarized from historical reports:

Devil’s Gate Limestone (Dd) – Late Devonian

The oldest rocks exposed in the northern Pancake range is the Devil’s Gate Limestone, which is typified by medium to massive beds that locally form bold outcrops in areas of moderate to high relief. The limestone is composed of fine- to coarse-grained limestone that weathers to medium- to light-gray platy fragments. The thickness of the Devil’s Gate Limestone ranges from about 1,000 feet to, locally, 2,500 feet. The limestone contains stromatolitic fossil horizons. The Devil’s Gate Limestone is the primary host to gold mineralization at South Pan.

White pine group – late Devonian to Mississippian

The White Pine Group includes the Pilot Shale, Joana Limestone, Chainman Shale, and Diamond Peak Formation.

Pilot Shale (MDp) – Late Devonian to Mississippian

The Pilot Shale consists of mainly of thin-bedded dolomitic siltstone, with interbeds of silty shale and lesser argillaceous, silty limestone and clayey shale; the unit weathers to platy, olivegray fragments. The thickness of the Pilot Shale ranges from 300 feet to 900 feet. Silicified and argillized Pilot Shale is the dominant host for gold mineralization at North Pan and is also host to other significant precious metal deposits in eastern Nevada; most notably, at some of the Alligator Ridge and Bald Mountain deposits.

Joana Limestone (Mj) – Mississippian

The Pilot Shale grades upward into the Joana Limestone, which is characterized by coarse grained, medium-gray limestone beds with interbeds of calcareous, poorly consolidated sandstone near its lower contact. Echinoderm, bryozoan, foraminifera, algae, and crinoid fossils are common. The Joana Limestone ranges in thickness from 90 feet to 500 feet. Jasperoids formed in Joana Limestone to the northeast of the South Pan resource have returned anomalous gold values from surface rock chip samples.

Chainman Shale (Mc) – Mississippian

The Chainman Shale is generally composed of dark-gray to black shale with interbeds of siltstone and silty shale, ranging in thickness from 1,000 feet to 2,000 feet. The Chainman Shale weathers readily, forms very subdued topography, and often hosts the development of local drainages. The Upper Joana Limestone and the lower Chainman Shale are the hosts for gold mineralization at the Easy Junior deposit, located several miles southeast of the Pan Gold property.

In the Pan Gold project area, the Chainman Shale is strongly oxidized and locally silicified near its contact with the underlying Joana Limestone, although drilling did not reveal anomalous gold in the subsurface at the contact.

Diamond Peak Formation (Md) – Mississippian

The Diamond Peak Formation consists of olive-gray siltstone, silty claystone, sandstone, conglomerate, and minor limestone. Field workers are able to distinguish this unit from the Pilot Shale and Chainman Shale by the occurrence of the conglomeratic horizons. The Diamond Peak Formation ranges from less than 1,000 feet to 3,700 feet, although in the Pancake range the thickness averages about 2,400 feet.

Ely Limestone (Pe) – Pennsylvanian

The Ely Limestone is the youngest Paleozoic unit exposed in the northern Pancake range. It consists of coarsely crystalline, medium-gray limestone with local interbeds of silty limestone that contains chert nodules. Thickness of the Ely Limestone ranges from 1,800 feet to nearly 3,000 feet.

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Tertiary Volcanic Rocks

Tertiary volcanic rocks in the northern Pancake range include rhyodacite and quartz latite air fall tuff and welded tuff of the Pancake Summit Tuff (Oligocene) and Bates Mountain Tuff (Miocene).

Pan Gold Property Geology

The Pan Gold property is situated along a north–trending ridge in the northern Pancake range; all of the

stratigraphy is exposed on, or proximal to, the property.

The Pan Gold project area is grossly divided into two structural zones by the north-trending Pan Nevada fault, which can be continuously recognized from several miles north of the project area through and beyond the southern boundary of the property. The Pan Nevada fault appears to be a primary control for gold mineralization. The fault itself often cannot be seen in the field, but it is easily recognized by the juxtaposition of younger sedimentary rocks to the east against older sedimentary rocks to the west (i.e., down to the east).

Stratigraphy exposed on the footwall (west side) of the Pan Nevada fault is Devil’s Gate Limestone or Pilot Shale; stratigraphy exposed on the hanging wall (east side) ranges from Devil’s Gate Limestone in the far southern portion of the property to Ely Limestone in the northern portion. All gold mineralization identified to date at the Pan Gold property is hosted in either the Devil’s Gate Limestone or Pilot Shale.

In general, stratigraphy dips westward from 10° to 30° on the west side of the Pan Nevada fault. Conversely, east of the Pan Nevada fault, the rocks dip steeply (locally, as much as 70°) to the northeastward, such that the stratigraphic section from the upper Devil’s Gate Limestone to the Ely Limestone is exposed over a distance of about two miles. This apparent rotation is due to the regional-scale folding of the Paleozoic sedimentary rocks. In the southern portion of the Pan Gold property, the Pan Nevada fault intersects and offsets a northwest-trending axial plane of a smaller-scale anticline.

Other structures, synthetic and subparallel to the Pan Nevada fault, occur to the west of the Pan Nevada fault; several of these faults appear to have focused gold mineralization. In addition, the area is also transected by a series of northeast-and east-trending faults that may also have controlled mineralization, with displacements ranging from a few feet to several hundred feet. In the northern portion of the property, these faults form a series of horsts and grabens.

Deposit Type

The type of gold mineralization and accompanying alteration present at the Pan Gold property appears to fall under the general classification of low-sulfidation epithermal-type deposits. The model for the Pan Gold deposit is similar to that for other carbonate or calcareous sediment-hosted epithermal gold deposits in Nevada. Controls on mineralization for this type of deposit include both structure and stratigraphy, where gold mineralization is generally distributed along normal, high-angle faults and laterally from these structures, subparallel to the stratigraphy. Structural intersections often form an important control for localizing mineralizing fluids. Alteration types typical to the deposit type include silicification, decalcification, oxidation, and argillization, all of which are present at the Pan Gold property.

Gold deposits of the same type in White Pine County include Alligator Ridge - Bald Mountain district deposits hosted by the Pilot Shale. Mineralization in the closed Easy Junior mine, located about 7 miles southeast of the Pan Gold  property, is hosted in the lower Chainman Shale / upper Joana Limestone contact.

Mineralization

The Pan Gold property is divided into three different areas, based on geography and mineral occurrence:

North, Middle, and South Pan. The North Pan area includes the Red Hill, Pilot Ridge, and Syncline areas, while Middle Pan includes the large West Middle Pan area that lies well to the west of the Pan Nevada fault. Although

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each area has its own unique structural and lithologic characteristics, the North, Middle, and South Pan areas were mineralized by the same hydrothermal event.

North Pan

The North Pan deposit has a strike length of nearly 4,000 feet, with gold mineralization contained in numerous, semi-continuous and discontinuous zones proximal to the projection of the Pan Nevada fault zone from the south. Gold mineralization occurs in jasperoid and silicified and argillized Pilot Shale where mineralized (+0.01 ounce gold per ton) thicknesses of several hundred feet are not uncommon on Pilot Ridge. Individual mineralized zones range in dimension from tens of feet to one zone that is nearly 2,000 feet long in the north-south direction and 200 feet wide in the east-west direction.

As demonstrated by the 2004 Pan-Nevada core drilling program, the mineralization at Pilot Ridge occurs within a zone of brecciation up to several hundred feet wide that lies immediately west of the Pan Nevada Fault. Within this broad zone of brecciation, gold occurs along northeast- and northwest-trending structural zones, while gold more commonly occurs along bedding planes in the lower Pilot Shale further to the west. Of note is the northwest-trending structural zone identified at Red Hill, west of Pilot Ridge, where numerous drill intercepts of +0.05 ounces gold per ton occur along a subvertical 100 foot wide zone of faulting and brecciation.

Only minor occurrences of gold have been found in the underlying Devil’s Gate Limestone at North Pan and no significant gold has been encountered east of the Pan Nevada fault zone.

Careful logging of the RC chips and core from the 2004 drilling programs has resulted in the recognition of additional details concerning the North Pan mineralization. Heine stated that the principal hosts of the North Pan gold mineralization are: (1) de-calcified and silicified (iron poor) Pilot Shale; (2) tectonic breccia composed of angular, silicified Pilot Shale fragments cemented and partially replaced by strong hematite, iron oxides, and silica; and (3) late-stage crosscutting stockworks containing massive iron oxides with drusy quartz coatings along vein walls.

The Pan-Nevada core drilling demonstrated that breccias, both fragment and matrix supported, are extremely common throughout Pilot Ridge and Red Hill. It was noted that crackle breccias and breccias composed of milled, rounded fragments were observed occasionally in the core, which suggested the possibility of hydrothermal brecciation.

Argillic alteration was noted in Pan-Nevada core holes 04-C1, C2, and C4. The argillic alteration occurs in the Pilot Shale and underlies the various silicic zones described above. Based on the limited core information, it is believed that the contact between the argillic and overlying silicic alteration zones is quite sharp, with the argillic alteration becoming increasingly closer to the surface in a northerly direction at Pilot Ridge.

Middle Pan Property

Middle Pan property is a sparsely drilled area that incorporates roughly 3,000 feet of north-south strike length of the Pan-Nevada fault between the North and South Pan area. Only minor, sporadic intervals of mineralization have been intersected in the Pilot Shale west of the Pan-Nevada fault in the main Middle Pan area. Several areas of gold mineralization have been identified in the West Middle Pan area, although none of them have been drilled sufficiently to determine their full extents. No gold resources have been defined to date at Middle Pan area.

South Pan-Nevada Property

Gold mineralization at South Pan-Nevada occurs within and adjacent to the Pan Nevada fault zone, between the fault zone and the axial plane of a northwest trending anticline, and along the Pilot Shale/Devil’s Gate Limestone contact. At South Pan, the Pan-Nevada fault is characterized by brecciated and silica flooded Devil’s Gate Limestone with distinct gray to black calcite veins; the fault/breccia/silicified zone ranges from a few tens of feet to locally, nearly 400 feet wide. Gold mineralization above 0.01 ounces gold per ton occurs continuously for up to 1,500 feet along strike, and up to 80 feet thick and 500 feet down the dip of the fault zone.

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Gold mineralization also occurs along the steeply west-dipping limb of an anticline, between the hanging wall of the Pan-Nevada fault and the axial plane of the anticline. Both the Pilot Shale and Devil’s Gate Limestone are hosts to the mineralization, but the strongest gold mineralization occurs in a sliver of Pilot Shale caught up between the two structures. Mineralized zones above 0.01 ounce gold per ton up to 200 feet thick (true thickness) and 300 feet long in the up-dip direction are not uncommon. Mineralization abruptly ends where the axis of the anticline intersects the Pan Nevada fault zone, though another pod of gold mineralization occurs along the fault zone several hundred feet north of the intersection.

The contact between the Devil’s Gate Limestone and Pilot Shale on the east-dipping limb of the anticline is also a host to gold mineralization. Here, discreet lenses of +0.01 ounce gold per ton  mineralization occur within 100 feet above or below the contact. The thickness of individual mineralized zones range from a few feet to 40 feet (true thickness) and can extend up to 300 feet down-dip. The overall strike length of mineralization along the contact, composed of numerous individual mineralized zones, is about 1,500 feet.

Mineral Resources & Reserves

The following technical disclosure is based upon a technical report entitled “Pan Gold Project – Updated Technical Report – White Pine County, Nevada USA” which we refer to as the “Pan Technical Report” for the Pan Gold project dated January 15, 2005 which was prepared by Michael M. Gustin, R.P. Geo., of Mine Development Associates, a “qualified person” for the purposes of NI 43-101.  

Mineral Resource Classification

Mineral resources for the Pan Gold project were classified based on the distance of the model blocks to the composite data.  All classified blocks required a minimum of two composites to receive an estimated gold grade and lie within the gold domain boundaries.  Measured resource blocks received an interpolated grade in the first estimation pass and lie within 40 feet of the nearest Pan-Nevada composite.  Indicated resource blocks consist of all other blocks assigned a grade by the first estimation.  Inferred resource blocks are those model blocks inside of the interpreted gold domain boundaries that were estimated by the second estimation pass.  

Measured, Indicated and Inferred mineral resources for the Pan Gold project are shown in the tables below.  Measured resources are restricted to a short radius around Pan-Nevada composites due to the lack of documentation regarding the sampling, sample preparation, analytical procedures, and laboratory QA/QC practices of all previous operators.

The North and South Pan estimations were checked by comparing: (1) estimated block grades and drill hole assays on cross sections; (2) the inverse distance cubed and kriging estimates of North and South Pan, respectively, to nearest neighbor calculations; and (3) the grade distributions of the coded assays, composites, estimated block grades, and nearest neighbor grades.  

Mineralization for Pan Gold Deposit

Measured and Indicated Resources

Au Cutoff (oz/ton)	North Pan			South Pan			Total Measured & Indicated
	Tons	Au Grade (oz/ton)	Au Ounces	Tons	Au Grade (oz/ton)	Au Ounces	Tons	Au Grade (oz/ton)	Au Ounces
0.010	12,212,000	0.018	222,200	6,749,000	0.021	139,200	18,961,000	0.019	361,400
0.015	6,437,000	0.024	154,000	4,529,000	0.025	112,500	10,966,000	0.024	266,500
0.020	3,528,000	0.030	105,700	2,842,000	0.030	84,100	6,370,000	0.030	189,800
0.030	1,165,000	0.043	49,800	1,040,000	0.040	41,800	2,204,000	0.042	91,600
0.040	549,000	0.053	29,000	415,000	0.050	20,700	964,000	0.052	49,700
0.050	295,000	0.060	17,700	153,000	0.061	9,300	448,000	0.060	27,100

Inferred Resources

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Au Cutoff (oz/ton)	North Pan			South Pan			Total Inferred
	Tons	Au Grade (oz/ton)	Au Ounces	Tons	Au Grade (oz/ton)	Au Ounces	Tons	Au Grade (oz/ton)	Au Ounces
0.010	2,817,000	0.017	49,200	5,485,000	0.017	91,400	8,302,000	0.017	140,600
0.015	1,446,000	0.023	32,900	3,172,000	0.020	62,900	4,619,000	0.021	95,900
0.020	789,000	0.028	22,000	1,124,000	0.026	28,800	1,912,000	0.027	50,800
0.030	262,000	0.036	9,600	257,000	0.036	9,200	519,000	0.036	18,700
0.040	79,000	0.045	3,600	44,000	0.045	2,000	123,000	0.045	5,500
0.050	14,000	0.051	700	8,000	0.053	400	22,000	0.052	1,200

Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101, commonly referred to as NI 43-101. The definitions given in NI 43-101 are adopted from those given by the Canadian Institute of Mining Metallurgy and Petroleum.

Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Mineral Resources:  The tables set forth above use the terms “Measured” mineral resources and “Indicated” mineral resources.  We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them.  “Inferred” mineral resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.  In accordance with Canadian rules, estimates of inferred mineral resources cannot form the basis of feasibility or other economic studies.  U.S. investors are cautioned not to assume that any part or all of the inferred mineral resource exists or is economically or legally mineable.

Update on the Pan Gold Project

On September 26, 2006, Pan-Nevada announced the results of 61 reverse circulation holes drilled in the Black Stallion Zones of the Pan Gold project.  A total of 32 of these holes encountered potentially economic intercepts of gold mineralization.

On April 19, 2007 Midway began a Phase I exploration program to include about 120 holes (40,000 feet) of reverse circulation drilling designed to expand mineral resource.  By June 5, 2007 Midway had received and announced results of the first four holes drilled in the Pilot Ridge area.  The fourth hole (07-04) intersected 75 feet grading 0.060 ounce per standard ton gold and 60 feet grading 0.021 ounce per standard ton gold.  A nearby hole, 07-03, intersected 115 feet grading 0.023 ounce per standard ton gold to the west of 07-04, in the same stratigraphic horizon.  This new discovery in the Boulders target, north of Pilot Ridge opens up new growth potential to the north and northwest of the current Pilot Ridge mineral resource. The Boulders target is a large volcanic covered area north of the Pan resource and has no historic exploration drilling.  Midway has staked an additional 158 claims around the project, increasing the land holdings to over 13 square miles.  Multiple new targets are being tested by Midway.

EMPLOYEES AND CONSULTANTS

Midway’s employees and consultants are employed or retained on standard industry terms.  

Midway, Doris Meyer and her wholly owned private British Columbia company, Golden Oak Corporate Services Ltd. entered into a contract on December 1, 2006 whereby Doris Meyer agreed to be Midway’s Chief Financial Officer and Corporate Secretary and Golden Oak provides bookkeeping, accounting, financial reporting, corporate and regulatory compliance services to Midway.  The contract is renewable and may be cancelled on 90 days written notice by either party.

Alan Branham’s employment contract is discussed in “Executive Compensation and Corporate Governance” beginning on page 66 of this prospectus.  

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COMPETITION

The mining industry is intensely competitive. Significant competition exists for the acquisition of properties producing or capable of producing gold or other metals. Midway may be at a competitive disadvantage in acquiring additional mining properties because it must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than Midway. Midway may also encounter increasing competition from other mining companies in its efforts to hire experienced mining professionals. Competition for exploration resources at all levels is currently very intense. Increased competition could adversely affect Midway’s ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.

DESCRIPTION OF PROPERTY

Midway is an exploration stage company engaged in the acquisition, exploration, and development of gold and silver mineral properties in North America. It is our objective to identify mineral prospects of merit, conduct preliminary exploration work, and if results are positive, conduct advanced exploration and development work. Our mineral properties are all located in Nevada. The Midway and Spring Valley gold properties are advanced stage projects and have developing gold resources and the Thunder Mountain project is an earlier stage gold and silver exploration project.  On April 13, 2007, we completed the acquisition of Pan-Nevada Gold Corporation thereby acquiring their advanced stage Pan gold project and the Monte, Afghan and Jessup earlier stage gold exploration projects.   

For more information regarding Midway’s properties see “Description of the Business – Properties” on page 26 of this prospectus.  

LEGAL PROCEEDINGS

Neither we nor any of our property is currently subject to any material legal proceedings or other regulatory proceedings.

In May 2006 Midway purchased additional property from Seymork Investments Ltd. for US$200,000 to expand the Spring Valley project in Nevada (the “Disputed Area”). The Disputed Area represents about 4% of the surface area of the Spring Valley project.  In 1997, as a part of a loan arrangement, Emma Wagner transferred title of the Disputed Area to Seymork.  Seymork alleges it was a sale, Wagner alleges it was collateral for a loan.  In 1998, the parties entered into another loan arrangement whereby this time Wagner lent Seymork funds, using title to the Disputed Area as security for the loan.  Subsequently, Wagner assigned the rights to the loan to a group represented by Wallace D. Stephens (collectively “Stephens”).   The loan was not repaid and, in March 2006, Stephens sought to foreclose its interest against Seymork. In June 2006, Wagner brought a cro ss claim in the lawsuit against Seymork alleging that Wagner was the rightful owner of the Disputed Area.  Midway joined the lawsuit in order to protect our interests in the Disputed Area.  If the court determines that Wagner was the rightful owner of the property then Midway will lose title to the Disputed Area it purchased from Seymork and will write off the purchase price.

We believe that we have a credible basis for maintaining our title to the Disputed Area, and we have requested access to the documents supporting Wagner's position.  The outcome of this matter is not determinable.

MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Our common stock is quoted on the TSX.V under the symbol “MDW”. The following table sets out the market price range of Midway’s common stock on the TSX.V for the periods indicated.

Period	High $	Low $
2007

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Second Quarter	3.480	2.570
First Quarter	3.450	2.650
2006
First Quarter	2.600	1.580
Second Quarter	3.170	1.770
Third Quarter	3.740	2.210
Fourth Quarter	3.590	2.400
2005
First Quarter	1.490	0.800
Second Quarter	1.550	0.740
Third Quarter	1.930	1.080
Fourth Quarter	1.800	1.190

The above quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.

As of July 24, 2007, the closing bid quotation for our common stock was $2.89 per share as quoted by the TSX.V.

As of July 24, 2007, we had 46,221,381 shares of common stock issued and outstanding, held by 297 registered shareholders.

DIVIDEND POLICY

The declaration of dividends on our common shares is within the discretion of our board of directors and will depend upon the assessment of, among other factors, results of operations, capital requirements and the operating and financial condition of Midway. The Board has never declared a dividend on the common shares. At the present time, we anticipate that all available funds will be invested to finance the growth of our business.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information related to our equity compensation plans as of July 24, 2007.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options, warrants and rights Cdn$ (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity Compensation
Plans approved by
Security Holders	2,911,000	$1.84	1,711,138
Equity Compensation
Plans not approved by
Security Holders	Nil	$Nil	Nil
Total	2,911,000	$1.84	1,711,138

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SELECTED FINANCIAL DATA

The selected financial data of Midway for the years ended December 31, 2006, 2005 and 2004, the three months ended March 31, 2007 and 2006 and Pan-Nevada for the fiscal years ended April 30, 2006 and 2005, and the nine-month period ended January 31, 2007, reflected in the following table, have been derived from the audited consolidated financial statements of Midway and Pan-Nevada and the interim unaudited financial statements for Midway and Pan-Nevada, which are included elsewhere in this prospectus.  The consolidated financial statements of Midway have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP), the application of which, in the case of Midway, conforms in all material respects for the periods presented with Canadian GAAP.

The selected financial data should be read in conjunction with the consolidated financial statements and other financial information included elsewhere in this prospectus.

Midway has not declared any dividends on its common shares since incorporation and does not anticipate that it will do so in the foreseeable future.  The present policy of Midway is to retain future earnings for use in its operations and the expansion of its business.

Selected Financial Data

(Canadian $ in 000s, except per share data)

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	Midway Gold Corp.					Pan-Nevada Gold Corporation
	Three Months Ended March 31		Year Ended December 31			Year Ended April 30		Nine Months Ended January 31
	2007	2006	2006	2005	2004	2006	2005	2007	2006
Statement Of Operations And Deficit
Operating Revenues	nil	nil	nil	nil	nil	nil	nil	nil	nil
Interest Income	77	18	197	42	9	6	3	19	1
Net Loss for the Period
Canadian GAAP	1,385	1,424	7,241	4,403	2,995	464	1,024	505	352
U.S. GAAP	1,385	1,424	7,241	4,403	2,995	1,385	1,268	2,145	1,017
Basic & Diluted Loss per common share
Canadian GAAP	0.04	0.05	0.23	0.18	0.16	0.02	0.07	0.02	0.02
U.S. GAAP	0.04	0.05	0.23	0.18	0.16	0.07	0.08	0.09	0.05
Dividends Declared	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Balance Sheet
Total Assets, U.S.GAAP	15,654	9,308	16,695	8,143	5,950	3,192	1,573	5,265	3,242
Working Capital (deficit), U.S. GAAP	6,951	2,090	8,127	1,094	357	551	(110)	766	987
Mineral Properties
Canadian GAAP	7,679	6,689	7,679	6,601	6,031	2,502	1,523	4,370	2,187
U.S. GAAP	7,679	6,689	7,679	6,601	6,031	170	111	397	111
Net Assets
Canadian GAAP	15,226	8,517	16,088	7,164	5,593	3,105	1,458	5,188	3,217
U.S. GAAP	15,226	8,517	16,088	7,164	5,593	773	47	1,215	1,140
Shareholders’ Equity
Canadian GAAP	15,226	8,517	16,088	7,164	5,593	3,105	1,458	5,188	3,217
U.S. GAAP	15,226	8,517	16,088	7,164	5,593	773	47	1,215	1,140
Weighted Average Number of Shares Outstanding 000’s	36,999	28,051	32,000	24,064	19,037	19,320	15,579	24,678	18,805

In this prospectus, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars.  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

MIDWAY SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following selected unaudited pro forma consolidated financial information for Midway is based on the assumptions described in the respective notes to the Midway unaudited pro forma consolidated financial statements as at December 31, 2006, attached to this prospectus.  These pro forma consolidated financial statements have been prepared based on the assumption, among other things, that the acquisition of Pan-Nevada had occurred on December 31, 2006.  The unaudited pro forma consolidated financial statements are not necessarily indicative of Midway’s consolidated financial position and results from operations if the events reflected therein had been in effect on December 31, 2006, nor do they purport to project Midway’s consolidated financial position or results from operations for any future periods.

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The pro forma consolidated financial statements are based on certain assumptions and adjustments, including the non-recurring expenditures related to the Arrangement.  The selected unaudited pro forma consolidated financial information given below should be read in conjunction with the description of the Arrangement contained in this prospectus, the unaudited pro forma consolidated financial statements contained in this prospectus and the audited and unaudited financial statements of Pan-Nevada and Midway incorporated by reference into this prospectus.

MANAGEMENT’S DISCUSSION AND ANALYSIS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under “Risk Factors and Uncertainties” and elsewhere in this prospectus.

This discussion and analysis should be read in conjunction with the accompanying Consolidated Financial Statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Midway to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis Midway reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that Midway believes to be reason able under the circumstances. Actual results are likely to differ from

55

those estimates under different assumptions or conditions, but Midway does not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies Midway believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are outlined below in “Critical Accounting Policies,” and have not changed significantly.

In addition, statements contained in this prospectus that are not historical facts are forward-looking statements (within the meaning of the Canadian securities legislation and the U.S. Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties.  Forward-looking statements include, but are not limited to, statements with respect to the future price of metals; the estimation of mineral reserves and resources, the realization of mineral reserve estimates; the timing and amount of estimated future production, costs of production, and capital expenditures; costs and timing of the development of new deposits; success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and the timing an d possible outcome of pending litigation.  In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”.  Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Pan-Nevada or Midway, post-Arrangement, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.  Such ris ks and other factors include, among others, risks related to the integration of acquisitions; risks related to operations; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of metals; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the sections entitled “Risk Factors and Uncertainties” in this prospectus.  Although Midway has attempted to identify important factors that could affect Midway and may cause actual actions, events or results to differ materially from those described in forward- looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, readers should not place undue reliance on forward-looking statements.  The forward-looking statements in this prospectus speak only as of the date hereof.  Midway does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.

OVERVIEW

Midway is focused on the creation of value for shareholders by exploring and developing high-grade, quality precious metal resources in stable mining areas.  In the year ended December 31, 2006 and the first quarter ended March 31, 2007 our exploration programs were conducted on our 100% owned Midway and Spring Valley gold and silver mineral properties located in Nevada, USA. On December 12, 2006 we signed a letter of intent agreement to acquire all of the shares of Pan-Nevada Gold Corporation (Pan-Nevada) for shares of Midway.  On April 13, 2007 we completed the acquisition of Pan-Nevada and acquired their gold and silver mineral properties located in Nevada. Our projects now are actively exploring and developing gold resources on three of the major gold trends in Nevada. The acquisition of Pan-Nevada doubled our gold mineralization inventory with the addition of the gold resources on the Pan project.

Midway accomplished the following in 2006:

·

We drilled 88 of 90 holes (66,616 feet) outside the current defined resource at Spring Valley and increased the size of the deposit area from 0.6 miles by 0.3 miles to a depth of 984 feet to 0.6 miles by 0.6 miles to a depth of 1,400 feet.

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·

We discovered placer gold in over 100 of the Spring Valley drill holes.  The overburden gravels in several Spring Valley bedrock gold deposits contain significant placer gold.  The early processing of these gravels to recover the coarse gold should decrease the mining costs.

·

A new gold zone was discovered by drilling a soil gold anomaly in the Limerick Basin area, 1.9 miles west of the main Spring Valley resource. Narrow but high-grade gold was noted 20 to 45 feet beneath the surface in a rhyolite sill.  

·

We drilled 56 holes (26,450 feet) at the Midway project expanding the mineralized zone 900 feet to the east-southeast and delineated the new Dauntless discovery.

·

We negotiated the acquisition of Pan-Nevada completed  in April 2007 doubling our  current mineral resource inventory with exploration projects in Nevada’s Cortez, Round Mountain, and Humboldt gold trends

·

Barrick Gold Corp. (“Barrick”) purchased 1 million units of a private placement bringing Barrick’s equity ownership to 3,000,000 shares.

Highlights for the first quarter of 2007 and to May 31, 2007:

·

90,000 foot drill program underway at Spring Valley using four drill rigs.  We  have completed 9,800 feet at the West Diatreme and Valley Breccia zones

·

40,000 foot drill program underway at the Pan deposit designed to expand the 2005 near surface oxide resource and test for new higher grade targets on the project.

·

At the Midway project an underground exploration decline into the Discovery and Dauntless zones is being designed and permitted.  Hydrologic, metallurgical and waste rock testing is being conducted.

·

$4,657,500 proceeds from the exercise of 1,725,000 common share purchase warrants received in May, 2007.  Barrick Gold Corporation exercised all of its 1 million warrants thereby investing a further $2.7 million in Midway to bring its total purchases of common shares in Midway to 4 million.  

Spring Valley Property, Pershing County, Nevada

In 2006 we completed 66,616 feet of drilling in 90 holes with 88 of the holes drilled outside the defined resource expanding it to the north (North Hill and Porphyry deposits) and the West (West Diatreme and Valley Breccia deposits). The 2006 exploration program was designed to step out from the current resource around the edge of the diatreme to expand the known resource as well as testing for a much larger porphyry gold target at deeper levels.   At the time of the AMEC resource estimation the deposit covered a mineralized zone of 0.6 miles long by 0.3 miles wide that was continuous to a depth of 984 feet. Exploration in 2006 has expanded the gold zones to an area of almost 1 mile long by 0.6 miles wide that is continuous mineralized to a depth of 1,400 feet.  The mineral resources have not yet been re-estimated to include the results of the 2006 drilling.  Additional project work included a 3000 soil samp le grid survey, detailed stream sediment sampling, gravity and SP geophysical surveys, mapping and rock chip sampling of 17 square miles of claim holdings all directed towards expanding the potential size of this growing resource.

Exploration to date has identified distinct gold zones at Spring Valley:  the North Hill, West Diatreme, Porphyry, Pond, Sill, Valley Breccia and Limerick Hagen zones.  Surface exploration programs in 2006 have identified more than 12 new targets for follow up work in 2007.

In 2006 all except two deep core test holes were drilled outside the reported resource.  Most of the drilling focused around Spring Valley diatreme.  Of the 88 holes drilled outside the current resource, 57 encountered new gold.  The two new gold discovery zones are in the West Diatreme and North Hill area. In the West Diatreme area, 8 of 9 exploration holes in a 400 foot by 400 foot grid, encountered gold approximately 1,500 to 2,500 feet west of the current resource.  In the North Hill area, 14 of 18 exploration holes drilled on a 200 by 400 foot grid encountered gold north and northeast of the known resource.  

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We drilled 20 holes in the Limerick Basin, located 1.8 miles west of Spring Valley.  Narrow but high-grade gold was intercepted in several of the Limerick Basin with the highest intercept of 5 feet averaging 1.98 ounces per ton gold. Results from the Limerick Basin tests are especially encouraging since this represents a geologically similar zone to the high-grade Sill zone in which gold is present as quartz-tourmaline stock work veins hosted in rhyolite porphyry sill. The Limerick Hagen zone starts at the surface, varies from 40 to 150 feet thickness, and dips to the southwest. The zone was identified by soil and rock chip anomalies. The zone is open in all directions. A permit for an additional 30 holes has been submitted to the Bureau of Land Management for additional exploration in the second and third quarters of 2007.

The West Diatreme zone continues to expand. Gold occurs along the edges of porphyry dikes and sills, within high-angle faults, and along volcanic contacts along the west edge of the Spring Valley diatreme. The intrusive rocks occur along a splay of the Black Ridge Fault that controls a portion of the Rochester silver-gold deposit, three kilometers to the south. Native gold is associated with stock works and quartz veins. The current West Diatreme zone is 700 feet wide by 1,000 feet long. Of the 17 holes drilled in the area 14 of them encountered gold, defining the zone, which is open to the northwest, southwest and at depth.

Drilling on the North Hill and Porphyry area continues to identify new high-grade gold intercepts that are open to the north and northwest. Additional drilling will be necessary to delineate the orientation and extent of these zones. Gold is hosted in rhyolite porphyries.

As at May 28, 2007 there are four drills working at the Spring Valley Project, three reverse circulation and one diamond drill core rig.  Midway is currently drilling Spring Valley’s Pond, Valley Breccia, American Canyon, and North Hill areas. The drill rigs are attempting to expand the known gold resource at depth and along strike around the 3,500 foot wide Spring Valley diatreme and test the continuity of the recent discoveries on the project. The American Canyon drilling will test a new target approximately two miles south of the Spring Valley diatreme. This new target lies at the upper drainage to the American Canyon placer deposits where mapping and sampling had identified a gravel covered area which could potentially be the source of the gold bearing placer gravels. Midway controls the American Canyon target by claims, staked by the Company.  Over 90,000 feet of drilling is planned at Spring Valley, 60% whi ch will be targeted towards conversion of recent discoveries to resource and 40% towards stepping out into new areas and testing new gold targets identified in the fall of 2006.

On June 6, 2007 we announced that the Bureau of Land Management issued final approval for the Spring Valley Project Plan of Operations (the “Plan”).  The Plan allows us to drill up to 600 holes in a 2.5 square mile area.  The Plan allows for substantial key expansion of our exploration into significant untested portions of the Spring Valley diatreme and adjacent targets. We’re currently planning for over 100 drill holes, in 2007, to attempt to expand the current gold resource and to test up to a dozen new gold targets on the existing 17 square mile property.  The Company has added a fifth drill which will test the Limerick Basin target area.

Midway Property, Nye County, Nevada

In 2006 the Company drilled 26,450 feet in 56 reverse circulation and core holes. The program tested six gold zones and gold was intersected in all six zones.  In this phase, the Dauntless zone was extended 650 feet along strike.  The zone appears to vary from 23 to 66 feet in true width and is composed of two to three distinct southwest dipping sub-parallel zones. The veins vary in grade from .029 to 1.16 ounces per ton gold starting within 165 feet of the surface and are open along strike to the north and south.  The Enterprise and Cross zones have each been tested by at least five drill holes that have encountered veins with grades up to 0.61 to 0.87 ounces per ton gold. Limited gold was also encountered in the Hornet and Nautilus and the 121 South zones.

Following drilling we developed three-dimensional vein models of the Midway high-grade gold zones.  Twelve veins were identified in the Discovery and Dauntless zones.  Drill testing of these zones has been adequate to design an underground exploration bulk sample test. An additional 58 high-grade (>0.01 ounces of gold per ton) veins have been identified in the project, by drilling but are not fully explored.

During the third quarter of 2006 we hired a mining engineer from the Colorado School of Mines to develop plans for an underground exploration decline that could then be used to bulk sample the Discovery and Dauntless

58

gold zones that will allow metallurgical testing and allow better access to the exploration of the very high-grade gold zones encountered at Midway.

In December 2006 we were drilling and installing a series of 14 monitor wells to study the dewatering costs for the underground decline when four of the holes encountered gold. The best intercept was an extension of the Dauntless zone with 10 feet of 0.31 ounces of gold per ton.  The vein is estimated to be four feet true width and is approximately 130 feet south of the Dauntless zone.  These tests indicate that gold persists in vein zones peripheral to the Discovery zone.  The hydrology holes will determine water characterization for planning and permitting of an underground exploration decline into the Discovery and Dauntless deposits.

In 2007, we plan to complete the design and permitting of the underground exploration decline and take and process a bulk sample from three of the veins in Discovery and Dauntless vein area.  This exploration bulk sample will be taken from oxidized high-grade veins that vary in grade from 0.3 to 1.2 ounces of gold per ton.  This decline can then be used as a mining and exploration resource conversion platform for future expansions at Midway.

The first step of the permitting process will be to drill four hundred foot water wells in the Discovery area and conduct an extensive pump test to define the water flow demands for the underground working design and for permitting purposes. A 20 hole drill program will be conducted for stope design, mine access, and ventilation engineering purposes as well as waste rock permit sites.  This drilling is planned to begin in the second quarter of 2007.

In 2007 we have completed a 425 foot dewatering well at the Midway project.  A 24 and 72 hour pump test is in progress to determine dewatering needs for an underground exploration decline. The dewatering test is important for permitting the exploration decline.

Thunder Mountain Project, Nye County, Nevada

The Thunder Mountain project is an epithermal silver-gold property, six miles south of the Midway project.  Anomalous silver (up to 20 ounces of silver per ton) and low level gold is noted in rock chips collected from rhyolite plugs and flow domes.  The property is approximately 5.5 square miles and has had some limited drilling with narrow intercepts of up to 15 feet of 0.8 ounces of gold per ton (true width) of gold in quartz adularia veins in altered rhyolite. The Thunder Mountain project is held 100% by claims with no royalty burdens. High-grade gold and silver targets are adjacent to rhyolite flow domes and faults. The fault orientations are similar to zones noted at the Midway project.

A soil gas survey was conducted over a gravel covered area where a previous operator had intersected 35 feet of 0.735 ounces of gold per ton (15 feet true thickness) at a depth of 115 feet.  This survey identified a low-level soil gas anomaly above the gold intercept and extended the anomaly to the northwest.  Compilation, targeting, and permitting of additional exploration drill sites are in progress.

We plan an initial five hole evaluation drill program in 2007.

Pan-Nevada Gold Corporation (Pan-Nevada) acquisition

The Plan of Arrangement, between Midway and Pan-Nevada took effect on April 13, 2007 so that Pan-Nevada became our wholly owned subsidiary.

On April 13, 2007 we issued 7,764,109 common shares of Midway to Pan-Nevada shareholders on the basis of one Midway share for every 3.5714 Pan-Nevada shares held. Midway issued 870,323 common share purchase warrants and 308,000 stock options under the Arrangement to Pan-Nevada stock option and share purchase warrant holders adjusted to reflect the same 3.5714 exchange ratio as the common shares.

We doubled our current mineral resource holdings with this acquisition.  Pan-Nevada’s Pan Gold project reported an independently prepared Canadian NI43-101 compliant mineral measured and indicated resource of 15,875,000 tons grading 0.019 ounces of gold per ton containing over 300,000 ounces and an inferred resource of 8,302,000 tons grading 0.017 ounces of gold per ton containing over 140,000 ounces of gold.  (See PROPERTIES –

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Pan Gold project).  A new resource update is currently underway, which will report on over 200 holes drilled since February, 2005 and which is expected to enlarge this resource further.  This is a shallow oxide gold resource, in a Carlin-type gold deposit setting, that is open for further expansion.  

Almost immediately after acquiring the Pan Gold project, we began drilling. By May 15, 2007, five holes were completed north of the northern most Pilot Ridge resource area. This sediment hosted gold system is over two miles long and is open to the north and northwest, beneath Tertiary post mineral volcanic tuff. The Company has an initial Phase 1 test of 5,000 feet that it hopes to complete by the end of the second quarter. The Phase I program began by testing step-out along strike from the existing resources. A Phase II program of 120 holes (35,000 feet) is currently being planned which will focus on resource expansion and conceptual step-outs (>1000 feet) that target new discoveries.  The Phase II drilling will likely begin in late-June 2007 with two reverse circulation drill rigs. Mineralization at the Pan project starts at the surface and is currently open along strike and has been drilled to 500 foot depths.  The Pan deposits are all oxi dized (simple metallurgy) and form disseminated Carlin style gold deposits in silty limestone and shale. The Pan project is located on the south end of the prolific Battle Mountain-Eureka gold trend in north central Nevada.

The Company has not confirmed its exploration plans for all the Pan-Nevada projects, but is certain that in 2007 the new resource estimation for the Pan project will be complete.

Imperial units of measure have been used in this MD&A.  To convert Imperial measurements to Metric equivalents divide by:

Short tons to tonnes	1.10231
Ounces (troy) to kilograms	32.150
Ounces (troy) to grams	0.03215
Ounces (troy) / short ton to grams/tonne	0.02917
Acres to hectares	2.47105
Miles to kilometres	0.62137
Feet to meters	3.28084

Our goals for 2007:

Spring Valley project

·

in-fill drilling to define high-grade zones and identify geologic controls on gold mineralization

·

step-out drilling to increase drill hole density to 100 to 200 foot centers within and on the edges of known mineralization

·

drilling for discoveries in new targets identified at Spring Valley

·

update mineral resource by end of year

Midway project

·

complete studies to plan underground decline for bulk test and to continue exploration from an underground base

·

contingent on the studies confirming the feasibility of constructing an underground decline to complete the cost estimates and obtain permits by end of year

Thunder Mountain project

·

drill test identified targets to determine if a next phase of exploration is warranted

Pan project

·

complete updated NI43-101 compliant mineral resource estimate

·

drill test two key areas with five drill holes to determine next

·

an initial 40,000 foot program is planned

OPERATIONS DURING THE YEAR ENDED DECEMBER 31, 2006

The net loss for the year ended December 31, 2006 was $7,241,228 (2005 - $4,402,715).  

Other significant differences in costs between the years are as follows:

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Exploration expenses in the year ended December 31, 2006 were $6,432,052 (2005 - $3,791,850).  The details of the expenses may be found in schedule 1 to the consolidated financial statements for each year.  In the current year a total of $1,991,058 was spent at the Midway project, $4,362,326 at the Spring Valley project and $78,668 on investigation of properties not retained.  This compares the 2005 expenditures of $724,700 at the Midway project, $2,538,437 at the Spring Valley project and $528,713 on investigation of properties not retained.  Exploration levels are determined by the success of previous exploration programs on each project and available cash to fund additional programs.  Results of the current year exploration program are discussed above under each property.  Engineering and consulting fees for 2006 include the non-cash estimated fair value of stock based compensation for stock options granted to consultants in the year of $364,088 (2005 - $102,917).

Investor relations increased in fiscal year 2006 due to our increased attendance at various investor shows in 2006 and a focus on increasing the market’s awareness of Midway.  During the fiscal 2006 year, we engaged various companies to provide research analysis and investor related services.

Our President’s salary increased from US$10,000 per month to US$12,500 per month effective February 1, 2006.  In 2006, we also engaged the services of three part-time personnel to assist the President in the Montana office. Cash salaries totaled $234,407 and the estimated fair value of stock based compensation for stock options granted to employees, directors and officers in the year were $628,312 (2005 - $nil).

Increases in interest income in the current year are a result of the increased interest rates and higher levels of cash on deposit.

OPERATIONS DURING THE THREE MONTHS ENDED MARCH 31, 2007

The net loss for the three months ended March 31, 2007 was $1,385,026 (2006 –$1,423,881).  

Other significant differences in costs between the three month periods are as follows:

Exploration expenses in the three months ended March 31, 2007 were $987,010 (2006 - $1,562,551).  The details of the expenses in each period may be found in the schedule to the unaudited consolidated interim financial statements.  In the current period a total of $276,102 was spent at the Midway project, $661,119 at the Spring Valley project and $49,789 on investigation of properties.  This compares to the 2006 expenditures of $924,482 at the Midway project, $579,749 at the Spring Valley project and $58,320 on investigation of properties.  Exploration levels are determined by the success of previous exploration programs on each project and available cash to fund additional programs.  Results of the current period exploration programs are discussed above under each property.  Salaries and labour include the non-cash estimated fair value of stock based compensation for stock options granted to employees in the period of $nil (2 006 - $203,880). In the 2007 first quarter we hired 8 of the technical personnel who had been acting as consultants as full time employees.

Investor relations increased in the first quarter 2007 due to our attendance at various investor shows in the first three months of 2007 and a focus on increasing the market’s awareness of Midway.  During the fiscal 2006 year, we engaged various companies to provide research analysis and investor related services.

Salary payments are to the President and administrative staff based in Helena, Montana.  Cash salaries totaled $79,199 and the estimated fair value of stock based compensation for stock options granted to employees, directors and officers in the period were $177,260.

Increases in interest income in the current period are a result of the increased interest rates and higher levels of cash on deposit.

LIQUIDITY AND CAPITAL RESOURCES FOR THE YEAR ENDED DECEMBER 31, 2006

We began the 2006 year with cash on hand of $1,280,982.  During the 2006 fiscal year we expended $6,678,661 on operations, invested a total of $1,118,670 in mineral property and equipment and raised $15,085,188 from the issue of shares for cash to end the year with cash on hand of $8,568,839.

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Working capital at December 31, 2006 was $8,126,648 compared to $1,093,824 at December 31, 2005.

Midway closed a private placement in May 2006 of 3,725,000 units at $1.80 per unit for proceeds of $6,705,000.  In November 2006 we completed a second non-brokered private placement of 2,000,000 units at $2.50 per units for gross proceeds of $5,000,000.  Each unit comprised one common share and one-half non-transferable common share purchase warrant.  Each whole warrant will entitle the holder to acquire one additional common share for one year from closing.

In the fiscal 2006 year we issued a total of 306,000 common shares pursuant to the exercise of stock options for cash proceeds of $214,200 and 3,227,000 common shares pursuant to the issue of common share purchase warrants for cash proceeds of $3,414,500.

LIQUIDITY AND CAPITAL RESOURCES FOR THE THREE MONTHS ENDED MARCH 31, 2007

We began the 2007 year with cash on hand of $8,568,839.  During the first quarter 2007 we expended $1,716,006 on operations, invested a total of $324,761 in mineral property and equipment and raised $345,350 from the issue of shares for cash to end at March 31, 2007 with cash on hand of $6,873,422.

Working capital at March 31, 2007 was $6,951,204 compared to $8,126,648 at December 31, 2006.

We have no revenues from operations, and should we wish to accelerate our exploration and development programs or acquire additional mineral exploration projects and fund exploration programs on those newly acquired projects, we may raise additional equity financing to fund the increase.  

In the first quarter of 2007, we issued a total of 200,000 common shares pursuant to the exercise of stock options for cash proceeds of $311,600 and 12,500 common shares pursuant to the exercise of common share purchase warrants for cash proceeds of $33,750.

From April 1, 2007 to May 16, 2007 we issued 1,805,558 common shares pursuant to the exercise of share purchase warrants priced at $2.70 for proceeds of $4,802,791.  The remaining 137,500 share purchase warrants expired unexercised.   

As of May 28, 2007, there are 1,777,265 share purchase warrants outstanding at prices ranging from $1.43 to $3.00 and 2,991,500 stock options at prices ranging from $0.80 to $3.20.  If all the warrants and options were exercised the proceeds to us would be approximately $9.7 million. While it is probable that some of these warrants and options will be exercised, it is not possible to predict the timing or the amount of funds which might be received.  

PLAN OF OPERATIONS

Midway has historically relied on issues of equity financing to fund its operations.  A forecast of the twelve months ending July 31, 2008 follows.  It can be seen that, Midway will need to curtail its activities in the second half of 2007 or raise additional capital to fund its planned programs and future programs to advance its projects.  Midway will need to raise at least $10 million to comfortably complete is programs and begin the next phases of exploration on each project but will likely raise more to completely fund the next phase of work identified on each project after the current phase of exploration is complete.  It is not possible at this date to predict with any accuracy what Midway’s cash needs will be.  If exploration costs are the only thing being funded Midway will likely raise all of its cash from an equity financing.  If development capital is being raised then it may be a combination of equity financing and debt financing.

Note USD denominated expenditures translated to CDN at the rate of 1.0372

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Working capital, March 31, 2007			$6,951,204
Acquisition of Pan-Nevada Gold Corporation	a		541,721
Share purchase warrant exercises	b		5,596,428
Stock option exercises	c		88,999
Adjusted available working capital			13,178,352
Item 13.  Other expenses of issuance and distribution	d		-77,728
General and administrative expenses – sixteen months	e		-2,266,667
Current phase exploration program Midway project	f	-2,500,000	-2,593,000
Property acquisition payments Midway project	g	-250,000	-259,300
Current phase exploration program Spring Valley project	h	-3,600,000	-3,733,920
Property acquisition payments Spring Valley project	i	-3,211,000	-3,330,449
Current phase exploration program Pan project	j	-700,000	-726,040
Current phase exploration other projects	k	-745,000	-772,714
Forecast working capital deficit  in twelve months			$    (581,466)

a)

Pan-Nevada Gold Corporation was acquired on April 16, 2007 with a cash balance of $541,721

b)

Midway issued 2,236,322 shares pursuant to the exercise of share purchase warrants from April 1, 2007 to July 24, 2007

c)

Midway issued 80,500 shares pursuant to the exercise of stock options from April 1, 2007 to July 24, 2007

d)

Item 13 – Other expenses of Issuance and Distribution

e)

General and administrative expenses are estimated for the sixteen month period from April 1, 2007 to July 31, 2008 based on the expenses incurred in fiscal year 2006, the first quarter of fiscal year 2007 and increased by 20% to allow for increased staffing and activity

f)

Current phase exploration program Midway project as described in Description of the Business, Properties Midway project

g)

Property acquisition payments Midway project as described in Note 4 to the Consolidated Interim Financial Statements for the three months ended March 31, 2007

h)

Current phase exploration program Spring Valley project as described in Description of the Business, Properties Spring Valley project

i)

Property acquisition payments Spring Valley project as described in Note 4 to the Consolidated Interim Financial Statements for the three months ended March 31, 2007

j)

Current phase exploration program Pan  project as described in Description of the Business, Properties Pan project

k)

Cumulative current phase exploration programs and options payments for the Thunder Mtn., Afgan, Monte, KDK, Jessup and Maggie Creek projects.

OFF-BALANCE SHEET ARRANGEMENTS

There are no off balance sheet arrangements.

INFLATION

We do not believe that inflation has had a significant impact on our consolidated results of operations or financial condition.

CRITICAL ACCOUNTING POLICIES

Critical accounting estimates used in the preparation of the financial statements include our estimate of recoverable value on our property, plant and equipment, site reclamation and rehabilitation as well as the value assigned to stock-based compensation expense. These estimates involve considerable judgment and are, or could be, affected by significant factors that are out of our control.

The factors affecting stock-based compensation include estimates of when stock options might be exercised and the stock price volatility. The timing for exercise of options is out of our control and will depend, among other

63

things, upon a variety of factors including the market value of Midway shares and financial objectives of the holders of the options. We used historical data to determine volatility in accordance with Black-Scholes modeling, however the future volatility is inherently uncertain and the model has its limitations. While these estimates can have a material impact on the stock-based compensation expense and hence results of operations, there is no impact on our financial condition.

Midway’s recoverability evaluation of its property, plant and equipment is based on market conditions for minerals, underlying mineral resources associated with the assets and future costs that may be required for ultimate realization through mining operations or by sale. Midway is in an industry that is exposed to a number of risks and uncertainties, including exploration risk, development risk, commodity price risk, operating risk, ownership and political risk, funding and currency risk, as well as environmental risk. Bearing these risks in mind, Midway has assumed recent world commodity prices will be achievable. We have considered the mineral resource reports by independent engineers on the Midway, Spring Valley and Pan projects in considering the recoverability of the carrying costs of the mineral properties.  All of these assumptions are potentially subject to change, out of our control, however such changes are not determinable. According ly, there is always the potential for a material adjustment to the value assigned to property, plant and equipment.

Midway has an obligation to reclaim its properties after the surface has been disturbed by exploration methods at the site. As a result Midway has recorded a liability for the fair value of the reclamation costs it expects to incur. The Company estimated applicable inflation and credit-adjusted risk-free rates as well as expected reclamation time frames. To the extent that the estimated reclamation costs change, such changes will impact future reclamation expense recorded.

RECENT UNITED STATES ACCOUNTING PRONOUNCEMENTS

September 2006 - FASB issued Statement No. 157, “Fair Value Measures”.  This Statement defines fair value, establishes a framework for measuring fair value, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. Statement No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of Statement No. 157 will change current practice. Statement No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact of Statement No. 157 but does not expect that it will have a material impact on the consolidated financial statements.

June 2006 - FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109” (“FIN 48”).  This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB No. 109, “Accounting for Income Taxes.”  This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  This Interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006.   The Company has determined that the implementation of FIN 48 will  not have an impact on its resul ts of operations or financial position.

In May 2005, FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections – A Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”), which is effective for fiscal years beginning after December 15, 2005.  SFAS 154 requires that changes in accounting policy be accounted for on a retroactive basis.

CONTRACTUAL OBLIGATIONS

As of December 31, 2006, we had the following contractual obligations:

Payments Due by Period

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	Total		Less than 1 Year		2-3 Years		4-5 Years		More than 5 Years
Long-term Debt	$	Nil	$	Nil	$	Nil	$	Nil	$	Nil
Contractual Obligation		Nil		Nil		Nil		Nil		Nil
Total	$	Nil	$	Nil	$	Nil	$	Nil	$	Nil

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Midway has no publicly or privately traded securities or market instruments aside from our own equity.  The only publicly traded securities are the common shares of Midway, which trade on the TSX.V.  We have no debt instruments subject to interest payments, sales contracts, swaps, derivatives, or forward agreements or contracts, or inventory.

Midway has no currency or commodity contracts, and we do not trade in such instruments.

Midway has no cash flow or revenue from operations.  Our operating funds are currently provided by equity issues.  We have to date always raised funds in Canadian dollars although we incur the majority of our expenditures in Canadian and United States dollars.  The shares of Midway are listed for trading on the TSX.Vand accordingly our ability to raise equity funds and the price at which such issues are sold is directly related to the activity and price of our shares on such exchange.  In addition, as we incur expenditures in both Canadian and United States currencies we have exposure to foreign currency gains or losses.  We do not currently enter into any contracts or arrangements to hedge against currency fluctuations.

We have no debt instruments which are subject to interest payments.  

We periodically access the capital markets with the issuance of new shares to fund operating expenses, and we do not maintain significant cash reserves over periods of time that could be materially affected by fluctuations in interest rates or foreign exchange rates.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following table sets forth certain information with respect to Midway’s current directors, executive officers and key employees. The term for each director expires at Midway’s next annual meeting or until his or her successor is appointed. The ages of the directors, executive officers and key employees are shown as of July 24, 2007.

Name	Position	Director/Officer Since	Age
Alan D. Branham	President, CEO and Director	June 1, 2004		47
Doris Meyer, CGA	Chief Financial Officer and Corporate Secretary	December 1, 2006		55
Brian J. McAlister	Director	June 30, 1997		50
Brian E. Bayley	Director	May 14, 1996		54

65

George T. Hawes	Director	June 12, 2003	60
William M. Sheriff	Director	April 13, 2007	48
William A. Lupien	Director	April 13, 2007	65

Alan D. Branham – President, Chief Executive Officer and Director.  Previously, a senior geologist with Newmont Mining Corp. since 1987, Mr. Branham brings more than 20 years of international exploration experience to Midway.  Mr. Branham earned a Masters of Science Degree in Economic Geology from Washington State University, a Bachelor Degree from Stanford University, California, and has participated in successful exploration projects in the Southwestern United States, Mexico and Central America. Mr. Branham has conducted extensive exploration in the Great Basin area 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 on the Carlin Trend in Nevada.  Mr. Branham has been a director and has served as the President and Chief Executive Officer of Midway since June 1, 2004.

Doris Meyer, CGA – Chief Financial Officer and Corporate Secretary.  Ms. Meyer is a Canadian Certified General Accountant and Chief Financial Officer and Corporate Secretary of Midway. Ms. Meyer gained her experience in the mining industry as Vice President, Finance of Queenstake from 1985 to 2003 and Corporate Secretary until 2004. While at Queenstake, she was a part of or led negotiations of joint venture and acquisition agreements, and equity and debt financings. She was a key member of the team that negotiated the acquisition of the Jerritt Canyon mine in Nevada. Ms. Meyer is now an independent director of Queenstake and she acts as Chief Financial Officer and/or Corporate Secretary of several publicly traded mining companies and her company, Golden Oak Corporate Services Ltd., provides those clients with administrative, accounting and compliance services.  Ms. Meyer has served as the Chief Financi al Officer and Corporate Secretary of Midway since December 1, 2006.

Brian J. McAlister – Director. Brian McAlister is the President of Cornet Capital Corporation, a corporation owned and controlled by Mr. McAlister, which is engaged in the business of assisting start-up corporations with capital raising, funding, and other consulting activities. Over the past 23 years, Mr. McAlister has assisted in excess of 25 early stage companies in varied industries including biotechnology, enterprise software, and natural resources.  In 1991 Mr. McAlister co-founded Novadigm Inc., a software corporation whose securities trade on the NASDAQ.  Mr. McAlister holds a Bachelor of Science Degree (1979) with a major in Finance from the University of Denver.  Mr. McAlister served as President and Chief Executive Officer until June 1, 2004 and has served as a director of Midway since June 30, 1997.

Brian E. Bayley – Director.  Since June 30, 2003, Mr. Bayley has been the President and Chief Executive Officer of Quest Capital Corp. (“Quest”), a public company involved in providing asset backed collaterized loans and real estate mortgages.  Quest’s shares trade on the TSX, AIM and AMEX stock exchanges.  In addition to being the President and director of Quest Management Corp., a private management company which is wholly-owned by Quest, Mr. Bayley is also a director and/or officer of numerous other public companies.  Mr. Bayley holds an MBA from Queen’s University, Kingston, Ontario.  Mr. Bayley has served as a director of Midway since May 14, 1996.

George T. Hawes – Director.  Mr. Hawes is President of G.T. Hawes & Co., a private New York real estate and investment company. He is a director of Proginet Corporation., a publicly traded enterprise security software company, the shares of which trade on the OTCBB Securities Market in the United States, since  2004 and he is presently chairman of the our Audit Committee.  Mr. Hawes has served as a director of Midway since June 12, 2003.

William M. Sheriff – Director.  Mr. Sheriff holds a Bachelor of Science degree in Geology. Mr. Sheriff began his minerals career in 1980 and in 1985 founded Platoro West Incorporated, a minerals exploration firm specializing in project identification and acquisition throughout the western USA.  Mr. Sheriff is President of Pacific Intermountain Gold Corporation, a private corporation 75% owned by Seabridge Gold Corporation, which holds over 30 advanced gold exploration projects throughout Nevada and is Pan-Nevada's joint venture partner in two gold projects.   Mr. Sheriff is a director, Chairman and Vice President, Corporate Development of Energy Metals

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Corporation and he is also a director of Eurasian Minerals Inc.  Mr. Sheriff has served as a director of Midway since April 13, 2007.

William A. Lupien – Director.  Mr. Lupien brings over 40 years of public market financial expertise and US equity market exposure to Midway's board. Mr. Lupien was a specialist on the Pacific Stock Exchange from 1968 until 1983.  Mr. Lupien has served on numerous private and public company boards including Mitchum, Jones & Templeton, Instinet, National Health Enterprises, and others. He also held a position as Trustee of the Securities Industry Institute and the Securities and Exchange Commission National Market Advisory Board as well as being a Governor of the Pacific Stock Exchange for 6 years. Mr. Lupien is the co-author along with David Nassar of Market Evaluation and Analysis for Swing Trading which was published in 2004 by McGraw Hill. Mr. Lupien is currently a private investor and a financial equity market consultant. Mr. Lupien is also a director of Energy Metals Corporation.  Mr. Lupi en has served as a director of Midway since April 13, 2007.

None of our executive officers or key employees is related by blood, marriage or adoption to any other director or executive officer.

To our knowledge, there is no arrangement or understanding between any of our officers and any other person pursuant to which the officer was selected to serve as an officer.

EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE

SUMMARY COMPENSATION TABLE

The following table sets forth compensation paid in Canadian dollar equivalents to each of the individuals who served as our Chief Executive Officer and our other most highly compensated executive officers (the “named executive officers”) for the fiscal years ended December 31, 2006, 2005 and 2004.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All other Comp.	Total
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)
Alan D. Branham -President, Chief Executive Officer and Director (1)	2006	$167,279	Nil	Nil	50,000	Nil	Nil	Nil	$167,279
	2005	$145,368	Nil	Nil	50,000	Nil	Nil	Nil	$145,368
	2004	$104,104	Nil	Nil	800,000	Nil	Nil	Nil	$104,104
Doris Meyer - Chief Financial Officer and Corporate Secretary (2)	2006	$7,500	Nil	Nil	100,000	Nil	Nil	Nil	$7,500
K. Peter Miller -Chief Financial Officer (3)	2006 2005 2004	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil 20,000 Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Brian J. McAlister(4), President and Chief Executive Officer until June 1, 2004	2006 2005 2004	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	75,000 75,000 Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil $50,000	Nil Nil $50,000

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⁽¹⁾

Alan D. Branham was appointed President and Chief Executive Officer of Midway on June 1, 2004.  His remuneration commenced on May 1, 2004 at US$120,000 per annum (which was subsequently increased on February 1, 2006 to US$150,000 per annum) and was paid by MGC Resources Inc., a subsidiary of Midway.  

⁽²⁾

Doris Meyer was appointed Chief Financial Officer of Midway on November 30, 2006.  Consulting fees are paid to Golden Oak Corporate Services Ltd., a company owned by Ms. Meyer beginning December 1, 2006.

⁽³⁾

Peter Miller resigned as Chief Financial Officer of Midway on November 30, 2006.  Mr. Miller is an employee of Quest Management Corp.   

⁽⁴⁾

Brian J. McAlister resigned as President and Chief Executive Officer of Midway on June 1, 2004.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Exercise Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)		(h)	(i)	(j)
Alan D. Branham - President, Chief Executive Officer and Director	400,000 258,500 50,000 50,000	Nil Nil Nil Nil	Nil Nil Nil Nil	$2.04 $0.80 $1.30 $2.53	04/13/2004 9/14/2004 06/24/2005 06/15/2006	Nil Nil Nil Nil		Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil
Doris Meyer - Chief Financial Officer and Corporate Secretary	100,000	Nil	Nil	$2.70	11/30/2006	Nil		Nil	Nil	Nil
Option Awards							Stock Awards

RETIREMENT, RESIGNATION OR TERMINATION PLANS

We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our Company or as a result of a change in the responsibilities of an executive following a change in control of our Company except for Mr. Branham.

Alan Branham, the President and Chief Executive Officer of Midway, entered into an employment agreement with Midway on May 1, 2004 (amended on January 31, 2007) pursuant to which Mr. Branham agreed to perform the duties and fulfill the responsibilities consistent with the position held for not less than 75% of his time in consideration of an annual salary of US$120,000, increased to US$150,000 effective February 1, 2006, to be reviewed annually by Mr. Branham and Midway.  Mr. Branham’s employment is for an indefinite term, continuing

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until terminated pursuant to the terms of the agreement.  Midway may terminate Mr. Branham’s employment for cause, as more particularly set out in the employment agreement, or at any time without cause by payment to Mr. Branham, if he is terminated before May 1, 2010 an amount equal to his annual salary, based on his annual salary and health benefit insurance premiums at the time of termination, and all wages owing to Mr. Branham up to and including his last day of employment.  Mr. Branham may terminate his employment on 30 days’ written notice to Midway if a change in control of Midway occurs, in which case Midway will pay Mr. Branham an amount equal to his annual salary, based on his annual salary and health benefit insurance premiums at the time of termination, and all wages owing to Mr. Branham up to and including his last day of employment. Mr. Branham may terminate his employment at any time on 30 days’ written not ice to Midway.

DIRECTOR COMPENSATION

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Non-Qualified Compensation Earnings ($)	All Other Compensation ($)	Total ($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
Alan D. Branham	$Nil	Nil	50,000	Nil	Nil	Nil	$Nil
Brian J. McAlister	$Nil	Nil	75,000	Nil	Nil	Nil	$Nil
Brian E. Bayley	$Nil	Nil	75,000	Nil	Nil	Nil	$Nil
George T. Hawes	$Nil	Nil	75,000	Nil	Nil	Nil	$Nil
Kelly Hyslop(1)	$Nil	Nil	50,000	Nil	Nil	Nil	$Nil

⁽¹⁾

Dr. Kelly Hyslop resigned as a director of Midway on April 13, 2007, however he will continue to be involved with Midway on a consulting basis from time to time and his options will continue on that basis.

William Sheriff and William Lupien joined the board of directors on April 13, 2007 with the completion of the Arrangement, and on April 26, 2007 each of them were granted 100,000 stock options at an exercise price of $3.20 for a five year term.

Director Compensation Agreements and Summary of Director Compensation Policies

Midway does not pay its directors a fee for acting as such.  They are, however, entitled to be reimbursed for reasonable expenditures incurred in performing their duties as directors.  Midway does, from time to time, grant options to purchase common shares to the directors.  The above table sets out details of incentive stock options granted by Midway to all the directors, including Alan Branham and Brian McAlister, who were reported as Named Executive Officers during the fiscal year ended December 31, 2006.

LONG TERM INCENTIVE PLAN AWARDS

No long-term incentive plan awards have been made by Midway to date.

DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE

We do not provide retirement benefits for the directors or officers.

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EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS

As reported above in the retirement, resignation and termination plan section in this prospectus.

REPORT ON REPRICING OF OPTIONS/SARS

No stock options were re-priced in the fiscal year ended December 31, 2006 or to the date of this Prospectus.

REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

During the year ended December 31, 2006, our Board of Directors was responsible for establishing compensation policy and administering the compensation programs of our executive officers.

The amount of compensation paid by us to each of our directors and officers and the terms of those persons’ employment is determined solely by the Board of Directors. We believe that the compensation paid to its directors and officers is fair to Midway.

Our Board of Directors believes that the use of direct stock awards is at times appropriate for employees, and in the future may use direct stock awards to reward outstanding service or to attract and retain individuals with exceptional talent and credentials. The use of stock options and other awards is intended to strengthen the alignment of interests of executive officers and other key employees with those of our stockholders.

CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES

Corporate Cease Trade Orders or Bankruptcies

No director, officer, promoter or other member of management of Midway is, or within the ten years prior to the date hereof has been, a director, officer, promoter or other member of management of any other issuer that, while that person was acting in the capacity of a director, officer, promoter or other member of management of that issuer, was the subject of a cease trade order or similar order or an order that denied Midway access to any statutory exemptions for a period of more than 30 consecutive days, was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or has been subject to or appointed to hold the assets of that director, officer or promoter, other than as disclosed herein.

Brian E. Bayley

PetroFalcon Corporation/TSX listed (director November 28, 2001 - current) and Quest Ventures Ltd. On February 27, 2002 the British Columbia Securities Commission (“BCSC”) issued an order regarding a private placement of PetroFalcon Corporation to Quest Ventures Ltd., a private company in which Brian E. Bayley is a director. The BCSC considered it to be in the public interest to remove the applicability of certain exemptions from the prospectus and registration requirements of the Securities Act (British Columbia) for PetroFalcon Corporation until a shareholders meeting of PetroFalcon Corporation was held. In addition, the BCSC removed the applicability of the same exemptions for Quest Ventures Ltd. in respect of the common shares received pursuant to the private placement. Approval of shareholders was received on May 23, 2002 and the BCSC reinstated the applicability of the exemptions from the pro spectus and registration requirements for both companies shortly thereafter.

Esperanza Silver Corp./TSX.V listed (director December 14, 1999 - current). In early 2003 the directors and officers of Esperanza Silver Corp. became aware that it was subject to outstanding cease trading orders in each of Alberta (issued on September 17, 1998) and Québec (issued on August 12, 1997) arising from its previous failure to comply with the financial statements filing requirements of the above securities commissions. The historical financial statements and filing fees were subsequently filed and the Québec order was rescinded on May 16, 2003 and the Alberta order on August 1, 2003.

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Westate Energy Inc. (director and officer December 1996 - October 1997). In January 1994 the BCSC issued a cease trade order for failure to comply with the financial statement filing requirements of the securities commission.

American Natural Energy Corp./TSXV listed (director June 15, 2001 - present). In June 2003 each of the Quebec Securities Commission, the BCSC and the Manitoba Securities Commission issued a cease trade order or failure to comply with the financial statement filing requirements of the above securities commissions. The historical financial statements and filing fees were subsequently filed and all the orders were rescinded in August, 2003.

PENALTIES OR SANCTIONS

No director, officer, promoter or other member of management of Midway has, during the ten years prior to the date hereof, been subject to any penalties or sanctions imposed by a court or securities regulatory authority relating to trading in securities, promotion, formation or management of a publicly traded company, or involving fraud or theft.

PERSONAL BANKRUPTCIES

No director, officer, promoter or other member of management of Midway has, during the ten years prior to the date hereof, been declared bankrupt or made a voluntary assignment into bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or has been subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold his or her assets.

CONFLICTS OF INTEREST

The directors of Midway are required by law to act honestly and in good faith with a view to the best interest of Midway and to disclose any interests which they may have in any project or opportunity of Midway.  If a conflict of interest arises at a meeting of the board of directors, any director in a conflict will disclose his interest and abstain from voting on such matter.  In determining whether or not Midway will participate in any project or opportunity, that director will primarily consider the degree of risk to which Midway may be exposed and its financial position at that time.

To the best of Midway's knowledge, there are no known existing or potential conflicts of interest among Midway, its promoters, directors, officers or other members of management of Midway as a result of their outside business interests except that certain of the directors, officers, promoters and other members of management serve as directors, officers, promoters and members of management of other public companies, and therefore it is possible that a conflict may arise between their duties as a director, officer, promoter or member of management of such other companies.

The directors and officers of Midway are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and Midway will rely upon such laws in respect of any directors' and officers' conflicts of interest or in respect of any breaches of duty by any of its directors or officers.  Such directors or officers, in accordance with the BCBCA, will disclose all such conflicts and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

BOARD COMMITTEES

Audit Committee and Audit Committee Financial Expert

Midway’s Board of Directors have adopted the following charter for the Audit Committee which sets out the Committee’s mandate, organizational, powers and responsibilities.  

CHARTER

FOR

THE AUDIT COMMITTEE

71

OF

THE BOARD OF DIRECTORS

OF

MIDWAY GOLD CORP.

I.

MANDATE

The Audit Committee (the "Committee") of the Board of Directors (the "Board") of MIDWAY GOLD CORP. (the "Company") shall assist the Board in fulfilling its financial oversight responsibilities. The Committee's primary duties and responsibilities under this mandate are to serve as an independent and objective party to monitor:

1.

The quality and integrity of Midway's financial statements and other financial information;

2.

The compliance of such statements and information with legal and regulatory requirements;

3.

The qualifications and independence of Midway's independent external auditor (the "Auditor"); and

4.

The performance of Midway's internal accounting procedures and Auditor.

II.

STRUCTURE AND OPERATIONS

A.

 Composition

The Committee shall be comprised of three or more members.

B.

Qualifications

Each member of the Committee must be a member of the Board.

A majority of the members of the Committee shall not be officers or employees of Midway or of an affiliate of Midway.

Each member of the Committee must be able to read and understand fundamental financial statements, including Midway's balance sheet, income statement, and cash flow statement.

C.

Appointment and Removal

In accordance with the By-Laws of Midway, the members of the Committee shall be appointed by the Board and shall serve until such member's successor is duly elected and qualified or until such member's earlier resignation or removal. Any member of the Committee may be removed, with or without cause, by a majority vote of the Board.

D.

Chair

Unless the Board shall select a Chair, the members of the Committee shall designate a Chair by the majority vote of all of the members of the Committee. The Chair shall call, set the agendas for and chair all meetings of the Committee.

E.

Sub-Committees

The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that a decision of such subcommittee to grant a pre-approval shall be presented to the full Committee at its next scheduled meeting.

F.

 Meetings

The Committee shall meet at least once in each fiscal year, or more frequently as circumstances dictate. The Auditor shall be given reasonable notice of, and be entitled to attend and speak at, each meeting of the Committee concerning Midway's annual financial statements and, if the Committee feels it is necessary or appropriate, at every other meeting. On request by the Auditor, the Chair shall call a meeting of the Committee to consider any matter

72

that the Auditor believes should be brought to the attention of the Committee, the Board or the shareholders of Midway.

At each meeting, a quorum shall consist of a majority of members that are not officers or employees of Midway or of an affiliate of Midway.

As part of its goal to foster open communication, the Committee may periodically meet separately with each of management and the Auditor to discuss any matters that the Committee or any of these groups believes would be appropriate to discuss privately. In addition, the Committee should meet with the Auditor and management annually to review Midway's financial statements in a manner consistent with Section III of this Charter.

The Committee may invite to its meetings any director, any manager of Midway, and any other person whom it deems appropriate to consult in order to carry out its responsibilities. The Committee may also exclude from its meetings any person it deems appropriate to exclude in order to carry out its responsibilities.

III.

DUTIES

A.

Introduction

The following functions shall be the common recurring duties of the Committee in carrying out its purposes outlined in Section I of this Charter. These duties should serve as a guide with the understanding that the Committee may fulfill additional duties and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory or other conditions. The Committee shall also carry out any other responsibilities and duties delegated to it by the Board from time to time related to the purposes of the Committee outlined in Section I of this Charter.

The Committee, in discharging its oversight role, is empowered to study or investigate any matter of interest or concern which the Committee in its sole discretion deems appropriate for study or investigation by the Committee.

The Committee shall be given full access to Midway's internal accounting staff, managers, other staff and Auditor as necessary to carry out these duties. While acting within the scope of its stated purpose, the Committee shall have all the authority of, but shall remain subject to, the Board.

B.

Powers and Responsibilities

The Committee will have the following responsibilities and, in order to perform and discharge these responsibilities, will be vested with the powers and authorities set forth below, namely, the Committee shall:

Independence of Auditor

1)

Review and discuss with the Auditor any disclosed relationships or services that may impact the objectivity and independence of the Auditor and, if necessary, obtain a formal written statement from the Auditor setting forth all relationships between the Auditor and Midway, consistent with independence standards established by the Canadian Institute of Chartered Accountants.

2)

Take, or recommend that the Board take, appropriate action to oversee the independence of the Auditor.

3)

Require the Auditor to report directly to the Committee.

4)

review and approve Midway's hiring policies regarding partners, employees and former partners and employees of the Auditor and former independent external auditor of Midway.

Performance & Completion by Auditor of its Work

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5)

Be directly responsible for the oversight of the work by the Auditor (including resolution of disagreements between management and the Auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work.

6)

Review annually the performance of the Auditor and recommend the appointment by the Board of a new, or re-election by Midway's shareholders of the existing, Auditor.

7)

Pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for Midway by the Auditor unless such non-audit services:

(a)

which are not pre-approved, are reasonably expected not to constitute, in the aggregate, more than 5% of the total amount of revenues paid by Midway to the Auditor during the fiscal year in which the non-audit services are provided;

(b)

were not recognized by Midway at the time of the engagement to be non-audit services; and

(c)

are promptly brought to the attention of the Committee by Midway and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Committee.

Internal Financial Controls & Operations of Midway

8)

Establish procedures for:

(a)

the receipt, retention and treatment of complaints received by Midway regarding accounting, internal accounting controls, or auditing matters; and

(b)

the confidential, anonymous submission by employees of Midway of concerns regarding questionable accounting or auditing matters.

Preparation of Financial Statements

9)

Discuss with management and the Auditor significant financial reporting issues and judgments made in connection with the preparation of Midway's financial statements, including any significant changes in Midway's selection or application of accounting principles, any major issues as to the adequacy of Midway's internal controls and any special steps adopted in light of material control deficiencies.

10)

Discuss with management and the Auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise material issues regarding Midway's financial statements or accounting policies.

11)

Discuss with management and the Auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on Midway's financial statements.

12)

Discuss with management Midway's major financial risk exposures and the steps management has taken to monitor and control such exposures, including Midway's risk assessment and risk management policies.

13)

Discuss with the Auditor the matters required to be discussed relating to the conduct of any audit, in particular:

(a)

The adoption of, or changes to, Midway's significant auditing and accounting principles and practices as suggested by the Auditor, internal auditor or management.

(b)

The management inquiry letter provided by the Auditor and Midway's response to that letter.

(c)

Any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, and any significant disagreements with management.

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Public Disclosure by Midway

14)

Review Midway's annual and quarterly financial statements, management discussion and analysis (MD&A) and earnings press releases before the Board approves and Midway publicly discloses this information.

15)

Review Midway's financial reporting procedures and internal controls to be satisfied that adequate procedures are in place for the review of Midway's public disclosure of financial information extracted or derived from its financial statements, other than disclosure described in the previous paragraph, and periodically assessing the adequacy of those procedures.

16)

Review disclosures made to the Committee by Midway's Chief Executive Officer and Chief Financial Officer during their certification process of Midway's financial statements about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in Midway's internal controls.

Manner of Carrying Out its Mandate

17)

Consult, to the extent it deems necessary or appropriate, with the Auditor but without the presence of management, about the quality of Midway's accounting principles, internal controls and the completeness and accuracy of Midway's financial statements.

18)

Request any officer or employee of Midway or Midway's outside counsel or Auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.

19)

Meet, to the extent it deems necessary or appropriate, with management, any internal auditor and the Auditor in separate executive sessions at least quarterly.

20)

Have the authority, to the extent it deems necessary or appropriate, to retain special independent legal, accounting or other consultants to advise the Committee.

21)

Make regular reports to the Board.

22)

Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

23)

Annually review the Committee's own performance.

24)

Provide an open avenue of communication among the Auditor, Midway's financial and senior management and the Board.

25)

Not delegate, other than to one or more independent members of the Committee, the authority to pre-approve, which the Committee must ratify at its next meeting, non-audit services to be provided by the Auditor.

C.

Limitation of Audit Committee's Role

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that Midway's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the Auditor.

Composition of the Audit Committee

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Name of member	Independent (1)	Financially literate (2)
Brian J. McAlister (3)	Yes	Yes
Brian E. Bayley (4)	Yes	Yes
George T. Hawes (5)	Yes	Yes

(1) To be considered to be independent, a member of the Committee must not have any direct or indirect 'material relationship' with Midway. A material relationship is a relationship which could, in the view of the Board of Directors of Midway, reasonably interfere with the exercise of a member's independent judgment.

(2) To be considered financially literate, a member of the Committee must have the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by Midway's financial statements.

(3) Mr. McAlister graduated from the University of Denver in 1979 with a Bachelor of Science degree in Business with a major in Finance; he passed the Canadian Securities Course in 1980 and has been a director of numerous public companies.

(4) Mr. Bayley graduated from the University of Victoria with a B.A. (Hon) in 1977; he received his MBA from Queen’s University in 1979 and is currently an officer and/or a director of numerous public companies.

(5) Mr. Hawes graduated in 1968 from the University of Notre Dame with a degree in Accountancy; from 1968 to 1972 he worked for the public accounting firm of Hurdman and Cranstoun (now part of KPMG); he received his CPA designation in 1971; he previously was the Chairman of the Audit Committee of Gentry Resources, Ltd.; and he currently sits on the Audit Committee of Proginet Corporation and is Chairman of Midway’s Audit Committee.

Nominating Committee

Midway’s Board of Directors have adopted the following charter for the Corporate Governance and Nominating Committee which sets out the Committee’s mandate, organizational, powers and responsibilities.  

CHARTER

FOR THE

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

OF

THE BOARD OF DIRECTORS

OF

MIDWAY GOLD CORP.

MEMBERSHIP

(a)

The Nominating and Corporate Governance Committee (the “Committee”) of Midway Gold Corp. (the “Company”) will be comprised of no fewer than three members as appointed by the Board of Directors (the “Board”).  The Committee will select its own Chairman.

(b)

A majority of the Committee will meet the independence requirements of the stock exchanges and markets on which the Company’s securities are listed or traded and applicable securities laws.

(c)

The first Committee will be appointed by the Board.  Subsequently, the Committee will recommend to the Board, the Committee members and the Committee Chair from among its members.

(d)

Each Committee member will serve at the pleasure of the Board for such term as the Board may decide or until such Committee member is no longer a Board member.

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MEETINGS

(a)

The Committee will meet in person or by telephone conference as frequently as necessary to carry out its responsibilities under this Charter, but in no event less than once per year.

(b)

The Committee Chair will be responsible for calling the meetings of the Committee, establishing meeting agenda with input from management and supervising the conduct of the meetings.

(c)

A majority of the number of the appointed Committee members will constitute a quorum for conducting business at a meeting of the Committee.

(d)

The Committee may request any officer or other employee of the Company, or any representative of the Company’s legal counsel or other advisors, to attend meetings or to meet with any members or representatives of the Committee.

MANDATE

The Committee’s purpose will be to:

(a)

identify individuals qualified to become Board members;

(b)

recommend candidates to fill Board vacancies and newly created Director positions;

(c)

recommend whether incumbent Directors should be nominated for re-election to the Board upon expiration of their terms; and

(d)

make recommendations to the Board with respect to developments in the areas of corporate governance and the practices of the Board.  It will also assume responsibility for developing the Company’s approach to governance issues.

IDENTIFICATION OF NEW DIRECTOR CANDIDATES

(a)

In consultation with the Chair of the Board, the Committee will identify individuals believed to be qualified to become Board members and recommend candidates to the Board to fill new or vacant positions.

(b)

In recommending candidates, the Committee shall consider such factors as it deems appropriate, including potential conflicts of interest, professional experience, personal character, diversity, outside commitments (for example, service on other boards) and particular areas of expertise - all in the context of the needs of the Board.

(c)

The Committee will also review the qualifications of, and make recommendations to the Board regarding Director nominees submitted to the Company in accordance with the Company’s by-laws or otherwise.

EVALUATE INCUMBENT DIRECTORS

The Committee (in consultation with the Chair of the Board) will evaluate and recommend whether an incumbent Director should be nominated for re-election to the Board upon expiration of such Director’s term.

SIZE AND COMPOSITION

The Committee (in consultation with the Chair of the Board) will make recommendations to the Board regarding the composition and the appropriate size of the Board.

COMMITTEE CHARTERS

The Committee will annually review the Company’s Committee Charters and recommend revisions to the Board as necessary.

ORIENTATION AND CONTINUING EDUCATION PROGRAMS

77

The Committee will provide, with the assistance of management, suitable programs and materials for the orientation of new Directors and the continuing education of incumbent Directors.

ASSIGNMENT OF COMMITTEE MEMBERS

The Committee will recommend assignment of Board members to the various Committees of the Board and recommend Committee Chairs.

INFORMATION PROVIDED TO BOARD MEETING

The Committee will assess the adequacy and quality of information provided to the Board prior to and during its meetings.

REVIEW OF TAKEOVER DEFENSES

The Committee will periodically review the Company’s need for a shareholders’ rights plan and/or other anti-takeover provisions, and will report to the Board whether such measures continue to be, or would be, as the case may be, in the best interest of shareholders.  The Committee will recommend revisions or termination as necessary to the Board.

SECURITIES COMPLIANCE PROCEDURES

The Committee will supervise and evaluate the Company’s securities compliance procedures and report to the Board on any necessary changes to such procedures and on the recommended adoption of any additional procedures.

PUBLIC, ENVIRONMENTAL AND SOCIAL ISSUES

The Committee will, from time to time, review the Company’s policies and programs in such areas as:

(a)

Equal Employment Opportunity;

(b)

Charitable Contributions;

(c)

Political Action/Legislative Affairs; and

(d)

Employee Health and Safety.

OTHER DELEGATED DUTIES OR RESPONSIBILITIES

The Committee will perform any other duties or responsibilities delegated to the Committee by the Board from time to time.

RESOURCES OF THE COMMITTEE

(a)

The Committee has the authority to engage independent legal, accounting or other advisors.

(b)

The Company will provide for appropriate funding, as determined by the Committee, for payment of compensation to any consultants and to any other advisors employed by the Committee, provided however that such funding will not exceed $25,000 annually without the prior approval of the Board.

(c)

The Committee will have the sole authority to engage search firms to assist in the identification of Director candidates and the sole authority to set the fees and other retention terms of such firms.

REPORTS TO THE BOARD

(a)

The Committee will regularly apprise the Board of any significant developments in the course of performing its Charter responsibilities.

(b)

The Chairman of the Committee will periodically report to the Board, the Company’s findings and recommendations.

78

(c)

The Committee will prepare and recommend any mandated annual disclosure regarding corporate governance practices to be included in the Company’s annual report.

CHARTER REVIEWS

The Committee will review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

PERFORMANCE ASSESSMENT

(a)

The Committee will annually review its own performance and effectiveness.

(b)

The Committee will also oversee the annual assessment of the full Board’s performance.

Compensation Committee

Midway’s Board of Directors have adopted the following charter for the Compensation Committee which sets out the Committee’s mandate, organizational, powers and responsibilities.  

CHARTER

FOR

THE COMPENSATION COMMITTEE

OF

THE BOARD OF DIRECTORS

OF

MIDWAY GOLD CORP.

I.

MANDATE

The Compensation Committee is a committee of the Board of Directors with the primary function to assist the Board of Directors in fulfilling its oversight responsibilities by:

·

Reviewing and approving and then recommending to the Board of Directors salary, bonus, and other benefits, direct or indirect, and any change control packages of the Chairperson of the Board of Directors (if any), the President, the Chief Executive Officer and other members of the senior management team;

·

Recommendation of salary guidelines to the Board of Directors;

·

Administration of the Company’s compensation plans, including stock option plans, outside directors compensation plans, and such other compensation plans or structures as are adopted by the Company from time-to-time;

II.

COMPOSITION AND MEETINGS

The Compensation Committee shall be comprised at all times of three or more directors as determined by the Board of Directors, each of whom shall be independent directors in accordance with Multilateral Instrument 58-201.  A director is considered to be “independent” if he or she has no direct or indirect material relationship which could in the view of the Board of Directors reasonably interfere with the exercise of a director’s independent judgment.  Notwithstanding the foregoing, a director shall be considered to have a material relationship with the Company (and therefore shall be considered a “dependent” director) if he or she falls in one of the categories listed in Schedule “A” attached hereto.  Each member will have, to the satisfaction of the Board of Directors, sufficient skills and/or experience which are relevant and will be of contribution to the carrying out of the mandate of the Compensa tion Committee.

The members of the Compensation Committee shall be elected by the Board of Directors at the annual organizational meeting of the Board of Directors or until their successors are duly elected and qualified.  The Board of Directors may remove a member of the Compensation Committee at any time in its sole discretion by resolution of the Board of Directors.  Unless a Chairperson is elected by the full Board of Directors, the members of the

79

Compensation Committee may designate a Chairperson by majority vote of the full membership of the Compensation Committee.  

The Compensation Committee shall meet at least once annually or more frequently as circumstances require.  The Compensation Committee may ask members of management or others to attend meetings or to provide information as necessary.  The Compensation Committee may retain the services of outside compensation specialists to the extent required.

Quorum for the transaction of business at any meeting of the Compensation Committee shall be a majority of the number of members of the Compensation Committee or such greater number as the Compensation Committee shall by resolution determine.

Meetings of the Compensation Committee shall be held from time to time as the Compensation Committee or the Chairperson of the Compensation Committee shall determine upon 48 hours notice to each of its members.  The notice period may be waived by a quorum of the Compensation Committee.

III.

RESPONSIBILITIES AND DUTIES

Responsibilities, duties and powers of the Compensation Committee include:

1.

Annually reviewing and revising this Charter as necessary with the approval of the Board of Directors.  

2.

Providing annual reports to the Board of Directors on compensation matters.

3.

Annually reviewing and making recommendations to the Board of Directors upon the recommendation of members of senior management with respect to the Company’s overall compensation and benefits philosophies and programs for employees, including base salaries, bonus and any incentive plans, deferred compensation and retirement plans and share purchase or issuance plans including stock options.  As part of its review process, the Compensation Committee will review peer group and other industry compensation data reported through surveys and other sources.

4.

Annually reviewing and approving corporate goals and objectives relevant to the Chief Executive Officer’s and other members of the senior management team’s compensation and evaluating their performance in light of those corporate goals and objectives.  Based on such evaluation, annually reviewing and making recommendations to the Board of Directors with respect to compensation and benefit programs for the Chief Executive Officer and doing same for other members of the senior management team including base salaries, bonuses or other performance incentives and stock options.  In setting the salary of the Chief Executive Officer and other members of the senior management team, the Compensation Committee will take into consideration salaries paid to others in similar positions in the Company’s industry.  

5.

Reviewing and making recommendations to the Board of Directors with respect to the implementation or variation of stock option plans, share purchase plans, restricted share plans, compensation and incentive plans and retirement plans.  The number of options, restricted shares or other compensation granted will give consideration to the potential contribution an individual may make to the Company’s success.

6.

The Compensation Committee shall prepare a report on executive compensation on an annual basis in connection with the preparation of the Company’s annual information circular or as otherwise required pursuant to applicable securities laws.  The Compensation Committee is also responsible to review all other executive compensation disclosure before it is filed with regulators and/or made public.

7.

The Compensation Committee is responsible for reviewing and recommending to the Board of Directors the compensation of the Board of Directors including, annual retainer, meeting fees, option grants and other benefits conferred upon the Board of Directors.

80

8.

The Compensation Committee is responsible for viewing and submitting to the Board of Directors as a whole, recommendations concerning executive compensation and compensation plan matters.  Unless such matters are delegated specifically to the Compensation Committee, the Compensation Committee shall only make recommendations to the Board of Directors for their consideration and approval, if appropriate.  The Board of Directors will have the responsibility to instruct management to implement the directives.

9.

The Compensation Committee may engage and compensate any outside advisor that it determines to be necessary from time to time to carry out its responsibilities.

CODE OF ETHICS

The board has adopted a Code of Ethics.

The code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

1.

Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

2.

Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;

3.

Compliance with applicable governmental laws, rules and regulations;

4.

The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

5.

Accountability for adherence to the code.

COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION

There were no compensation committee or board interlocks among the members of our board of directors.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of July 24, 2007 by:

·

each person who is known by us to beneficially own more than 5% of our issued and outstanding shares of common stock;

·

our named executive officers;

·

our directors; and

·

all of our executive officers and directors as a group.

Name of Shareholder	Address	Amount and Nature of Beneficial Ownership	Percent of Class(1)
Directors and Named Executive Officers
Alan D. Branham		844,500	1.8	%
Doris  Meyer		100,000	0.2	%
Brian J. McAlister		246,000	0.5	%

81

Brian E. Bayley	268,250		0.6	%
George T. Hawes	3,672,300		7.9	%
William M. Sheriff (2)	2,818,318		6.1	%
William A. Lupien	1,148,356	(3)	2.5	%
Total	9,097,724		19.7	%
5% Shareholders
George T. Hawes	3,672,300		7.9	%
Barrick Gold Corporation	4,000,000		8.7	%

(1)

The information as to securities beneficially owned or over which a director or officer will exercise control or direction, not being within the knowledge of Midway, has been furnished by the respective directors and officers individually based on shareholdings in Midway as of the date of this prospectus.

(2)

All of Mr. Sheriff’s shares are held in two private companies controlled by Mr. Sheriff.

(3)

848,238 of these Midway shares are held by Kudu Partners, LP, a private company owned as to 4.531% by Mr. Lupien and the balance by other shareholders.  Mr. Lupien may be considered to jointly exercise control and direction over these Kudu Partners, LP shares.

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS

Except for the transactions described in the section entitled “Retirement, Resignation or Termination Plans” on page 68 of this prospectus, none of our directors, named executive officers or more-than-five-percent shareholders, nor any associate or affiliate of the foregoing, have any interest, direct or indirect, in any transaction, from our inception to the date of this prospectus, or in any proposed transactions which has materially affected or will materially affect us.

FINANCIAL STATEMENTS

82

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars)

Years ended December 31, 2006 and 2005

83

KPMG LLP

Chartered Accountants

PO Box 10426  777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Board of Directors of Midway Gold Corp.

We have audited the accompanying consolidated balance sheets of Midway Gold Corp. ("the Company") and subsidiaries as of December 31, 2006 and 2005 and the related consolidated statements of operations and deficit and cash flows for each of the years in the three-year period ended December 31, 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and subsidiaries as of December 31, 2006 and 2005 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2006 in conformity with U.S. generally accepted accounting principles.

Chartered Accountants

“KPMG LLP”

Vancouver, Canada

March 30, 2007

84

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED BALANCE SHEETS

(Prepared under US GAAP (note 2 (a))

(Expressed in Canadian dollars)

			December 31, 2006		December 31, 2005
Assets
Current assets:
	Cash and cash equivalents	$	8,568,839	$	1,280,982
	Amounts receivable		84,444		52,735
	Prepaid expenses		79,896		34,472
			8,733,179		1,368,189
Reclamation deposit			192,715		165,825
Equipment (note 4)			66,622		7,141
Deferred acquisition costs (note 5 (c))			23,316		-
Mineral properties (note 5)			7,679,050		6,601,349
		$	16,694,882	$	8,142,504
Liabilities and Stockholders' Equity
Current liabilities
	Accounts payable and accrued liabilities	$	523,211	$	268,906
	Promissory note (note 5)		83,320		5,459
			606,531		274,365
Promissory note (note 5)			-		83,148
Future income tax liability			-		621,000
Stockholders' equity (note 6)
	Common stock authorized -  unlimited, no par value
	Issued - 35,927,950 (2005 - 26,629,950)		37,871,763		22,763,399
	Additional paid-in capital		4,620,560		3,563,336
	Deficit accumulated during the exploration stage		(26,403,972)		(19,162,744)
			16,088,351		7,163,991
		$	16,694,882	$	8,142,504
Nature of operations (note 1)
Commitments (note 5)
Contingency (note 7)
Subsequent events (notes 5 and 13)
Approved on behalf of the Board:
"George Hawes" Director		"Alan Branham" Director

The accompanying notes are an integral part of these consolidated financial statements.

85

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

 (Prepared under US GAAP (note 2 (a))

(Expressed in Canadian dollars)

			Year ended December 31, 2006		Year ended December 31, 2005		Year ended December 31, 2004		Cumulative period from inception (May 14, 1996) to December 31, 2006
Expenses
	Consulting (note 8)	$	37,625	$	8,546		36,759	$	178,782
	Depreciation		19,282		5,112		5,447		41,337
	Interest and bank charges		12,242		1,499		1,346		812,196
	Investor relations		282,034		91,039		55,847		658,568
	Legal, audit and accounting		148,945		141,995		121,146		865,513
	Management fees		-		-		50,000		265,000
	Mineral exploration expenditures (Schedule)		6,432,052		3,791,850		1,665,301		23,990,858
	Office and administration (note 8)		147,396		89,584		57,162		745,400
	Salaries and benefits		862,719		554,984		1,066,706		3,262,791
	Transfer agent and filing fees		26,121		21,290		16,529		191,743
	Travel		67,024		31,903		42,639		408,019
Loss before undernoted			8,035,440		4,737,802		3,118,882		31,420,207
Other income (expenses):
	Foreign exchange gain (loss)		(22,983)		(39,897)		51,336		198,038
	Interest income		196,195		41,763		8,844		378,853
	Recovery mineral property interests		-		-		-		2,806,312
	Write off of mineral property interests		-		-		-		(25,189)
	Other income		-		87,221		-		87,221
			173,212		89,087		60,180		3,445,235
Net loss before income tax			7,862,228		4,648,715		3,058,702		27,974,972
	Income tax recovery		621,000		246,000		64,000		1,571,000
Net loss		$	7,241,228	$	4,402,715		2,994,702	$	26,403,972
Basic and diluted loss per share		$	0.23	$	0.18	$	0.16
Weighted average number of shares outstanding			32,000,213		24,064,403		19,037,085

The accompanying notes are an integral part of these consolidated financial statements.

86

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Prepared under US GAAP (note 2 (a))

(Expressed in Canadian dollars)

				Year ended December 31, 2006		Year ended December 31, 2005		Year ended December 31, 2004		Cumulative period from inception (May 14, 1996) to December 31, 2006
Cash provided by (used in):
Operating activities:
	Net loss		$	(7,241,228)	$	(4,402,715)	$	(2,994,702)	$	(26,403,972)
	Items not involving cash:
		Depreciation		19,282		5,112		5,447		296,319
		Stock-based compensation		992,400		488,075		941,478		2,979,953
		Unrealized foreign exchange gain		(5,287)		(20,000)		(69,000)		(294,287)
		Non-cash interest expense		-		-		-		234,765
		Income tax recovery		(621,000)		(246,000)		(64,000)		(1,571,000)
		Recoveries mineral property interests		-		-		-		(2,806,312)
		Write off of mineral property interests		-		-		-		25,189
	Change in non-cash working capital items:
		Amounts receivable		(31,709)		(23,481)		(6,014)		(85,793)
		Prepaid expenses		(45,424)		(11,952)		82,149		(100,529)
		Accounts payable and accrued liabilities		254,305		(75,810)		239,696		725,655
				(6,678,661)		(4,286,771)		(1,864,946)		(27,000,012)
Investments activities:
	Proceeds on sale of subsidiary			-		-		-		254,366
	Mineral property acquisitions			(989,701)		(482,001)		(324,768)		(12,402,244)
	Deferred acquisition costs			(23,316)		-		-		(23,316)
	Purchase of equipment			(78,763)		-		(15,862)		(1,346,444)
	Reclamation deposit			(26,890)		(85,949)		(50,058)		(660,561)
				(1,118,670)		(567,950)		(390,688)		(14,178,199)
Financing activities:
	Advance from Red Emerald Ltd.			-		-		-		12,010,075
	Common stock issued, net of issue costs			15,085,188		5,486,170		2,498,789		31,412,370
	Convertible debenture			-		-		-		6,324,605
				15,085,188		5,486,170		2,498,789		49,747,050
Increase in cash				7,287,857		631,449		243,155		8,568,839
Cash and cash equivalents, beginning of year				1,280,982		649,533		406,378		-
Cash and cash equivalents, end of year			$	8,568,839	$	1,280,982	$	649,533	$	8,568,839
	Interest received		$	196,195	$	41,763	$	8,844
Supplemental disclosure with respect to cash flows (note 10)

The accompanying notes are an integral part of these consolidated financial statements.

87

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

 (Prepared under US GAAP (note 2 (a))

(Expressed in Canadian dollars)

		Number of shares	Common stock	Additional paid-in capital	Accumulated deficit during the exploration stage	Total stockholders' equity
Balance, May 14, 1996 (date of inception)		-	$-	$-	$-	$-
Shares issued:
	Private placements	700,000	168,722	-	-	168,722
Net loss		-	-	-	(114,800)	(114,800)
Balance, December 31, 1996		700,000	168,722	-	(114,800)	53,922
Shares issued:
	Initial public offering	2,025,000	590,570	-	-	590,570
	Principal shares	750,000	7,500	-	-	7,500
	Private placement	1,000,000	1,932,554	321,239	-	2,253,793
	Exercise of share purchase warrants	1,000,000	2,803,205	-	-	2,803,205
	Acquisition of mineral property interest	1,000,000	2,065,500	-	-	2,065,500
	Finders fee	150,000	309,825	-	-	309,825
Net loss		-	-	-	(2,027,672)	(2,027,672)
Balance, December 31, 1997		6,625,000	7,877,876	321,239	(2,142,472)	6,056,643
Shares issued:
	Exercise of share purchase warrants	100,000	332,124	(32,124)	-	300,000
	Acquisition of mineral property interest	200,000	246,000	-	-	246,000
	Finders fee	150,000	224,250	-	-	224,250
Net loss		-	-	-	(1,943,674)	(1,943,674)
Balance, December 31, 1998		7,075,000	8,680,250	289,115	(4,086,146)	4,883,219
Consolidation of shares on a two for one new basis		(3,537,500)	-	-	-	-
Net loss		-	-	-	(2,378,063)	(2,378,063)
Balance, December 31, 1999		3,537,500	8,680,250	289,115	(6,464,209)	2,505,156
Net loss		-	-	-	(4,718,044)	(4,718,044)
Balance, December 31, 2000		3,537,500	8,680,250	289,115	(11,182,253)	(2,212,888)
Net earnings		-	-	-	2,427,256	2,427,256
Balance, December 31, 2001		3,537,500	8,680,250	289,115	(8,754,997)	214,368
Shares issued:
	Private placement	4,824,500	2,133,786	246,839	-	2,380,625
	Exercise of share purchase warrants	4,028,000	1,007,000	-	-	1,007,000
	Exercise of stock options	32,000	12,800	-	-	12,800
	Financing shares issued	31,250	35,000	-	-	35,000
	Acquisition of mineral property interest	4,500,000	3,600,000	-	-	3,600,000
	Share issue costs	-	(544,260)	-	-	(544,260)
Stock based compensation		-	-	27,000	-	27,000
Net loss		-	-	-	(1,657,651)	(1,657,651)
Balance, December 31, 2002		16,953,250	14,924,576	562,954	(10,412,648)	5,074,882
Shares issued:
	Private placement	700,000	638,838	201,162	-	840,000
	Exercise of share purchase warrants	294,500	73,625	-	-	73,625
	Share issue costs	-	(19,932)	-	-	(19,932)
Stock based compensation		-	-	531,000		531,000
Net loss		-	-	-	(1,352,679)	(1,352,679)
Balance, December 31, 2003		17,947,750	15,617,107	1,295,116	(11,765,327)	5,146,896
Shares issued:
	Private placement	2,234,400	2,122,269	175,407	-	2,297,676
	Exercise of share purchase warrants	213,500	300,892	(46,267)	-	254,625
	Exercise of stock options	250,000	157,000	(27,000)	-	130,000
	Share issue costs	-	(183,512)	-	-	(183,512)
Stock based compensation		-	-	941,478	-	941,478
Net loss		-	-	-	(2,994,702)	(2,994,702)
Balance, December 31, 2004, carried forward		20,645,650	18,013,756	2,338,734	(14,760,029)	5,592,461

The accompanying notes are an integral part of these consolidated financial statements.

88

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (continued)

 (Prepared under US GAAP (note 2 (a))

(Expressed in Canadian dollars)

		Number of shares	Common stock	Additional paid-in capital	Accumulated deficit during the exploration stage	Total stockholders' equity
Balance, December 31, 2004 brought forward		20,645,650	18,013,756	2,338,734	(14,760,029)	5,592,461
	Private placement	4,075,800	3,266,095	773,335	-	4,039,430
	Exercise of stock options	165,500	124,364	(31,964)	-	92,400
	Exercise of share purchase warrants	1,743,000	1,543,844	(4,844)	-	1,539,000
	Share issue costs	-	-	-	-	-
Stock based compensation		-	(184,660)	488,075	-	303,415
Net loss		-	-	-	(4,402,715)	(4,402,715)
Balance, December 31, 2005		26,629,950	22,763,399	3,563,336	(19,162,744)	7,163,991
Shares issued:
	Private placements	5,725,000	10,760,355	944,645	-	11,705,000
	Exercise of stock options	306,000	325,530	(111,330)	-	214,200
	Exercise of share purchase warrants	3,227,000	4,182,991	(768,491)	-	3,414,500
	Acquisition of mineral property interest	40,000	88,000	-	-	88,000
	Share issue costs	-	(248,512)	-	-	(248,512)
Stock based compensation		-	-	992,400	-	992,400
Net loss		-	-	-	(7,241,228)	(7,241,228)
Balance, December 31, 2006		35,927,950	$37,871,763	$4,620,560	$(26,403,972)	$16,088,351

The accompanying notes are an integral part of these consolidated financial statements.

89

MIDWAY GOLD CORP.

(an exploration stage company)

SCHEDULE OF MINERAL EXPLORATION COSTS

 (Prepared under US GAAP (note 2 (a))

(Expressed in Canadian dollars)

		Year ended December 31, 2006	Year ended December 31, 2005	Year ended December 31, 2004	Cumulative period from inception (May 14, 1996) to December 31, 2006
Exploration costs incurred are summarized as follows:
Midway project
	Assays and analysis	$159,184	$45,498	$2,659	$207,341
	Communication	2,995	2,980	678	9,513
	Drilling	933,246	294,412	4,357	1,232,015
	Engineering and consulting	639,829	173,437	58,383	2,619,553
	Environmental	36,973	57,186	-	94,159
	Field office and supplies	45,381	30,544	11,794	87,719
	Legal and accounting	-	-	-	10,419
	Property maintenance and taxes	57,357	79,429	92,345	303,506
	Reclamation costs	16,231	7,790	-	24,021
	Reproduction and drafting	7,091	1,742	99	20,803
	Travel, transportation and accomodation	92,771	31,682	17,248	202,579
		1,991,058	724,700	187,563	4,811,628
Spring Valley project
	Assays and analysis	777,730	428,107	59,397	1,327,567
	Communication	3,816	2,289	3,231	10,307
	Drilling	1,935,887	1,386,351	479,399	4,130,337
	Engineering and consulting	1,041,001	358,798	253,412	1,750,214
	Environmental	108,923	37,773	-	146,696
	Equipment rental	-	-	35,558	64,651
	Field office and supplies	109,102	104,934	39,908	263,347
	Operator fee	-	-	56,002	108,339
	Property maintenance and taxes	120,240	71,625	54,978	262,557
	Reclamation costs	21,338	7,477	-	28,815
	Reproduction and drafting	22,738	2,146	3,309	28,933
	Travel, transportation and accomodation	221,551	138,937	30,077	393,958
		4,362,326	2,538,437	1,015,271	8,515,721
Pioche/Mineral Mountain project
	Acquisition costs and option payments	-	-	40,340	40,340
	Assays and analysis	-	-	13,037	13,037
	Drilling	-	-	232,205	232,205
	Engineering and consulting	-	-	38,212	38,212
	Field office and supplies	-	-	16,236	16,236
	Property maintenance and taxes	-	-	49,750	49,750
	Reclamation costs	-	-	32,683	32,683
	Travel, transportation and accomodation	-	-	21,124	21,124
		-	-	443,587	443,587
	Sub-total balance carried forward	6,353,384	3,263,137	1,646,421	13,770,936

The accompanying notes are an integral part of these consolidated financial statements.

90

MIDWAY GOLD CORP.

(an exploration stage company)

SCHEDULE OF MINERAL EXPLORATION COSTS (continued)

 (Prepared under US GAAP (note 2 (a))

(Expressed in Canadian dollars)

		Year ended December 31, 2006	Year ended December 31, 2005	Year ended December 31, 2004	Cumulative period from inception (May 14, 1996) to December 31, 2006
	Sub-total balance brought forward	6,353,384	3,263,137	1,646,421	13,770,936
Ruby Violet project
	Assays and analysis	-	-	-	20,499
	Communication	-	-	-	108,762
	Depreciation	-	-	-	254,982
	Drilling	-	-	-	467,372
	Engineering and consulting	-	-	-	3,120,317
	Equipment rental	-	-	-	337,577
	Field office and supplies	-	-	-	277,119
	Foreign exchange gain	-	-	-	(38,134)
	Freight	-	-	-	234,956
	Interest on convertible loans	-	-	-	1,288,897
	Legal and accounting	-	-	-	453,269
	Marketing	-	-	-	91,917
	Mining costs	-	-	-	693,985
	Processing and laboratory supplies	-	-	-	941,335
	Property maintenance and taxes	-	-	-	298,752
	Security	-	-	-	350,584
	Travel, transportation and accomodation	-	-	-	392,031
	Utilities and water	-	-	-	59,425
		-	-	-	9,353,645
Black Prince project
	Communication	-	-	-	938
	Drilling	-	-	-	77,167
	Engineering and consulting	-	-	-	78,698
	Equipment rental	-	-	-	10,800
	Field office and supplies	-	-	-	3,397
	Geological and geophysical	-	-	-	63,481
	Legal and accounting	-	-	-	1,163
	Property maintenance and taxes	-	-	-	13,249
	Reproduction and drafting	-	-	-	1,179
	Travel, transportation and accomodation	-	-	-	7,255
	Recoveries	-	-	-	(40,000)
		-	-	-	217,327
Property investigations
	Assays and analysis	22,057	106,986	-	129,043
	Drilling	-	169,129	-	169,129
	Engineering and consulting	21,359	113,034	18,880	175,962
	Equipment rental	2,145	6,998	-	9,143
	Field office and supplies	-	13,179	-	13,179
	Operator fee	30,923	72,531	-	103,454
	Property maintenance and taxes	(5,828)	6,906	-	1,078
	Reclamation costs	2,085	1,685	-	3,770
	Reproduction and drafting	5,927	38,265	-	44,192
		78,668	528,713	18,880	648,950
		$6,432,052	$3,791,850	$1,665,301	$23,990,858

The accompanying notes are an integral part of these consolidated financial statements.

91

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

1. Nature of operations:

Midway Gold Corp. (the “Company”) was incorporated on May 14, 1996 under the laws of the Province of British Columbia and its principal business activities are the acquisition, exploration and development of mineral properties.

The Company is in the process of exploring and developing its mineral properties and has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The recoverability of amounts shown for mineral properties is dependent upon the discovery of economically recoverable ore reserves in its mineral properties, the ability of the Company to obtain the necessary financing to complete development, confirmation of the Company’s interest in the underlying mineral claims and upon future profitable production from or proceeds from the disposition of its mineral properties.

These financial statements have been prepared in accordance with accounting principles applicable to a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business.  As at December 31, 2006, the Company had an accumulated deficit of $26,403,972, working capital of $8,126,648 which may not be sufficient to achieve the Company’s business objectives.  Management anticipates that the Company will continue to raise adequate funding through equity financings.  The Company’s continuing operations and the ability of the Company to discharge its liabilities and fulfill its commitments as they come due is dependent upon the ability of the Company to continue to obtain additional financial resources.  Failure to continue as a going concern would require the restatement of assets and liabilities on a liquidation basis, which could differ materially from the going concern basis. &nbs p;

2. Significant accounting policies:

(a)

Basis of presentation:

These consolidated financial statements have been prepared under accounting principles generally accepted in the United States of America (“US GAAP”).  Previously, the Company prepared its financial statements under Canadian GAAP. The major differences between Canadian and US GAAP, which affect the Company, is the accounting treatment of mineral property costs described in Notes 3.  These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

(b)

Cash and cash equivalents:

Cash and cash equivalents are comprised of cash and highly liquid investments having original terms to maturity of 90 days or less when acquired.

(c)

Equipment:

Equipment is recorded at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over three to five years, which represents the estimated useful lives of the assets.

(d)

Mineral properties:

Emerging Issues Task Force (“EITF”) No. 04-02 – “Whether Mineral Rights are Tangible or Intangible Assets”, concluded that mineral rights are tangible assets.  Accordingly, the Company continues to capitalize mineral property acquisition costs pursuant to US GAAP.  Exploration expenditures are expensed until an independent feasibility study has determined that the property is capable of commercial production and mine development begins.  At the Company’s current stage of exploration no economically recoverable reserves have been identified on any of its properties.  However, there are sufficient mineralized areas in the Midway and Spring Valley mineral properties that the Company has continued to defer and capitalize mineral property acquisition costs related to these

92

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

properties.  Exploration costs will continue to be expensed as they are incurred until an independent feasibility study has been completed and mine development begins.

Property acquisition costs include cash consideration and the fair value of common shares issued for mineral property interests. For property acquired under an option agreement or by joint venture, where payments are made at the sole discretion of the Company, payments are recorded in the accounts at the time of payment.

The amounts shown for mineral properties represent costs incurred to date, less recoveries and write-downs, and are not intended to reflect present or future values.

(e)

Asset retirement obligations:

The Company records the fair value of the liability for closure and removal costs associated with the legal obligations upon retirement or removal of any tangible long-lived assets in accordance with Statements of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations”.  The initial recognition of any liability will be capitalized as part of the asset cost and depreciated over its estimated useful life.  In subsequent periods, the liability will be adjusted for any changes in the amount.  To date, the Company has not incurred any asset retirement obligations.

(f)

Impairment of long-lived assets

Long-lived assets are continually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

(g)

Stock-based compensation:

The Company has a stock option plan that is described in note 6(c).

On January 1, 2006 the Company has adopted SFAS No. 123R (revised), “Share-Based Payment” under the modified prospective transition option.  Under this transition option, any new option granted in 2006, modified in 2006 or unvested at the date of adoption are accounted for under SFAS 123R in 2006.  Under SFAS No. 123R the Company is required to measure and record to the financial statements the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for such award.  SFAS 123R requires estimates of forfeitures of unvested instruments at the grant date in determining the total compensation to be recognized.  Prior to the adoption of SFAS No. 123R, the Company followed the fair value method allowable under SFAS No. 123 and recognized the fair value of an empl oyee’s services award over the vesting period and accounted for forfeitures only as they occurred.  Stock based payments to non-employees are measured at the fair value of consideration received or equity instruments issued, whichever is more reliable and are periodically re-measured until counter party performance is complete.  

The offset to the recorded compensation cost is to additional paid-in capital. Consideration received on the exercise of stock options is recorded as share capital and the related additional paid-in capital is transferred to share capital.

(h)

Income taxes:

The Company uses the asset and liability method of accounting for income taxes in accordance with Statements of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. Under this method future income

93

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

tax assets and liabilities are determined based on differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences), and losses carried forward. Future income tax assets and liabilities are measured using the enacted tax rates which will be in effect when the temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in operations in the period in which the change is enacted. The amount of future income tax assets recognized is limited to the amount of the benefit that is more likely than not to be realized.

(i)

Net loss per share:

Basic net loss per share is computed by dividing the net loss for the period attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic loss per share) and potentially dilutive shares of common stock.  Diluted net loss per share is not presented separately from basic net loss per share as the conversion of outstanding stock options and warrants into common shares would be anti-dilutive.  At December 31, 2006, the total number of potentially dilutive shares of common stock excluded from basic net loss per share was 5,421,000 (December 31, 2005 – 5,326,500; December 31, 2004 – 3,233,000).

(j)

Foreign currency translation:

Transactions and account balances originally stated in currencies other than the Canadian dollar have been translated into Canadian dollars as follows:

§

Revenue and expense items at the rate of exchange in effect on the dates they occur.

§

Non-monetary assets and liabilities at the rate of exchange in effect on the dates the assets were acquired or the liabilities were incurred.

§

Monetary assets and liabilities at the exchange rate at the balance sheet date.

Exchange gains and losses are recorded in operations in the period in which they occur, except for exchange gains and losses related to translation of monetary assets and liabilities associated with mineral properties, which are deferred and included in mineral properties.

(k)

Share capital:

The Company records proceeds from share issuances, net of issue costs. Shares issued for consideration other than cash are valued at the quoted market price on the date the agreement to issue the shares was reached and announced for business combinations and at the date of issuance for other non-monetary transactions.

(l)

Warrants:

The Company accounts for warrants using the fair value method.  Under this method, the value of warrants is measured at fair value at the grant date using the Black-Scholes valuation model and recorded as share capital when the warrants are exercised.

(m)

Estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of management estimates include the determination of impairment of

94

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

mineral properties and equipment, useful lives for amortization, valuation allowances for future income tax assets, the assumptions used in determining fair value of non-cash stock-based compensation and amounts of reclamation and environmental obligations. Financial results as determined by actual events may differ from these estimates.

(n)

Recent United States Accounting Pronouncements:

September 2006 - FASB issued Statement No. 157, “Fair Value Measures”.  This Statement defines fair value, establishes a framework for measuring fair value, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. Statement No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of Statement No. 157 will change current practice. Statement No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact of Statement No. 157 but does not expect that it will have a material impact on the consolidated financial statements.

June 2006 - FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109” (“FIN 48”).  This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB No. 109, “Accounting for Income Taxes.”  This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  This Interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006.   The Company has determined that the implementation of FIN 48 will likely not have an impact on its res ults of operations or financial position.

In May 2005, FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections – A Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”), which is effective for fiscal years beginning after December 15, 2005.  SFAS 154 requires that changes in accounting policy be accounted for on a retroactive basis.  The Company adopted SFAS 154 on January 1, 2006.

(o)

Comparative figures:

Certain of the comparative figures have been reclassified to conform to the presentation in the current year.

3. Reconciliation to Canadian GAAP

The major difference between Canadian and US GAAP, which affected the Company, are the accounting treatment of mineral property exploration costs.   Under Canadian GAAP, companies have the option to capitalize mineral property acquisition costs and exploration expenditures until such time as it is determined that further work is not warranted, at which point deferred property costs would be written off.   Prior to the 2006 fiscal year, under Canadian GAAP all costs related to mineral properties were capitalized on a property-by-property basis. Such costs include acquisition costs, exploration, development, depreciation of equipment used for exploration and development activities and direct administrative expenditures, net of any recoveries. When there is little prospect of further work on a property being carried out by the Company, the remaining deferred costs of that property are written down to their estimated recoverable amount du ring the period such determination is made.

On December 31, 2006, the Company changed its accounting policy for accounting for mineral properties under Canadian GAAP to be consistent with US GAAP.  This accounting policy change was applied on a retroactive basis with restatement of prior year Canadian GAAP statements.

95

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

After taking into account the change in accounting for exploration costs, there are no material differences between US GAAP and Canadian GAAP in these consolidated financial statements.

4. Equipment:

	December 31, 2006
	Cost	Accumulated depreciation	Net book value
Computer equipment	$38,568	$19,166	$19,402
Office equipment	16,249	14,191	2,058
Field equipment	17,862	2,484	15,378
Trucks	37,117	7,333	29,784
	$109,796	$43,174	$66,622
	December 31, 2005
	Cost	Accumulated depreciation	Net book value
Computer equipment	$29,196	$22,055	$7,141

5. Mineral properties:

The continuity of expenditures on mineral properties is as follows:

	Midway (a)	Spring Valley (b)	Total
December 31, 2003	$5,589,043	$116,930	$5,705,973
Acquistion costs and option payments	-	324,768	324,768
December 31, 2004	5,589,043	441,698	6,030,741
Acquisition costs and option payments	242,243	328,365	570,608
December 31, 2005	5,831,286	770,063	6,601,349
Acquisition costs and option payments	279,578	798,123	1,077,701
December 31, 2006	$6,110,864	$1,568,186	$7,679,050

(a)

Midway property, Nevada:

During 2001, the Company entered into an option agreement with Rex Exploration Corp. (“Rex”) to earn a 65% interest in the Midway property, a mineral property consisting of 135 unpatented mining claims located in central Nye County, Nevada. Rex had an underlying option agreement with the owners of the mineral property whereby Rex could earn a 100% interest in the mineral property, subject to a sliding scale royalty of between 2% and 7% of net smelter returns (“NSR”), by making option payments totaling US$275,000 over the period to August 2003 and making an option exercise payment of US$3,000,000 on August 15, 2004 (the "Underlying

96

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

Agreement"). This option exercise payment date was subsequently extended to August 15, 2005. In order for the Company to earn its 65% interest in the property, the Company agreed to make the US$275,000 option payments to the owners required pursuant to the Underlying Agreement, incur an additional US$925,000 on exploration and development expenditures on the property by August 15, 2004, and pay the Company's 65% share of the US$3,000,000 option exercise payment due August 15, 2004. However, effective October 30, 2002, the Company acquired all of the issued and outstanding shares of Rex in exchange for 4,500,000 common shares of the Company valued at $3.6 million.

During the period October 15, 2002 to June 8, 2004 Newmont Mining Corporation had an option to acquire a 51% interest in the Midway property before terminating its option.   

On November 2, 2004, the Underlying Agreement was amended whereby the Company has the option to acquire a 100% interest in the Midway property by further payments totaling US$200,000 on or before August 15, 2005 (paid), subject only to a sliding scale royalty on NSR from any commercial production of between 2% to 7%, based on changes in gold prices.

In addition, the original option exercise payment of US$3,000,000 due August 15, 2005 was replaced with a series of annual payments as advances upon the royalty payable from commercial production as follows:

Option payment US$	Dates
250,000	On or before August 15, 2006 (paid)
250,000	On or before August 15, 2007
300,000	On or before August 15, 2008 and annually thereafter

 (b)

Spring Valley property, Nevada:

On August 15, 2003, the Company entered into an option agreement (the “Spring Valley Option Agreement”) with an unrelated individual (the “Owner”) whereby the Company has an option to earn a 100% interest in 44 unpatented mining claims (the “Spring Valley Claims”). Under the terms of the Spring Valley Option Agreement, the Company paid an initial option payment of US$75,000 to the Owner of the Spring Valley Claims. In order for the Company to earn its 100% interest in the Spring Valley Claims, the Company is required to maintain the mineral claims in good standing and to make the option payments and incur minimum expenditures as follows:

Option payment US$	Expenditures US$	Dates
100,000	150,000	On or before August 15, 2004 (paid and incurred)
100,000	150,000	On or before August 15, 2005 (paid and incurred)
200,000	150,000	On or before August 15, 2006 (paid and incurred)
3,000,000	150,000	On or before August 15, 2007

97

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

The Company has the option to make the final payment of US$3,000,000 at any time. Upon making the final payment, the Company will acquire a 100% interest in the Spring Valley Claims, subject only to the Owner’s royalty on NSR from commercial production over 500,000 ounces. The royalty is on a sliding scale increasing from 2% to 7% based on changes in gold prices. In addition, the Owner is entitled to a 1% overriding royalty on NSR from commercial production on all lands owned by the Company or an affiliate and located outside, but within a one half (1/2) mile perimeter of the Spring Valley Claims.

On September 1, 2003, the Company entered into an option agreement (the “SV Option Agreement”) with an unrelated company (the “Optionor”) to acquire all right, title and interest in 28 unpatented mining claims (the “SV Claims”), subject to a 2% net smelter royalty on commercial production payable to the Optionor. The SV Claims are contiguous to the Spring Valley Claims. Under the terms of the SV Option Agreement, the Company is required to maintain the mineral claims in good standing and to make the following option payments:

Option payment US$	Dates
10,000	September 10, 2003 (paid)
20,000	On or before March 1, 2004 (paid)
50,000	On or before September 1, 2004 (paid)
50,000	On or before September 1, 2005 (paid)
70,000	On or before September 1, 2006 (paid)
100,000	On or before September 1, 2007
100,000	On or before September 1, 2008
100,000	On or before September 1, 2009
500,000

The Company has the option to make the final option payment of US$500,000, less the total amount of all previous option payments made, at any time. Upon making the final payment, the Company will acquire an undivided 100% interest in the SV Claims, subject only to the Optionor’s 2% net smelter royalty.

In 2003 and 2004, the Company staked 50 claims adjacent to the Spring Valley property and in 2004, the Company purchased one claim for US$75,000. In 2005, the Company staked an additional 38 claims, also adjacent to the Spring Valley property. These claims have no royalty or payment burden, except for annual maintenance costs of approximately US$170 per claim. On September 7, 2005, the Company entered into a Purchase and Sale Agreement (“Agreement”) to buy 544 acres of surface land adjacent to the Spring Valley property for US$108,840. Upon execution of the Agreement, the Company paid a total of US$34,142, together with a promissory note in the principal amount of US$76,188, amortized over ten years, bearing interest at ten percent per annum on the unpaid principal balance with minimum quarterly principal and interest payments of US$3,035.  The promissory note was paid out in February 2007 so that the entire balance of $83,319 is recorded as a current liability at December 31, 2006 (2005 - $5,459). The promissory note was secured by a first priority deed of trust and assignment of rents on the property.

On January 25, 2006, the Company entered into a Purchase and Sale Agreement to acquire 101 federal mining claims (“Claims”) from Coeur Rochester, Inc (“Coeur”), adjoining the Spring Valley property, for the price of 40,000 common shares of Midway at a value of $2.20 per share. Coeur retains a 3% NSR royalty on any production and sale of metals from the Claims.

98

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

On April 25, 2006, the Company entered into a Mineral Lease Agreement and Option to Purchase 12 unpatented lode mining claims for a series of annual payments as advances upon the 3% NSR royalties payable:

Option payment US$	Dates
12,000	Upon execution of agreement (paid)
24,000	On or before April 25, 2007
36,000	On or before April 25, 2008 and annually thereafter

The Company has the option to purchase these claims for a total purchase of US$600,000. Any advance royalties paid will be credited against the purchase price.

On May 5, 2006, the Company completed a purchase of land and mineral rights of 920 gross acres, 320 acres net surface, 770 acres net mineral, for US$200,000, and is subject to a 3% NSR royalty on any production and sale of metals from the claims.  This land and mineral rights also form part of the Spring Valley property.

On July 18, 2006, the Company entered into a mineral lease agreement and option to purchase 97 unpatented lode mining claims for a series of annual payments as advances upon a 3% NSR royalties payable:

Option payment US$	Dates
10,000	Upon execution of agreement (paid)
15,000	On or before July 18, 2007
20,000	On or before July 18, 2008 and annually thereafter

The Company has the option to purchase these claims for a total purchase of US$600,000. Any advance royalties paid will be credited against the purchase price.

On September 1, 2006, the Company purchased a 40 acre parcel, located near the Spring Valley diatreme, for $30,000.

On October 25, 2006 Company entered into a mineral lease agreement and option to purchase 6 unpatented lode mining claims for a series of annual payments as advances upon a 3% NSR royalties payable.

99

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

Option payment US$	Dates
6,000	Upon execution of agreemen, October 25, 2006 (paid)
12,000	On or before October 26, 2007
20,000	On or before October 26, 2008
25,000	On or before October 25, 2009 and annually thereafter

The Company has the option to purchase each claim for a price of US$100,000. Any advance royalties paid will be credited against the purchase price.

On October 30, 2006, the Company entered into a mineral lease agreement and option to purchase 2 unpatented lode mining claims for a series of annual payments as advances upon a 3% NSR royalties payable.

Option payment US$	Dates
2,000	Upon execution of agreement, October 30, 2006 (paid)
4,000	On or before October 30, 2007
5,000	On or before October 30, 2008
6,000	On or before October 30, 2009 and annually thereafter

The Company has the option to purchase each claim for a price of US$100,000. Any advance royalties paid will be credited against the purchase price.

(c)

Acquisition of Pan-Nevada Gold Corporation (“Pan-Nevada”).

On December 12, 2006, the Company entered into a Letter of Intent that provides for a proposed acquisition of Pan-Nevada by way of a Plan of Arrangement (the “Arrangement”).  As at December 31, 2006, the Company had deferred transaction costs in the amount of $23,316 in connection with the Arrangement.

On April 13, 2007 the Arrangement closed.  As a result the Company acquired all the issued and outstanding Pan-Nevada common shares on the basis of one common share of the Company being issued for every 3.5714 Pan-Nevada common shares held and on April 16, 2007 issued 7,764,109 common shares.   Pan-Nevada option and warrant holders are entitled to receive 308,000 stock options and 870,323 share purchase warrants of the Company.  For accounting purposes the Company is considered to be the acquirer of Pan-Nevada assets.  Substantially all the consideration paid will be allocated to mineral properties.

Pan-Nevada’s projects are all in Nevada and include the Pan, Jessup, Afgan, Monte, KDK, Maggie Creek exploration prospects.

6. Common Stock

(a)

On June 17, 2005, in conjunction with the transition of the Company from the Company Act (BC) to the Business Corporations Act (BC), the Company’s authorized common share structure was changed from 100,000,000 common shares to an unlimited number of common shares.

100

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

(b)

Share issuances:

(i)

During 1996, the Company issued 420,000 common shares at $0.25 per share by way of a non-brokered private placement for proceeds of $98,722 net of issue costs.  In addition the Company issued 280,000 flow-through common shares at $0.25 per share by way of a non-brokered private placement for proceeds of $70,000.

(ii)

During 1997, the Company completed an initial public offering of 2,000,000 common shares at $0.35 per share for proceeds of $590,570, net of issue costs.  In connection with this offering, the Company’s agent received a selling commission of 10% or $0.035 per share and was issued 25,000 shares as a corporate finance fee.

(iii)

During 1997, the Company issued 1,000,000 units at $2.50 per unit by way of a private placement for proceeds of $2,253,793 net of issue costs.  Each unit consisted of one common share and one non-transferable share purchase to purchase one additional common share at $3.00 per share until February 14, 1998.  The proceeds of the financing of $2,500,000 were allocated $2,178,761 as to the common shares and $321,239 as to the warrants.   During 1998 100,000 of the warrants were exercised and 900,000 expired.  In connection with this private placement, the Company’s agent received a selling commission of 7.5% of the proceeds of the units sold or $0.1875 per unit and a corporate finance fee of $15,000.

(iv)

During 1997, the Company issued 750,000 common shares as performance shares for proceeds of $7,500 that were held in escrow in accordance with the rules of the regulatory authorities of British Columbia.  The shares were released 25% in each of 1998, 1999, 2000 and 2001.

(v)

During 1997, pursuant to an equity participation agreement to acquire an interest in Gemstone Mining Inc. (“Gemstone”), a Utah Corporation that by agreement the creditors of Gemstone were issued 1,000,000 units of the Company on conversion of a debt of $2,065,500 (US$1,500,000). Each unit consisted of one common share and one non-transferable share purchase to purchase one additional common share at US$2.00 per share that was immediately exercised for proceeds of $2,803,205 (US$2,000,000).  The first one-third tranche of a conditional finders’ fee was satisfied by the issue of 150,000 common shares in connection with the acquisition of Gemstone.

(vi)

During 1998, the Company issued 100,000 common shares pursuant to the exercise of share purchase warrants for proceeds of $300,000.

(vii)

During 1998, the Company issued 200,000 common shares in connection with the acquisition of Gemstone as well as the second tranche of finder’s fee in connection with that acquisition.  The Company’s option to acquire Gemstone expired on January 31, 1998 and the remaining one-third tranche were not issued.

(viii)

During 1999, the Company consolidated its issued share capital on a two old for one new basis and changed its name from Neary Resources Corporation to Red Emerald Resource Corp.

(ix)

During 2002, the Company issued 3,500,000 units at $0.25 per unit for proceeds of $875,000 by way of a short form offering document under the policies of the TSX Venture Exchange.  Each unit consists of one common share and one common share purchase warrant that entitled the holder to purchase one additional common share at $0.25 per share until October 19, 2002.  The Company also issued 150,000 common shares as a finance fee in connection with this offering, and issued the agent 875,000 share purchase warrants exercisable at $0.25 per share until April 19, 2004.  During 2002 the Company issued 1,134,500 special warrants at $1.25 per special warrant for proceeds of $1,418,125.  Each Special Warrant automatically converted to a unit comprising one common share and one share purchase warrant that entitled the holder to purchase one additional common share at $1.55 per share until November 6, 2003.  The proceeds of the financing of $1,418,125 were allocated on a relative fair value basis as $1,171,286 to common shares and $246,839 as to the warrants.  During 2003 all of the warrants expired unexercised.  In connection with the offering the Company paid the agent a 10% commission totaling $113,450, issued the agent 40,000 common shares as a finance fee in connection with this offering, and issued the agent 170,175 share purchase warrant exercisable at $1.55 per share until July 5, 2003.

101

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

(x)

During 2002, the Company issued 4,028,000 common shares pursuant to the exercise of share purchase warrants for proceeds of $1,007,000.

(xi)

During 2002, the Company issued 32,000 common shares pursuant to the exercise of stock options for proceeds of $12,800.

(xii)

During 2002, the Company issued 31,250 common shares as additional consideration to a director who loaned the Company $780,000 bearing interest at 12% per annum.  The loan and interest was repaid prior to December 31, 2002.

(xiii)

During 2002, the Company acquired Rex Exploration Corp. (“Rex”) in exchange for 4,500,000 common shares of the Company.

(xiv)

During 2003, the Company issued 700,000 units at $1.20 per unit for proceeds of $840,000 by way of a non-brokered private placement.  Each unit consists of one common share and one share purchase warrant that entitled the holder to purchase one additional common share at $1.50  until May 25, 2004.  The proceeds of the financing of $840,000 were allocated $638,838 as to common shares and $201,162 as to the warrants.  During 2004 161,000 of the warrants were exercised and 539,000 expired.  Share issue expenses were $19,932.

(xv)

During 2003, the Company issued 294,500 common shares pursuant to the exercise of share purchase warrants for proceeds of $73,625.

(xvi)

In January 2004, the Company issued 400,000 units at $2.00 per unit for proceeds of $800,000 by way of a private placement.  Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $2.35 per share for a six month period.  The proceeds of the financing of $800,000 were allocated on a relative fair value basis as $624,593 to common shares and $175,407 as to the warrants.  All of the warrants expired unexercised in 2004.  The Company issued 40,000 common shares as a finder’s fee for this private placement.

(xvii)

In August 2004, the Company issued 1,020,000 units at $0.75 per unit for proceeds of $765,000 by way of a private placement.  Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $0.80 per share until August 25, 2005.  All of the warrants were subsequently exercised.  The Company issued 55,650 common shares as a finder’s fee for this private placement.

(xviii)

In December 2004, the Company issued 700,000 units at $0.85 per unit for proceeds of $595,000 by way of a private placement.  Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $1.00 per share until December 20, 2005.  All of the warrants were subsequently exercised.  The Company issued 18,750 common shares as a finder’s fee for this private placement.

(xix)

In February 2005, the Company issued 2,500,000 units at $0.85 per unit for proceeds of $2,125,000 by way of a private placement. Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $1.00 per share until February 16, 2006. The proceeds of the financing of $2,125,000 were allocated on a relative fair value basis as $1,598,457 to common shares and $526,543 as to warrants.  There were 23,000 warrants exercised in fiscal year 2005 and the balance exercised in fiscal year 2006. The Company issued 75,800 common shares for $64,430 and paid $69,700 in cash as a finder’s fee and incurred $26,709 in additional issue costs for this private placement.

(xx)

In July 2005, the Company issued 1,000,000 units at $1.15 per unit for proceeds of $1,150,000 by way of a private placement. Each unit consisted of one common share and one-half non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $1.15 per share until July 27, 2006.  The proceeds of the financing of $1,150,000 were allocated on a relative fair value basis as $995,193 to common shares and $154,807 as to warrants.   All of the warrants were exercised in fiscal year 2006. The Company incurred $15,560 in issue costs.

(xxi)

In August 2005, the Company issued 500,000 units at $1.40 per unit for proceeds of $700,000 by way of a private placement. Each unit consisted of one common share and one-half nontransferable share purchase warrant that entitled the holder to purchase one additional common share at $1.45 per share until August

102

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

22, 2006. The proceeds of the financing of $700,000 were allocated on a relative fair value basis as $608,015 to common shares and $91,985 as to warrants.   All of the warrants were exercised in fiscal year 2006. The Company incurred $8,261 in issue costs.

(xxii)

In January 2006, the Company issued 40,000 common shares at a value of $88,000 pursuant to a purchase and sale agreement to purchase mining claims for the Spring Valley project.

(xxiii)

In May 2006, the Company issued 3,725,000 units at $1.80 per unit for proceeds of $6,705,000 by way of a private placement.  Each unit consisted of one common share and one-half nontransferable share purchase warrant.  Each whole warrant entitles the holder to purchase one additional common share at $2.70 per share until May 16, 2007 subject to the Company’s right to call the warrants, on 30 days’ notice in the event the 15 consecutive day trading average of the common shares of the Company exceeds $3.25.  The proceeds of the financing of $6,705,000 were allocated on a relative fair value basis as $5,998,846 to common shares and $706,154 as to warrants.   All of the warrants were outstanding at December 31, 2006. The Company incurred $65,216 in issue costs.

(xxiv)

In November 2006, the Company issued 2,000,000 units at $2.50 per unit for proceeds of $5,000,000 by way of a private placement. Each unit consisted of one common share and one-half nontransferable share purchase warrant.  Each whole warrant entitles the holder to purchase one additional common share at $3.00 per share until November 10, 2007.  The proceeds of the financing of $2,000,000 were allocated on a relative fair value basis as $1,761,509 to common shares and $238,491 as to warrants.   All of the warrants were outstanding at December 31, 2006. The Company paid $88,750 in finders’ fees and incurred $94,546 in issue costs for this private placement.

(c)

Stock options:

The Company has an incentive share option plan (the “Plan”) that allows it to grant incentive stock options to its officers, directors, employees and consultants. The Plan permits the Company’s directors to grant incentive stock options for the purchase of shares of the Company to persons in consideration for services. Stock options must be non-transferable and the aggregate number of shares that may be reserved for issuance pursuant to stock options may not exceed 10% of the issued shares of the Company at the time of granting and may not exceed 5% to any individual (maximum of 2% to any consultant). The exercise price of stock options is determined by the board of directors of the Company at the time of grant and may not be less than the closing price of the Company’s shares on the trading day immediately preceding the date on which the option is granted and publicly announced, less an applicable discount, and may not otherwise be l ess than $0.10 per share. Options have a maximum term of ten years and terminate 90 days following the termination of the optionee’s employment, except in the case of death or disability, in which case they terminate one year after the event.  Options vest immediately upon being granted and are exercisable at any time.

103

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

The continuity of stock options is as follows:

Expiry date	Exercise price per share	Balance December 31, 2005	Granted	Exercised	Cancelled	Balance December 31, 2006	Intrinsic value December 31, 2006
August 14, 2006	$0.40	113,000	-	(113,000)	-	-	$-
March 7, 2007	$1.40	150,000	-	-	-	150,000	247,500
February 27, 2008	$1.36	50,000	-	-	(50,000)	-	-
September 5, 2008	$1.24	200,000	-	-	-	200,000	362,000
April 13, 2014	$2.04	400,000	-	-	-	400,000	404,000
September 14, 2009	$0.80	384,500	-	(76,000)	-	308,500	694,125
November 26, 2006	$0.80	50,000	-	(50,000)	-	-	-
February 4, 2010	$0.85	122,000	-	(42,000)	-	80,000	176,000
June 24, 2010	$1.30	600,000	-	(25,000)	-	575,000	1,006,250
October 4, 2010	$1.70	30,000	-	-		30,000	40,500
March 9, 2011	$2.00	-	100,000	-	-	100,000	105,000
March 22, 2011	$2.00	-	100,000	-	-	100,000	105,000
May 4, 2011	$2.00	-	30,000	-	-	30,000	31,500
June 11, 2011	$2.53	-	405,000	-	-	405,000	210,600
August 30, 2011	$2.63	-	40,000	-	-	40,000	16,800
November 30, 2011	$2.70	-	140,000	-	-	140,000	49,000
		2,099,500	815,000	(306,000)	(50,000)	2,558,500	$3,448,275
Weighted average exercise price		$1.27	$2.41	$0.70	$1.36	$1.62
At December 31, 2006, all 2,558,500 stock options were exercisable.

104

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

Expiry date	Exercise price per share	Balance December 31, 2004	Granted	Exercised	Cancelled	Balance December 31, 2005	Intrinsic value December 31, 2005
August 14, 2006	$0.40	213,000	-	(100,000)	-	113,000	$135,600
March 7, 2007	$1.40	150,000	-	-	-	150,000	30,000
February 27, 2008	$1.36	50,000	-	-	-	50,000	12,000
September 5, 2008	$1.24	200,000	-	-	-	200,000	72,000
April 13, 2014	$2.04	400,000	-	-	-	400,000	-
September 14, 2009	$0.80	450,000	-	(65,500)	-	384,500	307,600
November 26, 2006	$0.80	50,000	-	-	-	50,000	40,000
February 4, 2010	$0.85	-	122,000	-	-	122,000	91,500
June 24, 2010	$1.30	-	600,000	-	-	600,000	180,000
October 4, 2010	$1.70	-	30,000	-	-	30,000	-
		1,513,000	752,000	(165,500)	-	2,099,500	$868,700
Weighted average exercise price		$1.21	$1.24	$0.56	-	$1.27
At December 31, 2005, all 2,099,500 stock options were exercisable.
Expiry date	Exercise price per share	Balance December 31, 2003	Granted	Exercised	Cancelled	Balance December 31, 2004	Intrinsic value December 31, 2004
August 14, 2006	$0.40	313,000	-	(100,000)	-	213,000	138,450
May 31, 2004	$0.60	150,000		(150,000)		-	-
March 7, 2007	$1.40	150,000	-	-	-	150,000	-
February 27, 2008	$1.36	50,000	-	-	-	50,000	-
September 5, 2008	$1.24	200,000	-	-	-	200,000	-
April 13, 2014	$2.04	-	400,000	-	-	400,000	-
September 14, 2009	$0.80	-	450,000	-	-	450,000	112,500
November 26, 2006	$0.80	-	50,000	-	-	50,000	-
		863,000	900,000	(250,000)	-	1,513,000	$250,950
Weighted average exercise price		$0.86	$1.35	$0.52	-	$1.21
At December 31, 2004, 1,463,000 stock options were exercisable.

During 2006, the Company granted 815,000 options and based on their estimated fair value at their grant dates, recorded stock-based compensation expense of $992,400 in the statement of operations of which $628,312 is included in salaries and benefits and $364,088 has been included in engineering and consulting exploration costs.  The fair value of each option grant was calculated using the Black-Scholes option pricing model with the

105

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

following assumptions: expected life of 2.5 years; volatility ranging from 81% to 82%; no dividend yield; and a risk free interest rate ranging from 3.88% to 4.27%.

During 2005, the Company granted 752,000 options and based on their estimated fair value at their grant dates, recorded stock-based compensation expense of $488,075 in the statement of operations. The fair value of each option grant was calculated using the Black-Scholes option pricing model with the following assumptions: expected life ranging from 2 to 2.5 years; volatility ranging from 79% to 84%; no dividend yield; and a risk free interest rate ranging from 2.83% to 3.69%.

During 2004, the Company granted 900,000 options and based on their estimated fair value at their grant dates, recorded stock-based compensation expense of $941,478 in the statement of operations.  The fair value of each option grant was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 2 to 5 years; volatility ranging from 77% to 118%; no dividend yield; and a risk free interest rate ranging from 2% to 3.3%.

The weighted average grant date fair value of options for the year ended December 31, 2006 was $1.22 (2005 - $0.61; 2004 - $1.16).

The intrinsic value of stock options outstanding at December 31, 2006, 2005 and 2004 relates to vested options.  Intrinsic value for stock options is calculated on the difference between the exercise prices of the underlying options and the quoted price of our common stock as of the reporting date.

(d)

Share purchase warrants:

The continuity of share purchase warrants is as follows:

Expiry date	Exercise price per share	Balance December 31, 2005	Issued	Exercised	Expired	Balance December 31, 2006
February 16, 2006	$1.00	2,477,000	-	(2,477,000)	-	-
July 27, 2006	$1.15	500,000	-	(500,000)	-	-
August 22, 2006	$1.45	250,000	-	(250,000)	-	-
May 16, 2007	$2.70	-	1,862,500	-	-	1,862,500
November 10, 2007	$3.00	-	1,000,000	-	-	1,000,000
		3,227,000	2,862,500	(3,227,000)	-	2,862,500
Expiry date	Exercise price per share	Balance December 31, 2004	Issued	Exercised	Expired	Balance December 31, 2005
August 25, 2005	$0.80	1,020,000	-	(1,020,000)	-	-
December 20, 2005	$1.00	700,000	-	(700,000)	-	-
February 16, 2006	$1.00	-	2,500,000	(23,000)	-	2,477,000
July 27, 2006	$1.15	-	500,000	-	-	500,000
August 22, 2006	$1.45	-	250,000	-	-	250,000
		1,720,000	3,250,000	(1,743,000)		3,227,000

106

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

Expiry date	Exercise price per share	Balance December 31, 2003	Issued	Exercised	Expired	Balance December 31, 2004
April 19, 2004	$0.25	52,500	-	(52,500)		-
May 25, 2004	$1.50	700,000	-	(161,000)	(539,000)	-
July 23, 2004	$2.35	-	400,000		(400,000)	-
August 25, 2005	$0.80	-	1,020,000	-	-	1,020,000
December 20, 2005	$1.00	-	700,000	-	-	700,000
		752,500	2,120,000	(213,500)	(939,000)	1,720,000

7. Contingency:

In May 2006 the Company’s wholly-owned Nevada subsidiary MGC Resources Inc. (“MGC") purchased additional property (the “Disputed Area”) from Seymork Investments Ltd. (“Seymork”) for US$200,000 to expand the Spring Valley project in Nevada. The Disputed Area represents about 4% of the surface area of the Spring Valley project.  In 1997, as a part of a loan arrangement, Emma Wagner (“Wagner”) transferred title of the Disputed Area to Seymork.  Seymork alleges it was a sale, Wagner alleges it was collateral for a loan.  In 1998, the parties entered into another loan arrangement whereby this time Wagner lent Seymork funds, using title to the Disputed Area as security for the loan.  Subsequently, Wagner assigned the rights to the loan to a group represented by Wallace D. Stephens (collectively “Stephens”).   The loan was not repaid and, in March 2006,&nbs p;Stephens sought to foreclose its interest against Seymork. In June 2006, Wagner brought a cross claim in the lawsuit against Seymork alleging that Wagner was the rightful owner of the Disputed Area.  The Company plans to join the lawsuit in order to protect its interests in the Disputed Area.  If the court determines that Wagner was the rightful owner of the property then the Company will lose title to the Disputed Area it purchased from Seymork and will write off the purchase price.

The Company believes it has a credible basis for maintaining its title to the Disputed Area, and it will be requesting access to the documents supporting Wagner's position.  The outcome of this matter is not determinable.

8. Related party transactions:

During fiscal 2006, the Company was charged a total of $122,500 (2005 - $60,000; 2004 - $92,000) for office and administration fees and consulting fees by directors, officers and companies with common directors. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. A total of $587 owing to these companies is included in accounts payable and accrued liabilities at December 31, 2006 (2005 - $5,830).

9. Financial instruments:

In all material respects, the carrying amounts for the Company’s cash, amounts receivable and accounts payable and accrued liabilities approximate their fair values due to the short term nature of these instruments. Based on the Company’s credit adjusted risk free rate and subsequent payment, the carrying value of its promissory note approximates its fair value.  There are no financial instruments noted that require recording in comprehensive income under US GAAP.

10. Supplemental disclosure with respect to cash flows:

The significant non-cash transaction for the year ended December 31, 2006 consisted of the issue of 40,000 common shares for an option payment for a mineral property in the amount of $88,000 (note 5b) and the transfer of $111,330 for the fair value of stock options exercised from paid in additional capital to share capital.

107

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

The significant non-cash transaction for the year ended December 31, 2005 consisted of the issue of 75,800 common shares for a finders fee in the amount of $64,430 (note 6b) and the transfer of $31,964 for the fair value of stock options exercised from paid in additional capital to share capital and a promissory note for $88,607 (US$76,188) issued for payment of a mineral property acquisition (note 5b).

The significant non-cash transaction for the year ended December 31, 2004 consisted of the issue of 114,400 common shares for finders fees in the amount of $137,676 (note 6b) and the transfer of $27,000 for the fair value of stock options exercised from paid in additional capital to share capital.

11. Income taxes:

Substantially all of the difference between the actual tax expense (recovery) of nil and the expected B.C. statutory corporate income tax recovery relates to tax benefits not recognized and stock-based compensation not deductible for tax purposes.

The significant components of the Company’s future income tax assets and liabilities at December 31, 2006 and 2005 are as follows:

				2006		2005
Future income tax assets:
	Canada:
		Equipment, mineral properties and other	$	174,000	$	186,000
		Losses carried forward		1,038,000		1,136,000
		Capital losses carried forward		978,000		1,079,000
	United States:
		Mineral properties		2,087,000		99,000
		Losses carried forward		494,000		311,000
	Total future income tax assets			4,771,000		2,811,000
Valuation allowance				(3,200,000)		(1,861,000)
Net future income tax assets				1,571,000		950,000
Future income tax liabilities:
	United States:
		Mineral properties		1,571,000		1,571,000
Net future income tax assets (liabilities)			$	-	$	(621,000)

At December 31, 2006, the Company has available losses for tax purposes in Canada and the United States of approximately $3,349,000 (2005 - $3,300,000) and $1,452,000 (2005 - $900,000), respectively, which can be applied to reduce taxable income until 2026. The Company also has Canadian capital losses of approximately $6,300,000, which are without expiry.

12. Segment disclosures:

The Company considers itself to operate in a single segment, being mineral exploration and development. Geographic information is as follows:

108

MIDWAY GOLD CORP.

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars, unless otherwise noted)

Years ended December 31, 2006, 2005 and 2004

		Canada	United States	Total
December 31, 2006:
	Loss for the year	1,232,763	6,008,465	7,241,228
	Assets	8,690,669	8,004,213	16,694,882
December 31, 2005
	Loss for the year	1,290,013	3,112,702	4,402,715
	Assets	578,156	7,564,348	8,142,504
December 31, 2004
	Loss for the year	1,289,999	1,704,703	2,994,702
	Assets	578,156	6,246,021	6,824,177

13. Subsequent events:

Subsequent to December 31, 2006, the Board of Directors granted 25,000 stock options at an exercise price of $3.00 that expire on January 23, 2012 and 100,000 stock options at an exercise price of $2.93 that expire on March 7, 2012.  In addition the Company issued 200,000 common shares pursuant to the exercise of stock options for gross proceeds of $311,675 and 12,500 common shares pursuant to the exercise of share purchase warrants for gross proceeds of $33,750.

109

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Expressed in Canadian dollars)

(unaudited)

Three months ended March 31, 2007 and 2006

110

MIDWAY GOLD CORP.

CONSOLIDATED INTERIM BALANCE SHEETS

(Expressed in Canadian dollars)

			March 31, 2007		December 31, 2006
			(unaudited)
Assets
Current assets:
	Cash	$	6,873,422	$	8,568,839
	Amounts receivable		174,901		84,444
	Prepaid expenses		330,989		79,896
			7,379,312		8,733,179
Reclamation deposit			190,929		192,715
Equipment (note 3)			120,521		66,622
Deferred acquisition costs (note 4 (c))			284,231		23,316
Mineral properties (note 4)			7,679,050		7,679,050
		$	15,654,043	$	16,694,882
Liabilities and Shareholders' Equity
Current liabilities
	Accounts payable and accrued liabilities	$	428,108	$	523,211
	Promissory note (note 4 (b))		-		83,320
			428,108		606,531
Stockholders' equity (note 5)
	Common stock authorized - unlimited, no par value
	Issued - 37,140,450 (2006 - 35,927,950)		38,438,005		37,871,763
	Additional paid in capital		4,576,928		4,620,560
	Deficit accumulated during the exploration stage		(27,788,998)		(26,403,972)
			15,225,935		16,088,351
		$	15,654,043	$	16,694,882
Nature of operations (note 1)
Commitments (note 4)
Contingency (note 6)
Subsequent events (notes 4 (c) and 9)

Approved on behalf of the Board:

“George Hawes” Director

“Alan Branham” Director

The accompanying notes are an integral part of these consolidated interim financial statements.

111

MIDWAY GOLD CORP.

CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT

 (Expressed in Canadian dollars) (unaudited)

			Three months ended March 31, 2007		Three months ended March 31, 2006		Cumulative period from inception (May 14, 1996) to March 31, 2007
					(restated note 3)
Expenses
	Consulting	$	3,968	$	-	$	182,750
	Depreciation		9,947		1,882		51,284
	Interest and bank charges		1,865		2,577		814,061
	Investor relations		83,664		32,273		742,232
	Legal, audit and accounting		33,584		34,053		899,097
	Management fees		-		-		265,000
	Mineral exploration expenditures (Schedule)		987,010		1,562,551		24,977,868
	Office and administration (note 7)		37,548		25,115		782,948
	Salaries and benefits		256,459		50,380		3,519,250
	Transfer agent and filing fees		6,592		10,893		198,335
	Travel		19,083		15,126		427,102
Loss before undernoted			1,439,720		1,734,850		32,859,927
Other (income) expenses:
	Foreign exchange (gain) loss		22,663		(5,420)		(175,375)
	Interest income		(77,357)		(17,549)		(456,210)
	Recovery of mineral property interests						(2,806,312)
	Write-off of mineral property interests						25,189
	Other income						(87,221)
			(54,694)		(22,969)		(3,499,929)
Net loss before income tax			1,385,026		1,711,881		29,359,998
	Income tax recovery		-		(288,000)		(1,571,000)
Net loss and comprehensive loss		$	1,385,026	$	1,423,881	$	27,788,998
Basic and diluted loss per share		$	0.04	$	0.05
Weighted average number of shares outstanding			36,999,400		28,051,361

The accompanying notes are an integral part of these consolidated interim financial statements.

112

MIDWAY GOLD CORP.

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Expressed in Canadian dollars) (unaudited)

				Three months ended March 31, 2007		Three months ended March 31, 2006		Cumulative period from inception (May 14, 1996) to March 31, 2007
Cash provided by (used in):						(restated note 3)
Operating activities:
	Net loss		$	(1,385,026)	$	(1,423,881)	$	(27,788,998)
	Items not involving cash:							-
		Depreciation		9,947		1,882		306,266
		Stock-based compensation		177,260		203,880		3,157,213
		Unrealized foreign exchange loss (gain)		1,786		-		(292,501)
		Non-cash interest expense		-		-		234,765
		Income tax recovery		-		(288,000)		(1,571,000)
		Recoveries mineral property interests		-		-		(2,806,312)
		Write-off of mineral property interests		-		-		25,189
	Change in non-cash working capital items:							-
		Amounts receivable		(90,457)		7,946		(176,250)
		Prepaid expenses		(251,093)		(51,277)		(351,622)
		Accounts payable, accrued liabilities and promissory note		(178,423)		100,765		547,232
				(1,716,006)		(1,448,685)		(28,716,018)
Investments activities:
	Proceeds on sale of subsidiary			-		-		254,366
	Mineral property acquisitions			-		-		(12,402,244)
	Deferred acquisition costs			(260,915)		-		(284,231)
	Purchase of equipment			(63,846)		(8,781)		(1,410,290)
	Reclamation deposit			-		27,116		(660,561)
				(324,761)		18,335		(14,502,960)
Financing activities:
	Advance from Red Emerald Ltd.			-		-		12,010,075
	Convertible debenture			-		-		31,412,370
	Common stock issued, net of issue costs			345,350		2,485,000		6,669,955
				345,350		2,485,000		50,092,400
Increase in cash				(1,695,417)		1,054,650		6,873,422
Cash, beginning of period				8,568,839		1,280,982		-
Cash,end of period			$	6,873,422	$	2,335,632	$	6,873,422
Supplemental disclosure with respect to cash flows (note 8)
	Interest received		$	76,296	$	17,549

The accompanying notes are an integral part of these consolidated interim financial statements.

113

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

 (Expressed in Canadian dollars)

		Number of shares	Common stock	Additional paid-in capital	Accumulated deficit during the exploration stage	Total stockholders' equity
Balance, May 14, 1996 (date of inception)		-	$-	$-	$-	$-
Shares issued:
	Private placements	700,000	168,722	-	-	168,722
Net loss		-	-	-	(114,800)	(114,800)
Balance, December 31, 1996		700,000	168,722	-	(114,800)	53,922
Shares issued:
	Initial public offering	2,025,000	590,570	-	-	590,570
	Principal shares	750,000	7,500	-	-	7,500
	Private placement	1,000,000	2,253,793	-	-	2,253,793
	Exercise of share purchase warrants	1,000,000	2,803,205	-	-	2,803,205
	Acquistion of mineral property interest	1,000,000	2,065,500	-	-	2,065,500
	Finders fee	150,000	309,825	-	-	309,825
Net loss		-	-	-	(2,027,672)	(2,027,672)
Balance, December 31, 1997		6,625,000	8,199,115	-	(2,142,472)	6,056,643
Shares issued:
	Exercise of share purchase warrants	100,000	300,000	-	-	300,000
	Acquistion of mineral property interest	200,000	246,000	-	-	246,000
	Finders fee	150,000	224,250	-	-	224,250
Net loss		-	-	-	(1,943,674)	(1,943,674)
Balance, December 31, 1998		7,075,000	8,969,365	-	(4,086,146)	4,883,219
Consolidation of shares on a two for one new basis		(3,537,500)	-	-	-	-
Net loss		-	-	-	(2,378,063)	(2,378,063)
Balance, December 31, 1999		3,537,500	8,969,365	-	(6,464,209)	2,505,156
Net loss		-	-	-	(4,718,044)	(4,718,044)
Balance, December 31, 2000		3,537,500	8,969,365	-	(11,182,253)	(2,212,888)
Net earnings		-	-	-	2,427,256	2,427,256
Balance, December 31, 2001		3,537,500	8,969,365	-	(8,754,997)	214,368
Shares issued:
	Private placement	4,824,500	2,380,625	-	-	2,380,625
	Exercise of share purchase warrants	4,028,000	1,007,000	-	-	1,007,000
	Exercise of stock options	32,000	12,800	-	-	12,800
	Financing shares issued	31,250	35,000	-	-	35,000
	Acquistion of mineral property interest	4,500,000	3,600,000	-	-	3,600,000
	Share issue costs	-	(544,260)	-	-	(544,260)
Stock based compensation		-	-	27,000	-	27,000
Net loss		-	-	-	(1,657,651)	(1,657,651)
Balance, December 31, 2002		16,953,250	15,460,530	27,000	(10,412,648)	5,074,882
Shares issued:
	Private placement	700,000	840,000	-	-	840,000
	Exercise of share purchase warrants	294,500	73,625	-	-	73,625
	Share issue costs	-	(19,932)	-	-	(19,932)
Stock based compensation		-	-	531,000		531,000
Net loss		-	-	-	(1,352,679)	(1,352,679)
Balance, December 31, 2003		17,947,750	16,354,223	558,000	(11,765,327)	5,146,896
Shares issued:
	Private placement	2,234,400	2,297,676	-	-	2,297,676
	Exercise of share purchase warrants	213,500	254,625	-	-	254,625
	Exercise of stock options	250,000	157,000	(27,000)	-	130,000
	Share issue costs	-	(183,512)	-	-	(183,512)
Stock based compensation		-	-	941,478	-	941,478
Net loss		-	-	-	(2,994,702)	(2,994,702)
Balance, December 31, 2004, carried forward		20,645,650	18,880,012	1,472,478	(14,760,029)	5,592,461

The accompanying notes are an integral part of these consolidated interim financial statements.

114

MIDWAY GOLD CORP.

(an exploration stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - CONTINUED

 (Expressed in Canadian dollars)

		Number of shares	Common stock	Additional paid-in capital	Accumulated deficit during the exploration stage	Total stockholders' equity
Balance, December 31, 2004 brought forward		20,645,650	18,880,012	1,472,478	(14,760,029)	5,592,461
	Private placement	4,075,800	4,039,430	-	-	4,039,430
	Exercise of stock options	165,500	124,364	(31,964)	-	92,400
	Exercise of share purchase warrants	1,743,000	1,539,000	-	-	1,539,000
	Share issue costs	-	-	-	-	-
Stock based compensation		-	(184,660)	488,075	-	303,415
Net loss		-	-	-	(4,402,715)	(4,402,715)
Balance, December 31, 2005		26,629,950	24,398,146	1,928,589	(19,162,744)	7,163,991
Shares issued:
	Private placements	5,725,000	11,705,000	-	-	11,705,000
	Exercise of stock options	306,000	325,530	(111,330)	-	214,200
	Exercise of share purchase warrants	3,227,000	3,414,500	-	-	3,414,500
	Acquistion of mineral property interest	40,000	88,000	-	-	88,000
	Share issue costs	-	(248,512)	-	-	(248,512)
Stock based compensation		-	-	992,400	-	992,400
Net loss		-	-	-	(7,241,228)	(7,241,228)
Balance, December 31, 2006		35,927,950	37,871,763	4,620,560	(26,403,972)	16,088,351
Shares issued:
	Exercise of stock options	200,000	527,753	(216,153)	-	311,600
	Exercise of share purchase warrants	12,500	38,489	(4,739)	-	33,750
Stock based compensation		-	-	177,260	-	177,260
Net loss					(1,385,026)	(1,385,026)
Balance, March 31, 2007		36,140,450	$38,438,005	$4,576,928	$(27,788,998)	$15,225,935

The accompanying notes are an integral part of these consolidated interim financial statements.

115

MIDWAY GOLD CORP.

(an exploration stage company)

SCHEDULE OF MINERAL EXPLORATION EXPENDITURES

(Expressed in Canadian dollars) (unaudited)

		Three months  ended March 31,  2007	Three months  ended March 31,  2006	Cumulative period from  inception (May 14, 1996) to  March 31, 2007
Exploration expenditures incurred are summarized as follows:
Midway project
	Assays and analysis	$11,354	$115,421	$218,695
	Communication	-	809	9,513
	Drilling	9,247	563,805	1,241,262
	Engineering and consulting	142,525	88,701	2,762,078
	Environmental	13,785	17,633	107,944
	Field office and supplies	15,900	15,911	103,619
	Legal and accounting	-	-	10,419
	Property maintenance and taxes	2,232	1,277	305,738
	Reclamation costs	-	-	24,021
	Reproduction and drafting	-	35	20,803
	Salaries and labour	41,115	89,402	41,115
	Travel, transportation and accomodation	39,944	31,488	242,523
		276,102	924,482	5,087,730
Spring Valley project
	Assays and analysis	144,952	119,264	1,472,519
	Communication	-	729	10,307
	Drilling	217,598	69,795	4,347,935
	Engineering and consulting	100,701	127,136	1,850,915
	Environmental	36,458	36,268	183,154
	Equipment rent	-	-	64,651
	Field office and supplies	26,655	29,550	290,002
	Legal	37,654	-	37,654
	Operator fee	-	-	108,339
	Property maintenance and taxes	158	7,885	262,715
	Reclamation costs	-	540	28,815
	Reproduction and drafting	791	5,989	29,724
	Salaries and labour	42,596	149,180	42,596
	Travel, transportation and accomodation	53,556	33,413	447,514
		661,119	579,749	9,176,840
Property investigations
	Assays and analysis	5,653	4,502	134,696
	Drilling	-	-	169,129
	Engineering and consulting	31,985	37,117	207,947
	Equipment rent	-	-	9,143
	Field office and supplies	852	257	14,031
	Operator fee	-	-	103,454
	Property maintenance and taxes	5,096	-	6,174
	Reclamation costs	-	-	3,770
	Reproduction and drafting	1,172	-	45,364
	Salaries and labour	2,534	-	2,534
	Travel, transportation and accomodation	2,497	16,444	2,497
		49,789	58,320	698,739
	Sub-total balance carried forward	987,010	1,562,551	14,963,309

116

MIDWAY GOLD CORP.

(an exploration stage company)

SCHEDULE OF MINERAL EXPLORATION EXPENDITURES - CONTINUED

(Expressed in Canadian dollars) (unaudited)

		Three months  ended March 31,  2007	Three months  ended March 31,  2006	Cumulative period from  inception (May 14, 1996) to  March 31, 2007
	Sub-total balance brought forward	987,010	1,562,551	14,963,309
Pioche/Mineral Mountain project
	Acquisition costs and option payments	-	-	40,340
	Assays and analysis	-	-	13,037
	Drilling	-	-	232,205
	Engineering and consulting	-	-	38,212
	Field office and supplies	-	-	16,236
	Property maintenance and taxes	-	-	49,750
	Reclamation costs	-	-	32,683
	Travel, transportation and accomodation	-	-	21,124
		-	-	443,587
Ruby Violet project
	Assays and analysis	-	-	20,499
	Communication	-	-	108,762
	Depreciation	-	-	254,982
	Drilling	-	-	467,372
	Engineering and consulting	-	-	3,120,317
	Equipment rental	-	-	337,577
	Field office and supplies	-	-	277,119
	Foreign exchange gain	-	-	(38,134)
	Freight	-	-	234,956
	Interest on convertible loans	-	-	1,288,897
	Legal and accounting	-	-	453,269
	Marketing	-	-	91,917
	Mining costs	-	-	693,985
	Processing and laboratory supplies	-	-	941,335
	Property maintenance and taxes	-	-	298,752
	Security	-	-	350,584
	Travel, transportation and accomodation	-	-	392,031
	Utilities and water	-	-	59,425
		-	-	9,353,645
Black Prince project
	Communication	-	-	938
	Drilling	-	-	77,167
	Engineering and consulting	-	-	78,698
	Equipment rental	-	-	10,800
	Field office and supplies	-	-	3,397
	Geological and geophysical	-	-	63,481
	Legal and accounting	-	-	1,163
	Property maintenance and taxes	-	-	13,249
	Reproduction and drafting	-	-	1,179
	Travel, transportation and accomodation	-	-	7,255
	Recoveries	-	-	(40,000)
		-	-	217,327
		$987,010	$1,562,551	$24,977,868

117

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

1.

Nature of operations:

Midway Gold Corp. (the “Company”) was incorporated on May 14, 1996 under the laws of the Province of British Columbia and its principal business activities are the acquisition, exploration and development of mineral properties.

The Company is in the process of exploring and developing its mineral properties and has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The recoverability of amounts shown for mineral properties is dependent upon the discovery of economically recoverable ore reserves in its mineral properties, the ability of the Company to obtain the necessary financing to complete development, confirmation of the Company’s interest in the underlying mineral claims and upon future profitable production from or proceeds from the disposition of its mineral properties.

2.

Significant accounting policies and change in accounting policy:

These consolidated interim financial statements for the Company have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”).  They do not include all of the information and disclosures required by US GAAP for annual financial statements.  In the opinion of management, all adjustments considered necessary for fair presentation have been included in these financial statements.   The interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements including the notes thereto for the year ended December 31, 2006 which may be found on www.sedar.com.

The accounting policies followed by the Company are set out in note 2 to the audited consolidated financial statements for the year ended December 31, 2006 and have been consistently followed in the preparation of these consolidated interim financial statements.

Recently Issued Financial Accounting Standards:

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, Fair Value Measurements. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’ s long-term measurement objectives for accounting for financial instruments. The Company expects to adopt SFAS No. 159 on January 1, 2008 and the Company does not expect a significant impact on the consolidated financial statements.

In September 2006, FASB issued SFAS No. 157, Fair Value Measurements. This standard provides guidance for using fair value to measure assets and liabilities. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. The standard clarifies that for items that are not actively traded, fair value should reflect the price in a transaction with a markets participant, including an adjustment for risk. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market which the reporting entity transacts. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provid ed that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company expects to adopt SFAS No. 157 on January 1, 2008 and the Company does not expect a significant impact on the consolidated financial statements.

118

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

3.

Equipment:

	March 31, 2007			December 31, 2006
	Cost	Accumulated depreciation	Net book value	Cost	Accumulated depreciation	Net book value
Computer equipment	$74,217	$23,900	$50,317	$38,568	$19,166	$19,402
Office equipment	16,249	14,375	1,874	16,249	14,191	2,058
Field equipment	23,393	3,475	19,918	17,862	2,484	15,378
Trucks	59,782	11,370	48,412	37,117	7,333	29,784
	$173,641	$53,120	$120,521	$109,796	$43,174	$66,622

4.

Mineral properties:

The continuity of expenditures on mineral properties is as follows:

	Midway (a)	Spring Valley (b)	Total
December 31, 2006 and March 31, 2007	$6,110,864	$1,568,186	$7,679,050

(a)

Midway property, Nevada:

During 2001, the Company entered into an option agreement with Rex Exploration Corp. (“Rex”) to earn a 65% interest in the Midway property, a mineral property consisting of 135 unpatented mining claims located in central Nye County, Nevada. Rex had an underlying option agreement with the owners of the mineral property whereby Rex could earn a 100% interest in the mineral property, subject to a sliding scale royalty of between 2% and 7% of net smelter returns (“NSR”), by making option payments totaling US$275,000 over the period to August 2003 and making an option exercise payment of US$3,000,000 on August 15, 2004 (the "Underlying Agreement"). This option exercise payment date was subsequently extended to August 15, 2005. In order for the Company to earn its 65% interest in the property, the Company agreed to make the US$275,000 option payments to the owners required pursuant to the Underlying Agreement, incur an additional US$925,000 on exploration and development expenditures on the property by August 15, 2004, and pay the Company's 65% share of the US$3,000,000 option exercise payment due August 15, 2004. Effective October 30, 2002, the Company acquired all of the issued and outstanding shares of Rex in exchange for 4,500,000 common shares of the Company.

During the period October 15, 2002 to June 8, 2004 Newmont Mining Corporation had an option to acquire a 51% interest in the Midway property before terminating its option.   

On November 2, 2004, the Underlying Agreement was amended whereby the Company has the option to acquire a 100% interest in the Midway property by further payments totaling US$200,000 on or before August 15, 2005 (paid), subject only to a sliding scale royalty on NSR from any commercial production of between 2% to 7%, based on changes in gold prices.

In addition, the original option exercise payment of US$3,000,000 due August 15, 2005 was replaced with a series of annual payments as advances upon the royalty payable from commercial production as follows:

119

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

4.

Mineral properties – Midway (continued)

Option payment US$	Dates
250,000	On or before August 15, 2006 (paid)
250,000	On or before August 15, 2007
300,000	On or before August 15, 2008 and annually thereafter

 (b)

Spring Valley property, Nevada:

On August 15, 2003, the Company entered into an option agreement (the “Spring Valley Option Agreement”) with an unrelated individual (the “Owner”) whereby the Company has an option to earn a 100% interest in 44 unpatented mining claims (the “Spring Valley Claims”). Under the terms of the Spring Valley Option Agreement, the Company paid an initial option payment of US$75,000 to the Owner of the Spring Valley Claims. In order for the Company to earn its 100% interest in the Spring Valley Claims, the Company is required to maintain the mineral claims in good standing and to make the option payments and incur minimum expenditures as follows:

Option payment US$	Expenditures US$	Dates
100,000	150,000	On or before August 15, 2004 (paid and incurred)
100,000	150,000	On or before August 15, 2005 (paid and incurred)
200,000	150,000	On or before August 15, 2006 (paid and incurred)
3,000,000	150,000	On or before August 15, 2007

The Company has the option to make the final payment of US$3,000,000 at any time. Upon making the final payment, the Company will acquire a 100% interest in the Spring Valley Claims, subject only to the Owner’s royalty on NSR from commercial production over 500,000 ounces. The royalty is on a sliding scale increasing from 2% to 7% based on changes in gold prices. In addition, the Owner is entitled to a 1% overriding royalty on NSR from commercial production on all lands owned by the Company or an affiliate and located outside, but within a one half (1/2) mile perimeter of the Spring Valley Claims.

On September 1, 2003, the Company entered into an option agreement (the “SV Option Agreement”) with an unrelated company (the “Optionor”) to acquire all right, title and interest in 28 unpatented mining claims (the “SV Claims”), subject to a 2% net smelter royalty on commercial production payable to the Optionor. The SV Claims are contiguous to the Spring Valley Claims. Under the terms of the SV Option Agreement, the Company is required to maintain the mineral claims in good standing and to make the following option payments:

120

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

4.

Mineral properties – Spring Valley (continued)

Option payment US$	Dates
10,000	September 10, 2003 (paid)
20,000	On or before March 1, 2004 (paid)
50,000	On or before September 1, 2004 (paid)
50,000	On or before September 1, 2005 (paid)
70,000	On or before September 1, 2006 (paid)
100,000	On or before September 1, 2007
100,000	On or before September 1, 2008
100,000	On or before September 1, 2009
500,000

The Company has the option to make the final option payment of US$500,000, less the total amount of all previous option payments made, at any time. Upon making the final payment, the Company will acquire an undivided 100% interest in the SV Claims, subject only to the Optionor’s 2% net smelter royalty.

In 2003 and 2004, the Company staked 50 claims adjacent to the Spring Valley property and in 2004, the Company purchased one claim for US$75,000. In 2005, the Company staked an additional 38 claims, also adjacent to the Spring Valley property. These claims have no royalty or payment burden, except for annual maintenance costs of approximately US$170 per claim. On September 7, 2005, the Company entered into a Purchase and Sale Agreement (“Agreement”) to buy 544 acres of surface land adjacent to the Spring Valley property for US$108,840. Upon execution of the Agreement, the Company paid a total of US$34,142, together with a promissory note in the principal amount of US$76,188, amortized over ten years, bearing interest at ten percent per annum on the unpaid principal balance with minimum quarterly principal and interest payments of US$3,035.  The promissory note was re-paid in February 2007.

On January 25, 2006, the Company entered into a Purchase and Sale Agreement to acquire 101 federal mining claims (“Claims”) from Coeur Rochester, Inc (“Coeur”), adjoining the Spring Valley property, for the price of 40,000 common shares of Midway at a value of $2.20 per share. Coeur retains a 3% NSR royalty on any production and sale of metals from the Claims.

On April 25, 2006, the Company entered into a Mineral Lease Agreement and Option to Purchase 12 unpatented lode mining claims for a series of annual payments as advances upon the 3% NSR royalties payable:

Option payment US$	Dates
12,000	Upon execution of agreement (paid)
24,000	On or before April 25, 2007 (paid)
36,000	On or before April 25, 2008 and annually thereafter

The Company has the option to purchase these claims for a total purchase of US$600,000. Any advance royalties paid will be credited against the purchase price.

121

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

4.

Mineral properties – Spring Valley property (continued)

On May 5, 2006, the Company completed a purchase of land and mineral rights of 920 gross acres, 320 acres net surface, 770 acres net mineral, for US$200,000, and is subject to a 3% NSR royalty on any production and sale of metals from the claims.  This land and mineral rights also form part of the Spring Valley property.

On July 18, 2006, the Company entered into a mineral lease agreement and option to purchase 97 unpatented lode mining claims for a series of annual payments as advances upon a 3% NSR royalties payable:

Option payment US$	Dates
10,000	Upon execution of agreement (paid)
15,000	On or before July 18, 2007
20,000	On or before July 18, 2008 and annually thereafter

The Company has the option to purchase these claims for a total purchase of US$600,000. Any advance royalties paid will be credited against the purchase price.

On September 1, 2006, the Company purchased a 40 acre parcel, located near the Spring Valley diatreme, for $30,000.

On October 25, 2006 Company entered into a mineral lease agreement and option to purchase 6 unpatented lode mining claims for a series of annual payments as advances upon a 3% NSR royalties payable.

Option payment US$	Dates
6,000	Upon execution of agreemen, October 25, 2006 (paid)
12,000	On or before October 26, 2007
20,000	On or before October 26, 2008
25,000	On or before October 25, 2009 and annually thereafter

The Company has the option to purchase each claim for a price of US$100,000. Any advance royalties paid will be credited against the purchase price.

On October 30, 2006, the Company entered into a mineral lease agreement and option to purchase 2 unpatented lode mining claims for a series of annual payments as advances upon a 3% NSR royalties payable.

Option payment US$	Dates
2,000	Upon execution of agreement, October 30, 2006 (paid)
4,000	On or before October 30, 2007
5,000	On or before October 30, 2008
6,000	On or before October 30, 2009 and annually thereafter

122

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

4.

Mineral properties – Spring Valley property (continued)

The Company has the option to purchase each claim for a price of US$100,000. Any advance royalties paid will be credited against the purchase price.

(c)

Acquisition of Pan-Nevada Gold Corporation (“Pan-Nevada”).

On December 12, 2006, the Company entered into a Letter of Intent that provides for a proposed acquisition of Pan-Nevada by way of a Plan of Arrangement (the “Arrangement”).  As at March 31, 2007, the Company had recorded deferred transaction costs in the amount of $284,231 in connection with the Arrangement.

On April 13, 2007 the Arrangement closed.  As a result, the Company acquired all the issued and outstanding Pan-Nevada common shares on the basis of one common share of the Company being issued for every 3.5714 Pan-Nevada common shares held and issued 7,764,109 common shares.   Pan-Nevada option and warrant holders are entitled to receive 308,000 stock options and 870,323 share purchase warrants of the Company.  For accounting purposes the Company is considered to be the acquirer of Pan-Nevada assets.  

Pan-Nevada’s projects are all in Nevada and include the Pan, Jessup, Afgan, Monte, KDK and Maggie Creek exploration prospects.

5.

Share capital

(a)

The Company’s authorized to issue an unlimited number of common shares.

(b)

Share issuances:

(i)

During 1996, the Company issued 420,000 common shares at $0.25 per share by way of a non-brokered private placement for proceeds of $98,722 net of issue costs.  In addition the Company issued 280,000 flow-through common shares at $0.25 per share by way of a non-brokered private placement for proceeds of $70,000.

(ii)

During 1997, the Company completed an initial public offering of 2,000,000 common shares at $0.35 per share for proceeds of $590,570, net of issue costs.  In connection with this offering, the Company’s agent received a selling commission of 10% or $0.035 per share and was issued 25,000 shares as a corporate finance fee.

(iii)

During 1997, the Company issued 1,000,000 units at $2.50 per unit by way of a private placement for proceeds of $2,253,793 net of issue costs.  Each unit consisted of one common share and one non-transferable share purchase to purchase one additional common share at $3.00 per share until February 14, 1998.  The proceeds of the financing of $2,500,000 were allocated $2,178,761 as to the common shares and $321,239 as to the warrants.   During 1998 100,000 of the warrants were exercised and 900,000 expired.  In connection with this private placement, the Company’s agent received a selling commission of 7.5% of the proceeds of the units sold or $0.1875 per unit and a corporate finance fee of $15,000.

(iv)

During 1997, the Company issued 750,000 common shares as performance shares for proceeds of $7,500 that were held in escrow in accordance with the rules of the regulatory authorities of British Columbia.  The shares were released 25% in each of 1998, 1999, 2000 and 2001.

(v)

During 1997, pursuant to an equity participation agreement to acquire an interest in Gemstone Mining Inc. (“Gemstone”), a Utah Corporation that by agreement the creditors of Gemstone were issued 1,000,000 units of the Company on conversion of a debt of $2,065,500 (US$1,500,000). Each unit consisted of one common share and one non-transferable share purchase to purchase one additional common share at US$2.00 per share that was immediately exercised for proceeds of $2,803,205 (US$2,000,000).  The first one-third tranche of a conditional finders’ fee was satisfied by the issue of 150,000 common shares in connection with the acquisition of Gemstone.

(vi)

During 1998, the Company issued 100,000 common shares pursuant to the exercise of share purchase warrants for proceeds of $300,000.

123

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

5.

Share capital (continued)

(vii)

During 1998, the Company issued 200,000 common shares in connection with the acquisition of Gemstone as well as the second tranche of finder’s fee in connection with that acquisition.  The Company’s option to acquire Gemstone expired on January 31, 1998 and the remaining one-third tranche were not issued.

(viii)

During 1999, the Company consolidated its issued share capital on a two old for one new basis and changed its name from Neary Resources Corporation to Red Emerald Resource Corp.

(ix)

During 2002, the Company issued 3,500,000 units at $0.25 per unit for proceeds of $875,000 by way of a short form offering document under the policies of the TSX Venture Exchange.  Each unit consists of one common share and one common share purchase warrant that entitled the holder to purchase one additional common share at $0.25 per share until October 19, 2002.  The Company also issued 150,000 common shares as a finance fee in connection with this offering, and issued the agent 875,000 share purchase warrants exercisable at $0.25 per share until April 19, 2004.  During 2002 the Company issued 1,134,500 special warrants at $1.25 per special warrant for proceeds of $1,418,125.  Each Special Warrant automatically converted to a unit comprising one common share and one share purchase warrant that entitled the holder to purchase one additional common share at $1.55 per share until November 6, 2003.  The proceeds of the financing of $1,418,125 were allocated on a relative fair value basis as $1,171,286 to common shares and $246,839 as to the warrants.  During 2003 all of the warrants expired unexercised.  In connection with the offering the Company paid the agent a 10% commission totaling $113,450, issued the agent 40,000 common shares as a finance fee in connection with this offering, and issued the agent 170,175 share purchase warrant exercisable at $1.55 per share until July 5, 2003.

(x)

During 2002, the Company issued 4,028,000 common shares pursuant to the exercise of share purchase warrants for proceeds of $1,007,000.

(xi)

During 2002, the Company issued 32,000 common shares pursuant to the exercise of stock options for proceeds of $12,800.

(xii)

During 2002, the Company issued 31,250 common shares as additional consideration to a director who loaned the Company $780,000 bearing interest at 12% per annum.  The loan and interest was repaid prior to December 31, 2002.

(xiii)

During 2002, the Company acquired Rex Exploration Corp. (“Rex”) in exchange for 4,500,000 common shares of the Company.

(xiv)

During 2003, the Company issued 700,000 units at $1.20 per unit for proceeds of $840,000 by way of a non-brokered private placement.  Each unit consists of one common share and one share purchase warrant that entitled the holder to purchase one additional common share at $1.50  until May 25, 2004.  The proceeds of the financing of $840,000 were allocated $638,838 as to common shares and $201,162 as to the warrants.  During 2004 161,000 of the warrants were exercised and 539,000 expired.  Share issue expenses were $19,932.

(xv)

During 2003, the Company issued 294,500 common shares pursuant to the exercise of share purchase warrants for proceeds of $73,625.

(xvi)

In January 2004, the Company issued 400,000 units at $2.00 per unit for proceeds of $800,000 by way of a private placement.  Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $2.35 per share for a six month period.  The proceeds of the financing of $800,000 were allocated on a relative fair value basis as $624,593 to common shares and $175,407 as to the warrants.  All of the warrants expired unexercised in 2004.  The Company issued 40,000 common shares as a finder’s fee for this private placement.

(xvii)

In August 2004, the Company issued 1,020,000 units at $0.75 per unit for proceeds of $765,000 by way of a private placement.  Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $0.80 per share until August 25, 2005.  All of the warrants were subsequently exercised.  The Company issued 55,650 common shares as a finder’s fee for this private placement.

124

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

5.

Share capital (continued)

(xviii)

In December 2004, the Company issued 700,000 units at $0.85 per unit for proceeds of $595,000 by way of a private placement.  Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $1.00 per share until December 20, 2005.  All of the warrants were subsequently exercised.  The Company issued 18,750 common shares as a finder’s fee for this private placement.

(xix)

In February 2005, the Company issued 2,500,000 units at $0.85 per unit for proceeds of $2,125,000 by way of a private placement. Each unit consisted of one common share and one non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $1.00 per share until February 16, 2006. The proceeds of the financing of $2,125,000 were allocated on a relative fair value basis as $1,598,457 to common shares and $526,543 as to warrants.  There were 23,000 warrants exercised in fiscal year 2005 and the balance exercised in fiscal year 2006. The Company issued 75,800 common shares for $64,430 and paid $69,700 in cash as a finder’s fee and incurred $26,709 in additional issue costs for this private placement.

(xx)

In July 2005, the Company issued 1,000,000 units at $1.15 per unit for proceeds of $1,150,000 by way of a private placement. Each unit consisted of one common share and one-half non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $1.15 per share until July 27, 2006.  The proceeds of the financing of $1,150,000 were allocated on a relative fair value basis as $995,193 to common shares and $154,807 as to warrants.   All of the warrants were exercised in fiscal year 2006. The Company incurred $15,560 in issue costs.

(xxi)

In August 2005, the Company issued 500,000 units at $1.40 per unit for proceeds of $700,000 by way of a private placement. Each unit consisted of one common share and one-half nontransferable share purchase warrant that entitled the holder to purchase one additional common share at $1.45 per share until August 22, 2006. The proceeds of the financing of $700,000 were allocated on a relative fair value basis as $608,015 to common shares and $91,985 as to warrants.   All of the warrants were exercised in fiscal year 2006. The Company incurred $8,261 in issue costs.

(xxii)

In January 2006, the Company issued 40,000 common shares at a value of $88,000 pursuant to a purchase and sale agreement to purchase mining claims for the Spring Valley project.

(xxiii)

In May 2006, the Company issued 3,725,000 units at $1.80 per unit for proceeds of $6,705,000 by way of a private placement.  Each unit consisted of one common share and one-half nontransferable share purchase warrant.  Each whole warrant entitles the holder to purchase one additional common share at $2.70 per share until May 16, 2007 subject to the Company’s right to call the warrants, on 30 days’ notice in the event the 15 consecutive day trading average of the common shares of the Company exceeds $3.25.  The proceeds of the financing of $6,705,000 were allocated on a relative fair value basis as $5,998,846 to common shares and $706,154 as to warrants.   All of the warrants were outstanding at December 31, 2006. The Company incurred $65,216 in issue costs.

(xxiv)

In November 2006, the Company issued 2,000,000 units at $2.50 per unit for proceeds of $5,000,000 by way of a private placement. Each unit consisted of one common share and one-half nontransferable share purchase warrant.  Each whole warrant entitles the holder to purchase one additional common share at $3.00 per share until November 10, 2007.  The proceeds of the financing of $2,000,000 were allocated on a relative fair value basis as $1,761,509 to common shares and $238,491 as to warrants.   All of the warrants were outstanding at December 31, 2006. The Company paid $88,750 in finders’ fees and incurred $94,546 in issue costs for this private placement.

125

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

5.

Share capital (continued)

 (c)

Stock options:

The Company has an incentive share option plan (the “Plan”) that allows it to grant incentive stock options to its officers, directors, employees and consultants. The Plan permits the Company’s directors to grant incentive stock options for the purchase of shares of the Company to persons in consideration for services. Stock options must be non-transferable and the aggregate number of shares that may be reserved for issuance pursuant to stock options may not exceed 10% of the issued shares of the Company at the time of granting and may not exceed 5% to any individual (maximum of 2% to any consultant). The exercise price of stock options is determined by the board of directors of the Company at the time of grant and may not be less than the closing price of the Company’s shares on the trading day immediately preceding the date on which the option is granted and publicly announced, less an applicable discount, and may not otherwise be less than $0.10 per share. Options have a maximum term of ten years and terminate 90 days following the termination of the optionee’s employment, except in the case of death or disability, in which case they terminate one year after the event.  Options vest immediately upon being granted and are exercisable at any time.

Expiry date	Exercise price per share	Balance December 31, 2006	Granted	Exercised	Cancelled	Balance March 31, 2007
March 7, 2007	$1.40	150,000	-	(150,000)	-	-
September 5, 2008	$1.24	200,000	-	-	-	200,000
September 14, 2009	$0.80	308,500	-	-	-	308,500
February 4, 2010	$0.85	80,000	-	-	-	80,000
June 24, 2010	$1.30	575,000	-	-	-	575,000
October 4, 2010	$1.70	30,000		(30,000)		-
March 9, 2011	$2.00	100,000	-	-	-	100,000
March 22, 2011	$2.00	100,000	-	-	-	100,000
May 4, 2011	$2.00	30,000	-	-	-	30,000
June 11, 2011	$2.53	405,000	-	(20,000)	-	385,000
August 30, 2011	$2.63	40,000	-	-	-	40,000
November 30, 2011	$2.70	140,000	-	-	-	140,000
January 23, 2012	$3.00	-	25,000	-	-	25,000
March 7, 2012	$2.93	-	100,000	-	-	100,000
April 13, 2014	$2.04	400,000	-	-	-	400,000
		2,558,500	125,000	(200,000)	-	2,483,500

(d)

Share purchase warrants:

The continuity of share purchase warrants is as follows:

Expiry date	Exercise price per share	Balance December 31, 2006	Issued	Exercised	Expired	Balance March 31, 2007
May 16, 2007	$2.70	1,862,500	-	(12,500)	-	1,850,000
November 10, 2007	$3.00	1,000,000	-	-	-	1,000,000
		2,862,500	-	(12,500)	-	2,850,000

126

MIDWAY GOLD CORP.

(an exploration stage company)

Notes to Consolidated Interim Financial Statements

For the three month periods ended March 31, 2007 and 2006

(Unaudited)

6.

Contingency:

In May 2006 the Company’s wholly-owned Nevada subsidiary MGC Resources Inc. (“MGC") purchased additional property (the “Disputed Area”) from Seymork Investments Ltd. (“Seymork”) for US$200,000 to expand the Spring Valley project in Nevada. The Disputed Area represents about 4% of the surface area of the Spring Valley project.  In 1997, as a part of a loan arrangement, Emma Wagner (“Wagner”) transferred title of the Disputed Area to Seymork.  Seymork alleges it was a sale, Wagner alleges it was collateral for a loan.  In 1998, the parties entered into another loan arrangement whereby this time Wagner lent Seymork funds, using title to the Disputed Area as security for the loan.  Subsequently, Wagner assigned the rights to the loan to a group represented by Wallace D. Stephens (collectively “Stephens”).   The loan was not repaid and, in March 2006,&nbs p;Stephens sought to foreclose its interest against Seymork. In June 2006, Wagner brought a cross claim in the lawsuit against Seymork alleging that Wagner was the rightful owner of the Disputed Area.  The Company has joined the lawsuit in order to protect its interests in the Disputed Area.  If the court determines that Wagner was the rightful owner of the property then the Company will lose title to the Disputed Area it purchased from Seymork and will write off the purchase price.

The Company believes it has a credible basis for maintaining its title to the Disputed Area, and it has requested access to the documents supporting Wagner's position.  The outcome of this matter is not determinable.

7.

Related party transactions:

(a)

During the three months ended March 31, 2007 $Nil (2006 - $17,500) was paid for office facilities and administrative services to a company with a director in common.

(b)

During the three months ended March 31, 2007 $22,500 (2006 - $Nil) was paid for office facilities and administrative services to a company with an officer in common.

(c)

Included in accounts payable and accrued liabilities at March 31, 2007 is $500 (March 31, 2006 - $16,007) payable to the companies referred to in this note.

These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

8.

Supplemental disclosure with respect to cash flows:

The significant non-cash transaction for the three months ended March 31, 2007 consisted of the transfer of $216,153 for the fair value of stock options exercised from paid in additional capital to share capital and the transfer of $4,739 for the fair value of stock purchase warrants exercised from paid in additional capital to share capital.

The significant non-cash transaction for the three months ended March 31, 2006 consisted of the issue of 40,000 common shares for an option payment for a mineral property in the amount of $88,000 (note 5(b)) and the transfer of $4,880 for the fair value of stock options exercised from paid in additional capital to share capital.

9. Subsequent events:

Subsequent to March 31, 2007:

(a)

the Board of Directors granted 200,000 stock options at an exercise price of $3.20 that expire on April 26, 2012

(b)

the Company issued 1,805,558 common shares pursuant to the exercise of share purchase warrants for proceeds of $4,802,791

(c)

a total of 137,500 share purchase warrants with an exercise price of $2.70 expired unexercised on May 16, 2007

127

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

128

DAVIDSON & COMPANY LLP _{Chartered Accountants} ^{A Partnership of Incorporated Professionals}

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders of

Pan-Nevada Gold Corporation

(formerly Castleworth Ventures Inc.)

We have audited the consolidated balance sheets of Pan-Nevada Gold Corporation (formerly Castleworth Ventures Inc.) as at April 30, 2006 and 2005 and the consolidated statements of operations and deficit and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at April 30, 2006 and 2005 and the results of its operations and cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.  

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants
July 24, 2006

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA –

U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements.  Our report to the shareholders dated July 24, 2006 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants
July 24, 2006

A Member of SC INTERNATIONAL

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6

Telephone (604) 687-0947  Fax (604) 687-6172

129

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

CONSOLIDATED BALANCE SHEETS

AS AT APRIL 30

	2006	2005
ASSETS
Current
Cash	$ 621,394	$ 1,678
Receivables	8,657	1,134
Prepaid expenses	7,133	1,257
	637,184	4,069
Reclamation bonds	52,106	46,348
Mineral properties (Note 3)	2,502,497	1,522,545
	$ 3,191,787	$ 1,572,962
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	$ 78,902	$ 34,779
Due to related parties (Note 7)	7,516	29,086
Promissory note (Note 4)	-	50,671
	86,418	114,536
Shareholders' equity
Capital stock (Note 5)	9,658,134	7,624,451
Contributed surplus (Note 5)	306,568	229,460
Deficit	(6,859,333)	(6,395,485)
	3,105,369	1,458,426
	$ 3,191,787	$ 1,572,962

Nature and continuance of operations (Note 1)

Subsequent events (Note 11)

On behalf of the Board:
“John Watson”	Director	“Harold Gershuny”	Director

The accompanying notes are an integral part of these consolidated financial statements.

130

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

YEAR ENDED APRIL 30

	2006	2005
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting and management fees	$ 132,274	$ 173,764
Office	38,935	20,346
Professional fees	75,893	36,780
Rent	17,597	9,481
Shareholder communications	21,144	21,922
Stock-based compensation (Note 6)	77,108	122,580
Transfer agent and regulatory fees	22,978	13,501
Travel	32,391	19,125
Loss before other items	(418,320)	(417,499)
OTHER ITEMS
Interest income	5,670	2,821
Loss on foreign exchange	(51,198)	(8,325)
Write-off of mineral property and reclamation bond (Note 3)	-	(225,065)
Write-off of deferred exploration costs (Note 3)	-	(375,872)
	(45,528)	(606,441)
Loss for the year	(463,848)	(1,023,940)
Deficit, beginning of year	(6,395,485)	(5,371,545)
Deficit, end of year	$ (6,859,333)	$ (6,395,485)
Basic and diluted loss per common share	$ (0.02)	$ (0.07)
Weighted average number of common shares outstanding	19,320,139	15,578,564

The accompanying notes are an integral part of these consolidated financial statements.

131

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED APRIL 30

	2006	2005
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year	$ (463,848)	$ (1,023,940)
Items not affecting cash:
Accrued interest payable on promissory note	-	671
Loss on foreign exchange	5,173	2,323
Stock-based compensation	77,108	122,580
Write-off of mineral property	-	600,937
Changes in non-cash working capital items:
(Increase) decrease in receivables	(7,523)	158
(Increase) decrease in prepaid expenses	(6,012)	10,972
Decrease in accounts payable and accrued liabilities	(7,478)	(4,473)
Cash flows used in operating activities	(402,580)	(290,772)
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayment) advances from related parties	(21,570)	29,086
(Repayment) proceeds from promissory note	(50,000)	50,000
Issuance of capital stock	2,047,340	169,000
Share issue costs	(13,657)	-
Cash flows provided by financing activities	1,962,113	248,086
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition and exploration of mineral properties	(929,022)	(620,160)
Reclamation bonds	(10,795)	(39,800)
Cash flows used in investing activities	(939,817)	(659,960)
Change in cash during the year	619,716	(702,646)
Cash, beginning of year	1,678	704,324
Cash, end of year	$ 621,394	$ 1,678

Supplemental disclosure with respect to cash flows (Note 8)

The accompanying notes are an integral part of these consolidated financial statements.

132

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

1.

NATURE AND CONTINUANCE OF OPERATIONS

The Company was incorporated on February 11, 1981 under the British Columbia Company Act and its primary business is the acquisition and exploration of mineral properties in the U.S.A.  The Company is considered to be in the exploration stage.  On January 20, 2006, the Company changed its name from “Castleworth Ventures Inc.” to “Pan-Nevada Gold Corporation”.

The Company is in the process of exploring and developing its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable.  The recoverability of the amounts shown for the mineral property and related deferred exploration costs is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete their development and upon future profitable production.

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation.  The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.  Continued operations of the Company are dependent on the Company's ability to receive continued financial support, complete public equity financing, or generate profitable operations in the future. For the purposes of these financial statements these principles conform, in all material respects, to generally accepted accounting principles in the United States, except as described in Note 12.

2.

SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Apex Energy (U.S.) Inc., a Nevada company.  All significant inter-company transactions and balances have been eliminated upon consolidation.

Use of estimates

The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year.  Actual results could differ from those estimates.

Asset retirement obligations

An asset retirement obligation is a legal obligation associated with the retirement of tangible long-lived assets that the Company is required to settle. The Company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made.  The carrying amount of the related long-lived asset is increased by the same amount as the liability.  This policy was adopted retroactively in fiscal 2005 and has not affected the Company’s consolidated financial statements.  

133

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Mineral properties

All costs related to the acquisition, exploration and development of mineral properties are capitalized by property.  If economically recoverable ore reserves are developed, capitalized costs of the related property are reclassified as mining assets and amortized using the unit of production method.  When a property is abandoned, all related costs are written off to operations.  If, after management review, it is determined that the carrying amount of a mineral property is impaired, that property is written down to its estimated net realizable value.  A mineral property is reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

The amounts shown for mineral properties and deferred exploration costs do not necessarily represent present or future values.  Their recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof.  

Foreign currency translation

The Company’s subsidiary is an integrated foreign operation and is translated into Canadian dollars using the temporal method. Monetary items are translated at the exchange rate in effect at the balance sheet date and non-monetary items are translated at historical exchange rates. Income and expense items are translated at rates approximating those in effect at the time of the transaction.  Translation gains and losses are reflected in loss for the year.

Stock-based compensation

The Company uses the fair value method whereby the Company recognizes compensation costs for the granting of all stock options and direct awards of stock.  Any consideration paid by the option holders to purchase shares is credited to capital stock.

Future income taxes

Future income taxes are recorded using the asset and liability method whereby future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled.  The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs.  To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.

134

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments.  Under this method the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments.  It assumes that the proceeds would be used to purchase common shares at the average market price during the year.  For the years presented, this calculation proved to be anti-dilutive.

Basic loss per share is calculated using the weighted average number of common shares outstanding during the year.

Comparative figures

Certain comparative figures have been reclassified to conform with the current year’s presentation.

3.

MINERAL PROPERTIES

2006	Jessup Property	Lyle Campbell Trust Properties	Monte Property	Total
Acquisition costs:
Balance, April 30, 2005	$ -	$ 110,756	$ -	$ 110,756
Additions	59,055	-	-	59,055
Balance, April 30, 2006	59,055	110,756	-	169,811
Exploration costs:
Balance, April 30, 2005	-	1,411,789	-	1,411,789
Advance royalty	30,016	92,880	11,489	134,385
Assays	25,161	106,605	-	131,766
Consulting fees	8,741	2,729	-	11,470
Drilling	127,418	164,993	-	292,411
Geological	66,098	80,496	228	146,822
Mapping	17,158	16,409	-	33,567
Meals and lodging	1,278	10,935	-	12,213
Other	10,209	20,547	-	30,756
Staking and maintenance fees	7,000	82,339	-	89,339
Travel	3,468	18,369	-	21,837
Truck / equipment	8,563	7,768	-	16,331
Total additions	305,110	604,070	11,717	920,897
Balance, April 30, 2006	305,110	2,015,859	11,717	2,332,686
Total costs, April 30, 2006	$ 364,165	$ 2,126,615	$ 11,717	$ 2,502,497

135

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

3.

MINERAL PROPERTIES (cont’d…)

2005	Thunder Mountain Property	Lyle Campbell Trust Properties	Total
Acquisition costs:
Balance, April 30, 2004	$ 218,529	$ 110,756	$ 329,285
Written-off	(218,529)	-	(218,529)
Balance, April 30, 2005	-	110,756	110,756
Exploration costs:
Balance, April 30, 2004	372,161	795,340	1,167,501
Assays	-	51,283	51,283
Consulting fees	-	1,734	1,734
Drilling	-	184,889	184,889
Geological	-	108,121	108,121
Mapping	-	3,207	3,207
Meals and lodging	-	3,803	3,803
Metallurgical	-	51,837	51,837
Other	87	17,230	17,317
Royalty payments	2,523	73,518	76,041
Staking and maintenance fees	1,101	100,548	101,649
Travel	-	4,968	4,968
Truck / equipment	-	15,311	15,311
Total additions	3,711	616,449	620,160
Written-off	(375,872)	-	(375,872)
Balance, April 30, 2005	-	1,411,789	1,411,789
Total costs, April 30, 2005	$ -	$ 1,522,545	$ 1,522,545

Title to mineral properties

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties.  The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties are in good standing.

136

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

3.

MINERAL PROPERTIES (cont’d…)

Lyle Campbell Trust Properties, Nevada, U.S.A.

During fiscal 2003, the Company entered into a lease option agreement with the Lyle Campbell Trust for a 100% interest in certain gold properties in Nevada.  The Company paid $70,707 (US$45,000) as an advance towards royalty payments and acquired additional claims by staking at a cost of $40,049.

Pursuant to the agreement, the Company must:

i)

Pay US$37,500 advance royalty upon signing of the agreement (paid);

ii)

Pay US$37,500 advance royalty in January 2004 (paid);

iii)

Pay US$60,000 advance royalty in January 2005 (paid);

iv)

Pay US$80,000 advance royalty in January 2006 (paid);

v)

Pay an advance royalty of the greater of US$130,000 or the US dollar equivalent of certain amounts of gold as of the date of the agreement.

The Company must also pay a production royalty based on gross sales on the following sliding scale:

i)

2.5% if gold is less than US$340/ounce;

ii)

3.0% if gold is between US$340/ounce and US$450/ounce;

iii)

4.0% if gold is greater than US $450/ounce.

The Company has advanced funds for reclamation bonds to regulatory bodies against reclamation obligations relating to exploration work on the mineral properties.

In addition, the Company must incur the following exploration expenditures on the Lyle Campbell Trust Properties:

i)

US$80,000 in the 2003 calendar year (incurred);

ii)

US$85,000 in the 2004 calendar year (incurred);

iii)

US$120,000 in the 2005 calendar year (incurred);

iv)

US$130,000 in the 2006 calendar year;

v)

US$165,000 in 2007 and each calendar year thereafter.

Monte Property, Nevada, U.S.A.

During fiscal 2006, the Company entered into a lease agreement with the Lyle Campbell Trust with regard to the Monte property located in White Pine County, Nevada.

Pursuant to the agreement, the Company must:

i)

Pay US$10,000 advance royalty upon signing of the agreement (paid);

ii)

Pay US$10,000 advance royalty in January 2007;

iii)

Pay US$30,000 advance royalty in January 2008;

iv)

Pay US$45,000 advance royalty in January 2009;

v)

Pay an advance royalty of the greater of US$60,000 or the US dollar equivalent of certain amounts of gold as of the date of the agreement.

137

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

3.

MINERAL PROPERTIES (cont’d…)

Monte Property, Nevada, U.S.A. (cont’d…)

The Company must also pay a production royalty on gross sales on the following sliding scale:

i)

2.5% if gold is less than US$340/ounce;

ii)

3.0% if gold is between US$340/ounce and US$450/ounce;

iii)

4.0% if gold is greater than US$450/ounce.

In addition, the Company must incur the following exploration expenditures on the Monte property:

i)

US$35,000 in the 2006 calendar year;

ii)

US$50,000 in the 2007 calendar year;

iii)

US$75,000 in 2008 and each calendar year thereafter.

Jessup Property, Nevada, U.S.A.

In November 2005, the Company entered into an option agreement with Sunrise Land & Minerals Inc. (“Sunrise”), to acquire a 100% leasehold interest in the Jessup property located northeast of Reno, Nevada pursuant to which the Company paid $59,055.  The Company and Sunrise have two directors in common.

The Company assumed all underlying obligations of the Jessup lease during the 12 month option period.  The Company may acquire the Jessup lease by paying Sunrise a further US$400,000, of which US$200,000 is payable by November 17, 2006 and the remaining US$200,000 is payable by November 17, 2007.

Pursuant to the agreement, the Company must:

i)

Pay US$5,000/month advance royalty in 2006;

ii)

Pay US$6,000/month advance royalty in 2007;

iii)

Pay US$7,000/month advance royalty in 2008;

iv)

Pay US$8,000/month advance royalty in 2009;

v)

Pay an advance royalty of US$9,000/month in 2010 and thereafter.

The Company must also pay a Net Smelter Return (“NSR”) on the following sliding scale:

i)

2.6% NSR if gold is less than US$340/ounce;

ii)

3.1% NSR if gold is between US$340/ounce and US$450/ounce;

iii)

4.1% NSR if gold is between US$450/ounce and US$500/ounce;

iv)

5.1% NSR if gold is greater than US$500/ounce.

There is also a right to buy out all but 1.6% of the royalty for US$2,000,000 if exercised before 2008, US$2,500,000 if exercised during 2008 and US$3,000,000 if exercised after 2008.  All advance royalty payments and production royalty payments made under the lease agreements are to be credited to the buyout.

138

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

3.

MINERAL PROPERTIES (cont’d…)

Jessup Property, Nevada, U.S.A. (cont’d…)

In February 2006, the Company entered into an option agreement with certain individuals, to acquire a 100% leasehold interest in certain claims located in Churchill County, Nevada.

Pursuant to the agreement, the Company must:

i)

Pay US$6,000 advance royalty upon signing of the agreement (paid);

ii)

Pay US$7,000 advance royalty in January 2007;

iii)

Pay US$8,000 advance royalty in January 2008;

iv)

Pay US$9,000 advance royalty in January 2009;

v)

Pay US$10,000 advance royalty in January 2010 and thereafter.

The Company must also pay a 2.0% Net Smelter Return (“NSR”)

There is also a right to buy out 50% of the royalty for US$1,000,000 at any time during the agreement.

In February, 2006, the Company entered into an option agreement with Victory Exploration (“Victory”), to acquire a 100% leasehold interest in certain claims located in Churchill County, Nevada.

Pursuant to the agreement, the Company must:

i)

Pay US$2,500 advance royalty upon signing of the agreement (paid);

ii)

Pay US$5,000 advance royalty from 2007 to 2010;

iii)

Pay US$10,000 advance royalty from 2011 to 2015;

iv)

Pay US$20,000 advance royalty from 2016 to 2020;

v)

Pay US$30,000 advance royalty from 2021 to thereafter.

The Company must also pay a 5.0% Net Smelter Return (“NSR”).

There is also a right to buy out 50% of the royalty for US$250,000 at any time during the first 5 years of the agreement.

Thunder Mountain Property, Nye County, Nevada, U.S.A.

During fiscal 2003, the Company entered into an option agreement to earn a 50% interest in certain mineral claims in Nye County, Nevada. The Company paid $39,625 and issued 350,000 common shares at a value of $109,000.  The Company also acquired additional claims by staking at a cost of $69,904.

During fiscal 2005, management decided to no longer pursue the interest in the claims and allowed the option agreement to lapse.  Accordingly, $218,529 in mineral property acquisition costs, $375,872 in deferred exploration costs and $6,536 of reclamation bonds were written off to operations.

139

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

4.

PROMISSORY NOTE

Promissory note with a principal balance of $50,000 payable to a director of the Company, bearing interest at 8% per annum, compounded monthly. During fiscal 2006, the Company repaid the note including interest.

5.

CAPITAL STOCK AND CONTRIBUTED SURPLUS

	Number of Shares	Capital Stock	Contributed Surplus
Authorized
100,000,000 common shares without par value
Issued
Balance at April 30, 2004	15,255,331	$ 7,434,709	$ 127,622
Exercise of stock options	545,000	169,000	-
Contributed surplus adjustment for exercised options	-	20,742	(20,742)
Stock-based compensation	-	-	122,580
Balance at April 30, 2005	15,800,331	7,624,451	229,460
Private placements	5,118,350	2,047,340	-
Share issuance costs	-	(13,657)	-
Stock-based compensation	-	-	77,108
Balance as at April 30, 2006	20,918,681	$ 9,658,134	$ 306,568

Private placements

In July, 2005, the Company issued 4,118,350 units at $0.40 per unit for gross proceeds of $1,647,340.  Each unit consisted of one common share and one non-transferable share purchase warrant entitling the holder to purchase one additional common share at $0.50 until July 19, 2006 and at $0.55 until July 19, 2007.  The Company incurred share issue costs of $13,657 related to this private placement.

In January, 2006, the Company issued 1,000,000 common shares at $0.40 per share for gross proceeds of $400,000 pursuant to a non-brokered private placement.

140

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

6.

STOCK OPTIONS AND WARRANTS

The Company has a shareholder approved stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company.  Under the plan, the exercise price of each option equals the market price, minimum price or a discounted price, of the Company’s stock as calculated on the date of grant.  The options can be granted for a maximum term of 5 years and vest at the discretion of the board of directors.

	Warrants		Stock Options
	Number	Weighted Average Exercise Price	Number	Weighted Average Exercise Price
Outstanding, April 30, 2004	1,325,781	$ 0.89	505,000	$ 0.55
Granted	-	-	475,000	0.40
Exercised	-	-	(545,000)	0.31
Expired/cancelled	(990,781)	0.77	(160,000)	1.01
Outstanding, April 30, 2005	335,000	1.25	275,000	0.49
Granted	4,118,350	0.50	875,000	0.40
Exercised	-	-	-	-
Expired/cancelled	(335,000)	1.25	(100,000)	0.65
Outstanding, April 30, 2006	4,118,350	$ 0.50	1,050,000	$ 0.40
Number currently exercisable	4,118,350	$ 0.50	750,000	$ 0.40

At April 30, 2006, the Company had outstanding stock options and warrants, enabling the holders to acquire common shares as follows:

	Number of Shares	Exercise Price	Expiry Date
Stock options	75,000	$   0.40	August 3, 2006
	100,000	0.40	February 8, 2007
	550,000	0.40	August 11, 2007
	300,000	0.40	February 11, 2008
	25,000	0.52	January 24, 2008
Warrants	4,118,350	0.50	July 19, 2006
		then at 0.55	July 19, 2007

141

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

6.

STOCK OPTIONS AND WARRANTS (cont’d…)

On August 11, 2005, the Company granted 300,000 stock options to a director, which are exercisable at $0.40 per share until February 11, 2008 and which only vest if at least one of the following events occur:

a)

Receipt of an unconditional offer of at least $0.75 per share for at least 75% of the Company’s outstanding common shares.

b)

The Company receives a technical report from an independent qualified person in respect of one of its properties, which complies with the requirements of National Instrument 43-101 of the Canadian Securities Administrators (“NI 43-101”), which report includes a resource estimate that, when the number of ounces of gold or gold equivalent in all categories of resources in such resource estimate is added to the total number of ounces of gold or gold equivalent in all categories of resources in the most recent NI 43-101 compliant resource estimates by independent qualified persons on each of the Company’s other properties, the total number of ounces of gold or gold equivalent for all of the projects of the Company combined exceeds 1,000,000.

Stock-based compensation

The Company granted 875,000 (2005 – 475,000) stock options during the fiscal year ended April 30, 2006.  Stock-based compensation expense of $77,108 (2005 - $122,580) is based on options vesting as calculated using the Black-Scholes option pricing model was recognized and also recorded as contributed surplus on the balance sheet.  The weighted average fair value of the stock options granted during fiscal 2006 was $0.13 (2005 - $0.26) per option.

The following weighted average assumptions were used for the Black-Scholes valuation of stock options issued during the year:

	2006	2005
Risk-free interest rate	3%	3%
Expected life of options	2 years	2 years
Annualized volatility	68%	167%
Dividend rate	0.00%	0.00%

7.

RELATED PARTY TRANSACTIONS

The Company entered into the following transactions with related parties not disclosed elsewhere in the financial statements:

a)

Paid or accrued consulting and management fees totalling $126,858 (2005 - $128,064) to directors and companies controlled by directors.

b)

Paid or accrued rent totalling $17,597 (2005 - $9,481) to a company with a common director.

142

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

7.

RELATED PARTY TRANSACTIONS (cont’d…)

c)

Paid $59,055 (2005 – Nil) in acquisition costs to a company with a common director for the Jessup property.

d)

Paid $23,123 (2005 – Nil) to a company with a common director for advance royalties on the Jessup property.

These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Amounts due to related parties are owing to a director and a company controlled by a common director, are non-interest bearing, unsecured and have no fixed terms of repayment.

8.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

	2006	2005
Cash paid during the year for interest	$ 1,350	$ -
Cash paid during the year for income taxes	$ -	$ -

The significant non-cash transaction for the year ended April 30, 2006 was incurring mineral property expenditures of $50,930 through accounts payable and accrued liabilities.

There were no significant non-cash transactions for the year ended April 30, 2005.

9.

FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, receivables, reclamation bonds, due to related parties and accounts payable and accrued liabilities.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The Company is exposed to financial risk arising from fluctuations in foreign exchange rates and the degree of volatility of these rates.  The Company does not use derivative instruments to reduce its exposure to foreign currency risk.  The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

143

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

10.

INCOME TAXES

a)

A reconciliation of current income taxes at statutory rates with the reported taxes is as follows:

	2006	2005
Loss before income tax recovery	$ (463,848)	$ (1,023,940)
Expected income tax recovery	$ (143,793)	$ (364,727)
Other non deductible mineral property costs	71,032	281,944
Stock-based compensation not deductible for tax purposes	23,903	43,663
Unrecognized benefits of non-capital losses	48,858	39,120
Total income tax recovery	$ -	$ -

b)

Details of future income tax assets are as follows:

	2006	2005
Future tax assets:
Non-capital loss carryforwards	$ 479,055	$ 471,000
Capital losses available for future periods	10,586	10,001
Other	17,730	19,288
Resource deductions	1,245,254	1,089,477
	1,752,625	1,589,766
Valuation allowance	(1,752,625)	(1,589,766)
Net future tax assets	$ -	$ -

The Company has non-capital losses of approximately $1,270,000 which may be carried forward and applied against taxable income in future years.  These losses, if unutilized, will expire through 2016.  Subject to certain restrictions, the Company has further resource development and exploration expenditures totalling approximately $5,800,000 available to reduce taxable income of future years.

In addition, the Company has capital losses of approximately $56,000 which may be applied against taxable capital gains in the future.   These capital losses may be carried forward indefinitely.

The benefits of these losses and resource deduction have not been reflected in these consolidated financial statements and have been offset by a valuation allowance.

144

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

11.

SUBSEQUENT EVENTS

The following event occurred subsequent to April 30, 2006:

a) The Company received $1,280,029 from the exercise of 2,560,058 warrants priced at $0.50 per warrant.

b)

The Company received $40,000 from the exercise of 100,000 stock options priced at $0.40 per option.

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES

The consolidated financial statements have been prepared in accordance with Canadian GAAP.  Canadian GAAP differs in certain material respects from US GAAP.  The material differences between Canadian GAAP and US GAAP and their effect on the Company’s consolidated financial statements are summarized in the tables below.

Consolidated balance sheets
	April 30, 2006 $	April 30, 2005 $
TOTAL ASSETS
Canadian GAAP	3,191,787	1,572,962
Mineral properties (i)	(2,332,686)	(1,411,789)
US GAAP	859,101	161,173
TOTAL LIABILITIES
Canadian and US GAAP	86,418	1114,536
SHAREHOLDERS' EQUITY
Canadian GAAP	3,105,369	1,458,426
Mineral properties (i)	(2,332,686)	(1,411,789)
	772,683	46,637
US GAAP	859,101	161,173

145

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (cont’d…)

Consolidated statements of operations	Year ended  April 30, 2006 $	Year ended  April 30, 2005 $
Net loss under Canadian GAAP	(463,848)	(1,023,940)
Write-off of deferred exploration costs	-	375,872
Mineral property expenditures (i)	(920,897)	(620,160)
Net loss under US GAAP	(1,384,745)	(1,268,228)
Loss per share under US GAAP	(0.07)	(0.08)
Weighted average number of common shares outstanding	19,320,139	15,578,564
Consolidate statements of cash flows	Year ended  April 30, 2006 $	Year ended  April 30, 2005 $
OPERATING ACTIVITIES
Cash used under Canadian GAAP	(402,580)	(290,772)
Mineral property expenditures (i)	(869,967)	(620,160)
Cash used under US GAAP	(1,272,547)	(910,932)
INVESTING ACTIVITIES
Cash used under Canadian GAAP	(939,817)	(659,960)
Mineral property expenditures (i)	869,967	620,160
Cash used under US GAAP	(69,850)	(39,800)

Mineral property acquisition and exploration costs

Mineral property costs, including acquisition and exploration costs, are accounted for in accordance with Canadian GAAP as disclosed in Note 2.  Emerging Issues Task Force (“EITF”) No. 04-02 – “Whether Mineral Rights are Tangible or Intangible Assets”, concluded that mineral rights are tangible assets.  Accordingly, the Company continues to capitalize mineral property acquisition costs pursuant to US GAAP.  Exploration expenditures are expensed until an independent feasibility study has determined that the property is capable of commercial production and mine development begins.  At the Company’s current stage of exploration no economically recoverable reserves have been identified on any of its properties.  Exploration costs will continue to be expensed as they are incurred until an independent feasibility study has been completed and mine development begins.

146

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (cont’d…)

Property acquisition costs include cash consideration and the fair value of common shares issued for mineral property interests. For property acquired under an option agreement or by joint venture, where payments are made at the sole discretion of the Company, payments are recorded in the accounts at the time of payment.

The amounts shown for mineral properties represent costs incurred to date, less recoveries and write-downs, and are not intended to reflect present or future values.

(i)

Functional currency

The Company’s functional currency is the Canadian dollar.

(ii)

Credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents.  The Company places its cash and cash equivalents with high quality financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts.  The Company believes that credit risk associated with cash is remote.

(iii)

Stock-based compensation

Under United States GAAP, Statements of Financial Accounting Standards No. 123, “Accounting for Stock-based Compensation” (“SFAS 123”) recommended, but did not require, companies to establish a fair market value based method of accounting for stock-based compensation plans.  For the year ended April 30, 2005, the Company has elected to follow the recommendations of SFAS 123 and has chosen to account for stock-based compensation using the fair value based method.

Effective May 1, 2005, the Company adopted SFAS No. 123(revised), “Share-Based Payment: (“SFAS 123(R)”) utilizing the modified prospective approach. The impact of adoption of the standard did not materially affect the Company’s financial position, results of operations, or cash flows because the Company previously adopted the fair value based method of accounting for stock options prescribed by SFAS 123, “Accounting for Stock-Based Compensation”. Accordingly, there is no difference between Canadian GAAP and United States GAAP in the accounting for stock-based compensation for the years ended April 30, 2006 and 2005.

Recent United States Accounting Pronouncements:

September 2006 - FASB issued Statement No. 157, “Fair Value Measures”.  This Statement defines fair value, establishes a framework for measuring fair value, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. Statement No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of Statement No. 157 will change current practice. Statement No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact of Statement No. 157 but does not expect that it will have a material impact on the consolidated financial statements.

147

PAN-NEVADA GOLD CORPORATION

(formerly Castleworth Ventures Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2006

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (cont’d…)

June 2006 - FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109” (“FIN 48”).  This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB No. 109, “Accounting for Income Taxes.”  This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  This Interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006.   The Company has determined that the implementation of FIN 48 will likely not have an impact on its res ults of operations or financial position.

In May 2005, FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections – A Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”), which is effective for fiscal years beginning after December 15, 2005.  SFAS 154 requires that changes in accounting policy be accounted for on a retroactive basis.

148

PAN-NEVADA GOLD CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

NINE MONTH PERIOD ENDED

JANUARY 31, 2007

UNAUDITED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited consolidated financial statements for the period ended January 31, 2007.

149

PAN-NEVADA GOLD CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited – Prepared by Management)

	January 31, 2007	April 30, 2006
ASSETS
Current
Cash	$ 830,071	$ 621,394
Receivables	6,352	8,657
Prepaid expenses	6,391	7,133
	842,814	637,184
Reclamation bonds	52,463	52,106
Mineral properties (Note 4)	4,369,699	2,502,497
	$ 5,264,976	$ 3,191,787
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	$ 76,207	$ 78,902
Due to related parties	794	7,516
	77,001	86,418
Shareholders' equity
Capital stock (Note 5)	12,190,780	9,658,134
Contributed surplus (Note 5)	361,295	306,568
Deficit	(7,364,100)	(6,859,333)
	5,187,975	3,105,369
	$ 5,264,976	$ 3,191,787

Nature of operations (Note 2)

Subsequent events (Note 12)

On behalf of the Board:
“John Watson”	Director	“Harold Gershuny”	Director

The accompanying notes are an integral part of these consolidated financial statements.

150

PAN-NEVADA GOLD CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

(Unaudited – Prepared by Management)

	Three Month Period Ended January 31, 2007	Three Month Period Ended January 31, 2006	Nine Month Period Ended January 31, 2007	Nine Month Period Ended January 31, 2006
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting and management fees	$ 49,021	$ 29,729	$ 133,983	$ 83,806
Office	(362)	13,450	5,272	79,428
Professional fees	116,882	33,249	167,765	52,259
Rent	5,198	5,249	15,271	12,422
Shareholder communications	9,330	5,588	49,258	10,065
Stock-based compensation (Note 7)	-	-	109,969	67,885
Transfer agent and regulatory fees	9,041	7,387	19,344	24,705
Travel	9,074	8,857	22,933	22,986
Loss before other items	(198,184)	(103,509)	(523,795)	(353,556)
OTHER ITEMS
Interest income	7,146	1,338	19,028	1,338
Loss for the period	(191,038)	(102,171)	(504,767)	(352,218)
Deficit, beginning of the period	(7,173,062)	(6,645,532)	(6,859,333)	(6,395,485)
Deficit, end of the period	$ (7,364,100)	$ (6,747,703)	$ (7,364,100)	$ (6,747,703)
Basic and diluted loss per share	(0.01)	$ (0.01)	$ (0.02)	$ (0.02)
Weighted average number of shares outstanding	26,276,701	20,157,811	24,677,792	18,804,667

The accompanying notes are an integral part of these consolidated financial statements.

151

PAN-NEVADA GOLD CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – Prepared by Management)

	Three Month Period Ended January 31, 2007	Three Month Period Ended January 31, 2006	Nine Month Period Ended January 31, 2007	Nine Month Period Ended January 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period	$ (191,038)	$ (102,171)	$ (504,767)	$ (352,218)
Items not affecting cash:
Loss on foreign exchange	-	1,593	2,260	5,503
Stock-based compensation	-	-	109,969	67,885
Changes in non-cash working capital items:
Increase (decrease) in receivables	(2,190)	(2,298)	2,305	(3,003)
(Increase) decrease in prepaid expenses	20,059	(9,963)	(271)	(11,353)
Increase (decrease) in accounts payable
and accrued liabilities	48,939	(28,725)	(11,091)	(12,865)
Cash flows used in operating activities	(124,230)	(141,564)	(401,595)	(306,051)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition and exploration of mineral properties	(557,501)	(222,796)	(1,860,053)	(664,914)
Reclamation bonds	(357)	-	(357)	-
Cash flows used in investing activities	(557,858)	(222,796)	(1,860,410)	(664,914)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock	1,157,375	400,000	2,477,404	2,047,340
(Repayment) advances from related parties	794	3,537	(6,722)	(25,549)
Repayment of promissory note	-	-	-	(50,671)
Share subscriptions received in advance	(360,000)	-	-	-
Share issue costs	-	-	-	(4,920)
Cash flows provided by financing activities	798,169	403,537	2,470,682	1,966,200
Change in cash during the period	116,081	39,177	208,677	995,235
Cash, beginning of the period	713,990	957,736	621,394	1,678
Cash, end of the period	830,071	$ 996,913	$ 830,071	$ 996,913

Supplemental disclosures with respect to cash flows (Note 8)

The accompanying notes are an integral part of these consolidated financial statements.

152

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

1.

BASIS OF PRESENTATION

The unaudited consolidated financial statements contained herein include the accounts of Pan-Nevada Gold Corporation (the “Company”) and its wholly owned subsidiary, Apex Energy (U.S.) Inc., a Nevada company.  All significant inter-company transactions have been eliminated upon consolidation.

The interim period unaudited consolidated financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles.  All financial summaries included are presented on a comparative and consistent basis showing the figures for the corresponding period in the preceding year.  The preparation of financial data is based on accounting principles and practices consistent with those used in the preparation of annual financial statements.  Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  These interim period statements should be read together with the Company’s audited consolidated financial statements and the accompanying notes for the year ended April 30, 2006.  In the opinion of the Company, its unaudited interim consolidated fina ncial statements contain all adjustments necessary in order to present a fair statement of the results of the interim periods presented.

These unaudited consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future.

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation.

2.

NATURE OF OPERATIONS

The Company was incorporated on February 11, 1981 under the British Columbia Company Act and its primary business is the acquisition and exploration of mineral properties in the U.S.A.  On January 20, 2006, the Company changed its name from “Castleworth Ventures Inc.” to “Pan-Nevada Gold Corporation”.  The Company’s trading symbol on the TSX Venture Exchange also changed to PNV.

The Company is in the process of exploring and developing its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable.  The recoverability of the amounts shown for the mineral properties and related deferred exploration costs are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete their development and upon future profitable production.

On December 12, 2006, the Company entered into a Letter of Intent with Midway Gold Corp. (“Midway”) that provides for a proposed acquisition of the Company by way of a Plan of Arrangement (“Arrangement”) with the combined entity to carry on under the Midway Gold Corp. name. Under the Arrangement, the Company’s shareholders will receive one Midway share and one-half of one Midway share purchase warrant for every four shares of the Company. Each whole warrant will entitle the holder to purchase one additional Midway share at a price of $4.00 per share for a term of 12 months. The Company’s options and warrants will be convertible under the Arrangement into Midway options and warrants, on the same basis.

The Company announced an amended agreement which is fully disclosed in subsequent events. (Note 12)

153

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

3.

INCOME (LOSS) PER SHARE

Basic loss per share is calculated using the weighted-average number of shares outstanding during the period.

4.

MINERAL PROPERTIES

Title to mineral property interests

Title to mineral property interests involve certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral claims.  The Company has investigated title to its mineral property interests and, to the best of its knowledge, title to all of its interests are in good standing.

Lyle Campbell Trust Properties, Nevada, U.S.A.

During fiscal 2003, the Company entered into a lease option agreement with the Lyle Campbell Trust for a 100% interest in certain gold properties in Nevada.  The Company paid $70,707 (US$45,000) as an advance towards royalty payments and acquired additional claims by staking at a cost of $40,049.

Pursuant to the agreement, the Company must:

i)

Pay US$37,500 advance royalty upon signing of the agreement (paid);

ii)

Pay US$37,500 advance royalty in January 2004 (paid);

iii)

Pay US$60,000 advance royalty in January 2005 (paid);

iv)

Pay US$80,000 advance royalty in January 2006 (paid);

v)

In January 2007 and thereafter pay an advance royalty of the greater of US$165,000 or the US dollar equivalent of certain amounts of gold as of the date of the agreement. (paid US$165,000)

The Company must also pay a production royalty based on gross sales on the following sliding scale:

i)

2.5% if gold is less than US$340/ounce;

ii)

3.0% if gold is between US$340/ounce and US$450/ounce;

iii)

4.0% if gold is greater than US $450/ounce.

The Company has advanced funds for reclamation bonds to regulatory bodies against reclamation obligations relating to exploration work on the mineral properties.

In addition, the Company must incur the following exploration expenditures on the Lyle Campbell Trust Properties:

i)

US$80,000 in the 2003 calendar year (incurred);

ii)

US$85,000 in the 2004 calendar year (incurred);

iii)

US$120,000 in the 2005 calendar year (incurred);

iv)

US$130,000 in the 2006 calendar year; (incurred)

v)

US$165,000 in 2007 and each calendar year thereafter.

154

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

4.

MINERAL PROPERTIES (cont’d…)

Monte Property, Nevada, U.S.A.

During fiscal 2006, the Company entered into a lease agreement with the Lyle Campbell Trust with regard to the Monte property located in White Pine County, Nevada.

Pursuant to the agreement, the Company must:

i)

Pay US$10,000 advance royalty upon signing of the agreement (paid);

ii)

Pay US$10,000 advance royalty in January 2007 (paid);

iii)

Pay US$30,000 advance royalty in January 2008;

iv)

Pay US$45,000 advance royalty in January 2009;

v)

In January 2010 and thereafter pay an advance royalty of the greater of US$60,000 or the US dollar equivalent of certain amounts of gold as of the date of the agreement.

The Company must also pay a production royalty on gross sales on the following sliding scale:

i)

2.5% if gold is less than US$340/ounce;

ii)

3.0% if gold is between US$340/ounce and US$450/ounce;

iii)

4.0% if gold is greater than US$450/ounce.

In addition, the Company must incur the following exploration expenditures on the Monte property:

i)

US$35,000 in the 2006 calendar year (incurred);

ii)

US$50,000 in the 2007 calendar year;

iii)

US$75,000 in 2008 and each calendar year thereafter.

Jessup Property, Nevada, U.S.A.

In November 2005, the Company entered into an option agreement with Sunrise Land & Minerals Inc. (“Sunrise”), to acquire a 100% leasehold interest in the Jessup property located northeast of Reno, Nevada pursuant to which the Company paid $59,055.  The Company and Sunrise have two directors in common.

The Company assumed all underlying obligations of the Jessup lease during the 12 month option period.  On November 17, 2006, the Company exercised its option to acquire the Jessup lease by paying Sunrise US$200,000.  An additional US$200,000 is payable by November 17, 2007.

155

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

4.

MINERAL PROPERTIES (cont’d…)

Jessup Property, Nevada, U.S.A. (cont’d…)

Pursuant to the agreement, the Company must:

i)

Pay US$5,000/month advance royalty in 2006;

ii)

Pay US$6,000/month advance royalty in 2007 (renegotiated to US$5,000/month)

iii)

Pay US$7,000/month advance royalty in 2008;

iv)

Pay US$8,000/month advance royalty in 2009;

v)

Pay an advance royalty of US$9,000/month in 2010 and thereafter.

The Company must also pay a Net Smelter Return (“NSR”) on the following sliding scale:

i)

2.6% NSR if gold is less than US$340/ounce;

ii)

3.1% NSR if gold is between US$340/ounce and US$450/ounce;

iii)

4.1% NSR if gold is between US$450/ounce and US$500/ounce;

iv)

5.1% NSR if gold is greater than US$500/ounce.

There is also a right to buy out all but 1.6% of the royalty for US$2,000,000 if exercised before 2008, US$2,500,000 if exercised during 2008 and US$3,000,000 if exercised after 2008.  All advance royalty payments and production royalty payments made under the lease agreements are to be credited to the buyout.

In February 2006, the Company entered into an option agreement with certain individuals, to acquire a 100% leasehold interest in certain claims located in Churchill County, Nevada.

Pursuant to the agreement, the Company must:

i)

Pay US$6,000 advance royalty upon signing of the agreement (paid);

ii)

Pay US$7,000 advance royalty in January 2007 (paid);

iii)

Pay US$8,000 advance royalty in January 2008;

iv)

Pay US$9,000 advance royalty in January 2009;

v)

Pay US$10,000 advance royalty in January 2010 and thereafter.

The Company must also pay a 2.0% Net Smelter Return (“NSR”)

There is also a right to buy out 50% of the royalty for US$1,000,000 at any time during the agreement.

In February, 2006, the Company entered into an option agreement with Victory Exploration (“Victory”), to acquire a 100% leasehold interest in certain claims located in Churchill County, Nevada.

156

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

4.

MINERAL PROPERTIES (cont’d…)

Jessup Property, Nevada, U.S.A. (cont’d…)

Pursuant to the agreement, the Company must:

i)

Pay US$2,500 advance royalty upon signing of the agreement (paid);

ii)

Pay US$5,000 advance royalty from 2007 to 2010;

iii)

Pay US$10,000 advance royalty from 2011 to 2015;

iv)

Pay US$20,000 advance royalty from 2016 to 2020;

v)

Pay US$30,000 advance royalty from 2021 to thereafter.

The Company must also pay a 5.0% Net Smelter Return (“NSR”).

There is also a right to buy out 50% of the royalty for US$250,000 at any time during the first 5 years of the agreement.

	Jessup Property	Lyle Campbell Trust Properties	Monte Property	Total
Acquisition costs:
Balance, April 30, 2006	$ 59,055	$ 110,756	$ -	$ 169,811
Additions	227,240	-	-	227,240
Balance, January 31, 2007	286,295	110,756	-	397,051
Exploration costs:
Balance, April 30, 2006	305,110	2,015,859	11,717	2,332,686
Advance royalty	61,631	205,783	11,759	279,173
Assays	87,461	119,137	3,129	209,727
Consulting fees	11,543	25,358	-	36,901
Drilling	244,016	374,476	-	618,492
Geological	116,589	103,867	11,896	232,352
Mapping	2,884	5,861	2,381	11,126
Meals and lodging	1,763	10,610	907	13,280
Other	31,850	26,728	397	58,975
Reclamation	-	7,931	-	7,931
Staking and maintenance fees	21,102	86,941	15,531	123,574
Travel	6,341	15,720	918	22,979
Truck / equipment	6,160	17,562	1,730	25,452
Total additions	591,340	999,974	48,648	1,639,962
Balance, January 31, 2007	896,450	3,015,833	60,365	3,972,648
Total costs, January 31, 2007	$ 1,182,745	$ 3,126,589	$ 60,365	$ 4,369,699

157

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

5.

CAPITAL STOCK AND CONTRIBUTED SURPLUS

	Number of Shares	Capital Stock	Contributed Surplus
Authorized
100,000,000 common shares without par value
Issued
Balance as at April 30, 2006	20,918,681	$ 9,658,134	$ 306,568
Exercise of stock options	550,000	113,000	-
Exercise of warrants	2,622,558	1,314,404	-
Private placement	3,500,000	1,050,000	-
Contributed surplus adjustment for exercised options	-	55,242	(55,242)
Stock-based compensation	-	-	109,969
Balance as at January 31, 2007	27,591,239	$ 12,190,780	$ 361,295

On November 23, 2006, the Company issued 3,500,000 units for a private placement at $0.30 per unit for gross proceeds of $1,050,000.  Each unit consists of one common share and one half of one share purchase warrant. Each whole warrant will entitle the holder to purchase an additional common share at $0.40 until May 23, 2008. The common shares and warrants comprising the Units and any shares issued on exercise of the warrants are subject to a hold period expiring on March 24, 2007.  There were no commissions or finders fee payable on the financing.

During the nine month period ended January 31, 2007, the Company received $113,000 from the exercise of 550,000 stock options.

The Company received an additional $1,314,404 from the exercise of 2,622,558 warrants.

6.

STOCK OPTIONS AND WARRANTS

Options

The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company.  Under the plan, the exercise price of each option equals the market price, minimum price or a discounted price, of the Company’s stock as calculated on the date of grant.  The options can be granted for a maximum term of 5 years and vest at the discretion of the board of directors.

158

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

6.

STOCK OPTIONS AND WARRANTS (cont’d…)

As at January 31, 2007, the Company had the following outstanding stock options:

Number of Shares	Exercise Price	Expiry Date
75,000	$  0.40	February 9, 2007
475,000	0.40	August 11, 2007
300,000	0.40	February 11, 2008
500,000	0.30	October 11, 2008

Warrants

At January 31, 2007, the Company had share purchase warrants outstanding enabling holders to acquire the following:

Number of Shares	Exercise Price	Expiry Date
1,495,792	$  0.55	July 19, 2007
1,750,000	0.40	May 23, 2008

7.

STOCK-BASED COMPENSATION

During the nine month period ended January 31, 2007, the Company granted 600,000 (2006 – 550,000) stock options to directors and officers. The estimated fair value of these options was $0.18 (2005 - $0.12) per share for an estimated total of $109,969 (2005 - $67,885). This amount has been expensed as stock-based compensation in the statement of operations with a corresponding amount recorded as contributed surplus in shareholders’ equity.

The following assumptions were used for the Black-Scholes valuation of stock options granted during the period:

	2006	2005
Risk-free interest rate	3.88%	3.13%
Expected life of options	2 years	2 years
Annualized volatility	104.62%	67.28%
Dividend rate	0.00%	0.00%

159

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

8.

SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

The significant non-cash transaction for the nine month period ended January 31, 2007 was incurring mineral property expenditures of $7,149 through accounts payable and accrued liabilities.

There were no significant non-cash transactions during the nine month period ended January 31, 2006.

9.

RELATED PARTY TRANSACTIONS

The Company entered into the following transactions with related parties:

a)

Paid or accrued consulting and management fees totalling $113,603 (2006 - $81,306) to directors and companies controlled by directors.

b)

Paid or accrued rent totalling $15,271 (2006 - $12,422) to a company with a common director.

c)

Paid $50,626 (2006 - $11,592) to a company with a common director and shareholder for advance royalties on the Jessup property.  A second director is a shareholder of the company receiving the advance royalties.

d)

Paid $227,240 (2006 - $59,055) in acquisition costs to a company with a common director and shareholder for the Jessup property.  A second director is a shareholder of the company receiving the acquisition payment.

These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

10.

FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, receivables, reclamation bonds, accounts payable and accrued liabilities.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The Company is exposed to financial risk arising from fluctuations in foreign exchange rates and the degree of volatility of these rates.  The Company does not use derivative instruments to reduce its exposure to foreign currency risk.  The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

11.

SEGMENTED INFORMATION

The Company has one reportable operating segment being the acquisition and exploration of mineral properties.  All of the Company’s capital assets are located in the United States of America.

160

PAN-NEVADA GOLD CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

JANUARY 31, 2007

12.

SUBSEQUENT EVENTS

Exercised Stock Options

Subsequent to January 31, 2007, the Company received $90,000 from the exercise of 250,000 stock options.

Arrangement Agreement Signed and Amended

On February 16, 2007, the Company announced that it entered into an Arrangement Agreement (“Arrangement”) with Midway Gold Corp. (“Midway”) which supersedes the Letter of Intent previously announced on December 12, 2006.  The Arrangement was signed by Midway and the Company on February 20, 2007.

The Company plans to mail its Information Circular regarding the Arrangement to shareholders of record as of February 20, 2007.  

Shareholders of the Company can vote on the Arrangement at a special meeting.  The meeting will be held on Tuesday, April 10, 2007 at 2:00pm in the offices of DuMoulin Black, 10^th floor, 595 Howe Street, Vancouver, British Columbia.  A fairness opinion on the effect of the Arrangement will be provided with the meeting materials.

On February 26, 2007, the Company announced that the terms of the formal Arrangement have been modified.  Under the amended Arrangement, the Company’s shareholders will instead receive one Midway common share for every 3.5714 Pan-Nevada shares (or 0.28 of a Midway share for each Pan-Nevada share) and the Midway share purchase warrants will not be issued.  This change was made due to United States securities legislation issues affecting the exercise of the Midway warrants by U.S. residents.  The parties respective valuations of Midway and the Company have not changed.

Holders of existing Pan-Nevada share purchase warrants and stock options will receive new Midway share purchase warrants and stock options under the arrangement which are equivalent to their rights existing prior to the Arrangement.

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The consolidated financial statements have been prepared in accordance with Canadian GAAP.  Canadian GAAP differs in certain material respects from US GAAP.  The material differences between Canadian GAAP and US GAAP and their effect on the Company’s consolidated financial statements are summarized in the tables below.

161

Consolidated balance sheets
	January 31, 2007 $	April 30, 2006 $
TOTAL ASSETS
Canadian GAAP	5,264,976	3,191,787
Mineral properties (i)	(3,972,648)	(2,332,686)
US GAAP	1,292,328	859,101
TOTAL LIABILITIES
Canadian and US GAAP	77,001	86,418
SHAREHOLDERS' EQUITY
Canadian GAAP	5,187,975	3,105,369
Mineral properties (i)	(3,972,648)	(2,332,686)
	1,215,327	772,683
US GAAP	1,292,328	859,101

Consolidated statements of operations	Nine months ended January 31, 2007 $	Nine months ended January 31, 2006 $
Net loss under Canadian GAAP	(504,767)	(352,218)
Write-off of deferred exploration costs	-	-
Mineral property expenditures (i)	(1,639,962)	(664,914)
Net loss under US GAAP	(2,144,729)	(1,017,132)
Loss per share under US GAAP	(0.09)	(0.05)
Weighted average number of common shares outstanding	24,677,792	18.804,667
Consolidate statements of cash flows	Nine months ended January 31, 2007 $	Nine months ended January 31, 2006 $
OPERATING ACTIVITIES
Cash used under Canadian GAAP	(401,595)	(306,051)
Mineral property expenditures (i)	(1,632,813)	(664,914)
Cash used under US GAAP	(2,034,408)	(970,965)
INVESTING ACTIVITIES
Cash used under Canadian GAAP	(1,860,410)	(664,914)
Mineral property expenditures (i)	1,632,813	664,914
Cash used under US GAAP	(227,597)	-

162

(i)

Mineral property acquisition and exploration costs

Mineral property costs, including acquisition and exploration costs, are accounted for in accordance with Canadian GAAP as disclosed in Note 2.  Emerging Issues Task Force (“EITF”) No. 04-02 – “Whether Mineral Rights are Tangible or Intangible Assets”, concluded that mineral rights are tangible assets.  Accordingly, the Company continues to capitalize mineral property acquisition costs pursuant to US GAAP.  Exploration expenditures are expensed until an independent feasibility study has determined that the property is capable of commercial production and mine development begins.  At the Company’s current stage of exploration no economically recoverable reserves have been identified on any of its properties.  Exploration costs will continue to be expensed as they are incurred until an independent feasibility study has been completed and mine development begins.

Property acquisition costs include cash consideration and the fair value of common shares issued for mineral property interests. For property acquired under an option agreement or by joint venture, where payments are made at the sole discretion of the Company, payments are recorded in the accounts at the time of payment.

The amounts shown for mineral properties represent costs incurred to date, less recoveries and write-downs, and are not intended to reflect present or future values.

(ii)

Functional currency

The Company’s functional currency is the Canadian dollar.

(iii)

Credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents.  The Company places its cash and cash equivalents with high quality financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts.  The Company believes that credit risk associated with cash is remote.

(iv)

Stock-based compensation

Under United States GAAP, Statements of Financial Accounting Standards No. 123, “Accounting for Stock-based Compensation” (“SFAS 123”) recommended, but did not require, companies to establish a fair market value based method of accounting for stock-based compensation plans.  For the year ended April 30, 2005, the Company has elected to follow the recommendations of SFAS 123 and has chosen to account for stock-based compensation using the fair value based method.

Effective May 1, 2005, the Company adopted SFAS No. 123(revised), “Share-Based Payment: (“SFAS 123(R)”) utilizing the modified prospective approach. The impact of adoption of the standard did not materially affect the Company’s financial position, results of operations, or cash flows because the Company previously adopted the fair value based method of accounting for stock options prescribed by SFAS 123, “Accounting for Stock-Based Compensation”. Accordingly, there is no difference between Canadian GAAP and United States GAAP in the accounting for stock-based compensation for the years ended April 30, 2006 and 2005.

Recent United States Accounting Pronouncements:

September 2006 - FASB issued Statement No. 157, “Fair Value Measures”.  This Statement defines fair value, establishes a framework for measuring fair value, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. Statement No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of Statement No. 157 will change current practice. Statement No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact of Statement No. 157 but does not expect that it will have a material impact on the consolidated financial statements.

163

June 2006 - FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109” (“FIN 48”).  This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB No. 109, “Accounting for Income Taxes.”  This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  This Interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006.   The Company has determined that the implementation of FIN 48 will likely not have an impact on its results of operations or financial position.

In May 2005, FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections – A Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”), which is effective for fiscal years beginning after December 15, 2005.  SFAS 154 requires that changes in accounting policy be accounted for on a retroactive basis.

164

MIDWAY GOLD CORP.

Pro-Forma Consolidated Financial Statements

(Expressed in Canadian dollars)

(unaudited)

As at and for the three months ended March 31, 2007

and for the year ended December 31, 2006

165

MIDWAY GOLD CORP.

Pro-Forma Consolidated Balance Sheet

(Expressed in Canadian dollars)

(unaudited)

As at March 31, 2007

			Midway Gold Corp. March 31, 2007		Pan-Nevada Gold Corporation January 31, 2007		Pro Forma Adjustments	Notes		Pro Forma Consolidated
Assets
Current assets:
	Cash	$	6,873,422	$	830,071	$	(87,769)	2 (d)	$	7,615,724
	Amounts receivable		174,901		6,352		-			181,253
	Prepaid expenses		330,989		10,329		(4,045)	2 (d)		337,273
			7,379,312		846,752		(91,814)			8,134,250
Reclamation deposit			190,929		52,463		-			243,392
Equipment			120,521		-		-			120,521
Deferred acquisition costs			284,231		-		(284,231)	2 (d)		-
Mineral properties			7,679,050		397,051		36,239,223	2 (d)		44,315,324
		$	15,654,043	$	1,296,266	$	35,863,178		$	52,813,487
Liabilities and Stockholders' Equity
Current liabilities
	Accounts payable and accrued liabilities	$	428,108	$	80,939	$	-		$	509,047
			428,108		80,939		-			509,047
Future income taxes			-		-		10,050,000	2 (d)		10,050,000
Stockholders' equity
	Common stock authorized - unlimited, no par value
	Issued - 35,927,950 pre acquisition		40,244,167		12,190,780		(12,190,780)	2 (a)
	Issued - 43,692,059 post acquisition						25,000,431	2 (a)		65,244,598
	Additional paid in capital		2,770,766		361,295		(361,295)	2 (a)
							1,420,054	2 (c)
							608,020	2 (b)		4,798,840
	Deficit accumulated during exploration stage		(27,788,998)		(11,336,748)		11,336,748	2 (a)		(27,788,998)
			15,225,935		1,215,327		25,813,178			42,254,440
		$	15,654,043	$	1,296,266	$	35,863,178		$	52,813,487

See accompanying notes to pro forma consolidated financial statements

166

MIDWAY GOLD CORP.

Pro-Forma Consolidated Statements of Operations

(Expressed in Canadian dollars)

(unaudited)

Three months ended March 31, 2007

			Midway Gold Corp. three months ended March 31, 2007		Pan-Nevada Gold Corporation three months ended January 31, 2007		Pro Forma Adjustments	Notes		Pro Forma Consolidated
Expenses
	Consulting		3,968		49,021		-			52,989
	Depreciation		9,947		-					9,947
	Interest and bank charges		1,865		-		-			1,865
	Investor relations		83,664		9,330		-			92,994
	Legal, audit and accounting		33,584		116,882		-			150,466
	Mineral exploration expenditures		987,010		330,261					1,317,271
	Office and administration		37,548		4,836	2(d)	4,045			46,429
	Salaries and benefits		256,459		-		-			256,459
	Transfer agent and filing fees		6,592		9,041		-			15,633
	Travel		19,083		9,074		-			28,157
Loss before the undernoted			(1,439,720)		(528,445)		(4,045)	-		(1,972,210)
Other income (expenses):
	Foreign exchange gain (loss)		(22,663)		-		-			(22,663)
	Interest income		77,357		7,146		-			84,503
			54,694		7,146		-	-		61,840
Net loss before income tax			(1,385,026)		(521,299)		(4,045)	-		(1,910,370)
	Income tax recovery		-		-					-
Net loss		$	(1,385,026)	$	(521,299)	$	(4,045)		$	(1,910,370)
Basic and diluted loss per share		$	(0.04)		(0.02)		-		$	(0.04)
Weighted average number of shares*     outstanding			36,999,400		26,276,701		7,357,535			44,356,935

See accompanying notes to pro forma consolidated financial statements

167

MIDWAY GOLD CORP.

Pro-Forma Consolidated Statements of Operations

(Expressed in Canadian dollars)

(unaudited)

Year ended December 31, 2006

			Midway Gold Corp. year ended December 31, 2006		Pan-Nevada Gold Corporation year ended January 31, 2007		Pro Forma Adjustments	Notes		Pro Forma Consolidated
Expenses
	Consulting		37,625		301,644		-			339,269
	Depreciation		19,282		-					19,282
	Interest and bank charges		12,242		424		-			12,666
	Investor relations		282,034		60,637		-			342,671
	Legal, audit and accounting		148,945		191,399		-			340,344
	Mineral exploration expenditures		6,432,052		1,895,945					8,327,997
	Office and administration		147,396		31,121	2(d)	4,045			182,562
	Salaries and benefits		862,719		-		-			862,719
	Transfer agent and filing fees		26,121		17,618		-			43,739
	Travel		67,024		35,331		-			102,355
Loss before the undernoted			(8,035,440)		(2,534,119)		(4,045)	-		(10,573,604)
Other income (expenses):
	Foreign exchange gain (loss)		(22,983)		(1,586)		-			(24,569)
	Interest income		196,195		23,362		-			219,557
			173,212		21,776		-	-		194,988
Net loss before income tax			(7,862,228)		(2,512,343)		(4,045)	-		(10,378,616)
	Income tax recovery		621,000		-					621,000
Net loss		$	(7,241,228)	$	(2,512,343)	$	(4,045)		$	(9,757,616)
Basic and diluted loss per share		$	(0.23)		(0.10)		-		$	(0.27)
Weighted average number of shares outstanding			32,000,213		24,677,792		6,909,837			38,910,050

See accompanying notes to pro forma consolidated financial statements

168

MIDWAY GOLD CORP.

Notes to Pro Forma Consolidated Financial Statements

(Expressed in Canadian dollars)

(unaudited)

As at and for the three month period ended March 31, 2007 and the year ended December 31, 2006

1. Description of Offer and Basis of Presentation:

The accompanying unaudited pro forma consolidated financial statements of Midway Gold Corp. (the “Company” or “Midway”) have been prepared by management of Midway for inclusion in the prospectus of the Company dated August 2, 2007.  

On April 13, 2007 the Company and Pan-Nevada-Nevada Gold Corp. (“Pan-Nevada”) concluded an amended February 16, 2007 formal arrangement agreement (the “Arrangement Agreement”) whereby Midway acquired on April 16, 2007, through a series of transactions, all outstanding Pan-Nevada common shares on the basis of one Midway common share being issued for every 3.5714 Pan-Nevada common share held (the “Arrangement”). Pan-Nevada option and warrant holders received Midway options and warrants based on the Pan-Nevada/Midway share exchange ratio.  For purposes of the pro forma, Midway is considered to be the acquirer of Pan-Nevada assets.

These pro forma statements include:

(a)  a pro forma consolidated balance sheet prepared from the unaudited consolidated balance sheet of Midway as at March 31, 2007 and the unaudited balance sheet of Pan-Nevada as at January 31, 2007, as adjusted to generally accepted accounting principles in the United States of America (“US GAAP”), which gives pro forma effect to the acquisition of Pan-Nevada and the assumptions described in note 2 as if the transaction occurred on March 31, 2007.

(b)  a pro forma consolidated statement of operations for the three months ended March 31, 2007 prepared from the unaudited interim consolidated statement of operations of Midway for the three months ended March 31, 2007 and the unaudited interim consolidated statements of operations of Pan-Nevada for the three months ended January 31, 2007 adjusted to US GAAP which gives pro forma effect to the acquisition of Pan-Nevada and the assumptions described in note 2 as if this transaction occurred on January 1, 2006.

(c)  a pro forma consolidated statement of operations for the year ended December 31, 2006 prepared from the audited annual consolidated statement of operations of Midway for the year ended December 31, 2006 and the unaudited interim consolidated statements of operations of Pan-Nevada for the year ended January 31, 2007 which was constructed from the unaudited interim consolidated statement of operations of Pan-Nevada for the nine month period ended January 31, 2007 and the consolidated statement of operations of Pan-Nevada for the year ended April 30, 2006, adjusted to US GAAP, which gives pro forma effect to the acquisition of Pan-Nevada and the assumptions described in note 2 as if this transaction occurred on January 1, 2006.

It is management’s opinion that these pro forma consolidated financial statements include all adjustments necessary for the fair presentation, in all material respects, of the proposed acquisition described above in accordance with US GAAP applied on a basis consistent with Midway’s accounting policies, subject to the uncertainties with respect to the Pan-Nevada information as described in note 2.  No adjustments have been made to reflect potential cost savings that may occur subsequent to completion of the transaction.  The pro forma consolidated statements of operations do not reflect non-recurring changes or credits directly attributable to the transaction, of which none are currently anticipated.

These unaudited pro forma consolidated financial statements are not intended to reflect the results of operations or the financial position of Midway which would have actually resulted had the proposed transactions described in Note 2 occurred on January 1, 2006.  Further, this unaudited pro forma financial information is not necessarily indicative of the results of operations or the financial position that may be attained in the future.  The pro forma consolidated financial statements should be read in conjunction with the consolidated audited financial statements of Midway for the year ended December 31, 2006, the consolidated unaudited interim financial statements of Midway for the three months ended March 31, 2007 and the consolidated unaudited interim financial statements of Pan-Nevada for the nine month period ended January 31, 2007and the consolidated audited financial statements for the year ended April 30, 2006.

169

MIDWAY GOLD CORP.

Notes to Pro Forma Consolidated Financial Statements

(Expressed in Canadian dollars)

(unaudited)

As at and for the three month period ended March 31, 2007 and the year ended December 31, 2006

2. Pro Forma Assumptions:

The unaudited pro forma consolidated balance sheet incorporates the following pro forma assumptions:

Acquisition of Pan-Nevada:

(a)

The issuance of 7,764,109 common shares of Midway to the shareholders of Pan-Nevada in exchange for all of the shares of Pan-Nevada.  The value of each of the 7,764,109 Midway common share issued has been determined to be $3.22 (based on the closing price of Midway’s common shares on the closing of the Arrangement Agreement) for an aggregate value of $25,000,431).

(b)

Each 3.5714 Pan-Nevada stock option outstanding on closing of the Arrangement Agreement was exchanged for one Midway new option resulting in 308,000 Midway new options being issued.  Each Midway new option will, upon exercise in accordance with the terms thereof, entitle the holder to receive one Midway common share at an exercise price equal to 3.5714 times the original exercise price of each Pan-Nevada stock option.  The fair value of the 308,000 Midway New Options has been estimated to be $608,020 based on the Black-Scholes option pricing model (note 3(b)).  

(c)

Each 3.5714 Pan-Nevada share purchase warrant outstanding on closing of the Arrangement Agreement was exchanged for one Midway new warrant.  Each Midway new warrant will, upon exercise in accordance with the terms thereof, entitle the holder to receive one Midway common share at an exercise price equal to 3.5714 times the original exercise price of each Pan-Nevada warrant.   The fair value of the 870,323 Midway new warrants has been estimated to be $1,420,054 based on the Black-Scholes option pricing model (note 3(b)).

(d)

The payments of the costs of the proposed transaction are estimated as $372,000 of which $284,231 was incurred and recorded as deferred acquisition costs resulting in a remaining $87,769 estimated cash outlay.

The total acquisition price of the Pan-Nevada assets is as follows:

The total acquisition price of the Pan-Nevada assets is as follows:
Issuance of 7,764,109 shares of Midway net of issue costs	$25,000,431
Issuance of common share options	608,020
Issuance of share purchase warrants	1,420,054
Transaction costs	372,000
	$27,400,505
The total acquisition price has been allocated to the net assets of Pan-Nevada acquired as follows:
Cash	$830,071
Receivables	6,352
Prepaid expenses	6,284
Reclamation bonds	52,463
Mineral properties	36,636,274
Current liabilities	(80,939)
Future income tax	(10,050,000)
	$27,400,505

The pro forma adjustments include a deferred income tax liability of approximately $10 million which reflects temporary differences related to the accounting and tax values of Pan-Nevada’s identifiable assets and liabilities.  The deferred income tax liability may be materially different depending on determination of the actual tax basis of the mineral properties acquired.

As a consequence of the nature of this transaction, there may be actions and other events or changes initiated by Pan-Nevada that could significantly change the purchase price allocations.  For example, changes to other assets and 

liabilities will result in changes to the fair values of the assets and liabilities.   The final allocation of the purchase price and the fair values of Pan-Nevada’s assets and liabilities are subject to completion of definitive analysis, which would be carried out in the coming months.  

170

MIDWAY GOLD CORP.

Notes to Pro Forma Consolidated Financial Statements

(Expressed in Canadian dollars)

(unaudited)

As at and for the three month period ended March 31, 2007 and the year ended December 31, 2006

3.  Pro Forma Share Capital:

The issued common shares, share options and common share purchase warrants to purchase shares of Midway at the completion of the proposed transaction are expected to be:

(a)

Common shares, options and warrants:

	Number of shares	Amount
Balance March 31, 2007	36,140,450	$40,244,167
Issued for the acquisition of Pan-Nevada, net of issue costs	7,764,109	25,000,431
Pro-forma balance March 31, 2007	43,904,559	$65,244,598
	Number of warrants and options	Amount
Balance March 31, 2007	5,333,500	$2,770,766
Share purchase warrants issued for Pan-Nevada share purchase warrants	870,323	1,420,054
Stock options issued for Pan-Nevada stock options	308,000	608,020
Pro-forma balance March 31, 2007	6,511,823	$4,798,840

 (b)

Black Scholes assumptions:

Consideration for the acquisition of Pan-Nevada included the issuance of 308,000 Midway New Options to the holders of Pan-Nevada stock options and 870,323 Midway new warrants to the holders of Pan Nevada share purchase warrants on April 16, 2007. The assumptions used to calculate the aggregate value of the options used a risk free interest rate of 4.13%, an expected life of between 3 months to 18 months for the Midway new options, an expected life of between 3 months and 13 months for the Midway new warrants, an expected volatility of 68% and no dividends.

4. Loss per share:

The calculation of pro forma loss per share in the pro forma consolidated statements of operations for the three months ended March 31, 2007 and the year ending December 31, 2006, is based on the weighted average number of common shares of Midway actually outstanding for the period, plus the effect of the additional shares issued for the acquisition of Pan-Nevada assuming the transactions described in note 2 occurred on January 1, 2006. The actual weighted average number of shares outstanding of Pan-Nevada for the three months ended January 31, 2007 was 26,276,701 and for the year ended January 31, 2007 was 24,677,792.

171

THE SEC’S POSITION ON INDEMNIFICATION FOR

SECURITIES ACT LIABILITIES  

Our Articles provide that directors and officers shall be indemnified by us, to the extent authorized by Division 5 of Part 5 of the British Columbia Business Corporations Act, against all judgments, penalties or fines awarded or imposed in legal proceedings or investigative actions.  The Articles also authorize the board of directors to indemnify any other person, subject to the approval of the Supreme Court of British Columbia. 

Our employment agreement with Alan Branham provides for indemnification to the fullest extent permitted by applicable law. This includes indemnifying him for all expenses and liabilities, including criminal monetary judgments, penalties and fines, incurred by him in connection with any criminal or civil action brought or threatened against him by reason of his being or having been our officer or director or employee, except for gross negligence or willful misconduct.

To the extent that indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

TRANSFER AGENT AND REGISTRAR

Our registrar and transfer agent for our common stock is Computershare Investor Services Inc. located at its principal offices in Vancouver, British Columbia and Toronto, Ontario.

LEGAL MATTERS

The law firm of Davis & Company LLP has acted as our counsel by providing an opinion on the validity of the securities.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Exchange Act and, accordingly, file current and periodic reports, proxy statements and other information with the SEC. We have also filed a registration statement on Form S-1 under the Securities Act, as amended, in connection with this offering. This prospectus, which is part of the registration statement, does not contain all of the information contained in the registration statement. For further information with respect to us and the shares of common stock offered hereby, reference is made to such registration statement, including the exhibits thereto, which may be read, without charge, and copied at the public reference facilities maintained by the SEC at Judiciary Plaza, 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The S EC maintains a site on the World Wide Web at http://www.sec.gov that contains current and periodic reports, proxy statements and other information regarding registrants that filed electronically with the SEC. Statements contained in this prospectus as to the intent of any contract or other document referred to are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to this registration statement, each such statement being qualified in all respects by such reference.

172

MIDWAY GOLD CORP.

8,450,000 Shares of Common Stock

PROSPECTUS

August 2, 2007

173

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.   OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

	Amount
Securities and Exchange Commission Registration Fee	$  728
Legal Fees and Expenses	$50,000
Accounting Fees and Expenses	$25,000
Printing and Engraving Expenses	$1,000
Miscellaneous Expenses	$1,000
Total	$77,728

ITEM 14.     INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles provide that directors and officers shall be indemnified by us, to the extent authorized by Division 5 of Part 5 of the British Columbia Business Corporations Act, against all judgments, penalties or fines awarded or imposed in legal proceedings or investigative actions.  The Articles also authorize the board of directors to indemnify any other person, subject to the approval of the Supreme Court of British Columbia. 

Our employment agreement with Alan Branham provides for indemnification to the fullest extent permitted by applicable law. This includes indemnifying him for all expenses and liabilities, including criminal monetary judgments, penalties and fines, incurred by him in connection with any criminal or civil action brought or threatened against him by reason of his being or having been our officer or director or employee, except for gross negligence or willful misconduct.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

On December 12, 2006, Pan-Nevada and Midway announced an agreement whereby Midway would acquire, through a series of transactions, all of the issued and outstanding common shares in the capital of Pan-Nevada on the basis of one common share of Midway for every 3.5714 common shares of Pan-Nevada (or 0.28 of a Midway share for each Pan-Nevada share) pursuant to a Plan of Arrangement between Pan-Nevada and Midway (the “Arrangement”).  On April 13, 2007 (the “Effective Date”), the Plan of Arrangement was closed.  As a result of the Arrangement, all former Pan-Nevada shareholders became shareholders of Midway on the basis of one Midway share for every 3.5714 Pan-Nevada common shares held, and Midway issued 7,764,109 shares of common stock.  Also, holders of Pan-Nevada share purchase warrants and stock options were issued new Midway share purchase warrants and stock options under the Arrangement, adjusted to reflect the same 3.5714 exchange ratio as the common shares.  The new Midway share purchase warrants and stock potions are exercisable within the deadlines applicable to their Pan-Nevada stock options and warrants, subject to the terms of the Pan-Nevada stock option plan and warrant certificates, respectively, at prices relative of the 3.5714 exchange ratio.  Midway issued 870,323 warrants and 308,000 options in connection with the issuance.  The issuance by Midway of the Midway Shares, Options and Warrants pursuant to the Arrangement was not registered under the U.S. Securities Act or the securities laws of any state of the United States and was effected in reliance upon the Section 3(a)(10) Exemption under the U.S. Securities Act and applicable exemptions from registration under the securities laws of each state of the United States in which U.S. Shareholders reside.  Section 3(a)(10) of the U.S. Securities Act exempts from registration a secur ity which is issued in exchange for outstanding securities where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange have the right to appear, by a court or by a governmental authority expressly authorized by law to grant such approval.  Accordingly, the Final Order of the Court will, if granted, constitute a basis for the exemption from the registration requirements of the U.S. Securities Act with respect to the Midway Shares, Options and Warrants issued in connection with the Arrangement.

174

During the past three years Midway has raised all of its funding by way of private placements.  We offered and sold the following securities outside the United States to non-U.S. persons in off-shore transactions pursuant to the exclusion from registration available under Regulation S of the Securities Act and in the United States in private transactions not involving a public offering pursuant to exemptions available under Rule 506 of Regulation D and Section 4(2) of the Securities Act.

On August 26, 2004 Midway closed a $765,000 non-brokered private placement of 1,020,000 units at $0.75 per unit with each unit comprised of one common share and one non-transferable share purchase warrant.  All of the 1,020,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $0.80 per share for a period of six months were subsequently exercised.  A finders’ fee of 55,650 common shares was issued in connection with this transaction.

On December 21, 2004 Midway closed a $595,000 non-brokered private placement of 700,000 units at $0.85 per unit with each unit comprised of one common share and one non-transferable share purchase warrant.  All of the 700,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.00 per share for a period of one year were subsequently exercised.  A finders’ fee of 18,750 common shares was issued in connection with this transaction.

On February 16, 2005 Midway closed a $2,125,000 non-brokered private placement of 2,500,000 units at $0.85 per unit with each unit comprised of one common share and one non-transferable share purchase warrant.  All of the 2,500,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.00 per share for a period of one year were subsequently exercised.  A finders’ fee of $69,700 was paid and 75,800 common shares were issued in connection with this transaction.

On July 27, 2005 Midway closed a $1,150,000 non-brokered private placement of 1,000,000 units at $1.15 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  All of the 500,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.15 per share for a period of one year were subsequently exercised.

On August 22, 2005 Midway closed a $700,000 non-brokered private placement of 500,000 units at $1.40 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  All of the 250,000 share purchase warrants that entitled the holder to purchase one additional share at a price of $1.45 per share for a period of one year were subsequently exercised.

In January 2006 Midway issued 40,000 common shares at a value of $88,000 pursuant to a purchase and sale agreement to purchase mining claims for the Spring Valley project.

 On May 16, 2006 Midway closed a $6,705,000 non-brokered private placement of 3,725,000 units at $1.80 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  Of the 1,862,500 share purchase warrants that entitled the holder to purchase one additional share at a price of $2.70 per share for a period of one year 1,725,000 were subsequently exercised.

On November 10, 2006 Midway closed a $5,000,000 non-brokered private placement of 2,000,000 units at $2.50 per unit with each unit comprised of one common share and one-half of one non-transferable share purchase warrant.  The 1,000,000 share purchase warrant entitles the holder to purchase one additional share at a price of $3.00 per share until November 10, 2007

ITEM 16.   EXHIBITS

Exhibit Number	Description
2.1	Amended and Restated Arrangement Agreement between Midway Gold Corp. and Pan-Nevada Gold Corporation, dated February 26, 2007

175

3.1	Notice of Articles
3.2	Articles
4.1	Form of Stock Certificate
4.2	Form of Warrant Certificate issued in connection with the November 2006 Private Placement
4.3	Form of Subscription Agreement for May 2006 Private Placement
4.4	Form of Subscription Agreement for November 2006 Private Placement
5.1	Opinion of Davis & Company LLP
10.1	Option Amendment Agreement between Paul G. Schmidt and Mary Ann Schmidt and Thomas C. Patton and Linda Sue Patton and Midway Gold Corp., dated November 2, 2004
10.2	Purchase and Sale Agreement between Paul G. Schmidt and MGC Resources Inc., dated August 15, 2003.
10.3	Purchase and Sale Agreement between Echo Bay Exploration Inc. and MGC Resources Inc. dated September 1, 2003
10.4	Sale Deed between Nevada Land and Resource Company LLC and MGC Resources Inc., dated October 5, 2005
10.5	Purchase and Sale Agreement between Coeur Rochester, Inc. and MGC Resources Inc., dated January 25, 2006
10.6	Mineral Lease Agreement and Option to Purchase between Lamonte J. Duffy and MGC Resources Inc., dated April 25, 2006
10.7	Sale Deed between  Seymork Investments Ltd. and MGC Resources Inc., dated May 5, 2006
10.8	Mineral Lease Agreement and Option to Purchase between Dave Rowe, Randall Stoeberl and MGC Resources Inc., dated July 18, 2006
10.9	Mineral Lease Agreement and Option to Purchase between Lamonte J. Duffy and MGC Resources Inc., dated October 25, 2006
10.10	Mineral Lease Agreement and Option to Purchase between Dale Chabino and Diana Chabino and MGC Resources Inc., dated October 30, 2006
10.11	Mineral Lease Agreement between the Lyle Campbell Trust and Pan-Nevada Resources Corporation dated January 7, 2003
10.12	Mineral Lease Agreement and Option to Purchase between George D. Duffy and MGC Resources Inc. dated June 1, 2007.
10.13	Stock Option Plan of Midway Gold Corp.
10.14	Stock Option Plan of Midway Gold Corp. - Form of Stock Option Agreement
10.15	Employment Agreement between Alan Branham and Midway Gold Corp.

176

10.16	Contracting Agreement between Doris Meyer, Golden Oak Corporate Services Ltd. and Midway Gold Corp. dated December 1, 2006
10.17	Consulting Agreement between Kelly Hyslop
10.18	Consulting Agreement between John Watson
14.1	Code of Ethics
23.1	Consent of Todd Wakefield, M.S.c., MAusIMM (AMEC E&C Services, Mining & Metals)
23.2	Consent of Gordon Seibel, MAusIMM (AMEC E&C Services, Mining & Metals)
23.3	Not Used
23.4	Consent of Michael M. Gustin, R.P. Geo (Mine Development Associates)
23.5	Consent of  Steven Ristorcelli, R.P. Geo. (Mine Development Associates)
23.6	Consent of  Mine Development Associates
23.7	Consent of Davidson & Company LLP
23.8	Consent of KPMG LLP
24.1	Power of Attorney

177

ITEM 17.   UNDERTAKINGS.

(a)

The undersigned Registrant hereby undertakes:

(1)

To file, during any period in which offers or sales of securities are being made, a post-effective amendment to this registration statement to:

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or pr ospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

178

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described herein, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropri ate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

179

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Vancouver, B.C. on August 1, 2007.

MIDWAY GOLD CORP.


By:  /s/ Alan D. Branham
       Alan D. Branham
       President, Chief Executive Officer and Director

        Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Name	Title	Date
/s/ Alan D. Branham Alan D. Branham	President, Chief Executive Officer and Director	August 1, 2007
/s/ Doris Meyer Doris Meyer	Chief Financial Officer and Corporate Secretary	August 1, 2007
/s/ Brian J. McAlister Brian J. McAlister	Director	August 1, 2007
/s/ Brian E. Bayley Brian E. Bayley	Director	August 1, 2007
/s/ George T. Hawes George T. Hawes	Director	August 1, 2007
/s/ William M. Sheriff William M. Sheriff	Director	August 1, 2007
/s/ William A. Lupien William A. Lupien	Director	August 1, 2007

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Exhibit 24.1

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints each of Alan D. Branham and Doris Meyer as his or her attorney-in-fact and agent, with the full power of substitution and resubstitution and full power to act without the other, for them in any and all capacities, to sign any and all amendments, including post-effective amendments, and any registration statement relating to the same offering as this registration that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, to this registration statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

Name	Title	Date
/s/ Brian J. McAlister  Brian J. McAlister	Director	August 1, 2007
/s/ Brian E. Bayley  Brian E. Bayley	Director	August 1, 2007
/s/ George T. Hawes George T. Hawes	Director	August 1, 2007
/s/ William M. Sheriff William M. Sheriff	Director	August 1, 2007
/s/ William A. Lupien  William A. Lupien	Director	August 1, 2007

181

EX-2.1

AMENDED AND RESTATED ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT, amended and restated as of the 26^th day of February, 2007.  

AMONG:

MIDWAY GOLD CORP., a company incorporated under the laws of the Province of British Columbia and having a head office at Unit 1 - 15782 Marine Drive, White Rock, BC, V4B 1E6

(hereinafter referred to as “Midway”)

AND:

PN ACQUISITION LTD., a company that is a wholly-owned subsidiary of Midway and  incorporated under the laws of the Province of British Columbia

(hereinafter referred to as “Acquisitionco”)

AND:

PAN-NEVADA GOLD CORPORATION, a company incorporated under the laws of the Province of British Columbia and having its registered office at 10^th Floor, 595 Howe Street, Vancouver, BC  V6C 2T5

(hereinafter referred to as “P-N”)

WHEREAS:

A.

Midway, Acquisitionco, and P-N have agreed to proceed with a proposed plan of arrangement pursuant to Division 5 of Part 9 of the provisions of the BCBCA whereby P-N proposes to convene a meeting of its shareholders to consider the Arrangement on the terms and conditions set forth in the Plan of Arrangement attached as Appendix I hereto;

B.

In connection with the Arrangement, the parties propose that Midway will acquire all of the outstanding common shares in the capital of P-N by an exchange of securities with the result that the current shareholders of Midway will retain their current shareholdings in Midway and the current shareholders of P-N will receive Midway Common Shares, all pursuant to a certain specified share exchange ratio, and all as more particularly set out in the Plan of Arrangement attached as Appendix I hereto;

C.

Acquisitionco is a wholly-owned subsidiary of Midway, incorporated solely for the purposes of merging with P-N in connection with the Arrangement, and has not carried on any active business;

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D.

Each of the parties to this Agreement has agreed to participate in and support the Arrangement; and

E.

The parties have determined that it is advisable to amend and restate this Agreement as of February 26, 2007, which amended and restated Agreement will replace in its entirety the original Arrangement Agreement dated January 31, 2007 among the parties.

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises and the respective covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto covenant and agree as follows:

ARTICLE 1 - INTERPRETATION

1.1

Definitions

In this Agreement, including the recitals hereto, unless there is something in the subject matter or context inconsistent therewith, the following capitalized words and terms will have the following meanings:

(a)

“1933 Act” means the United States Securities Act of 1933, as amended;

(b)

“Affiliate” in respect of any person means any other person that, directly or through one or more intermediaries, controls or is controlled by or is under common control with such person and, for the purpose of this definition, “control” means the direct or indirect possession of the power to direct or cause the direction of the management and policies of another, whether through the ownership of voting securities, by contract or otherwise.  When used in relation to a business, “Affiliate” means, for periods both before and after the Effective Date, Affiliates as determined after giving effect to the Arrangement;

(c)

“Arrangement” means the statutory arrangement involving Midway, Acquisitionco, P-N, and the P-N Shareholders proposed under the provisions of sections 288 to 299 of the BCBCA on the terms and conditions set out in the Plan of Arrangement or any amendment or variation thereto made in accordance with the terms of the Arrangement Agreement;

(d)

“Arrangement Agreement” or “this Agreement” means this arrangement agreement governing the terms and conditions of the Arrangement and includes all appendices, schedules and exhibits hereto, as amended and restated as of February 26^th, 2007 as the same may be supplemented or amended;

(e)

“Arrangement Filings”  means the records and information provided to, and the records filed with, the Registrar under section 292(a) of the BCBCA that the Registrar requires, to give effect to any provisions of the Arrangement, together with a copy of the entered Final Order;

3

(f)

“Associate” has the meaning set out in subsection 1(1) of the Securities Act (British Columbia);

(g)

“BCBCA” means the Business Corporations Act (British Columbia);

(h)

“Business Day” means any day, which is not a Saturday or a Sunday, or a statutory holiday in British Columbia;

(i)

“Circular” means the definitive form, together with any amendments thereto, of the management proxy circular of P-N to be prepared and sent to the P-N Shareholders in connection with the P-N Meeting;

(j)

“Court” means the Supreme Court of the Province of British Columbia;

(k)

“Effective Date” means the date on which all conditions to the completion of the Arrangement as set out in Article 5 have been satisfied or waived in accordance with the provisions of this Agreement and all documents agreed to be delivered hereunder have been delivered to the satisfaction of the parties hereto, acting reasonably, and on which the Arrangement Filings are filed with the Registrar;

(l)

“Effective Time” means 12:01 am, Vancouver time, on the Effective Date;

(m)

“Final Order” means the final order of the Court approving the Arrangement pursuant to the BCBCA;

(n)

“Interim Order” means the interim order of the Court made pursuant to the application contemplated by section 4.5 hereof;

(o)

“Loss” means any loss, liability, damage, cost, expense, charge, fine, penalty or assessment of whatever nature or kind, including Taxes, the reasonable out-of-pocket costs and expenses of any action, suit, proceeding, demand, assessment, judgment, settlement or compromise relating thereto, fines and penalties and reasonable legal fees (on a solicitor and its own client basis) and expenses incurred in connection therewith, excluding loss of profits and consequential damages;

(p)

“Person” means and includes an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, a trustee, executor, administrator or other legal representative and the Crown or any agency or instrumentality thereof;

(q)

“Plan of Arrangement” means the plan of arrangement which is attached as Appendix I hereto and any amendment or variation thereto made in accordance with Article 6 of the Plan of Arrangement;

4

(r)

“P-N Business” means the business currently carried on by P-N, specifically, the acquisition and exploration of gold exploration properties and other exploration mineral properties in Nevada;

(s)

“P-N Meeting” means the special meeting of the P-N Shareholders to be held to consider, among other matters, the Arrangement, and any postponement or adjournment thereof;

(t)

“P-N Securityholder” means any P-N Shareholder or any holder of existing P-N Options or P-N Warrants;

(u)

 “P-N Shareholder” means a holder of existing P-N Common Shares;

(v)

“Registrar”  means the Registrar of Companies appointed under section 400 of the BCBCA;

(w)

“Representatives” means, collectively, the directors, officers, employees and agents of a party at any time and their respective heirs, executors, administrators and other legal representatives;

(x)

“Securityholder” means a holder of securities of one of the parties to this Agreement, as the context requires;

(y)

“Special Resolution” means a resolution passed by a majority of not less than two thirds of the votes cast by the P-N Shareholders who vote in respect of such resolution at the P-N Meeting;

(z)

“Subsidiary” means, with respect to a specified body corporate, a body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of directors thereof, whether or not shares of any other class or classes will or might be entitled to vote upon the happening of any event or contingency, are at the time owned, directly or indirectly, by such specified body corporate, and includes a body corporate in like relation to a subsidiary;

(aa)

“Superior Proposal” has the meaning set out in section 7.1 of this Agreement;

(bb)

“Support Agreement” means an agreement between Midway and certain P-N Shareholders pursuant to which, among other things, each such shareholder agrees, on the terms and subject to the conditions therein, irrevocably to support the Arrangement and to vote the P-N Common Shares referenced in said agreement in favour of the Arrangement;

(cc)

“Taxes” includes all applicable present and future income taxes, capital taxes, stamp taxes, charges to taxes, withholdings, sales and use taxes, value added taxes and goods and services taxes and all penalties, interest and other payments on or in respect thereof;

5

(dd)

“Treasury Regulations” means the U.S. Federal income tax regulations, including any temporary regulations, from time to time promulgated under the U.S. Tax Code;

(ee)

“U.S. Tax Code”  means the United States Internal Revenue Code of 1986 as amended from time to time; and

(ff)

“the Hearing” means the Court hearing at which the Final Order will be sought.

All capitalized words used in this Agreement and not otherwise defined herein will have the meanings set forth in the Plan of Arrangement.

1.2

Headings

The division of this Agreement into articles, sections and other portions and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof” and “hereunder” and similar expressions refer to this Agreement (including the appendices hereto) as a whole and not to any particular article, section or other portion hereof and includes any agreement, document or instrument supplementary or ancillary hereto.

1.3

Construction

In this Agreement, unless something in the context is inconsistent therewith:

(a)

the words “include” or “including” when following any general term or statement are not to be construed as limiting the general term or statement to the specific items or matters set forth or to similar items or matters, but rather as permitting it to refer to all other items or matters that could reasonably fall within its broadest possible scope;

(b)

a reference to a statute will be deemed to include every regulation made pursuant thereto, all amendments to the statute or to any such regulation enforced from time to time, and any statute or regulation that supplements or supersedes such statute or any such regulation;

(c)

a reference to time or date is to the local time or date in Vancouver, British Columbia, unless specifically indicated otherwise;

(d)

reference to a particular corporation includes the corporation derived from the amalgamation of the particular corporation, or of a corporation to which such reference is extended by this paragraph (d), with one or more other corporations;

(e)

a word importing the masculine gender includes the feminine or neuter and a word importing the singular includes the plural and vice versa; and

6

(f)

a reference to “approval”, “authorization”, “consent”, “designation” or “notice” means written approval, authorization, consent, designation or notice unless specifically indicated otherwise.

1.4

Date for Any Action

In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day in the place where the action is required to be taken, such action will be required to be taken on the next succeeding day which is a Business Day at such place, unless otherwise agreed to.

1.5

Currency

All sums of money which are referred to in this Agreement are expressed in lawful money of Canada unless otherwise specified.

1.6

Accounting Principles

Whenever in this Agreement reference is made to generally accepted accounting principles, such reference will be deemed to be to the Canadian generally accepted accounting principles from time to time approved by the Canadian Institute of Chartered Accountants, or any successor thereto, applicable as at the date on which a calculation is made or required to be made in accordance with generally accepted accounting principles.

1.7

Appendix

The attached Appendix I, entitled “Plan of Arrangement”, will be deemed to be incorporated into and form part of this Agreement.

1.8

Entire Agreement

This Agreement, together with the appendices, agreements and other documents herein or therein referred to, constitutes the entire agreement among the parties pertaining to the subject matter hereof and cancels and supersedes the letter agreement dated December 10, 2006 between Midway and P-N and all prior agreements, understandings, negotiations and discussions, whether oral or written, among the parties with respect to the subject matter hereof.

ARTICLE 2  - EFFECTIVE DATE OF ARRANGEMENT

2.1

Arrangement

Midway, Acquisitionco and P-N agree to effect the Arrangement pursuant to the provisions of sections 288 to 299 of the BCBCA and otherwise on the terms and subject to the conditions contained in this Agreement and the Plan of Arrangement.

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2.2

Effective Date and Time of Arrangement

The Arrangement will become effective at the Effective Time on the Effective Date, or on such date as otherwise agreed by the parties.  

2.3

Commitment to Effect Arrangement

Subject to satisfaction of the terms and conditions of this Agreement, the parties will each use all reasonable efforts and do all things reasonably required to cause the Arrangement to become effective on the Effective Date and, in conjunction therewith, to cause the transactions contemplated by the Plan of Arrangement to be completed on or prior to the Effective Date. Without limiting the generality of the foregoing, each of Midway and P-N will proceed forthwith to obtain conditional approval of the TSX-V to the Arrangement and the transactions contemplated thereunder.  P-N will proceed forthwith to call the P-N Meeting and apply for the Interim Order and, upon obtainment thereof, P-N will mail the Circular to the P-N Shareholders.  

2.4

Filing of Final Order

Subject to the rights of termination contained in Article 6 hereof, upon receipt of TSX-V conditional approval of the Arrangement, the P-N Shareholders approving the Arrangement by Special Resolution in accordance with the provisions of the Interim Order and the BCBCA, P-N obtaining the Final Order, and the other conditions contained in Article 5 hereof being satisfied or waived, Midway and P-N will file a copy of the Final Order together with such other documents as may be required to be filed pursuant to sections 288 to 299 of the BCBCA in order to make the Arrangement effective on the Effective Date.  Upon the Arrangement becoming effective, Midway and P-N will exchange such other documents as may be necessary or desirable in connection with the completion of the transactions contemplated by this Agreement and the Plan of Arrangement.

2.5

United States Section 3(a)(10) Exemption

The parties agree that the Arrangement will be carried out with the intention that all securities issued on completion of the Arrangement to P-N Securityholders will be issued by Midway in reliance on the exemption from the registration requirements of the 1933 Act provided by Section 3(a)(10) of the 1933 Act (the “Section 3(a)(10) Exemption”).  In order to ensure the availability of the Section 3(a)(10) Exemption, the parties agree that the Arrangement will be carried out on the following basis;

(a)

the Arrangement will be subject to the approval of the Court;

(b)

the Court will be advised as to the intention of the parties to rely on the Section 3(a)(10) Exemption prior to the Hearing;

(c)

the Court will be required to satisfy itself as to the fairness of the Arrangement;

(d)

the Final Order will expressly state that the Arrangement is approved by the Court as being fair to the P-N Securityholders to whom securities will be issued;

8

(e)

P-N will ensure that each P-N Securityholder entitled to receive securities on completion of the Arrangement will be given adequate notice advising them of their right to attend the Hearing and providing them with sufficient information necessary for them to exercise that right;

(f)

the P-N Securityholders will be advised that the securities issued in the Plan of Arrangement have not been registered under the 1933 Act and will be issued  by Midway in reliance on the exemption from the registration requirements of the 1933 Act provided by Section 3(a)(10) of the 1933 Act and may be subject to restrictions on resale under the securities laws of the United States, including, as applicable, Rules 144 and 145 under the 1933 Act with respect to affiliates;

(g)

the Interim Order approving the P-N Meeting to approve the Arrangement will specify that each P-N Securityholder will have the right to appear before the Court at the Hearing so long as such P-N Securityholder enters an appearance within a reasonable time; and

(h)

the Final Order will include a statement to the following effect:

“This Order will serve as a basis of a claim to an exemption, pursuant to section 3(a)(10) of the United States Securities Act of 1933 from the registration requirements otherwise imposed by that Act, regarding the distribution of securities of Midway pursuant to the Plan of Arrangement.”

2.6

Tax Matters

The parties intend to adopt this Agreement and the Plan of Arrangement as a plan of reorganization and to treat the transactions contemplated thereunder as reorganization in accordance with the provisions of section 368(a)(2)(E) of the U.S. Tax Code for United States Federal income tax purposes.  Except as provided in this Agreement, none of the parties will take any action that would cause the reorganization not to qualify as a reorganization in accordance with section 368(a)(2)(E) of the U.S. Tax Code.  However, neither Midway nor P-N makes any representation or warranty to the other party or to any P-N Shareholder, Midway Shareholder or other holder of P-N securities or Midway securities (including, without limitation, stock options) regarding the United States tax treatment of such transactions, whether such transactions will quality as a tax deferred plan of reorganization under the U.S. Tax Code, or any of the United States tax consequences to any shareholder or other holder under this Agreement or the Plan of Arrangement, and P-N and Midway acknowledge that Midway, P-N and the P-N Shareholders are relying solely on their own tax advisors in connection with this Agreement and the Plan of Arrangement and related transactions and agreements.

ARTICLE 3  - REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of Midway, Acquisitionco, and P-N

Each of the parties represents and warrants to each other as follows:

9

(a)

it is a corporation duly incorporated or continued and validly subsisting under the laws of the Province of British Columbia and has full capacity and authority to enter into this Agreement and, subject to obtaining the requisite approvals contemplated hereby, to perform its obligations hereunder;

(b)

it has taken all corporate actions necessary to authorize the execution and delivery of this Agreement, and this Agreement has been duly authorized by it;

(c)

neither the execution and delivery of this Agreement nor the performance of any of its covenants and obligations hereunder will constitute a material default under, or be in any material contravention or breach of:

(i)

any provision of its constating documents or governing documents;

(ii)

any judgment, decree, order, law, statute, rule or regulation applicable to it; or

(iii)

any agreement or instrument to which it is a party or by which it is bound;

(d)

no dissolution, winding-up, bankruptcy, liquidation or similar proceedings have been commenced or are pending or proposed in respect of it; and

(e)

it has the requisite organizational power and authority and all necessary governmental approvals to own, lease and operate the properties and assets it currently owns, operates or holds under lease and to carry on its business as it is now being conducted.

3.2

Representations by P-N

P-N represents and warrants to Midway and Acquisitionco as follows:

(a)

To P-N’s knowledge, it is not a “controlled foreign corporation” as defined in the U.S. Tax Code;

(b)

P-N is a “passive foreign investment company as defined in Section 1297(a) of the U.S. Tax Code and has been so prior to January 1, 2007 and continuously since January 1, 2006;

(c)

P-N operates at least one significant historical business line (e.g. the P-N Business as defined herein), or owns at least a significant portion of its historic business assets, in each case within the meaning of Treasury Regulations Section 1.368-1(d);

(d)

To P-N’s knowledge, there is no fact or circumstance, and P-N does not have a plan or intention to take or refrain from taking any action, other than action contemplated by this Agreement, that would be reasonably likely to prevent the

10

Plan of Arrangement from qualifying as a reorganization pursuant to the provisions of Section 368 of the U.S. Tax Code;

(e)

To P-N’s knowledge, there is no fact or circumstance that P-N would be subject to tax under section 897 of the U.S. Tax Code as a result of the Plan of Arrangement.

3.3

Representations by Midway

Midway represents and warrants to P-N and Acquisitionco as follows:

(a)

To Midway’s knowledge, Midway is a “passive foreign investment company” as defined in section 1297(a) of the U.S. Tax Code and has been continuously since January 1, 2007;

(b)

Following the merger as contemplated in the Plan of Arrangement, the merged P-N will continue the P-N Business or use a significant portion of P-N’s historic business assets in a business, in each case within the meaning of Treasury Regulations Section 1.368-1(d);

(c)

There is no intercorporate indebtedness existing among Midway, P-N or Acquisitionco that was issued, acquired or will be settled at a discount;

(d)

Midway has no current plan or intention to sell or otherwise dispose of any of P-N’s assets, except for dispositions made in the ordinary course of business, or transfers described in section 368(a)(2)(C) or the regulations thereunder;

(e)

To Midway’s knowledge, there is no fact or circumstance, and Midway does not have a plan or intention to take or refrain from taking any action, other than action contemplated by this Agreement, that would be reasonably likely to prevent the plan of Arrangement from qualifying as a reorganization pursuant to the provisions of Section 368 of the U.S. Tax Code.

(f)

To Midway’s knowledge, there is no fact or circumstance that Midway would be subject to tax under section 897 of the U.S. Tax Code as a result of the Plan of Arrangement.

ARTICLE 4  - COVENANTS

4.1

Covenants of Midway

Midway hereby covenants and agrees with P-N as follows:

(a)

its current and fully diluted share capital are as described in the Circular;

(b)

it does not have any material liabilities or obligations other than such liabilities or obligations disclosed in the Circular, including the financial statements

11

included therein and none of the information supplied by it for inclusion in the Circular omits to state any material liabilities or obligations incurred since the date of such financial statements;

(c)

 other than as disclosed in the Circular, there is no claim, action, proceeding or investigation pending or, to its knowledge, threatened against it, any of its Subsidiaries, or any of its properties or assets before any court, arbitrator or governmental authority, which, if adversely determined, could result in, individually or in the aggregate, a material adverse change or prevent or materially delay the consummation of the Arrangement;

(d)

none of the information supplied by it for inclusion in the Circular contains any untrue statement of a material fact, or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading;

(e)

until the Effective Date, Midway, and each of its Subsidiaries, will carry on its business in the ordinary course and will not enter into any transaction or material agreements or incur any obligation or liability out of the ordinary course of its business, except for transactions, material agreements or liabilities which have already been publicly disclosed and except as contemplated in this Agreement;

(f)

except for transactions which have already been publicly disclosed and except as contemplated in this Agreement, until the Effective Date, Midway will not, and will not suffer or permit any of its Subsidiaries to, merge into or with, or amalgamate, consolidate or enter into any other corporate reorganization with, any other corporation or Person or perform any act or enter into any transaction or negotiation which reasonably could be expected to, directly or indirectly, interfere or be inconsistent with the completion of the Arrangement or other transactions contemplated by this Agreement;

(g)

it will perform the obligations required to be performed by it, and will enter into all agreements required to be entered into by it under this Agreement and the Plan of Arrangement and will do all such other acts and things as may be necessary or desirable in order to carry out and give effect to the Arrangement and, without limiting the generality of the foregoing, Midway will:

(i)

sign a special resolution as a sole shareholder of Acquisitionco in favour of the approval of the Arrangement; and

(ii)

seek such other consents, orders, rulings, approvals and assurances as counsel may advise are necessary or desirable for the implementation of the Arrangement, including those referred to in section 5.1;

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(h)

it, by mutual agreement with the directors of P-N, will immediately after the Effective Date, appoint John Watson and William Sheriff as directors on Midway’s board of directors; and

(i)

it will use all reasonable efforts to cause each of the conditions precedent set out in sections 5.1 and 5.2 to be complied with on or before the Effective Date.

4.2

Covenants of P-N

P-N hereby covenants and agrees with Midway and Acquisitionco as follows:

(a)

its current and fully diluted share capital are as described in the Circular;

(b)

it does not have any material liabilities or obligations other than such liabilities or obligations disclosed in the Circular, including the financial statements included therein and none of the information supplied by it for inclusion in the Circular omits to state any material liabilities or obligations incurred since the date of such financial statements;

(c)

other than as disclosed in the Circular, there is no claim, action, proceeding or investigation pending or, to its knowledge, threatened against it, any of its Subsidiaries, or any of its properties or assets before any court, arbitrator or governmental authority, which, if adversely determined, could result in, individually or in the aggregate, a material adverse change or prevent or materially delay the consummation of the Arrangement;

(d)

none of the information supplied by it for inclusion in the Circular contains any untrue statement of a material fact, or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading;

(e)

until the Effective Date, P-N, and each of its Subsidiaries, will carry on its business in the ordinary course and will not enter into any transaction or material agreements or incur any obligation or liability out of the ordinary course of its business except for transactions, material agreements or liabilities which have already been publicly disclosed and except as contemplated in this Agreement;

(f)

except for transactions which have already been publicly disclosed and except as contemplated in this Agreement, until the Effective Date, P-N will not merge, and will not suffer or permit any of its Subsidiaries to merge, into or with, or amalgamate, consolidate or enter into any other corporate reorganization with, any other corporation or Person or perform any act or enter into any transaction or negotiation which reasonably could be expected to, directly or indirectly, interfere or be inconsistent with the completion of the Arrangement or other transactions contemplated by this Agreement;

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(g)

it will, in a timely and expeditious manner, mail, deliver or cause to be mailed or delivered the Circular and all proxy and meeting materials required by the BCBCA to the P-N Shareholders (and any other person to whom P-N may be required to deliver the Circular) all in accordance with the terms of the Interim Order and applicable law;

(h)

its board of directors will, prior to mailing the Circular and all proxy and meeting materials to the P-N Shareholders, obtain an opinion from P-N’s financial advisors that the consideration under the Arrangement is fair, from a financial point of view, to the P-N Shareholders, and provide Midway with a written copy of such opinion as soon as practicable.

(i)

it will perform the obligations required to be performed by it, and will enter into all agreements required to be entered into by it under this Agreement and the Plan of Arrangement and will do all such other acts and things as may be necessary or desirable in order to carry out and give effect to the Arrangement and related transactions as described in the Circular and, without limiting the generality of the foregoing, P-N will seek:

(i)

the Interim Order and the Final Order as provided for in section 4.5;

(ii)

the approval of the P-N Shareholders required for the implementation of the Arrangement; and

(iii)

such other consents, orders, rulings, approvals and assurances as counsel may advise are necessary or desirable for the implementation of the Arrangement, including those referred to in section 5.1;

(j)

it will convene the P-N Meeting as soon as practicable;  

(k)

it will use all reasonable efforts to cause each of the conditions precedent set out in sections 5.1 and 5.2 to be complied with on or before the Effective Date;

(l)

the board of directors of P-N immediately prior to Effective Date will consist of the directors of P-N who are on P-N’s board of directors as at the date of this Agreement and, such directors will resign on the Effective Date; and

(m)

subject to the approval of the P-N Shareholders to the Arrangement and the sole shareholder of Acquisitionco being obtained for the completion of the transactions contemplated by the Agreement, including the merger, and subject to the obtaining of all the applicable regulatory approvals, thereafter jointly with Acquisitionco file with the Registrar the Arrangement Filings.

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4.3

Covenants of Acquisitionco

Acquisitionco hereby covenants and agrees with P-N as follows:

(a)

from the date of execution hereof to the Effective Date, except with the prior written consent of P-N, it will not conduct any business which would prevent Acquisitionco from performing any of its obligations hereunder;

(b)

on the Effective Date, Acquisitionco will be a corporation which has, at no time, carried on any active business (other than is necessary to effect the Arrangement);

(c)

use its best efforts to cause each of the condition precedents set forth in section 5.1 of this Agreement to be complied with; and

(d)

subject to the approval of the P-N Shareholders and the sole shareholder of Acquisitionco being obtained and subject to the obtaining of all the applicable regulatory approvals, thereafter jointly with P-N file with the Registrar the Arrangement Filings.

4.4

Mutual Tax-Related Representation and Warranties

Each of Midway and P-N represents and warrants to each other as follows:

(a)

it has duly and timely filed, in proper form, all returns (collectively, the "Tax Returns") it was required to file in respect of taxes under the Income Tax Act (Canada), the Excise Tax Act (Canada), the Income Tax Act of British Columbia, the tax legislation of any other province of Canada or any foreign country having jurisdiction over its affairs or the affairs of a Subsidiary, for all prior periods in respect of which such filings have heretofore been required,

(b)

all Taxes shown in all Tax Returns and all Taxes owing, or accrued, on or prior to the Effective Date, whether or not the related Tax Returns have been filed, and all remittances of Taxes collected on behalf of any taxing authority owing on or prior to the Effective Date have been paid or accrued in its financial statements;

(c)

all payments by it or any Subsidiary to any non-resident of Canada has been made in accordance with all applicable legislation in respect of withholding taxes;

(d)

it has withheld from each payment made to any of its officers, directors, former directors and employees the amount of all Taxes and other deductions required to be withheld therefrom and has paid the same to the proper tax or other authority within the time required under any applicable tax legislation; and

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(e)

it has no materially adverse information or knowledge of any materially adverse fact relating to the Tax Returns, which has not been disclosed to the other parties.

4.5

Interim Order and Final Order

Midway and P-N each covenant and agree that each will support each other at the application for the Interim Order and the Hearing.  The Interim Order will provide for, among other things, the calling and holding of the P-N Meeting for the purpose of, among other matters, considering and, if deemed advisable, approving the Arrangement. P-N covenants and agrees that if the approval of the Arrangement by the P-N Shareholders as set forth in the Interim Order is obtained by P-N, as soon as practicable thereafter, P-N will take the necessary steps to submit the Arrangement to the Court and apply for the Final Order in such fashion as the Court may direct.

ARTICLE 5  - CONDITIONS

5.1

Mutual Conditions Precedent

The respective obligations of each party hereto to complete the transactions contemplated by this Agreement, and the obligation of the parties to file a copy of the Final Order and such other documents as may be required to be filed pursuant to sections 288 to 299 of the BCBCA in order to give effect to the Arrangement, will be subject to the satisfaction, on or before the Effective Date, of the following conditions:

(a)

the board of directors of each of Midway and P-N will have unanimously approved the Arrangement and the entering into this Agreement;

(b)

the Interim Order will have been granted in form and substance satisfactory to Midway and P-N, acting reasonably;

(c)

the Arrangement, with or without amendment, will have been approved at the P-N Meeting by the P-N Shareholders in accordance with the Interim Order;

(d)

the Final Order will have been granted in form and substance satisfactory to Midway and P-N, acting reasonably;

(e)

the TSX-V will have conditionally accepted the Arrangement and confirmed that the Midway New Common Shares, Midway New Option Shares and Midway New Warrant Shares have been conditionally listed on the TSX-V;

(f)

all other consents, orders, rulings, approvals and assurances, including regulatory and judicial approvals and orders required, necessary or desirable for the Arrangement to become effective will have been obtained or received from the Persons, authorities or bodies having jurisdiction in the circumstances, in a form acceptable to Midway and P-N, acting reasonably;   

16

(g)

the issue of the Midway securities issuable pursuant to the Arrangement will have been approved by all necessary corporate action to permit the Midway Shares to be issued as fully paid and non-assessable common shares; Midway New Options and Midway New Warrants will have been duly created and authorized, and the Midway Shares issuable on their exercise will be fully paid and non-assessable common shares of Midway upon receipt of payment therefor and compliance with the terms of their issuance; and the issuances of the above Midway securities under the Arrangement will be exempt from the registration requirements of the U.S. Securities Act and from the registration and prospectus requirements of applicable securities laws in each of the provinces and territories of Canada in which holders of securities of Pan-Nevada are resident;

(h)

notices of dissent will not have been delivered by P-N Shareholders holding such number of P-N Common Shares that is greater than five percent 5% of the total P-N Common Shares issued and outstanding on the Effective Date;

(i)

all the directors, officers, and certain Securityholders of P-N holding in the aggregate more than 50% of the issued P-N Common Shares will have executed a Support Agreement before the P-N Meeting;

(j)

P-N and Midway shall not have issued any new shares since December 31, 2006, other than upon the exercise of previously issued options or warrants;

(k)

the due diligence review by Midway of P-N and by P-N of Midway is satisfactory to each Midway and P-N, acting reasonably;

(l)

the Midway securities issued to P-N Shareholders in connection with the Arrangement will not have any escrow restriction or other trading restrictions attached to them and the issuance of such securities will not result in any material adverse tax consequences to P-N Shareholders;

(m)

up to and immediately prior to the Effective Date, Midway and P-N will have conducted their business in the ordinary course consistent with past practice and will not have engaged in any action that caused a material adverse change in its business, operations, assets, capitalization, finances, prospects, licences, property claims, permits, rights, privileges, or liabilities or a material adverse change to the value of Midway Common Shares or the P-N Common Shares, as the case may be;

(n)

there will not be in force any order or decree restraining or enjoining the consummation of the transaction contemplated by this Agreement; and

(o)

this Agreement will not have been terminated under Article 6.

Except for the conditions set forth in subsections 5.1(a), (b), (c), (d), (e), and (g) any of the foregoing conditions may be waived. Failure to comply with the condition set forth in subsection

17

5.1(i) will not be a breach of this Agreement if a Special Resolution approving the Arrangement is passed at the P-N Meeting.

5.2

Conditions and Obligations of Each Party

The obligation of each of Midway and P-N to complete the transactions contemplated by this Agreement is further subject to the condition, which may be waived by any such party without prejudice to its right to rely on any other condition in favour of such party, that each and every one of the covenants of the other party hereto to be performed on or before the Effective Date pursuant to the terms of this Agreement will have been duly performed by such party and that, except as affected by the transactions contemplated by this Agreement, the representations and warranties of the other party hereto will be true and correct in all material respects as at the Effective Date, with the same effect as if such representations and warranties had been made at and as of such time.

ARTICLE 6  - AMENDMENT AND TERMINATION

6.1

Amendment

This Amended and Restated Agreement amends and restates the arrangement agreement made January 31, 2007 among Midway, Acquisitionco, and P-N. Subject to any mandatory applicable restrictions under the BCBCA or the Final Order, this Agreement may, at any time and from time to time before or after the holding of the P-N Meeting, but not later than the Effective Date, be amended by written agreement of the parties hereto without, subject to applicable law, further notice to or authorization on the part of the P-N Shareholders.  Without limiting the generality of the foregoing, any such amendment may:

(a)

change the time for performance of any of the obligations or acts of the parties;

(b)

waive any inaccuracies or modify any representation contained herein or in any document to be delivered pursuant hereto;

(c)

waive compliance with or modify any of the covenants herein contained or waive or modify performance of any of the obligations of the parties; or

(d)

make such alterations in this Agreement as the parties may consider necessary or desirable in connection with the Interim Order or in order to ensure the tax efficacy of the Arrangement.

Notwithstanding the foregoing, the Plan of Arrangement may only be supplemented or amended in accordance with the provisions thereof.

6.2

Termination

This Agreement shall terminate:

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(a)

without any further action by the parties if the Effective Date will not have occurred on or before April 30, 2007, unless otherwise agreed by the parties;

(b)

in the event of a breach, in any material respect, by any of the parties hereto of a representation, warranty or covenant that any such party gave to any other party in this Agreement, provided however that a breach by Midway or Acquisitionco to each other shall not give rise to a termination of this Agreement;

(c)

in the event that the conditions to the Arrangement are not satisfied or waived by the parties to whom they are of benefit prior to the Effective Date, or any earlier date provided herein;

(d)

at any time prior to the Effective Date by unanimous agreement of the parties hereto without further action on the part of their respective shareholders; or

(e)

upon a determination of the Court which denies the granting of the Final Order, unless the parties agree to extend the Agreement until an appeal of the determination is heard.

6.3

Effect of Termination

Upon the termination of this Agreement pursuant to section 6.2 hereof, except for the obligations set out at sections 7.2 and 9.6, no party will have any liability or further obligation to any other party hereunder.

ARTICLE 7 - RIGHT TO MATCH OTHER PROPOSAL

7.1

Superior Proposal

The board of directors of P-N may respond to, in accordance with applicable law or in discharge of its fiduciary duties, any unsolicited offer or proposal received from another party, which P-N determines in good faith (after consultation with its financial advisors, and legal counsel) would, if consummated in accordance with its terms, result in a transaction that is financially superior for the P-N Shareholders to the transaction contemplated by this Arrangement Agreement (a "Superior Proposal"). P-N must immediately provide notice to Midway of the existence and terms of any such Superior Proposal and provide Midway with copies of all material information about the Superior Proposal immediately upon receipt thereof by P-N. Midway will have ten Business Days after the receipt of the material information about the Superior Proposal to notify P-N that it will offer an amendment to the Arrangement Agreement which provides terms that are substantially equivalent or superior in value to that provided under the Superior Proposal. P-N agrees that will not enter into any agreement regarding a Superior Proposal until the expiry of such ten Business Day period.

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7.2

Break Fee

P-N will pay a break fee of $480,000 to Midway within 30 Business Days from the date P-N provides notice under section 7.1 to Midway of a Superior Proposal if either of the following occurs:

(a)

P-N enters into an agreement regarding a Superior Proposal before the expiry of the ten Business Day period referred to in section 7.1 of this Agreement; or

(b)

at any time after the delivery of the P-N Circular to the P-N Shareholders, the board of P-N determines that a Superior Proposal has been made and recommends to the P-N Shareholders to accept the Superior Proposal.

ARTICLE 8 - MERGER

8.1

Merger of Conditions

The conditions set out in sections 5.1 and 5.2 will be conclusively deemed to have been satisfied, waived or released upon completion of the Arrangement on the Effective Date.

8.2

Merger of Representations, Warranties and Covenants

The provisions of sections 3.1, 4.1, 4.2, 4.3, and 4.4 will be conclusively deemed to have been satisfied in all respects upon completion of the Arrangement on the Effective Date and will accordingly merge in and not survive the effectuation of the Arrangement.

ARTICLE 9 - GENERAL

9.1

Notices

All notices which may be or are required to be given pursuant to any provision of this Agreement will be given or made in writing and will be deemed to be validly given if served personally or by facsimile, in each case to the attention of the senior officer at the following addresses or at such other addresses as will be specified by the parties by like notice:

If to Midway and Acquisitionco:

Midway Gold Corp.
Unit 1 - 15782 Marine Drive
White Rock, BC V4B 1E6
Attention:  Doris Meyer, CFO and Corporate Secretary
Facsimile: (604) 536-2788

and

Attention:  Alan D. Branham, President and CEO
Facsimile: (406) 475-9596

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with a copy to:

Davis & Company LLP
2800 Park Place
666 Burrard Street
Vancouver, BC  V6C 2Z7
Attention: Stuart B. Morrow
Facsimile: (604) 605-3547

If to P-N:

Pan-Nevada Gold Corporation
Suite 810, 609 Granville Street
Vancouver, BC V7Y 1G5
Attention: John E. Watson, President
Facsimile: (604) 623-3355

with a copy to:

DuMoulin Black
Suite 1000 - 595 Howe Street
Vancouver, BC V6C 2T5
Attention:  Bruce Scott
Facsimile:  (604) 687-8772

Any notice that is delivered will be deemed to be delivered on the date of delivery to such address if delivered on a Business Day prior to 5:00 p.m. (local time at the place of receipt) or on the next Business Day if delivered after 5:00 p.m. or on a non-Business Day.  Any notice delivered by facsimile transmission will be deemed to be delivered on the date of transmission if delivered on a Business Day prior to 5:00 p.m. (local time at the place of receipt) or the next Business Day if delivered after 5:00 p.m. or on a non-Business Day.

9.2

Assignment

No party may assign its rights or obligations under this Agreement or the Arrangement without the prior written consent of the other parties hereto.

9.3

Binding Effect

This Agreement and the Plan of Arrangement will be binding upon and will enure to the benefit of the parties hereto and their respective successors and permitted assigns.

9.4

Waiver

Any waiver or release of any of the provisions of this Agreement, to be effective, must be in writing executed by the party or parties granting the same.

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9.5

Governing Law

This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and will be treated in all respects as a British Columbia contract.

9.6

Fees and Expenses

Subject to section 7.2, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses whether or not the Arrangement is consummated except as follows:

(a)

if Midway terminates this Agreement for reasons not based on a breach of the representations, warranties or covenants of P-N contained in this Agreement, then Midway shall pay the sum of $200,000 to P-N within 5 Business Days of Midway's delivery of notice of termination to P-N.

9.7

Public Disclosure

No disclosure or announcement, public or otherwise, in respect of this Agreement or the transactions contemplated herein will be made by any party without the prior written agreement of the other parties as to timing, content and method, provided that the obligations herein will not prevent any party from making, after consultation with the other parties, such disclosure as its counsel advises is required by applicable laws or the rules and policies of the reporting jurisdictions of the party.

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9.8

Counterparts

This Agreement may be executed by facsimile and in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above.

MIDWAY GOLD CORP.

Per:

__________________________________________
Authorized Signatory

PN ACQUISITION LTD.

Per:

__________________________________________
Authorized Signatory

PAN-NEVADA GOLD CORPORATION

Per:

__________________________________________
Authorized Signatory

Appendix I to the Arrangement Agreement amended and restated as of the 26^th day of February, 2007, among Midway Gold Corp., PN Acquisition Ltd., and Pan-Nevada Gold Corporation

PLAN OF ARRANGEMENT UNDER SECTIONS 288 - 299

OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)

ARTICLE 1 - INTERPRETATION

1.1

Definitions

In this Plan of Arrangement, unless there is something in the subject matter or context inconsistent therewith, the following capitalized words and terms will have the following meanings:

(a)

Acquisitionco means a wholly-owned subsidiary of Midway, incorporated solely for the purposes of amalgamating with P-N, which has not carried on any active business;

(b)

“Acquisitionco Common Shares” means the common shares in the capital of Acquisitionco;

(c)

“Arrangement” means the statutory arrangement involving Midway, Acquisitionco, P-N, and the P-N Shareholders proposed under the provisions of sections 288 to 299 of the BCBCA, on the terms and conditions set out in this Plan of Arrangement or any amendment or variation thereto made in accordance with the terms of the Arrangement Agreement;

(d)

“Arrangement Agreement” means the arrangement agreement dated for reference as of the 31^st day of January, 2007 between Midway, Acquisitionco, and P-N to which this Plan of Arrangement is attached as Appendix I, as amended and restated as of February 26^th, 2007, as the same may be supplemented or amended;

(e)

“Arrangement Filings”  means the records and information provided to, and the records filed with, the Registrar under section 292(a) of the BCBCA that the Registrar requires, to give effect to any provisions of the Arrangement, together with a copy of the entered Final Order;

(f)

“BCBCA” means the Business Corporations Act (British Columbia);

(g)

“Business Day” means any day, which is not a Saturday or a Sunday, or a statutory holiday in British Columbia;

2

(h)

“Capital” means with respect to every share referred to herein, the capital of such shares within the meaning of section 72 of the BCBCA;

(i)

“Effective Date” means the date on which all conditions to the completion of the Arrangement as set out in Article 5 of the Arrangement Agreement have been satisfied or waived in accordance with the provisions of the Arrangement Agreement and all documents agreed to be delivered thereunder have been delivered to the satisfaction of the parties thereto, acting reasonably, and on which the Arrangement Filings are filed with the Registrar;

(j)

“Effective Time” means 12:01 am, Vancouver time, on the Effective Date;

(k)

“holder” means, when not qualified by the adjective “registered”, the person entitled to a share hereunder whether or not registered or entitled to be registered in respect thereof in the central securities register of Midway or P-N, as the case may be;

(l)

“ITA” means the Income Tax Act (Canada), as amended;

(m)

“PN Mergeco” means P-N after its merger with Acquisitionco;

(n)

“PN Mergeco Common Shares” means the common shares in the capital of PN Mergeco;

(o)

“Midway” means Midway Gold Corp., a company existing under the BCBCA;

(p)

“Midway Common Shares” means the common shares without par value in the capital of Midway as currently constituted;

(q)

 “Midway New Common Shares” means the common shares of Midway which Midway will be authorized to issue upon the Arrangement becoming effective and which are to be issued under the Arrangement to P-N Shareholders in exchange for their P-N Common Shares as set out in this Plan of Arrangement;

(r)

“Midway New Options” means the rights (whether or not vested) to purchase Midway Common Shares which will be issued to holders of P-N Options pursuant to the Plan of Arrangement and granted under the Midway PN Legacy Option Plan;

(s)

“Midway New Option Common Shares”  means the common shares of Midway which Midway will be authorized to issue upon the exercise of the Midway New Options and which will be reserved for issuance by Midway in accordance with this Plan of Arrangement;

(t)

“Midway New Warrants” means the warrants exercisable into Midway Common Shares which will be issued to the holders of P-N Warrants pursuant to the Plan of Arrangement;

3

(u)

“Midway New Warrant Common Shares” means the common shares of Midway which Midway will be authorized to issue upon the exercise of the Midway New Warrants and which will be reserved for issuance by Midway in accordance with this Plan of Arrangement;

(v)

“Midway PN Legacy Option Plan” means the new stock option plan of Midway created to grant the Midway New Options pursuant to the Plan of Arrangement;

(w)

“Notices of Dissent” has the meaning set out in section 5.2 of this Plan of Arrangement;

(x)

“P-N” means Pan-Nevada Gold Corporation, a corporation existing under the BCBCA;

(y)

“P-N Common Shares” means the common shares without par value in the capital of P-N as currently constituted;

(z)

“P-N Dissenting Shareholder” has the meaning set out in section 5.2 of this Plan of Arrangement;

(aa)

“P-N Dissenting Shares” has the meaning set out in section 5.2 of this Plan of Arrangement;

(bb)

“P-N Dissent Right” has the meaning set out in section 5.1 of this Plan of Arrangement;

(cc)

“P-N Meeting” means the special meeting of the P-N Shareholders to be held to consider the Arrangement and any postponement or adjournment thereof;

(dd)

“P-N Options” means the existing rights (whether or not vested) held by P-N Securityholders to purchase P-N Common Shares at the exercise price per share set out in each holder’s existing option agreement and which expire on the date set out in each holder’s existing option agreement;

(ee)

“P-N Stock Option Plan” means the existing stock option plan of P-N approved by P-N’s board of directors on October 12, 2004, as amended;

(ff)

“P-N Warrants” means the existing common share purchase warrants of P-N, entitling the holder to purchase one P-N Common Share at a price of $0.55 per share expiring on July 19, 2007 and at a price of $0.40 expiring on May 23, 2008;

(gg)

“Plan of Arrangement” means this plan of arrangement which is attached as Appendix I to the Arrangement Agreement and any amendment or variation thereto made in accordance with Article 6 of the Plan of Arrangement;

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(hh)

“Registrar”  means the Registrar of Companies appointed under section 400 of the BCBCA;

(ii)

 “Transfer Agent” means Computershare Investor Services Inc; and

(jj)

“TSX-V” means the TSX Venture Exchange.

1.2

Interpretation Not Affected By Headings

The division of this Plan of Arrangement into articles, sections, and other portions, and the insertion of headings are for the convenience of reference only and will not affect the construction or interpretation of this Plan of Arrangement.  The terms “this Plan of Arrangement”, “hereof”, “herein”, “hereunder” and similar expressions refer to this Plan of Arrangement as a whole and not to any particular article, section, subsection, paragraph or part hereof.  Unless something in the subject matter or context is inconsistent therewith, all references herein to articles, sections and other portions are to articles, sections and other portions to this Plan of Arrangement.

1.3

Number and Gender

In this Plan of Arrangement, words importing the singular number only will include the plural and vice versa, and words importing the masculine gender will include the feminine and neuter genders, and words importing persons will include individuals, partnerships, associations, trusts, unincorporated organizations and corporations.

1.4

Statutes

A reference to a statute will be deemed to include every regulation made pursuant thereto, all amendments to the statute or to any such regulation enforced from time to time, and any statute or regulation that supplements or supersedes such statute or any such regulation.

1.5

Currency

All references to currency herein are to lawful money of Canada unless otherwise specified herein.

1.6

Undefined Terms

Any undefined capitalized terms in this Plan of Arrangement will have the meanings ascribed to them in the Arrangement Agreement.

ARTICLE 2 - ARRANGEMENT AGREEMENT

2.1

Arrangement Agreement

This Plan of Arrangement is made pursuant and subject to the provisions of the Arrangement Agreement.

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2.2

Filing of Arrangement Filings

The filing of the Arrangement Filings will be conclusive evidence that the Arrangement has become effective and that each of the provisions of Article 3 has become effective in the sequence set out therein.

ARTICLE 3 - THE ARRANGEMENT

3.1

The Arrangement

On the Effective Date commencing at the Effective Time, the following will occur:

(a)

P-N and Aquisitionco will merge with the same effect as if they were amalgamated under section 269 of the BCBCA, except that the separate legal existence of P-N will not cease and P-N will survive the merger,

(b)

At and after the time of the step contemplated in section 3.1(a), and by virtue of the merger:

(i)

 the separate legal existence of Acquisitionco will cease without Acquisitionco being liquidated or wound up and P-N and Acquisitionco will continue as one company (hereinafter, “PN Mergeco”);

(ii)

PN Mergeco will own and hold all property of P-N and Acquisitionco, and without limiting the provisions hereof, all rights of creditors or others will be unimpaired by such merger, and all liabilities and other obligations of P-N and Acquisitionco, whether arising by contract or otherwise, will be enforceable against PN Mergeco to the same extent as if such obligations had been incurred or contracted by it;

(iii)

all rights, contracts, permits and interests of P-N and Acquisitionco will continue as rights, contracts, permits and interests of PN Mergeco as if P-N and Acquisitionco continued, and for greater certainty, the merger will not constitute a transfer or assignment of the rights or obligations of either P-N or Acquisitionco under any such rights, contracts, permits and interests;

(iv)

any existing cause of action, claim or liability to prosecution will be unaffected;

(v)

a civil, criminal or administrative action or proceeding pending by or against either P-N or Acquisitionco may be continued by or against PN Mergeco; and

(vi)

a conviction against, or ruling, order to judgment in favour of or against, either P-N or Acquisitionco may be enforced by or against PN Mergeco;

(c)

on and because of the merger contemplated in section 3.1(a):

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(i)

Midway will acquire all of the outstanding shares of PN Mergeco with the result that PN Mergeco will be a wholly-owned subsidiary of Midway and the all of issued the outstanding common shares Acquisitionco which were held by Midway will be cancelled;

(ii)

all of the issued and outstanding P-N Common Shares (other than P-N Dissenting Shares) will be exchanged, with good and marketable title, free and clear of all encumbrances, for fully paid Midway New Common Shares on the basis of one (1) Midway New Common Share for every 3.5714 P-N Common Shares exchanged and all such P-N Common Shares will be cancelled and the appropriate entry will be made in P-N’s central securities register. The Capital of the Midway New Common Shares will be equal to the Capital of P-N Common Shares exchanged therefore;

(iii)

in connection with such exchange in section 3.1(c)(ii), each P-N Shareholder will cease to be the holder of the P-N Common Shares so exchanged and will become the holder of the Midway New Common Shares issued to such P-N Shareholder;  the name of such P-N Shareholder will be removed from the P-N central securities register for P-N Common Shares in respect of the P-N Common Shares so exchanged and will be added to Midway’s central securities register for Midway New Common Shares so issued to such P-N Shareholder;

(iv)

in consideration of the issuance by Midway of the Midway New Common Shares pursuant to section 3.1(c)(ii), PN Mergeco will issue to Midway one hundred (100) fully paid PN Mergeco Common Shares;

(v)

each 3.5714 outstanding P-N Options that have not been duly exercised prior to the Effective Time will be exchanged for one (1) Midway New Option granted under the Midway PN Legacy Option Plan and the exercise price of each Midway New Option shall be 3.5714 times the exercise price of the exchanged P-N Options. Save and except for the exercise price set forth above and except as otherwise agreed to by the holders of the P-N Options and Midway, the term to expiry, conditions to and manner of exercising, vesting schedule, the status under applicable laws, and all other terms and conditions of the Midway New Options will otherwise be unchanged from those contained in or otherwise applicable to the related P-N Options;

(vi)

each 3.5714 outstanding P-N Warrants that have not been duly exercised prior to the Effective Time will be exchanged for one (1) Midway New Warrant and the exercise price of each Midway New Warrant shall be 3.5714 times the exercise price of the exchanged P-N Warrants. Save and except for the exercise price set forth above and except as otherwise agreed to by the holders of the P-N Warrants and Midway, the term to expiry, conditions to and manner of exercising, vesting schedule, the status under

7

applicable laws, and all other terms and conditions of the Midway New Warrants will otherwise be unchanged from those contained in or otherwise applicable to the related P-N Warrants;

(vii)

in connection with such exchanges in sections 3.1(c)(v) and (vi), the name of such holder of P-N Options and P-N Warrants will be removed from P-N’s central securities register in respect of the P-N Options and P-N Warrants so exchanged and will be added to Midway’s central securities register for Midway New Options and Midway New Warrants so issued to such holder of P-N Options and P-N Warrants; and

(viii)

all P-N Options and P-N Warrants and the P-N Stock Option Plan will be cancelled and terminated and Midway and PN Mergeco will have no liabilities or obligations for any P-N Options, P-N Warrants or the P-N Stock Option Plan;

(d)

P-N’s Common Shares will be delisted from trading on the TSX-V; and

(e)

the above exchanges and cancellations shall be deemed to occur on the Effective Date, notwithstanding that certain procedures related thereto are not completed until after the Effective Date.

3.2

Name of PN Mergeco

The name of PN Mergeco after the Effective Date shall continue as “Pan-Nevada Gold Corporation”.

3.3

Registered Office of PN Mergeco

The registered and records office of PN Mergeco shall be located at 2800 Park Place, 666 Burrard Street, Vancouver, British Columbia  V6C 2Z7.

3.4

Head Office of PN Mergeco

The head office of PN Mergeco shall be located at Unit 1 - 15782 Marine Drive, White Rock, British Columbia  V4B 1E6.

3.5

Authorized Capital of PN Mergeco

From and after the Effective Date, PN Mergeco shall be authorized to issue an unlimited number of common shares without par value.

3.6

Notice of Merger

The notice of merger of PN Mergeco shall be substantially in the form attached as Schedule A to this Plan of Arrangement.

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3.7

Notice of Articles

The notice of articles of PN Mergeco shall be substantially in the form attached as Schedule B to this Plan of Arrangement.

3.8

Articles of PN Mergeco

The articles of P-N will become the articles of PN Mergeco on the Effective Date, a copy of which is set out in Schedule C to this Plan of Arrangement, with such amendments thereto as may be necessary to give effect to this Plan of Arrangement until repealed, amended, or replaced.

3.9

First Annual Meeting of PN Mergeco

From and after the Effective Date, the first annual general meeting of PN Mergeco will be held within 18 months from the Effective Date.

3.10

Directors of PN Mergeco

From and after the Effective Date, the first director of PN Mergeco shall be the following person:

Brian E. Bayley

4143 Ranger Crescent

North Vancouver, BC   V7R 3K8

3.11

Officers of PN Mergeco

From and after the Effective Date, the first officers of PN Mergeco shall be the following persons:

President:

Brian Bayley

Corporate Secretary:

Sandra Lee

3.12

Deemed Fully Paid and Non-Assessable Shares

All Midway New Common Shares issued pursuant hereto will be deemed to be validly issued and outstanding as fully paid and non-assessable shares for all purposes of the BCBCA.

3.13

Arrangement Effectiveness

On the Effective Date, the Arrangement will become finally and conclusively binding on each of Midway, Acquisitionco, P-N and the P-N Securityholders.

3.14

Supplementary Actions

Notwithstanding that the transaction and events set out in section 3.1 will occur and will be deemed to occur in the order therein set out without any act or formality, each of Midway, Acquisitionco and P-N will be required to make, do and execute or cause and procure to be

9

made, done and executed all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may be required to further document or evidence any of the transactions or events set out in section 3.1, including without limitation, any resolutions of directors authorizing the issue, transfer or purchase for cancellation of shares, any share transfer powers evidencing the transfer of shares and any receipt therefore, any promissory notes and receipts therefore and any necessary additions to or deletions from share registers.

ARTICLE 4 - CERTIFICATES AND DOCUMENTATION

4.1

Issuance and Surrender of Share Certificates

As soon as practicable after the Effective Time, the Transfer Agent shall forward a letter of transmittal and instructions, to each holder of P-N Common Shares to which section 3.1 applies, at the address of each P-N Shareholder as it appeared in the register of P-N, for obtaining delivery of certificates representing Midway New Common Shares.  Upon surrender to the Transfer Agent for cancellation of a certificate which immediately prior to the Effective Time represented outstanding P-N Common Shares that were exchanged for Midway New Common Shares under this Plan of Arrangement, together with the duly completed letter of transmittal and such additional documents and instruments as the Transfer Agent may reasonable require, Midway will cause to be issued to such registered P-N Shareholders at the close of business on the Effective Date, share certificates representing in the aggregate number of the Midway N ew Common Shares to which such holders are entitled as at the Effective Date, and will cause such certificates to be delivered or mailed to such holder in accordance with the terms hereof.

Each certificate or other instrument which immediately prior to the Effective Time represented P-N Options or P-N Warrants will be deemed at all times after the Effective Time to represent only the right to receive Midway New Options and Midway New Warrants as set forth in section 3.1(c)(v) and (vi).

4.2

Fractional Shares, Warrants and Options

No fractional Midway New Common Shares, Midway New Options, and Midway New Warrants will be issued and the number of such securities to which each Securityholder will be entitled will be rounded down to the next whole number. No fractional shares issuable or transferable upon the exercise of any Midway New Options and Midway New Warrants after the Effective Date, will be issued, and no cash will be paid in lieu thereof, by Midway. Any fractions resulting will be rounded down to the nearest whole number.  

4.3

Lost Certificates

In the event any certificate, which immediately before the Effective Time represented one or more outstanding P-N Common Shares that were exchanged pursuant to section 3.1, is lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed, the Transfer Agent will issue in exchange for such lost, stolen or destroyed certificate, one or more certificates representing one or more Midway New Common Shares issuable in accordance with section 3.1 of this Plan of Arrangement, deliverable

10

in accordance with such holder’s letter of transmittal. When authorizing such issuances or payment in exchange for any lost, stolen or destroyed certificate, the person to whom certificates representing Midway New Common Shares are or is to be issued or delivered will, as a condition precedent to the issuance or payment thereof, give a bond satisfactory to Midway and its transfer agent in such sum as Midway may direct or otherwise indemnify Midway in a manner satisfactory to it, against any claim that may be made against one or both of them with respect to the certificate alleged to have been lost, stolen or destroyed.

4.4

Extinction of Rights

If any P-N Shareholder fails for any reason to deliver to the Transfer Agent for cancellation the certificates formerly representing P-N Common Shares, together with such other documents or instrument required by the Transfer Agent to effect the transfer of Midway New Common Shares on or before the tenth (10^th) anniversary of the Effective Date, such P-N Shareholder will be deemed to have donated and forfeited his, her, or its right to receive any Midway New Common Shares to which such P-N Shareholder is entitled in accordance with section 3.1 of this Plan of Arrangement.

ARTICLE 5 -  RIGHTS OF DISSENT AND APPRAISAL FOR P-N SHAREHOLDERS

5.1

P-N Dissent Right

Notwithstanding section 3.1 hereof, P-N Shareholders may exercise rights of dissent (the “P-N Dissent Right”) in connection with the Arrangement pursuant to the Interim Order and this Article 5.

5.2

P-N Notice of Dissent

Registered P-N Shareholders who wish to exercise a P-N Dissent Right must give written notice of dissent (“Notice of Dissent”) to P-N that must be in P-N’s possession by no later than 2:00 p.m. (Vancouver time) two (2) Business Days before the date of the P-N meeting, by depositing such Notice of Dissent with P-N, or mailing it to P-N by registered mail, at its registered office at 10^th Floor, 595 Howe Street, Vancouver, British Columbia  V6C 2T5, marked to the attention of Patricia Sandberg. A P-N Shareholder who has given a Notice of Dissent in accordance with this section 5.2 is herein referred to as a “P-N Dissenting Shareholder”.  A P-N Shareholder who wishes to dissent must prepare a separate notice of dissent for (i) the P-N Shareholder, if the P-N Shareholder is dissenting on its own behalf and (ii) each person who beneficially ow ns shares in the P-N Shareholder’s name and on whose behalf the P-N Shareholder is dissenting.  To be valid, a Notice of Dissent must:

(a)

identify in each Notice of Dissent the person on whose behalf dissent is being exercised;

(b)

set out the number of P-N Common Shares in respect of which the P-N Shareholder is exercising the P-N Dissent Right (the “P-N Dissenting Shares”), which number cannot be less than all of the P-N Common Shares held by the beneficial holder on whose behalf the P-N Dissent Right is being exercised;

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(c)

if the P-N Dissenting Shares constitute all of the shares of which the P-N Dissenting Shareholder is both the registered owner and beneficial owner and the P-N Dissenting Shareholder owns no other shares of P-N as beneficial owner, a statement to that effect;

(d)

if the P-N Dissenting Shares constitute all of the shares of which the P-N Dissenting Shareholder is both the registered and beneficial owner but the P-N Dissenting Shareholder owns other shares of P-N as beneficial owner, a statement to that effect, and

(i)

the names of the registered owners of those other shares,

(ii)

the number of those other shares that are held by each of those registered owners, and

(iii)

a statement that Notices of Dissent are being or have been sent in respect of all those other shares; and

(e)

if dissent is being exercised by the P-N Dissenting Shareholder on behalf of a beneficial owner who is not the P-N Dissenting Shareholder, a statement to that effect, and

(i)

the name and address of the beneficial owner, and

(ii)

a statement that the P-N Dissenting Shareholder is dissenting in relation to all of the shares beneficially owned by the beneficial owner that are registered in the P-N Dissenting Shareholder’s name.

5.3

Right of Dissenting Shareholder

The giving of a Notice of Dissent does not deprive a P-N Shareholder of his or her right to vote at the P-N Meeting on the Special Resolution approving the Arrangement.  A vote against the Special Resolution or the execution or exercise of a proxy with instructions to vote against the Special Resolution does not constitute a Notice of Dissent.

5.4

When P-N Dissent Right Not Available

A P-N Shareholder is not entitled to exercise a P-N Dissent Right with respect to any P-N Common Shares if a P-N Shareholder votes (or instructs or is deemed, by submission of any incomplete proxy, to have instructed his or her proxyholder to vote) in favour of the Special Resolution approving the Arrangement.  However, a P-N Shareholder may vote as a proxy for a P-N Shareholder whose proxy required an affirmative vote, without affecting his or her right to exercise the P-N Dissent Right in respect of the P-N Common Shares of which he or she is the registered holder.

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5.5

Notice to Proceed

If P-N intends to act on the authority of the Special Resolution approving the Arrangement, it must send a notice (the “Notice to Proceed”) to the P-N Dissenting Shareholder promptly after the later of:

(a)

the date on which P-N forms the intention to proceed, and

(b)

the date on which the Notice of Dissent was received.

If P-N has acted on the authority of that Special Resolution it must promptly send a Notice to Proceed to the P-N Dissenting Shareholder.  The Notice to Proceed must be dated not earlier than the date on which it is sent and state that P-N intends to act, or has acted, on the authority of the Special Resolution and advise the P-N Dissenting Shareholder of the manner in which dissent is to be completed under section 5.7 hereof.

5.6

Entitlement to Payment of Fair Value

On receiving a Notice to Proceed in accordance with section 5.5 hereof, the P-N Dissenting Shareholder is entitled to require PN Mergeco to purchase all of the P-N Common Shares in respect of which the Notice of Dissent was given.

5.7

Demand for Payment of Fair Value

A P-N Dissenting Shareholder who receives a Notice to Proceed is bound to sell its P-N Common Shares to PN Mergeco and must send to PN Mergeco by registered mail, at its registered office at 2800 Park Place, 666 Burrard Street, Vancouver, British Columbia  V6C 2Z7, marked to the attention of Stuart Morrow, within 30 days after the date of mailing the Notice to Proceed:

(a)

a written statement that the P-N Dissenting Shareholder requires PN Mergeco to purchase all of the P-N Dissenting Shares;

(b)

the certificates representing the P-N Dissenting Shares, and

(c)

if dissent is being exercised by the P-N Shareholder on behalf of a beneficial owner who is not the P-N Dissenting Shareholder, a written statement signed by the beneficial owner setting out whether the beneficial owner is the beneficial owner of other shares of P-N and if so, setting out:

(i)

the names of the registered owners of those other shares,

(ii)

the number of those other shares that are held by each of those registered owners, and

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(iii)

that dissent is being exercised in respect of all of those other shares, whereupon PN Mergeco is bound to purchase them in accordance with the Notice of Dissent.

5.8

Payment for P-N Dissenting Shares

PN Mergeco and the P-N Dissenting Shareholder may agree on the amount of the payout value of the P-N Dissenting Shares and in that event, must either promptly pay that amount to the P-N Dissenting Shareholder or send a notice to the P-N Dissenting Shareholder that PN Mergeco is unable lawfully to pay P-N Dissenting Shareholders for their shares as PN Mergeco is insolvent or if the payment would render PN Mergeco insolvent.

5.9

Application to Court to Fix Payout Value

If PN Mergeco and the P-N Dissenting Shareholder do not agree on the amount of the payout value of the P-N Dissenting Shares the P-N Dissenting Shareholder or PN Mergeco may apply to the Court and the Court may:

(a)

determine the payout value of the P-N Dissenting Shares or order that the payout value of the P-N Dissenting Shares be established by arbitration or by reference to the registrar or a referee of the Court;

(b)

join in the application each P-N Dissenting Shareholder who has not agreed with PN Mergeco on the amount of the payout value of the P-N Dissenting Shares; and

(c)

make consequential orders and give directions it considers appropriate.

Promptly after a determination of the payout value of the P-N Dissenting Shares has been made, PN Mergeco must either pay that amount to the P-N Dissenting Shareholder or send a notice to the P-N Dissenting Shareholder that PN Mergeco is unable lawfully to pay P-N Dissenting Shareholders for their shares as PN Mergeco is insolvent or if the payment would render PN Mergeco insolvent.  If the P-N Dissenting Shareholder receives a notice that PN Mergeco is unable to lawfully pay P-N Dissenting Shareholders for their shares the P-N Dissenting Shareholder may within 30 days after receipt of the notice, withdraw his or her Notice of Dissent.  If the Notice of Dissent is not withdrawn the P-N Dissenting Shareholder remains a claimant against PN Mergeco to be paid as soon as PN Mergeco is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of PN Mergeco but in prior ity to its shareholders.

5.10

Deemed Notice

Any notice required to be given by PN Mergeco, or a P-N Dissenting Shareholder to the other in connection with the exercise of the Dissent Right, will be deemed to have been given and received, if delivered, on the day of delivery, if mailed, on the earlier of the date of receipt or the second Business Day after the day of mailing, or, if sent by fax or other similar form of transmission, the first Business Day after the date of transmittal.

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5.11

Consequences of Exercising P-N Dissent Rights

A P-N Shareholder who:

(a)

properly exercises the P-N Dissent Right by complying with all of the procedures (the “Dissent Procedures”) required to be complied with by a P-N Dissenting Shareholder, will:

(i)

be bound by the provisions of this Article 5;

(ii)

be deemed not to have participated in the Arrangement; and

(iii)

cease to have any rights as a P-N Shareholder other than the right to be paid the payout value of the P-N Dissenting Shares by PN Mergeco in accordance with the Dissent Procedures and is deemed to have disposed of his or her shares immediately prior to the Effective Date; or

(b)

seeks to exercise the P-N Dissent Right, but:

(i)

who for any reason does not properly comply with each of the Dissent Procedures required to be complied with by a P-N Dissenting Shareholder, or

(ii)

subsequent to giving his or her Notice of Dissent, acts inconsistently with such dissent;

will be deemed to have participated in the Arrangement on the same basis as each non-dissenting P-N Shareholder and will receive his or her pro rata portion of the Midway New Common Shares based upon the number of P-N Common Shares of which such P-N Dissenting Shareholder is the registered holder.  Midway may in its sole discretion waive any non-compliance by a shareholder with any of the provisions of this Article 5 in order to give effect to a shareholder’s P-N Dissent Rights.

5.12

Abandonment of Dissent

A P-N Dissenting Shareholder may not withdraw a Notice of Dissent without the consent of P-N. or, after the Effective Date, PN Mergeco.  A P-N Dissenting Shareholder may, after obtaining the written consent of P-N or PN Mergeco, as applicable, at any time prior to the payment to the P-N Dissenting Shareholder of the full amount of money to which the P-N Dissenting Shareholder is entitled under this section Article 5, abandon such P-N Dissenting Shareholder’s dissent to the Arrangement by giving written notice to P-N or PN Mergeco, as applicable withdrawing the Notice of Dissent by depositing such notice with P-N or PN Mergeco or mailing it by registered mail to P-N or PN Mergeco, in each case as applicable, at its registered office at, in the case of PN Mergeco, 2800 Park Place, 666 Burrard Street, Vancouver, British Columbia  V6C 2Z7, marked to the attention of Stuart Morrow, and in the case of P-N, 10^th Floor - 595 Howe Street, Vancouver, British Columbia  V6C 2T5, marked to the attention of the Patricia Sandberg, or by

15

failing to send PN Mergeco the materials required under section 5.7 within the time specified therein, will then be deemed to have participated in the Arrangement on the same basis as each non-dissenting P-N Shareholder and will receive his or her pro rata portion of the Midway New Common Shares to which he or she is entitled.

5.13

Reservation of Midway New Common Shares

If a P-N Shareholder exercises the P-N Dissent Right, Midway will on the Effective Date set aside and not distribute that portion of the Midway New Common Shares which is attributable to the P-N Common Shares for which Dissent Rights have been exercised.  If a P-N Shareholder exercises the P-N Dissent Right, but as set out in subsection 5.11(b), does not properly comply with the Dissent Procedures or subsequent to giving his or her Notice of Dissent, acts inconsistently with such dissent, then Midway will distribute to such P-N Shareholder his or her pro rata portion of the Midway New Common Shares.  If a P-N Shareholder duly complies with the Dissent Procedures as set out in section 5.11(a), then Midway will retain the portion of the Midway New Common Shares attributable to such P-N Shareholder (the “Non-Distributed New Midway Shares”), and the Non-Distributed New Midway Shares will be dealt with as determined by the board of directors of Midway in its discretion.

ARTICLE 6 - AMENDMENT

6.1

Filing with Court

Midway and P-N reserve the right to amend, modify and/or supplement this Plan of Arrangement from time to time at any time prior to the Effective Date, provided that any such amendment, modification or supplement must be contained in a written document that is filed with the Court;

6.2

Before or After P-N Meeting

Save and except as may be otherwise provided in the Interim Order, any amendment, modification or supplement to this Plan of Arrangement may be proposed by Midway and P-N at any time prior to the P-N Meeting with or without any other prior notice or communication to P-N Shareholders, and if so proposed and accepted by P-N Shareholders voting at the P-N Meeting, will become part of this Plan of Arrangement for all purposes.  Subject to section 6.3, if such amendment, modification or supplement is made following the P-N Meeting, it shall be approved by the Court and, if required by the Court, communicated to the P-N Shareholders, and will become part of the Arrangement upon completion of all the conditions required in the Court approval; and

6.3

Without Approval of P-N Shareholders

Any amendment, modification or supplement to this Plan of Arrangement may be made by Midway and P-N without approval of the P-N Shareholders provided that it concerns a matter which, in the reasonable opinion of Midway and P-N, is of an administrative or ministerial nature required to better give effect to the implementation of this Plan of Arrangement and is not materially adverse to the financial or economic interests of any of the P-N Shareholders.

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ARTICLE 7 - TERMINATION

This Plan of Arrangement will automatically terminate and be of no further force and effect upon the termination of the Arrangement Agreement in accordance with its terms.

Schedule A to Appendix I “Plan of Arrangement” to the Arrangement Agreement, amended and restated as of the 26^th day of February, 2007, among Midway Gold Corp., PN Acquisition Ltd., and Pan-Nevada Gold Corporation

NOTICE OF AMALGAMATION OF PN MERGECO

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 17
Adapted and reprinted with permission of the Province of British Columbia – © 2004

	(a) Ministry of Finance Corporate and Personal Property Registries www.fin.gov.bc.ca/registries	2. AMALGAMATION APPLICATION 3. FORM 13 – BC COMPANY Section 275 Business Corporations Act
Telephone:  250 356 – 8626 DO NOT MAIL THIS FORM to the Corporate and Personal Property Registries unless you are instructed to do so by registry staff.  The Regulation under the Business Corporations Act requires the electronic version of this form to be filed on the Internet at www.corporateonline.gov.bc.ca			Schedule AFREEDOM OF INFORMATION AND PROTECTION OF PRIVACY ACT (FIPPA) The personal information requested on this form is made available to the public under the authority of the Business Corporations Act.  Questions about how the FIPPA applies to this personal information can be directed to the Administrative Assistant of the Corporate and Personal Property Registries at 250 356-1198, PO Box 9431 Stn Prov Govt, Victoria BC  V8W 9V3.

A. NAME OF COMPANY – Choose one of the following:
	The name _______________________________ is the name reserved for the amalgamated company.  The name reservation number is: _________________, OR
	The company is to be amalgamated with a name created by adding “B.C. Ltd.” after the incorporation number, OR
	The amalgamated company is to adopt, as its name, the name of one of the amalgamating companies. The name of the amalgamating company being adopted is: Pan-Nevada Gold Corporation The incorporation number of that company is: 0226603
Please note:  If you want the name of an amalgamating corporation that is a foreign corporation, you must obtain a name approval before completing this amalgamation application.
B. AMALGAMATION STATEMENT – Please indicate the statement applicable to the amalgamation.
	With Court Approval: This amalgamation has been approved by the court and a copy of the entered court order approving the amalgamation has been obtained and has been deposited in the records office of each of the amalgamating companies.
	OR
	Without Court Approval: This amalgamation has been effected without court approval.  A copy of all of the required affidavits under section 277(1) have been obtained and the affidavit obtained from each amalgamating company has been deposited in that company’s records office.
C. AMALGAMATION EFFECTIVE DATE – Choose one of the following:
	The amalgamation is to take effect at the time that this application is filed with the registrar.
	The amalgamation is to take effect at 12:01 a.m. Pacific Time on April 13, 2007  being a date that is not more than ten days after the date of the filing of this application.
	The amalgamation is to take effect at   a.m. or  p.m. Pacific Time on  being a date and time that is not more than ten days after the date of the filing of this application.

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 18
Adapted and reprinted with permission of the Province of British Columbia – © 2004

D.

AMALGAMATING CORPORATIONS

Enter the name of each amalgamating corporation below.  For each company, enter the incorporation number.  
If the amalgamating corporation is a foreign corporation, enter the foreign corporation’s jurisdiction and if registered
in BC as an extraprovincial company, enter the extraprovincial company’s registration number.  Attach an additional
sheet if more space is required.

	NAME OF AMALGAMATING CORPORATION	BC INCORPORATION NUMBER, OR EXTRAPROVINCIAL REGISTRATION NUMBER IN BC	FOREIGN CORPORATION’S JURISDICTION
1. P	Pan-Nevada Gold Corporation	0226603
2.	PN Acquisition Ltd.	0781388

E. FORMALITIES TO AMALGAMATION
If any amalgamating corporation is a foreign corporation, section 275 (1)(b) requires an authorization for the amalgamation from the foreign corporation’s jurisdiction to be filed.
	This is to confirm that each authorization for the amalgamation required under section 275(1)(b) is being submitted for filing concurrently with this application.
F. CERTIFIED CORRECT – I have read this form and found it to be correct.
This form must be signed by an authorized signing authority for each of the amalgamating companies as set out in Item D.
NAME OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION		SIGNATURE OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION	DATE SIGNED (YYYY / MM / DD)
1.   Pan-Nevada Gold Corporation		X
NAME OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION		SIGNATURE OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION	DATE SIGNED (YYYY / MM / DD)
2.   PN Acquisition Ltd.		X
NAME OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION		SIGNATURE OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION	DATE SIGNED (YYYY / MM / DD)
3.		X
NAME OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION		SIGNATURE OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION	DATE SIGNED (YYYY / MM / DD)
4.		X
NAME OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION		SIGNATURE OF AUTHORIZED SIGNING AUTHORITY FOR THE AMALGAMATING CORPORATION	DATE SIGNED (YYYY / MM / DD)
5.		X

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 19
Adapted and reprinted with permission of the Province of British Columbia – © 2004

Schedule B to Appendix I “Plan of Arrangement” to the Arrangement Agreement, amended and restated as of the 26^th day of February, 2007, among Midway Gold Corp., PN Acquisition Ltd., and Pan-Nevada Gold Corporation

NOTICE OF ARTICLES OF PN MERGECO

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 1
Adapted and reprinted with permission of the Province of British Columbia – © 2004

NOTICE OF ARTICLES

A.

NAME OF COMPANY

Set out the name of the company as set out in Item A of the Amalgamation Application.

Pan-Nevada Gold Corporation

B.

TRANSLATION OF COMPANY NAME

Set out every translation of the company name that the company intends to use outside of Canada.

C.

DIRECTOR NAME(S) AND ADDRESS(ES)

Set out the full name, delivery address and mailing address (if different) of every director of the company.  The director
may select to provide either (a) the delivery address and, if different, the mailing address for the office at which the
individual can usually be served with records between 9:00 a.m. and 4 p.m. on business days or (b) the delivery
address and, if different, the mailing address of the individual’s residence.  The delivery address must not be a post
office box.  Attach an additional sheet if more space is required.

LAST NAME FIRST NAME MIDDLE NAME	DELIVERY ADDRESS INCLUDING PROVINCE/STATE, COUNTRY AND POSTAL/ZIP CODE	MAILING ADDRESS INCLUDING PROVINCE/STATE, COUNTRY AND POSTAL/ZIP CODE
Bayley, Brian E.	4143 Ranger Crescent North Vancouver, BC   V7R 3K8	4143 Ranger Crescent North Vancouver, BC   V7R 3K8

D.

REGISTERED OFFICE ADDRESSES

DELIVERY ADDRESS OF THE COMPANY’S REGISTERED OFFICE (INCLUDING BC and POSTAL CODE)

2800 Park Place, 666 Burrard Street, Vancouver, BC  V6C 2Z7

MAILING ADDRESS OF THE COMPANY’S REGISTERED OFFICE (INCLUDING BC and POSTAL CODE)

2800 Park Place, 666 Burrard Street, Vancouver, BC  V6C 2Z7

E.

RECORDS OFFICE ADDRESSES

DELIVERY ADDRESS OF THE COMPANY’S RECORDS OFFICE (INCLUDING BC and POSTAL CODE)

2800 Park Place, 666 Burrard Street, Vancouver, BC  V6C 2Z7

MAILING ADDRESS OF THE COMPANY’S RECORDS OFFICE (INCLUDING BC and POSTAL CODE)

2800 Park Place, 666 Burrard Street, Vancouver, BC  V6C 2Z7

F. AUTHORIZED SHARE STRUCTURE
	Maximum number of shares of this class or series of shares that the company is authorized to issue, or indicate there is no maximum number	Kind of shares of this class or series of shares		Are there special rights or restrictions attached to the shares of this class or series of shares?
Identifying name of class or series of shares	MAXIMUM NUMBER OF SHARES AUTHORIZED OR NO MAXIMUM NUMBER	PAR VALUE OR WITHOUT PAR VALUE	TYPE OF CURRENCY	YES/NO
Common	None	Without	n/a	No

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 2
Adapted and reprinted with permission of the Province of British Columbia – © 2004

Schedule C to Appendix I “Plan of Arrangement” to the Arrangement Agreement, amended and restated as of the 26^th day of February, 2007, among Midway Gold Corp., PN Acquisition Ltd., and Pan-Nevada Gold Corporation

ARTICLES OF PN MERGECO

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 3
Adapted and reprinted with permission of the Province of British Columbia – © 2004

NOTICE

OF

AMALGAMATION OF PN MERGECO

1.

Interpretation

.

2.

Shares and Share Certificates

3.

Issue of Shares

4.

Share Registers

5.

Share Transfers

6.

Transmission of Shares

7.

Purchase of Shares

8.

Borrowing Powers

9.

Alterations

10.

Meetings of Shareholders

11.

Proceedings at Meetings of Shareholders

12.

Votes of Shareholders

13.

Directors

14.

Election and Removal of Directors

15.

Alternate Directors

16.

Powers and Duties of Directors

17.

Disclosure of Interest of Directors

18.

Proceedings of Directors

19.

Executive and Other Committees

20.

Officers

21.

Indemnification

22.

Dividends

23.

Documents, Records and Reports

24,

Notices

25.

Seal

26.

Prohibitions

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 4
Adapted and reprinted with permission of the Province of British Columbia – © 2004

1.

INTERPRETATION

1.1

Definitions

In these Articles, unless the context otherwise requires:

 (1)

‘board of directors”, ‘directors’ and “board” mean the directors or sole director of the Company for the time being;

 (2)

“Business Corporations Act” means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

 (3)

“Interpretation Act” means the Interpretation Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

 (4)

“legal personal representative” means the personal or other legal representative of the shareholder;

 (5)

“registered address” of a shareholder means the shareholder’s address as recorded in the central securities register;

 (6)

“seal” means the seal of the Company, if any.

1.2

Business Corporations Act and Interpretation Act Definitions Applicable

The definitions in the Business Corporations Act and the defmitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were set out herein. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act relating to a term used m these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict between these Articles and the Business Corporations Act, the Business Corporations Act will prevail.

2.

SHARES AND SHARE CERTIFICATES

2.1

Authorized Share Structure

The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.

2.2

Form of Share Certificate

Each share certificate issued by the Company must comply with, and be signed as required by, the Business Corporations Act.

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FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 5
Adapted and reprinted with permission of the Province of British Columbia – © 2004

2.3

Shareholder Entitled to Certificate or Acknowledgment

Each shareholder is entitled, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the shareholder’s name or (b) a non-transferable written acknowledgment of the shareholder’s right to obtain such a share certificate, provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate and delivery of a share certificate to one of several joint shareholders or to one of the shareholders’ duly authorized agents will be sufficient delivery to all.

2.4

Delivery by Mall

Any share certificate or non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate may be sent to the shareholder by mail at the shareholder’s registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.

2.5

Replacement of Worn Out or Defaced Certificate or Acknowledgement

If the directors are satisfied that a share certificate or a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate is worn out or defaced, they must, on production to them of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as they think fit:

 (1)

order the share certificate or acknowledgment, as the case may be, to be cancelled; and

 (2)

issue a replacement share certificate or acknowledgment, as the case may be.

2.6

Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment

If a share certificate or a non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate is lost, stolen or destroyed, a replacement share certificate or acknowledgment, as the case may be, must be issued to the person entitled to that share certificate or acknowledgment, as the case may be, if the directors receive:

 (I)

proof satisfactory to them that the share certificate or acknowledgment is lost, stolen or destroyed; and

 (2)

any indemnity the directors consider adequate.

2.7

Splitting Share Certificates

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder’s name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

2.8

Certificate Fee

There must be paid as a fee to the Company for issuance of any share certificate under Articles 2.5, 2.6 or 2.7, the amount, if any determined by the directors, which must not exceed the amount prescribed under the Business Corporations Act.

2.9

Trusts and Partial Interests in Shares

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or

fraction of a share or (except as by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

3.

ISSUE OF SHARES

3.1

Directors Authorized

Subject to the Business Corporations Act and the rights of the holders of issued shares of the Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

3.2

Commissions and Discounts

The Company may at any time, pay a reasonable commission or allow a reasonable discount to any person in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company or any other person or procuring or agreeing to procure purchasers for shares of the Company.

3.3

Brokerage

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

3.4

Conditions of Issue

Except as provided for by the Business Corporations Act, no share may be issued until it is fully paid. A share is fully paid when:

 (1)

consideration is provided to the Company for the issue of the share by one or more of the following:

 (a)

past services performed for the Company;

 (b)

property;

 (c)

money; and

 (2)

the directors in their discretion have determined that the value of the consideration received by the Company is equal to or greater than the issue price set for the share under Article 3.1.

3.5

Share Purchase Warrants and Rights

Subject to the Business Corporations Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

4.

SHARE REGISTERS

4.1

Central Securities Register and any Branch Securities Register

As required by and subject to the Business Corporations Act, the Company must maintain a central securities register and may maintain a branch securities register. The directors may, subject to the Business Corporations Act, appoint an agent to maintain the central securities register or any branch securities register. The directors may also appoint one or more agents, including the agent which keeps the central securities register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

4.2

Closing Register

The Company must not at any time close its central securities register.

5.

SHARE TRANSFERS

5.1

Registering Transfers

A transfer of a share of the Company must not be registered unless:

 (1)

a duly signed instrument of transfer in respect of the share has been received by the Company;

 (2)

if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate has been surrendered to the Company; and

 (3)

if a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that acknowledgment has been surrendered to the Company.

For the purpose of this Article, delivery or surrender to the agent which maintains the Company’s central securities register or a branch securities register, if applicable, will constitute receipt by or surrender to the Company.

5.2

Form of Instrument of Transfer

The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company’s share certificates or in any other form that may be approved by the directors from time to time.

5.3

Transferor Remains Shareholder

Except to the extent that the Business Corporations Act otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

5.4

Signing of Instrument of Transfer

If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

 (1)

in the name of the person named as transferee in that instrument of transfer; or

 (2)

if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.

5.5

Enquiry as to Title Not Required

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.

5.6

Transfer Fee

There must be paid as a fee to the Company, registration of any transfer, the amount, if any, determined by the directors.

6.

TRANSMISSION OF SHARES

6.1

Legal Personal Representative Recognized on Death

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate.

6.2

Rights of Legal Personal Representative

The legal personal representative has the same rights, privileges and obligations with respect to the shares as were held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

7.

PURCHASE OF SHARES

7.1

Company Authorized to Purchase Shares

Subject to Article 7.2, the special rights and restrictions attached to the shares of any class or series and the Business Corporations Act, the Company may, if authorized by resolution of the directors, purchase, redeem or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

7.2

Purchase When Insolvent

The Company must not make a payment or provide any other consideration to purchase, redeem or otherwise acquire any of its shares if there are reasonable grounds for believing that:

 (1)

the Company is insolvent; or

 (2)

making the payment or providing the consideration would render the Company insolvent.

7.3

Redemption of Shares

If the Company proposes to redeem some but not all of the shares of any class, the Directors may, subject to any special rights and restrictions attached to such class of shares, decide the manner in which the shares to be redeemed shall be selected.

7.4

Sale and Voting of Purchased Shares

If the Company retains a share which it has redeemed, purchased or otherwise acquired, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

(1)

is not entitled to vote the share at a meeting of its shareholders;

(2)

must not pay a dividend in respect of the share; and

(3)

must not make any other distribution in respect of the share.

8.

BORROWING POWERS

8.1

The Company, if authorized by the directors, may:

(1)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

(2)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

(3)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

(4)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

8.2

Any bonds, debentures or other debt obligations of the Company may be issued at a discount, premium or otherwise, or with special privileges as to redemption, surrender, drawing, allotment of or conversion into or exchange for shares or other securities, attending and voting at general meetings of the Company, appointment of Directors or otherwise and may, by their terms, be assignable free from any equities between the Company and the person to whom they were issued or any subsequent holder thereof, all as the Directors may determine.

9.

ALTERATIONS

9.1

Alteration of Authorized Share Structure

Subject to Article 9,2 and the Business Corporations Act, the Company may:

 (1)

by directors’ resolution or by ordinary resolution, in each case as determined by the directors:

 (a)

create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;

 (b)

increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;

(c)

subdivide or consolidate all or any of its unissued, or fully paid issued, shares;

(d)

if the Company is authorized to issue shares of a class of shares with par value:

 (i)

decrease the par value of those shares; or

 (ii)

if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;

(e)

change all or any of its unissued shares with par value into shares without par value or any of its unissued shares without par value into shares with par value or change all or any of its fully paid issued shares with par value into shares without par value; or

 (f)

alter the identifying name of any of its shares; and

 (2)

by ordinary resolution otherwise alter its shares or authorized share structure.

9.2

Special Rights and Restrictions

Subject to the Business Corporations Act, the Company may:

 (I)

by directors’ resolution or by ordinary resolution, in each case as determined by the directors, create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, if none of those shares have been issued; or vary or delete any special rights or restrictions attached to the shares of any class or series of shares, if none of those shares have been issued; and

 (2)

by special resolution of the shareholders of the class or series affected, do any of the acts in (1) above if any of the shares of the class or series of shares have been issued.

9,3

Change of Name

The Company may by resolution of its directors or by ordinary resolution, in each case as determined by the directors, authorize an alteration of its Notice of Articles in order to change its name.

9.4

Other Alterations

The Company, save as otherwise provided by these Articles and subject to the Business Corporations Act, may:

 (1)

by directors’ resolution or by ordinary resolution, in each case as determined by the directors, authorize alterations to the Articles that are procedural or administrative in nature or are matters that pursuant to these Articles are solely within the directors’ powers, control or authority; and

 (2)

if the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, by ordinary resolution alter these Articles.

10.

MEETINGS OF SHAREHOLDERS

10.1

Annual General Meetings

Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.

10.2

Resolution Instead of Annual General Meeting

If all the shareholders who are entitled to vote at an annual general meeting consent by a unanimous resolution under the Business Corporations Act to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.2, select as the Company’s annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

10.3

Calling of Meetings of Shareholders

The directors may, whenever they think fit, call a meeting of shareholders.

10.4

Location of Meetings of Shareholders and Meetings by Telephone or Other Electronic Means

A meeting of the Company may be held:

 (I)

at a location outside British Columbia if that location is:

 (a)

approved by resolution of the directors before the meeting is held; or

 (b)

approved in writing by the Registrar of Companies before the meeting is held; and

 (2)

entirely or in part by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if approved by directors’ resolution prior to the meeting and subject to the Business Corporations Act. Any person participating in a meeting by such means is deemed to be present at the meeting.

10.5

Notice for Meetings of Shareholders

Subject to Article 10.2, the Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by directors’ resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

 (1)

if and for so long as the Company is a public company, 21 days;

 (2)

otherwise, 10 days.

10.6

Record Date for Notice

The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the ease of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

 (1)

if and for so long as the Company is a public company, 21 days;

 (2)

otherwise, 10 days.

If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.7

Record Date for Voting

The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.8

Failure to Give Notice and Waiver of Notice

The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

10.9

Notice of Special Business at Meetings of Shareholders

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting or a circular prepared in connection with the meeting must:

(1)

state the generasl nature of the special business; and

(2)

if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document:

 (a)

will be available for inspection by shareholders at the Company’s records office, or at such other reasonably accessible location in British Columbia as is specified in the notice during statutory business hours on any one or more specified days before the day set for the holding of the meeting; and

(b)

may provide that the document is available by request from the Company or accessible electronically or on a website as determined by the directors.

11.

PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

11.1

Special Business

At a meeting of shareholders, the following business is special business:

(I)

at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

(2)

at an annual general meeting, all business is special business except for the following:

(a)

business relating to the conduct of or voting at the meeting;

(b)

consideration of any financial statements of the Company presented to the meeting;

(c)

consideration of any reports of the directors or auditor;

(d)

the setting or changing of the number of directors;

(e)

the election or appointment of directors;

(1)

the appointment of an auditor;

(g)

the setting of the remuneration of an auditor;

(h)

business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;

(i)

any other business which, under these Articles or the Business Corporations Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

11.2

Special Majority

The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

11.3

Quorum

Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is one person present or represented by proxy.

11.4

Other Persons May Attend

The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

11.5

Requirement of Quorum

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

11.6

Lack of Quorum

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

(1)

in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

(2)

in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

11.7

Lack of Quorum at Succeeding Meeting

If, at the meeting to which the meeting referred to in Article 11.7(2) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the meeting shall be terminated.

11.8

Chair

The following individual is entitled to preside as chair at a meeting of shareholders:

 (1)

the chair of the board, if any; or

 (2)

if the chair of the board is absent or unwilling to act as chair of the meeting, the president, if any.

11.9

Selection of Alternate Chair

If, at any meeting of shareholders, there is no chair of the board or president willing to act as chair of the meeting or present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present must choose a director, officer or corporate counsel to be chair of the meeting or if none of the above persons are present or if they decline to take the chair, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

11.10

Adjournments

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

11.11

Notice of Adjourned Meeting

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

11.12

Decisions by Show of Hands or Poll

Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

11.13

Declaration of Result

The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.12, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

11.14

Motion Need Not be Seconded

No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

11.15

Casting Vote

In case of an equality of votes, the chair of a meeting of shareholders, either on a show of hands or on a poll, has a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

11.16

Manner of Taking Poll

Subject to Article 11.17, if a poll is duly demanded at a meeting of shareholders:

(1)

the poll must be taken:

 (a)

at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

 (b)

in the manner, at the time and at the place that the chair of the meeting directs;

(2)

the result of the poll is deemed to be the decision of the meeting at which the poll is demanded;

(3)

the demand for the poll may be withdrawn by the person who demanded it.

11.17

Demand for Poll on Adjournment

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

11.18

Chair Must Resolve Dispute

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and his or her determination made in good faith is fmal and conclusive.

11.19

Casting of Votes

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

11.20

Demand for Poll

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

11.21

Demand for Poll Not to Prevent Continuance of Meeting

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

11.22

Retention of Ballots and Proxies

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

12.

VOTES OF SHAREHOLDERS

12.1

Number of Votes by Shareholder or by Shares

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

(1)

on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

(2)

on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

12.2

Votes of Persons in Representative Capacity

A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

12.3

Votes by Joint Holders

If there are joint shareholders registered in respect of any share:

 (1)

any one of the joint shareholders may vote at any meeting, either personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or

 (2)

if more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.

12.4

Legal Personal Representatives as Joint Shareholders

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of A.rticle 12.3, deemed to be joint shareholders.

12.5

Representative of a Corporate Shareholder

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

 (1)

for that purpose, the instrument appointing a representative must:

 (a)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

 (b)

be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting;

 (2)

if a representative is appointed under this Article 12.5:

 (a)

the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and

 (b)

the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.6

Proxy Provisions Do Not Apply to All Companies

Articles 12.7 to 12.15 do not apply to the Company if and for so long as it is a public company or a preexisting reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply.

12.7

Appointment of Proxy Holders

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint up to two proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

12.8

Alternate Proxy Holders

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

12.9

When Proxy Holder Need Not Be Shareholder

A person must not be appointed as a proxy holder unless the person is a shareholder, although a person who is not a shareholder may be appointed as a proxy holder if:

(1)

the person appointing the proxy holder is a corporation or a representative of a corporation appointed under Article 12.5;

(2)

the Company has at the time of the meeting for which the proxy holder is to be appointed only one shareholder entitled to vote at the meeting; or

(3)

the shareholders present in person or by proxy at and entitled to vote at the meeting for which the proxy holder is to be appointed, by a resolution on which the proxy holder is not entitled to vote but in respect of which the proxy holder is to be counted in the quorum, permit the proxy holder to attend and vote at the meeting.

12.10

Deposit of Proxy

A proxy for a meeting of shareholders must:

 (1)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

 (2)

unless the notice provides otherwise, be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting.

A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.11

Validity of Proxy Vote

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

 (I)

at the registered office of the Company, at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

 (2)

by the chair of the meeting, before the vote is taken.

12.12

Form of Proxy

A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:

Rev. 2005/3/4
FORM 13 – Leitch Systems Design Inc. – Approved July 4, 2005

Page 6
Adapted and reprinted with permission of the Province of British Columbia – © 2004

EX-3.1

EX-3.2

MIDWAY GOLD CORP.

(the “Company”)

The Company has as its articles the following articles.

Full name and signature of a director	Date of Signing
__________________________________________ George T. Hawes	June 17, 2005____________________

Incorporation number: 519941

MIDWAY GOLD CORP.
(the “Company”)

ARTICLES

Page

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1.

INTERPRETATION

1.1

Definitions

In these Articles, unless the context otherwise requires:

(1)

“board of directors”, “directors” and “board” mean the directors or sole director of the Company for the time being;

(2)

“Business Corporations Act” means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(3)

“Interpretation Act” means the Interpretation Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(4)

“legal personal representative” means the personal or other legal representative of the shareholder;

(5)

“registered address” of a shareholder means the shareholder’s address as recorded in the central securities register;

(6)

“seal” means the seal of the Company, if any.

1.2

Statutory Definitions Applicable

The definitions in the Business Corporations Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict between these Articles and the Business Corporations Act, the Business Corporations Act will prevail.

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2.

SHARES AND SHARE CERTIFICATES

2.1

Delivery of Share Certificates and Acknowledgements

Any share certificate or non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate may be sent to the shareholder by mail at the shareholder’s registered address and neither the Company nor any director, officer or agent for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen. Delivery of a share certificate or an acknowledgement to one of several joint shareholders or to a duly authorized agent of one of the shareholders will be sufficient delivery to all.

2.2

Splitting Share Certificates

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder’s name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

2.3

Certificate Fee

There must be paid to the Company, in relation to the issue of any share certificate under Article 2.2, the amount, if any, determined by the directors.

2.4

Recognition of Trusts

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

3.

ISSUE OF SHARES

3.1

Directors Authorized

Subject to the Business Corporations Act and the rights, if any, of the holders of issued shares of the Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

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3.2

Commissions and Discounts

The Company may at any time pay a reasonable commission or allow a reasonable discount to any person in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company or any other person or procuring or agreeing to procure purchasers for shares of the Company.

3.3

Brokerage

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities. 3.4. Share Purchase Warrants and Rights Subject to the Business Corporations Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

4.

SHARE REGISTERS

4.1

Central Securities Register

As required by and subject to the Business Corporations Act, the Company must maintain in British Columbia a central securities register. The directors may, subject to the Business Corporations Act, appoint an agent to maintain the central securities register. The directors may also appoint one or more agents, including the agent which keeps the central securities register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

5.

SHARE TRANSFERS

5.1

Registering Transfers

A transfer of a share of the Company must not be registered unless the Company or the transfer agent or registrar for the class or series of share to be transferred has received:

(1)

a duly signed instrument of transfer in respect of the share;

(2)

if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate;

(3)

if a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that acknowledgment; and

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(4)

such other evidence, if any, as the Company or the transfer agent or registrar for the class or series of share to be transferred may require to prove the title of the transferor or the transferor’s right to transfer the share, the due signing of the instrument of transfer and the right of the transferee to have the transfer registered.

5.2

Form of Instrument of Transfer

The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company’s share certificates or in any other form that may be approved by the directors from time to time.

5.3

Transferor Remains Shareholder

Except to the extent that the Business Corporations Act otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

5.4

Signing of Instrument of Transfer

If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

(1)

in the name of the person named as transferee in that instrument of transfer; or

if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.

5.5

Enquiry as to Title Not Required

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgment oaf right to obtain a share certificate for such shares.

5.6

Transfer Fee

There must be paid to the Company, in relation to the registration of any transfer, the amount, if any, determined by the directors.

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6.

TRANSMISSION OF SHARES

6.1

Legal Personal Representative Recognized on Death

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate. 6.2. Rights of Legal Personal Representative The legal personal representative has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

7.

PURCHASE OF SHARES

Subject to the special rights and restrictions attached to the shares of any class or series and the Business Corporations Act, the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares at the price and upon the terms determined by the directors.

8.

BORROWING POWERS

The Company, if authorized by the directors, may:

(1)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

(2)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

(3)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

(4)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

9.

ALTERATIONS

9.1

Alteration of Authorized Share Structure

Subject to Article 9.2 and the Business Corporations Act, the Company may by ordinary resolution:

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(1)

create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;

(2)

increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;

(3)

subdivide or consolidate all or any of its unissued, or fully paid issued, shares;

(4)

if the Company is authorized to issue shares of a class of shares with par value:

(a)

decrease the par value of those shares; or

(b)

if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;

(5)

change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;

(6)

alter the identifying name of any of its shares; or

(7)

otherwise alter its shares or authorized share structure when required or permitted to do so by the Business Corporations Act.

9.2

Special Rights and Restrictions

Subject to the Business Corporations Act, the Company may by ordinary resolution:

(1)

create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or

(2)

vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued.

9.3

Change of Name

The Company may by ordinary resolution authorize an alteration of its Notice of Articles in order to change its name and may, by ordinary resolution or directors’ resolution, adopt or change any translation of that name.

9.4

Other Alterations

If the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by ordinary resolution alter these Articles.

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10.

MEETINGS OF SHAREHOLDERS

10.1

Annual General Meetings

The Company must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.

10.2

Calling of Meetings of Shareholders

The directors may, whenever they think fit, call a meeting of shareholders.

10.3

Notice for Meetings of Shareholders.

The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least 21 days before the meeting.

10.4

Notice of Special Business at Meetings of Shareholders

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

(1)

state the general nature of the special business; and

(2)

if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:

(a)

at the Company’s records office, or at such other reasonably accessible location in British Columbia as is specified in the notice; and

(b)

during statutory business hours on any one or more specified days before the day set for the holding of the meeting.

11.

PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

11.1

Special Business

At a meeting of shareholders, the following business is special business:

(1)

at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

(2)

at an annual general meeting, all business is special business except for the following:

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(a)

business relating to the conduct of or voting at the meeting;

(b)

consideration of any financial statements of the Company presented to the meeting;

(c)

consideration of any reports of the directors or auditor;

(d)

the election or appointment of directors;

(e)

the appointment of an auditor;

(f)

the setting of the remuneration of an auditor;

(g)

business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;

any other business which, under these Articles or the Business Corporations Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

11.2

Special Majority

The majority of votes required for the Company to pass a special resolution at a general meeting of shareholders is two-thirds of the votes cast on the resolution.

11.3

Quorum

Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting.

11.4

Other Persons May Attend

The directors, the chief executive officer (if any), the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

11.5

Requirement of Quorum

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

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11.6

Lack of Quorum

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

(1)

in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

(2)

in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

11.7

Lack of Quorum at Succeeding Meeting

If, at the meeting to which the meeting referred to in Article 11.6(2) was adjourned, a quorum is

not present within one-half hour from the time set for the holding of the meeting, the person or

persons present and being, or representing by proxy, one or more shareholders entitled to attend

and vote at the meeting constitute a quorum.

11.8

Chair

The following individual is entitled to preside as chair at a meeting of shareholders:

(1)

the chair of the board, if any; or

(2)

if the chair of he board is absent or unwilling to act as chair of the meeting, the vice chair of the board, if any; or

(3)

if both the chair of the board and the vice chair of the board are absent or unwilling to act as chair of the meeting, the chief executive officer, if any.

11.9

Selection of Alternate Chair

If, at any meeting of shareholders, there is no chair of the board, vice chair of the board or chief executive officer present within 15 minutes after the time set for holding the meeting, or if the chair of the board, the vice chair of the board and the chief executive officer are unwilling to act as chair of the meeting, or if the chair of the board, the vice chair of the board and the chief executive officer have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present must choose one of their number to be chair of the meeting or if all of the directors present decline to take the chair or fail to so choose or if no director is present, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

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11.10

Adjournments

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

11.11

Notice of Adjourned Meeting

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

11.12

Decisions by Show of Hands or Poll

Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

11.13

Declaration of Result

The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.12, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

11.14

Chair May Propose or Second Motion

The chair of any meeting of shareholders is entitled to propose or second a motion.

11.15

Casting Vote

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

11.16

Manner of Taking Poll

Subject to Article 11.17, if a poll is duly demanded at a meeting of shareholders:

(1)

the poll must be taken:

(a)

at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

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(b)

in the manner, at the time and at the place that the chair of the meeting directs;

(2)

the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and

(3)

the demand for the poll may be withdrawn by the person who demanded it.

11.17

Demand for Poll on Adjournment

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

11.18

Chair Must Resolve Dispute

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and his or her determination made in good faith is final and conclusive.

11.19

Casting of Votes

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

11.20

No Demand for Poll

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

11.21

Demand for Poll Not to Prevent Continuance of Meeting

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

12.

VOTES OF SHAREHOLDERS

12.1

Number of Votes by Shareholder or by Shares

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

(1)

on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

(2)

on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

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12.2

Votes of Persons in Representative Capacity

A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

12.3

Votes by Joint Holders

If there are joint shareholders registered in respect of any share:

(1)

any one of the joint shareholders may vote at any meeting, either personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or

(2)

if more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.

12.4

Legal Personal Representatives as Joint Shareholders

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of Article 12.3, deemed to be joint shareholders registered in respect of that share.

12.5

Representative of a Corporate Shareholder

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

(1)

for that purpose, the instrument appointing a representative must:

(a)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

(b)

if the directors so determine, be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting;

(2)

if a representative is appointed under this Article 12.5:

(a)

the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and

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(b)

the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.6

Proxy Provisions Subject to Securities Requirements

Articles 12.7 to 12.15 apply only insofar as they are not inconsistent with any securities legislation in any province or territory of Canada or in the federal jurisdiction of the United States or in any states of the United States that is applicable to the Company and insofar as they are not inconsistent with the regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by securities commissions or similar authorities appointed under that legislation.

12.7

Appointment of Proxy Holders

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy. If a shareholder appoints more than one proxy holder for the same meeting, the shareholder must specify the number of shares each proxy holder shall be entitled to vote.

12.8

Alternate Proxy Holders

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

12.9

Proxy Holder Need Not Be Shareholder

A proxy holder need not be a shareholder of the Company.

12.10

Deposit of Proxy

A proxy for a meeting of shareholders must:

(1)

 be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

(2)

if the directors so determine, be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting.

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A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.11

Validity of Proxy Vote

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

(1)

at the registered office of the Company, at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

(2)

by the chair of the meeting, before the vote is taken.

12.12

Form of Proxy

A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:

[name of company]
(the “Company”)

The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name], or in the place of the foregoing [ name ] as proxy holder for the undersigned, with power of substitution to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy is given in respect of all shares registered in the name of the shareholder):      

Signed [month, day, year]

[Signature of shareholder]

[Name of shareholder printed]

12.13

Revocation of Proxy

Subject to Article 12.14, every proxy may be revoked by an instrument in writing that is:

(1)

received at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

(2)

provided, at the meeting, to the chair of the meeting.

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12.14

Revocation of Proxy Must Be Signed

An instrument referred to in Article 12.13 must be signed as follows:

(1)

if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or his or her legal personal representative or trustee in bankruptcy;

(2)

if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under Article 12.15.

12.15

Production of Evidence of Authority to Vote

The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

13.

DIRECTORS

13.1

Number of Directors

The number of directors, excluding additional directors appointed under Article 14.7, is set at the greater of three and the most recently set of:

(1)

the number of directors set by directors’ resolution; and

(2)

the number of directors set under Article 14.3.

13.2

Change in Number of Directors

If the number of directors is set under Article 13.1(1):

(1)

the shareholders may elect the directors needed to fill any vacancies in the board of directors up to that number;

(2)

if the shareholders do not elect the directors needed to fill any vacancies in the board of directors up to that number at the next meeting of shareholders following the setting of that number called for the purpose of electing directors, then the directors may (subject to Article 14.7) appoint, or the shareholders may elect, directors to fill those vacancies.

13.3

Directors’ Acts Valid Despite Vacancy

An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

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13.4

Remuneration of Directors

The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such, who is also a director.

13.5

Reimbursement of Expenses of Directors

The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.

13.6

Special Remuneration for Directors

If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Company’s business, he or she may be paid remuneration fixed by the directors, or, at the option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or in substitution for, any other remuneration that he or she may be entitled to receive.

13.7

Gratuity, Pension or Allowance on Retirement of Director

Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

14.

ELECTION AND REMOVAL OF DIRECTORS

14.1

Election at Annual General Meeting

At every annual general meeting:

(1)

the shareholders entitled to vote at the annual general meeting for the election of directors must elect a board of directors consisting of the number of directors for the time being set under these Articles; and

(2)

all the directors cease to hold office immediately before the election of directors under paragraph (1), but are eligible for re-election.

14.2

Failure to Elect or Appoint Directors

If:

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(1)

the Company fails to hold an annual general meeting on or before the date by which the annual general meeting is required to be held under the Business Corporations Act; or

(2)

the shareholders fall at the annual general meeting to elect any directors;

then each director then in office continues to hold office until the earlier of:

(3)

when his or her successor is elected or appointed; and

(4)

when he or she otherwise ceases to hold office under the Business Corporations Act or these Articles.

14.3

Places of Retiring Directors Not Filled

If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles until further new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

14.4

Directors May Fill Casual Vacancies

Any casual vacancy occurring in the board of directors may be filled by the directors.

14.5

Remaining Directors’ Power to Act

The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Business Corporations Act, for any other purpose.

14.6

Shareholders May Fill Vacancies

If the Company has no directors, the shareholders may elect directors to fill any vacancies on the board of directors.

14.7

Additional Directors

Notwithstanding Articles 13.1 and 13.2, between annual general meetings, the directors may appoint one or more additional directors, but the number of additional directors appointed under this Article 14.7 must not at any time exceed one-third of the number of the current directors who were elected or appointed as directors other than under this Article 14.7.

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Any director so appointed ceases to hold office immediately before the next election of directors under Article 14.1(1), but is eligible for re-election.

14.8

Ceasing to be a Director

A director ceases to be a director when:

(1)

the term of office of the director expires;

(2)

the director dies;

(3)

the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or

(4)

the director is removed from office pursuant to Articles 14.9 or 14.10.

14.9

Removal of Director by Shareholders

The Company may remove any director before the expiration of his or her term of office by ordinary resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

14.10

Removal of Director by Directors

The directors may remove any director before the expiration of his or her term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.

15.

ALTERNATE DIRECTORS

15.1

Appointment of Alternate Director

Any director (an “appointor”) may by notice in writing received by the Company appoint any person (an “appointee”) who is qualified to act as a director to be his or her alternate to act in his or her place at meetings of the directors or committees of the directors at which the appointor is not present unless (in the case of an appointee who is not a director) the directors have reasonably disapproved the appointment of such person as an alternate director and have given notice to that effect to his or her appointor within a reasonable time after the notice of appointment is received by the Company.

15.2

Notice of Meetings

Every alternate director so appointed is entitled to notice of meetings of the directors and of committees of the directors of which his or her appointor is a member and to attend and vote as a director at any such meetings at which his or her appointor is not present.

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15.3

Alternate for More Than One Director Attending Meetings

A person may be appointed as an alternate director by more than one director, and an alternate director:

(1)

will be counted in determining the quorum for a meeting of directors once for each of his or her appointors and, in the case of an appointee who is also a director, once more in that capacity;

(2)

has a separate vote at a meeting of directors for each of his or her appointors and, in the case of an appointee who is also a director, an additional vote in that capacity;

(3)

will be counted in determining the quorum for a meeting of a committee of directors once for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, once more in that capacity;

(4)

has a separate vote at a meeting of a committee of directors for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, an additional vote in that capacity.

15.4

Consent Resolutions

Every alternate director, if authorized by the notice appointing him or her, may sign in place of his or her appointor any resolutions to be consented to in writing.

15.5

Alternate Director Not an Agent

Every alternate director is deemed not to be the agent of his or her appointor.

15.6

Revocation of Appointment of Alternate Director

An appointor may at any time, by notice in writing received by the Company, revoke the appointment of an alternate director appointed by him or her.

15.7

Ceasing to be an Alternate Director

The appointment of an alternate director ceases when:

(1)

his or her appointor ceases to be a director and is not promptly re-elected or re-appointed;

(2)

the alternate director dies;

(3)

the alternate director resigns as an alternate director by notice in writing provided to the Company or a lawyer for the Company;

(4)

the alternate director ceases to be qualified to act as a director; or

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(5)

his or her appointor revokes the appointment of the alternate director.

15.8

Remuneration and Expenses of Alternate Director

The Company may reimburse an alternate director for the reasonable expenses that would be properly reimbursed if he or she were a director, and the alternate director is entitled to receive from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the appointor may from time to time direct.

16.

POWERS AND DUTIES OF DIRECTORS

16.1

Powers of Management

The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the shareholders of the Company.

16.2

Appointment of Attorney of Company

The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.

16.3

Remuneration of Auditor

The directors may set the remuneration of the auditor of the Company.

17.

INTERESTS OF DIRECTORS AND OFFICERS

17.1

Director Holding Other Office in the Company

A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

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17.2

No Disqualification

No director or intended director is disqualified by his or her office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

17.3

Professional Services by Director or Officer

Subject to the Business Corporations Act, a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

17.4

Director or Officer in Other Corporations

A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Business Corporations Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.

18.

PROCEEDINGS OF DIRECTORS

18.1

Meetings of Directors

The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

18.2

Voting at Meetings

Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does not have a second or casting vote.

18.3

Chair of Meetings

The following individual is entitled to preside as chair at a meeting of directors:

(1)

the chair of the board, if any;

(2)

in the absence of the chair of the board, the vice chair of the board, if any; or

(3)

any other director chosen by the directors if:

(a)

neither the chair of the board nor the vice chair of the board is present at the meeting within 15 minutes after the time set for holding the meeting;

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(b)

neither the chair of the board nor the vice chair of the board is willing to chair the meeting; or

(c)

the chair of the board and the vice chair of the board have advised the secretary, if any, or any other director, that they will not be present at the meeting.

18.4

Meetings by Telephone or Other Communications Medium

A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone if all directors participating in the meeting, whether in person or by telephone, are able to communicate with each other. A director may participate in a meeting of the directors or of any committee of the directors by a communications medium other than telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other and if all directors who wish to participate in the meeting agree to such participation. A director who participates in a meeting in a manner contemplated by this Article 18.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner.

18.5

Calling of Meetings

A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

18.6

Notice of Meetings

Other than for meetings held at regular intervals as determined by the directors pursuant to Article 18.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors and the alternate directors by any method set out in Article 24.1 or orally or by telephone.

18.7

When Notice Not Required

It is not necessary to give notice of a meeting of the directors to a director or an alternate director if:

(1)

the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or

(2)

the director or alternate director, as the case may be, has waived notice of the meeting.

18.8

Meeting Valid Despite Failure to Give Notice

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director or alternate director, does not invalidate any proceedings at that meeting.

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18.9

Waiver of Notice of Meetings

Any director or alternate director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and, unless the director otherwise requires by notice in writing to the Company, to his or her alternate director, and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director or alternate director.

Attendance of a director or alternate director at a meeting of the directors is a waiver of entitlement to notice of the meeting, unless that director or alternate director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

18.10

Quorum

The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be set at a majority of the board.

18.11

Consent Resolutions in Writing

A resolution of the directors or of any committee of the directors may be passed without a

meeting:

(1)

in all cases, if each of the directors entitled to vote on the resolution consents to it in writing; or

(2)

in the case of a resolution to approve a contract or transaction in respect of which a director has disclosed that he or she has or may have a disclosable interest, if each of the other directors who have not made such a disclosure consents in writing to the resolution.

A consent in writing under this Article may be by signed document, fax, email or any other method of transmitting legibly recorded messages. A consent in writing may be in two or more counterparts which together are deemed to constitute one consent in writing. A resolution of the directors or of any committee of the directors passed in accordance with this Article 18.11 is effective on the date stated in the consent in writing or on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.

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19.

EXECUTIVE AND OTHER COMMITTEES

19.1

Appointment and Powers of Executive Committee

The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors’ powers, except:

(1)

the power to fill vacancies in the board of directors;

(2)

the power to remove a director;

(3)

the power to change the membership of, or fill vacancies in, any committee of the directors; and

(4)

such other powers, if any, as may be set out in the resolution or any subsequent directors’ resolution.

19.2

Appointment and Powers and Obligations of Audit Committee

Subject to the Business Corporations Act and any securities legislation in any province or territory of Canada or in the federal jurisdiction of the United States or in any states of the United States that is applicable to the Company and the regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by securities commissions or similar authorities appointed under that legislation:

(1)

the directors shall appoint an audit committee at the times and consisting of the directors that they consider appropriate;

(2)

the audit committee shall exercise the powers and perform the functions and obligations given to it and required by the Business Corporations Act and by the said securities legislation, regulations, rules, administrative policy statements, blanket orders and rulings, notices and other administrative directions;

(3)

the directors may, by resolution, delegate to the audit committee, in addition to the powers referred to in paragraph (2), any of the directors’ powers, except:

(a)

the power to fill vacancies in the board of directors;

(b)

the power to remove a director;

(c)

the power to change the membership of, or fill vacancies in, any committee of the directors; and

(d)

the power to appoint or remove officers appointed by the directors; and

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(4)

the directors may make any delegation referred to in paragraph (3) subject to the conditions set out in the resolution or any subsequent directors’ resolution.

19.3

Appointment and Powers of Other Committees

The directors may, by resolution:

(1)

appoint one or more committees (other than the executive committee and the audit committee) consisting of the director or directors that they consider appropriate;

(2)

delegate to a committee appointed under paragraph (1) any of the directors’ powers, except:

(a)

the power to fill vacancies in the board of directors;

(b)

the power to remove a director;

(c)

the power to change the membership of, or fill vacancies in, any committee of the directors; and

(d)

the power to appoint or remove officers appointed by the directors; and

(3)

make any delegation referred to in paragraph (2) subject to the conditions set out in the resolution or any subsequent directors’ resolution.

19.4

Obligations of Committees

Any committee appointed under Articles 19.1, 19.2 or 19.3, in the exercise of the powers delegated to it, must:

(1)

conform to any rules that may from time to time be imposed on it by the directors; and

(2)

report every act or thing done in exercise of those powers at such times as the directors may require.

19.5

Powers of Board

The directors may, at any time, with respect to a committee appointed under Articles 19.1, 19.2 or 19.3:

(1)

revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;

(2)

terminate the appointment of, or change the membership of, the committee; and

(3)

fill vacancies in the committee.

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19.6

Committee Meetings

Subject to Article 19.4(1) and, in the case of the audit committee, the Business Corporations Act and the securities legislation, regulations, rules, administrative policy statements, blanket orders and rulings, notices and administrative directions referred to in Article 19.2, and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under Articles 19.1, 19.2 or 19.3:

(1)

the committee may meet and adjourn as it thinks proper;

(2)

he committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;

(3)

a majority of the members of the committee constitutes a quorum of the committee; and

(4)

questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.

20.

OFFICERS

20.1

Directors May Appoint Officers

The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.

20.2

Functions, Duties and Powers of Officers

The directors may, for each officer:

(1)

determine the functions and duties of the officer;

(2)

entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and

(3)

revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.

20.3

Qualifications

No officer may be appointed unless that officer is qualified in accordance with the Business Corporations Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or vice chair of the board must be a director. Any other officer need not be a director.

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20.4

Remuneration and Terms of Appointment

All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors thinks fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.

21.

INDEMNIFICATION

21.1

Definitions

In this Article:

(a)

“eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;

(b)

“eligible proceeding” means a legal proceeding or investigative action, whether current, threatened, pending or completed, in which a director, former director or alternate director of the Company (an “eligible party”) or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director or alternate director of the Company:

(i)

is or may be joined as a party; or

(ii)

is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding;

(c)

“expenses” has the meaning set out in the indemnity provisions of the Act.

21.2

Mandatory Indemnification of Directors and Officers and Former Directors and Officers

The Company must indemnify a director, officer, former director or officer or alternate director of the Company and their heirs and legal personal representatives, as set out in the Act, against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director, officer, former director and officer and alternate director is deemed to have contracted with the Company on the terms of the indemnity contained in this Article 21.2.

21.3

Mandatory Advancement of Expenses

The Company must pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible party in respect of that proceeding, but the Company must first receive from the eligible party a written undertaking that,

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if it is ultimately determined that the payment of expenses is prohibited by the Act, the eligible party will repay the amounts advanced.

21.4

Indemnification of Other Persons

The Company may indemnify any other person in accordance with the Act.

21.5

Non-Compliance with Business Corporations Act

The failure of a director, alternate director or officer of the Company to comply with the Act or these Articles does not invalidate any indemnity to which they are entitled under this Part.

21.6

Company May Purchase Insurance

The Company may purchase and maintain insurance for the benefit of any person (or their heirs or legal personal representatives) who:

(a)

is or was a director, alternate director, officer, employee or agent of the Company;

(b)

is or was a director, alternate director, officer, employee or agent of a corporation at a time when the corporation is or was an affiliate of the Company;

(c)

at the request of the Company, is or was a director, alternate director, officer, employee or agent of a corporation or of a partnership, trust, joint venture or other unincorporated entity;

(d)

at the request of the Company, holds or held a position equivalent to that of a director, alternate director or officer of a partnership, trust, joint venture or other unincorporated entity;

against any liability incurred by them as such director, alternate director, officer, employee or agent or person who holds or held such equivalent position.

22.

DIVIDENDS

22.1

Payment of Dividends Subject to Special Rights

The provisions of this Article 22 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

22.2

Declaration of Dividends

Subject to the Business Corporations Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

22.3

No Notice Required

The directors need not give notice to any shareholder of any declaration under Article 22.2.

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22.4

Record Date

The directors may set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months. If no record date is set, the record date is 5 p.m. on the date on which the directors pass the resolution declaring the dividend.

22.5

Manner of Paying Dividend

A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

22.6

Settlement of Difficulties

If any difficulty arises in regard to a distribution under Article 22.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:

(1)

set the value for distribution of specific assets;

(2)

determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled may be made to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and

(3)

vest any such specific assets in trustees for the persons entitled to the dividend.

22.7

When Dividend Payable

Any dividend may be made payable on such date as is fixed by the directors.

22.8

Dividends to be Paid in Accordance with Number of Shares

All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

22.9

Receipt by Joint Shareholders

If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

22.10

Dividend Bears No Interest

No dividend bears interest against the Company.

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22.11

Fractional Dividends

If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

22.12

Payment of Dividends

Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the registered address of the shareholder, or in the case of joint shareholders, to the registered address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

22.13

Capitalization of Retained Earnings or Surplus

Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any retained earnings or surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the retained earnings or surplus so capitalized or any part thereof.

23.

NOTICES

23.1

Method of Giving Notice

Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report or other record required or permitted by the Business Corporations Act or these Articles to be sent by or to a person may be sent by any one of the following methods:

(1)

mail addressed to the person at the applicable address for that person as follows:

(a)

for a record mailed to a shareholder, the shareholder’s registered address;

(b)

for a record mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records of that class;

(c)

in any other case, the mailing address of the intended recipient;

(2)

delivery at the applicable address for that person as follows, addressed to the person:

(a)

for a record delivered to a shareholder, the shareholder’s registered address;

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(b)

for a record delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records of that class;

(c)

in any other case, the delivery address of the intended recipient;

(3)

sending the record by fax to the fax number provided by the intended recipient for the sending of that record or records of that class;

(4)

sending the record by email to the email address provided by the intended recipient for the sending of that record or records of that class;

(5)

physical delivery to the intended recipient;

(6)

as otherwise permitted by any securities legislation in any province or territory of Canada or in the federal jurisdiction of the United States or in any states in the United States that is applicable to the Company and all regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by securities commissions or similar authorities appointed under that legislation.

23.2

Deemed Receipt of Mailing

A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in Article 23.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing.

23.3

Certificate of Sending

A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that behalf for the Company stating that a notice, statement, report or other record was addressed as required by Article 23.1, prepaid and mailed or otherwise sent as permitted by Article 23.1 is conclusive evidence of that fact.

23.4

Notice to Joint Shareholders

A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing the notice to the joint shareholder first named in the central securities register in respect of the share,

23.5

Notice to Legal Personal Representatives and Trustees

A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:

(1)

mailing the record, addressed to them:

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(a)

by name, by the title of the legal personal representative of the deceased or incapacitated shareholder, by the title of trustee of the bankrupt shareholder or by any similar description; and

(b)

at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled; or

(2)

if an address referred to in paragraph (1)(b) has not been supplied to the Company, by giving the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.

24.

SEAL

24.1

Who May Attest Seal

Except as provided in Articles 24.2 and 24.3, the Company’s seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:

(1)

any two directors;

(2)

any two officers;

(3)

any officer, together with any director; or

(4)

any one or more directors or officers or persons as may be determined by the directors.

24.2

Sealing Copies

For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite Article 24.1, the impression of the seal may be attested by the signature of any director or officer.

24.3

Mechanical Reproduction of Seal

The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Business Corporations Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and any two directors, any two officers, any officer together with any director, or any one or more directors or officers or persons as may be det ermined by the directors may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such

- 34 -

dies. Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.

24.4

Facsimile Signature

The signature of any one or more officers, directors and other persons determined by the directors, may, if authorized by the directors, be printed or otherwise mechanically reproduced upon any record executed or issued by the Company or any officer thereof. Any record on which the signature of any such person is so printed or mechanically reproduced by authorization of the directors shall be deemed to have been manually signed by such person whose signature is so printed or mechanically reproduced and shall be as valid to all intents and purposes as if such record had been signed manually, and notwithstanding that the person whose signature is so reproduced may have ceased to hold office at the date of the delivery or issue of such record.

EX-4.1

EX-4.2

VOID AFTER THE CLOSE OF BUSINESS IN THE CITY OF VANCOUVER,
PROVINCE OF BRITISH COLUMBIA, ON NOVEMBER 10, 2007

SHARE PURCHASE WARRANT

 COMMON SHARES OF MIDWAY GOLD CORP.
(the “Company”)

(Incorporated under the laws of the Province of British Columbia)

Warrant Certificate No. MDW-06-NOV-

THIS IS TO CERTIFY THAT for value received, , is entitled to purchase up to  Common shares of the Company as such shares were constituted on November 10, 2006, at any time and from time to time, in the City of Vancouver, Province of British Columbia, at the price of $3.00 per share if exercised on or before 5:00 p.m. on November 10, 2007, and upon and subject to the terms and conditions governing the holding of warrants in the Company in existence on November 10, 2006, a copy of which may be obtained from the Company or its transfer agent.

THIS WARRANT AND ALL RIGHTS ACQUIRED PURSUANT HERETO ARE NOT TRANSFERABLE.

This warrant may be exercised in whole or in part, from time to time, only at the office of Computershare Investor Services Inc., 510 Burrard Street, in the City of Vancouver, Province of British Columbia.  If  exercises this warrant in part, the Company shall cancel this certificate upon the surrender thereof, and shall promptly execute and deliver a new certificate for the balance of the warrants remaining.

This warrant is not valid unless signed by a director or officer of the Company.

IN WITNESS WHEREOF the Company has caused this warrant to be executed.

DATED:  November 10, 2006.

Midway Gold Corp.

By:

Authorized Signatory

ALL CERTIFICATES ISSUED PRIOR TO MARCH 11, 2007 WITH RESPECT TO THE SHARES ISSUABLE HEREUNDER MUST BEAR THE FOLLOWING LEGENDS:

MI 45-102:

“Unless permitted under securities legislation, the holder of the securities shall not trade the securities before March 11, 2007.”

TSX Venture Exchange Legend:

“Without the prior written approval of the TSX Venture Exchange and compliance with all applicable securities legislation, the security represented by this certificate may not be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until March 11, 2007.”

- 2 -

ALL CERTIFICATES ISSUED WITH RESPECT TO THE SHARES ISSUABLE HEREUNDER MUST BEAR THE FOLLOWING LEGEND:

US Legend

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) WITHIN THE UNITED STATES, IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT IN ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) OUTSIDE THE UNITED STATES, IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, P RIOR TO SUCH SALE, FURNISHED TO THE COMPANY A DECLARATION, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE  WITH U.S. SECURITIES LAWS.

SUBSCRIPTION FORM

The undersigned holder of this warrant hereby subscribes for _________________ of the common shares referred to in the said warrant according to the conditions thereof and herewith makes payment of the purchase price in full for the said number of shares.

Dated _________________________.

Name of Warrant Holder

Authorized Signatory

Address of Warrant Holder

EX-4.3

MIDWAY GOLD CORP.

SUBSCRIPTION FOR UNITS

TO:

Midway Gold Corp. (the "Company")

The undersigned (the "Subscriber") hereby irrevocably subscribes for and agrees to purchase the number of units (the "Units") in the capital of the Company, set forth below for the aggregate subscription price set forth below, representing a subscription price of $1.80 per Unit, upon and subject to the terms and conditions set forth in the "Terms and Conditions of Subscription for Securities of Midway Gold Corp." attached to and forming a part hereof.  Each Unit is comprised of one common share ("Common Share") in the capital of the Company and one-half common share purchase warrant ("Warrant").  Each Warrant entitles the Subscriber to purchase one additional Common Share (a "Warrant Share") for a period of 12 months from the Closing Date (as defined herein) at a subscription price of $2.70 per Warrant S hare.  The Warrant also provides that the Company may give the holder of the Warrant written notice (the "Early Expiry Notice") that the period in which the Warrant may be exercised will be reduced to a period of 30 days from the date on which the Early Expiry Notice is delivered to the holder of the Warrant (the "Early Expiry Period"), provided the daily weighted average selling price of the Common Shares on the TSX Venture Exchange (the "Exchange") exceeds $3.25 for 15 consecutive trading days prior to the date of the Early Expiry Notice.  The Warrant will terminate upon expiry of the Early Expiry Period in the event that the holder of the Warrant does not exercise the Warrant during the Early Expiry Period.  This subscription is subject to acceptance by the Company and may be accepted as to the number of Units set forth below or such lesser number as may be determined by the Company in its sole discretion.

(Name of Subscriber - please print) By: (Authorized Signature) (Official Capacity or Title - please print) (Please print name of individual whose signature appears above if different than the name of the subscriber printed above.) (Subscriber's Address, including postal code) (Telephone Number) (E-Mail Address)	Number of Units:
	Aggregate Subscription Price:   $
	The Subscriber owns, directly or indirectly, the following securities of the Company:   The Subscriber is r or is not r an insider of the Company; or The Subscriber is r or is not r a member of the pro-group of the Company [Please check the applicable box(s)]
Registration Instructions: (Name) (Account reference, if applicable) (Address, including postal code)	Delivery Instructions: (Name) (Account reference, if applicable) (Contact Name) (Address, including postal code)

- 2 -

The Subscriber acknowledges to the Company that the Subscriber has read and understood the terms and conditions of this agreement and, without in any way limiting the foregoing, the Subscriber confirms that all of the representations and warranties of the Subscriber contained herein are true and correct as of the date hereof and will continue to be true and correct as at the Time of Closing.

ACCEPTANCE:  The Company hereby accepts the above subscription as set forth above on the terms and conditions contained in this Subscription Agreement.

MIDWAY GOLD CORP.

Per:

May 16,

, 2006

Authorized Signatory

This is the second page of an agreement comprised of 9 pages (not including schedules)

TERMS AND CONDITIONS OF SUBSCRIPTION FOR
SECURITIES OF MIDWAY GOLD CORP.

1.

Terms of the Offering

1.1

The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that the Units subscribed for hereunder form part of an issuance and sale by the Company of securities for gross proceeds of up to $6,705,000 comprised of up to 3,725,000 Units at a subscription price of $1.80 per Unit, each Unit consisting of one Common Share and one-half Warrant (the "Offering").

1.2

Each whole Warrant will entitle the holder to acquire a Warrant Share (subject to customary adjustments) at a price of $2.70 per Warrant Share during the period commencing on the Closing Date (as herein defined) until the date which is one year following the Closing Date.  The Warrant also provides that the Company may provide the holder of the Warrant with an Early Expiry Notice indicating that the Warrant will expire and no longer be exercisable upon the expiry of the Early Expiry Period, provided that the daily weighted average selling price of the Common Shares on the Exchange exceeds $3.25 for 15 consecutive trading days prior to the date of the Early Expiry Notice.

1.3

The Subscriber acknowledges and agrees that the Company may, acting unilaterally, modify the size of the Offering without the consent of or notice to the Subscriber.

2.

Representations, Warranties and Covenants by Subscriber

2.1

The Subscriber (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) represents, warrants and covenants to the Company (and acknowledges that the Company, and their respective counsel, are relying thereon) as at the date hereof and as at the Closing Time (as such term is defined below) that:

(a)

it has been independently advised as to restrictions with respect to trading in the Common Shares, the Warrants and the Warrant Shares (collectively, the "Purchased Securities"), imposed by applicable securities legislation in the jurisdiction in which it resides, confirms that no representation has been made to it by or on behalf of the Company with respect thereto, acknowledges that it is aware of the characteristics of the Purchased Securities, the risks relating to an investment therein and of the fact that it may not be able to resell the Purchased Securities except in accordance with limited exemptions under applicable securities legislation and regulatory policies until expiry of the applicable hold period, which will be at least four months from the Closing Date, and in compliance with the other requirements of applicable law;

(b)

it has not received nor has it requested, nor does it have any need to receive, any document describing the business and affairs of the Company and it has not become aware of any advertisement with respect to the Offering or the distribution of the Units by the Company;

(c)

it has not relied upon any verbal or written representation as to fact or otherwise made by or on behalf of the Company;

(d)

the Subscriber is resident in the jurisdiction set forth in this Subscription Agreement as the "Subscriber's Address" below the Subscriber's signature as set forth on the first page

- 2 -

hereof and any act, solicitation, conduct or negotiation directly or indirectly in furtherance of such purchase and sale (whether to the Subscriber or to any beneficial purchaser for whom it may be acting) has occurred only in such jurisdiction;

(e)

the Subscriber is purchasing the Units as principal for its own account and not for the benefit of any other person;

(f)

the Subscriber is an "accredited investor", as such term is defined in National Instrument 45-106 entitled "Prospectus and Registration Exemptions" promulgated under the Securities Act (British Columbia) (which definition is reproduced in Exhibit "2" to Schedule "A" and Exhibit "1" to Schedule "B" attached hereto) and has concurrently executed and delivered a representation letter in the form attached as Schedule "A" to this Subscription Agreement provided that the Subscriber is a resident of the United States or in the form of attached as Schedule "B" to this Subscription Agreement provided that the Subscriber is a resident of any province in Canada;

(g)

if the Subscriber is a resident of the United States, the Subscriber is an "Accredited Investor" as defined in Rule 501 of Regulation D under the U.S. Securities Act of 1933 (the "U.S. Securities Act") and has concurrently executed and delivered a representation letter in the form attached as Schedule "A" to this Subscription Agreement; or, if the Subscriber is not an Accredited Investor within that meaning and as such the Subscriber was not offered the Units in the United States and, at the time this Agreement was executed on behalf of the Subscriber, the Subscriber was outside the United States;

(h)

it is aware that the Purchased Securities have not been and will not be registered under the United States Securities Act of 1933 (the "1933 Act"), that the Company has no obligation or present intention to file a registration statement under the 1933 Act, and that these securities may not be offered or sold in the United States without registration under the 1933 Act or compliance with requirements of an exemption from registration;

(i)

it undertakes and agrees that it will not offer or sell the Purchased Securities in the United States unless such securities are registered under the 1933 Act and the securities laws of all applicable states of the United States or an exemption from such registration requirements is available, and further that it will not resell the Purchased Securities, except in accordance with the provisions of applicable securities legislation, regulations, rules, policies and orders and stock exchange rules of any kind whatsoever (the "Securities Rules");

(j)

if the Subscriber is a company or body corporate that is a valid and subsisting corporation, it has the necessary corporate capacity and authority to execute and deliver this Subscription Agreement and to take all actions required pursuant thereto and certifies that all necessary approvals by its directors, shareholders, partners, members or otherwise has been given;

(k)

if the Subscriber is an individual, it is of the full age of majority and is legally competent to execute this Subscription Agreement and take all action pursuant hereto;

(l)

this Subscription Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the undersigned;

- 3 -

(m)

it has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and it is able to bear the economic risk of loss of its investment;

(n)

it understands that the Purchased Securities will be subject to a "hold period" and possibly other resale restrictions under applicable securities legislation and the policies of the Exchange and may not be resold until the expiry of such hold period except in accordance with limited exemptions under applicable securities legislation and regulatory policies and that the Company may cause a legend to such effect to be placed on the certificates representing the Purchased Securities.  The Subscriber acknowledges that it is aware that until the expiry of all such "hold periods" and resale restrictions, (i) such securities cannot be traded through the facilities of the Exchange since the certificate is not freely transferable and consequently is not "good delivery" in settlement of transactions on the Exchange; and (ii) the Exchange would deem the selling security holder to be respo nsible for any loss incurred on a sale made by him in such securities;

(o)

no representation has been made to it regarding the present or future value of the Purchased Securities;

(p)

it is aware that it is purchasing the Units hereunder pursuant to the appropriate exemptions (the "Exemptions") from the requirement to provide the Subscriber with a prospectus and sell the Units through a person registered to sell securities or equivalent requirements under the Securities Rules and as a result:

(i)

it is restricted from using most of the civil remedies available under the Securities Rules;

(ii)

there is no government or other insurance covering the Purchased Securities;

(iii)

it will not receive information that would otherwise be required to be provided to it under the Securities Rules;

(iv)

there are risks associated with the Purchased Securities;

(v)

the Company is relieved of certain obligations that would otherwise apply under the Securities Rules;

(vi)

there are restrictions on the Subscriber's ability to resell the Purchased Securities and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Purchased Securities;

(vii)

no securities commission or similar regulatory authority has reviewed or passed on the merits of the Purchased Securities or the Offering; and

(viii)

the Subscriber acknowledges that the Company has advised the Subscriber that the Company is relying on the Exemptions and, as a consequence of acquiring the Units pursuant to the Exemptions, certain protections, rights and remedies provided by the Securities Rules, including statutory rights of recission or damages, will not be available to the Subscriber;

- 4 -

(q)

it understands that the sale and delivery of the Units is conditional upon such sale being exempt from the requirements as to the filing of a prospectus or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus;

(r)

if required by Securities Rules or orders or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Company in filing, such reports, undertakings and other documents with respect to the issue or continued ownership of the Purchased Securities as may be required;

(s)

it will comply with all applicable Securities Rules concerning the purchasing, holding and resale or other disposition of the Purchased Securities, including the execution and filing of any required private placement reports.  In particular, the Subscriber will not resell or otherwise transfer or dispose of any of the Purchased Securities except in accordance with the provisions of all applicable Securities Rules;

(t)

in the case of a subscription by it for Units acting as agent for a disclosed principal, it is duly authorized to execute and deliver this Subscription Agreement and all other necessary documentation in connection with such subscription on behalf of such principal and this Subscription Agreement has been duly authorized, executed and delivered by or on behalf of, and constitutes a legal, valid and binding agreement of, such principal;

(u)

the acquisition of Units hereunder by the Subscriber will not result in the Subscriber becoming a "Control Person", as defined under applicable Securities Rules; and

(v)

the Subscriber acknowledges that it has been encouraged to obtain independent legal, income tax and investment advice with respect to its subscription for Units and accordingly, has had the opportunity to acquire an understanding of the meanings of all terms contained herein relevant to the Subscriber for purposes of giving representations, warranties and covenants under this Subscription Agreement.

3.

Representation and Warranties of the Company

3.1

The Company represents and warrants to the Subscriber (and acknowledges that the Subscriber is relying thereon) as at the date hereof and as at the Closing Time (as such term is defined below) that:

(a)

the Company is a valid and subsisting corporation duly incorporated and in good standing under the laws of British Columbia;

(b)

all or substantially all of the subscription funds for the Purchased Securities will be expended on further exploration of the Company’s Spring Valley project in Pershing County, Nevada;

(c)

the Company has taken, or prior to the Closing Date will take, all necessary corporate action to authorize the execution, delivery and performance of this Subscription Agreement, including the issuance of the Purchased Securities, and upon execution of this Subscription Agreement on behalf of the Company, this Subscription Agreement shall be duly executed by and shall constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with the terms hereof;

- 5 -

(d)

on the Closing Date, the Common Shares forming part of the Purchased Securities will be issued as fully paid and non-assessable securities and the Warrants will be duly and validly created, authorized and issued and the Warrant Shares will be duly and validly authorized, allotted and reserved for issuance, and such Common Shares and the Warrant Shares will, upon exercise in accordance with the certificates representing the Warrants, be issued as fully paid and non-assessable securities;

(e)

the Company is a "reporting issuer" as such term is defined in the Securities Act (British Columbia) and the Securities Act (Alberta) (collectively the "Securities Acts"); the Company has been a reporting issuer under each of the Securities Acts for more than 12 months; and the Company is not in default of any requirement of the Securities Acts or the rules, regulations and policies made thereunder;

(f)

the Company has good and sufficient right and authority to enter into this Subscription Agreement and to complete its transactions contemplated under this Subscription Agreement on the terms and conditions set forth herein;

(g)

the Purchased Securities form part of a class of shares which are listed and posted for trading on the Exchange and prior to the Closing Date, the Exchange will have accepted notice of the issuance of the Purchased Securities and shall have approved the listing of the Purchased Securities, subject only to the Company filing final documentation and the payment of additional listing fees;

(h)

as of the date of this Subscription Agreement, the Company has no knowledge of any "material change" (as such term is defined in the Securities Act (British Columbia) relating to the Company which has not been publicly disclosed; and

(i)

to the best of its knowledge, the execution and delivery of this Subscription Agreement, the performance of its obligations under this Agreement and the completion of its transactions contemplated under this Subscription Agreement will not conflict with, or result in the breach of or the acceleration of any indebtedness under, or constitute default under, the constating documents of the Company or any indenture, mortgage, agreement, lease, license or other instrument or any kind whatsoever to which the Company is a party or by which it is bound, or any judgment or order of any kind whatsoever or any Court or administrative body of any kind whatsoever by which it is bound.

4.

Closing

4.1

The Subscriber agrees to deliver to the Company not later than 10:00 a.m. (Vancouver time) on May 10, 2006 (or two business days before any amended Closing Date of which the Subscriber receives notice):

(a)

this duly completed and executed Subscription Agreement;

(b)

one manually signed and completed copy of the accredited investor certificate in the form attached to this Subscription Agreement as Schedule "A";

(c)

if the Subscriber is not an individual, one manually signed and completed copy of the Exchange's Corporate Placee Registration Form in the form attached to this Subscription Agreement as Schedule "C";

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(d)

a certified cheque or bank draft in the amount of the aggregate subscription price set forth on the face page of this Subscription Agreement made payable to "Midway Gold Corp."; and

(e)

such other documents as may be required by counsel to the Company.

4.2

The sale and issuance of the Units will be completed at the offices of Davis & Company LLP, Suite 2800, 666 Burrard Street, Vancouver, British Columbia, V6C 2Z7 on or before 10:00 a.m. Vancouver time on May 12, 2006 (the "Closing Date") or such other place, time or date as the Company may determine (such other date also being referred to as the Closing Date), provided that the Company shall not be required to complete the sale and issuance of the Purchased Securities unless the Subscriber shall have complied with Section 2 hereof, the conditions set forth in Section 5 hereof have been met or waived and the Company has received all of the regulatory approvals required for such issuance.  The obligation of the Subscriber to complete the purchase of the Purchased Securities shall be conditional on the Subscriber receiving a legal opinion from counsel to the Company on closing in form an d substance satisfactory to the Subscriber, acting reasonably, with respect to such matters as the Subscriber may reasonably request."

4.3

The Company shall be entitled to rely on delivery of a facsimile copy of executed subscriptions, and acceptance by the Company of such facsimile subscriptions shall be legally effective to create a valid and binding agreement between the Subscriber and the Company in accordance with the terms hereof.

4.4

The obligations of the Subscriber and the Company to complete the purchase and sale of the Units as contemplated hereby shall be conditional upon receipt of all regulatory approvals necessary to the purchase and sale of the Units on or before the Closing Date.  In the event that this condition has not been met or waived by the Company prior to the Closing Date, the Subscriber shall not be required to purchase, and the Company shall not be required to issue and sell, any Purchased Securities, and any subscription funds received by the Company will be returned to the Subscriber without interest thereon or deduction therefrom.

5.

General

5.1

The representations, warranties and covenants of the Subscriber herein are made with the intent that they be relied upon by the Company in determining the suitability of a purchaser of Units and the Subscriber agrees to indemnify the Company and its directors and officers against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur caused or arising from reliance thereon.  The Subscriber undertakes to immediately notify the Company of any change in any statement or other information relating to the Subscriber set forth herein which takes place prior to the Closing Date.

5.2

The contract arising out of this Subscription Agreement and all documents relating thereto shall be governed by and construed in accordance with the laws of the Province of British Columbia.

5.3

Time shall be of the essence hereof.

5.4

This Subscription Agreement represents the entire agreement of the parties hereto relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein.

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5.5

If any provision of this Subscription Agreement is determined to be void or unenforceable in whole or in part, it shall be deemed not to affect or impair the validity of any other provision of this agreement and such void or unenforceable provision shall be severable from this agreement.

5.6

The covenants, representations and warranties contained herein shall survive the closing of the transactions contemplated hereby.

5.7

The Subscriber (on its own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) acknowledges and consents to the fact that the Company is collecting the Subscriber's (and any beneficial purchaser's) personal information for the purposes of completing the Subscriber's subscription.  The Subscriber (on is own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) acknowledges and consents to the Company retain the personal information for as long as permitted or required by applicable law or business practices.  The Subscriber (on is own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) further acknowledges and consents to the fact the Company may be required by applicable securities laws, stock exchange rules, and investment dealers association rules to provide regu latory authorities any personal information provided by the Subscriber respecting itself (and any beneficial purchaser).  The Subscriber represents and warrants that it has the authority to provide the contents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers.

5.8

The Subscriber acknowledges and agrees that all costs incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the sale of the Purchased Securities to the Subscriber shall be borne by the Subscriber.

5.9

In this Subscription Agreement (including attachments), references to "$" are to Canadian dollars.

SCHEDULE "A"

REPRESENTATION LETTER

FOR UNITED STATES PURCHASERS

To:

Midway Gold Corp.

In connection with the purchase by the undersigned subscriber (the "Subscriber") of Units (as defined in the subscription agreement) of Midway Gold Corp. (the "Company"), the Subscriber hereby represents, warrants, covenants and certifies to the Company that the Subscriber is purchasing the Units as principal for its own account, is a resident of the United States and is an "accredited investor" as defined in Rule 501 of Regulation D under the U.S. Securities Act of 1933 (the "U.S. Securities Act") by virtue of satisfying one of the indicated criteria as set out in Exhibit "1" to this Representation Letter.

In addition, if Subscriber is a resident of the State of New York, the Subscriber represents that it also qualifies as an "institutional buyer," which may include a "qualified institutional buyer" as defined in Rule 144A under the U.S. Securities Act.

The Subscriber further represents, warrants, covenants and certifies that it is purchasing the Units as principal for its own account, for investment purposes only, and not with a view towards their resale or distribution, and the Subscriber has no present intention of selling or granting any participation in or otherwise distributing any of the Units in a manner contrary to the U.S. Securities Act or any applicable U.S. state securities law, and the Subscriber does not have any contract, understanding, agreement, or arrangement with any person to sell, transfer, or grant participation to such person, or to any third person, with respect to the Units or any portion thereof.

The Subscriber acknowledges that (A) the Units and the underlying securities are and will be "restricted securities" as defined in Rule 144 promulgated under the U.S. Securities Act; (B) neither the Units nor the underlying securities may be sold or otherwise transferred in the U.S. unless they have been first registered under the U.S. Securities Act and all applicable state securities laws, or unless the Subscriber shall have first delivered to the Company a written opinion of counsel (which counsel and opinion shall be reasonable satisfactory to the Company), to the effect that the proposed sale or transfer of the securities is exempt from the registration provisions of the U.S. Securities Act and all applicable state securities laws; and (C) upon the original issuance of the Units (and any underlying securities into which the Units are convertible or exercisable), and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, the certificates representing the Units will bear a restrictive securities legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR ANY STATE SECURITIES LAWS.  THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) IF OUTSIDE THE UNITED STATES, IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, OR (C) IF WITHIN THE UNITED STATES, EITHER (1) PURSUANT TO AN AVAILABLE EXEMPTION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UPON RECEIPT BY THE COMPANY OF A LEGAL OPINION (IN FORM AND SUBSTANCE SATISFACTORY TO

- 2 -

THE COMPANY) TO SUCH EFFECT, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT FOR SUCH SECURITIES. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE COMPANY'S REGISTRAR AND TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY AUTHORIZED DECLARATION, IN A FORM SATISFACTORY TO THE REGISTRAR AND TRANSFER AGENT AND THE COMPANY, TO THE EFFECT THAT SUCH SALE IS BEING MADE IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.

In addition, the Subscriber hereby represents, warrants, covenants and certifies to the Company that the Subscriber is an "accredited investor" within the meaning of National Instrument 45-106 by virtue of satisfying one of the indicated criteria as set out in Exhibit "2" to this Representation Letter.

Dated at ____________________________________, this _________ day of May, 2006.

Name of Subscriber

Signature

If the Subscriber is a corporation, office or title of signatory

EXHIBIT "1"

"accredited investor" means:

(a)

A bank as defined in Section 3(a)(2) of the U.S. Securities Act whether acting in its individual or fiduciary capacity; or

(b)

A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or

(c)

A broker or dealer registered pursuant to Section 15 of the U.S. Exchange Act, as amended; or

(d)

An insurance company as defined in Section 2(13) of the U.S. Securities Act; or

(e)

An investment company registered under the U.S. Investment Company Act of 1940; or

(f)

A business development company as defined in Section 2(1)(48) of the U.S. Investment Company Act of 1940; or

(g)

A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the U.S. Small Business Investment Act of 1958; or

(h)

A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of U.S.$5,000,000; or

(i)

An employee benefit plan within the meaning of the U.S. Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of U.S.$5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are Accredited Investors; or

(j)

A private business development company as defined in Section 202(a)(22) or the U.S. Investment Advisers Act of 1940; or

(k)

A corporation, a partnership, an organization described in Section 501(c)(3) of the U.S. Internal Revenue Code, or a Massachusetts or similar business trust, not formed for the specific purpose of acquiring the Units, with total assets in excess of U.S.$5,000,000; or

(l)

A director, executive officer or general partner of the Company; or

(m)

A natural person whose individual net worth (defined as the excess of total assets over total liabilities), or joint net worth with that person's spouse, at the time of his purchase exceeds U.S.$1,000,000; or

(n)

A natural person who had an individual income(*) in excess of U.S.$200,000 in each of the two most recent years or joint income with that person's spouse in excess of U.S.$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

(o)

A trust, with total assets in excess of U.S.$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described under the U.S. Securities Act Rule 506(b)(2)(ii); or

(p)

An entity in which all of the equity owners are Accredited Investors.

EXHIBIT "2"

"accredited investor" means:

(a)

a Canadian financial institution, or a Schedule III of the Bank Act (Canada),

(b)

the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada),

(c)

a subsidiary of any person referred to in paragraphs (a) or (b) if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary,

(d)

a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),

(e)

an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d),

(f)

the government of Canada or jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or jurisdiction of Canada,

(g)

a municipality, public board or commission in Canada, and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec,

(h)

any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government,

(i)

a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada,

(j)

an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000,

(k)

an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year,

(l)

an individual who, either alone or with a spouse, has net assets of at least $5,000,000,

(m)

a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements,

(n)

an investment fund that distributes or has distributed its securities only to

(i)

a person that is or was an accredited investor at the time of distribution,

(ii)

a person that acquires or acquired securities in the circumstances referred to in                            sections 2.10 and 2.19 of National Instrument 45-106, or

(iii)

a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 of NI 45-106.

(o)

an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

(p)

a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be,

- 2 -

(q)

a person acting on behalf of a fully managed account managed by that person, if that person

(i)

is registered or authorized to carry on business as an advisor or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

(ii)

in Ontario, is purchasing a security that is not a security of an investment fund.

(r)

a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility advisor or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on securities being traded,

(s)

an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) in form and function,

(t)

a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,

(u)

an investment fund that is advised by a person registered as an advisor or a person that is exempt from registration as an advisor, or

(v)

a person that is recognized or designated by the securities regulatory authority or except in Ontario and Québec, the regulator as

(i)

an accredited investor, or

(ii)

an exempt purchaser in Alberta or British Columbia after this NI 45-106 comes into force.

"Canadian financial institution" means

(a)

an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or

(b)

a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

"control person" means:

(a)

a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the Corporation, or

(b)

each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the issuer,

and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of the Corporation, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the Corporation.

"financial assets" means:

(a)

cash,

(b)

securities, or

(c)

a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purpose of securities legislation.

"non-redeemable investment fund" has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure Obligations;

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"person" means:

(a)

an individual,

(b)

a corporation,

(c)

a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and

(d)

an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative.

"related liabilities" means:

(a)

liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

(b)

liabilities that are secured by financial assets.

"subsidiary" means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

SCHEDULE "B"

REPRESENTATION LETTER

FOR CANADIAN PURCHASERS

TO:

Midway Gold Corp. (the "Company")

In connection with the purchase by the undersigned subscriber (the "Subscriber") of Units (as defined in the subscription agreement) of the Company, the Subscriber hereby represents, warrants, covenants and certifies to the Company that the Subscriber is resident in (circle place of residency) British Columbia, Alberta, Saskatchewan, Manitoba, Ontario or Quebec and is an "accredited investor" within the meaning of National Instrument 45-106 by virtue of satisfying one of the indicated criteria as set out in Exhibit "1" to this Representation Letter.

Dated at _____________________________, this _______ day of _________________________, 2006.

Name of Subscriber

Signature

If the Subscriber is a corporation, office or title of signatory

EXHIBIT "1"

"accredited investor" means:

(a)

a Canadian financial institution, or a Schedule III of the Bank Act (Canada),

(b)

the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada),

(c)

a subsidiary of any person referred to in paragraphs (a) or (b) if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary,

(d)

a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),

(e)

an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d),

(f)

the government of Canada or jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or jurisdiction of Canada,

(g)

a municipality, public board or commission in Canada, and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec,

(h)

any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government,

(i)

a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada,

(j)

an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000,

(k)

an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year,

(l)

an individual who, either alone or with a spouse, has net assets of at least $5,000,000,

(m)

a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements,

(n)

an investment fund that distributes or has distributed its securities only to

(a)

a person that is or was an accredited investor at the time of distribution,

(b)

a person that acquires or acquired securities in the circumstances referred to in sections 2.10 and 2.19 of National Instrument 45-106, or

(c)

a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 of NI 45-106.

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(o)

an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

(p)

a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be,

(q)

a person acting on behalf of a fully managed account managed by that person, if that person

(a)

is registered or authorized to carry on business as an advisor or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

(b)

in Ontario, is purchasing a security that is not a security of an investment fund.

(r)

a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility advisor or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on securities being traded,

(s)

an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) in form and function,

(t)

a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,

(u)

an investment fund that is advised by a person registered as an advisor or a person that is exempt from registration as an advisor, or

(v)

a person that is recognized or designated by the securities regulatory authority or except in Ontario and Québec, the regulator as

(a)  an accredited investor, or

(b)  exempt purchaser in Alberta or British Columbia after this NI 45-106 comes into force.

"Canadian financial institution" means

(a)

an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or

(b)

a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

"control person" means:

(a)

a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the Corporation, or

(b)

each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the issuer,

and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of the Corporation, the person or combination of persons is deemed, in the

- 3 -

absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the Corporation.

"financial assets" means:

(a)

cash,

(b)

securities, or

(c)

a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purpose of securities legislation.

"non-redeemable investment fund" has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure Obligations;

"person" means:

(a)

an individual,

(b)

a corporation,

(c)

a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and

(d)

an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative.

"related liabilities" means:

(a)

liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

(b)

liabilities that are secured by financial assets.

"subsidiary" means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

SCHEDULE "C"

FORM 4C

CORPORATE PLACEE REGISTRATION FORM

Where subscribers to a Private Placement are not individuals, the following information about the placee must be provided.  This Form will remain on file with the Exchange.  The corporation, trust, portfolio manager or other entity (the "Placee") need only file it on a one time basis, and it will be referenced for all subsequent Private Placements in which it participates.  If any of the information provided in this Form changes, the Placee must notify the Exchange prior to participating in further placements with Exchange listed companies.  If as a result of the Private Placement, the Placee becomes an Insider of the Issuer, Insiders of the Placee are reminded that they must file a Personal Information Form (2A) or, if applicable, Declarations, with the Exchange.

1.  Placee Information:

(a)  Name:  

(b)  Complete Address:  

(c)  Jurisdiction of Incorporation or Creation:  

2.  (a)  Is the Placee purchasing securities as a portfolio manager (Yes/No)?  

(b)  Is the Placee carrying on business as a portfolio manager outside of Canada (Yes/No)?  

3.  If the answer to 2(b) above was "Yes", the undersigned certifies that:

(a)  It is purchasing securities of an Issuer on behalf of managed accounts for which it is making the investment decision to purchase the securities and has full discretion to purchase or sell securities for such accounts without requiring the client's express consent to a transaction;

(b)  it carries on the business of managing the investment portfolios of clients through discretionary authority granted by those clients (a "portfolio manager" business) in _________________ [jurisdiction], and it is permitted by law to carry on a portfolio manager business in that jurisdiction;

(c)  it was not created solely or primarily for the purpose of purchasing securities of the Issuer;

(d)  the total asset value of the investment portfolios it manages on behalf of clients is not less than $20,000,000; and

(e)  it has no reasonable grounds to believe, that any of the directors, senior officers and other insiders of the Issuer, and the persons that carry on investor relations activities for the Issuer has a beneficial interest in any of the managed accounts for which it is purchasing

4.  If the answer to 2(a) above was "No", please provide the names and addresses of control persons of the Placee

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Name City Province or State Country

The undersigned acknowledges that it is bound by the provisions of applicable Securities Law, including provisions concerning the filing of insider reports and reports of acquisitions [See for example, sections 87 and 111 of the Securities Act (British Columbia) and sections 176 and 182 of the Securities Act (Alberta)].

Acknowledgement - Personal Information

"Personal Information" means any information about an identifiable individual, and includes information contained in sections 1, 2 and 4, as applicable, of this Form.

The undersigned hereby acknowledges and agrees that it has obtained the express written consent of each individual to:

(a)

the disclosure of Personal Information by the undersigned to the Exchange (as defined in Appendix 6B) pursuant to this Form; and

(b)

the collection, use and disclosure of Personal Information by the Exchange for the purposes described in Appendix 6B or as otherwise identified by the Exchange, from time to time.

Dated at

 on

, 2006.

(Name of Purchaser - please print)

(Authorized Signature)

(Official Capacity - please print)

(please print name of individual whose signature appears

above)

THIS IS NOT A PUBLIC DOCUMENT

EX-4.4

MIDWAY GOLD CORP.

SUBSCRIPTION FOR UNITS

TO:

Midway Gold Corp. (the "Company")

The undersigned (the "Subscriber") hereby subscribes for and agrees to purchase the number of units (the "Units") in the capital of the Company, set forth below for the aggregate subscription price set forth below, representing a subscription price of $2.50 per Unit, upon and subject to the terms and conditions set forth in the "Terms and Conditions of Subscription for Securities of Midway Gold Corp." attached to and forming a part hereof.  Each Unit is comprised of one common share ("Common Share") in the capital of the Company and one-half common share purchase warrant ("Warrant").  Each Warrant entitles the Subscriber to purchase one additional Common Share (a "Warrant Share") for a period of 12 months from the Closing Date (as defined herein) at a subscription price of $3.00 per Warrant Share.   This subscription is subject to acceptance by the Company and may be accepted as to the number of Units set forth below or such lesser number as may be determined by the Company in its sole discretion.

(Name of Subscriber - please print) By: (Authorized Signature) __________________________________________________ (Official Capacity or Title - please print) __________________________________________________ (Please print name of individual whose signature appears above if different than the name of the subscriber printed above.) (Subscriber's Address, including postal code) (Telephone Number) (E-Mail Address)	Number of Units:
	Aggregate Subscription Price:   $
	The Subscriber owns, directly or indirectly, the following securities of the Company:   The Subscriber is r or is not r an insider of the Company; or The Subscriber is r or is not r a member of the pro-group of the Company [Please check the applicable box(s)]
Registration Instructions: (Name) (Account reference, if applicable) (Address, including postal code)	Delivery Instructions: (Name) (Account reference, if applicable) (Contact Name) (Address, including postal code)

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The Subscriber acknowledges to the Company that the Subscriber has read and understood the terms and conditions of this agreement and, without in any way limiting the foregoing, the Subscriber confirms that all of the representations and warranties of the Subscriber contained herein are true and correct as of the date hereof and will continue to be true and correct as at the Closing Time.

ACCEPTANCE:  The Company hereby accepts the above subscription as set forth above on the terms and conditions contained in this Subscription Agreement.

MIDWAY GOLD CORP.

Per:

November          , 2006

Authorized Signatory

This is the second page of an agreement comprised of 9 pages (not including schedules)

TERMS AND CONDITIONS OF SUBSCRIPTION FOR
SECURITIES OF MIDWAY GOLD CORP.

1.

Terms of the Offering

1.1

The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that the Units subscribed for hereunder form part of an issuance and sale by the Company of securities for gross proceeds of up to $5,000,000 comprised of 2,000,000 Units at a subscription price of $2.50 per Unit, each Unit consisting of one Common Share and one-half Warrant (the "Offering").

1.2

Each whole Warrant will entitle the holder to acquire a Warrant Share (subject to customary adjustments) at a price of $3.00 per Warrant Share during the period commencing on the Closing Date (as herein defined) until the date which is one year following the Closing Date.

1.3

The Subscriber acknowledges and agrees that the Company may, acting unilaterally, increase the size of the Offering without the consent of or notice to the Subscriber.

2.

Representations, Warranties and Covenants by Subscriber

2.1

The Subscriber (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) represents, warrants and covenants to the Company (and acknowledges that the Company, and its respective counsel, are relying thereon) as at the date hereof and as at the Closing Time (as such term is defined below) that:

(a)

it has been independently advised as to restrictions with respect to trading in the Common Shares, the Warrants and the Warrant Shares (collectively, the "Purchased Securities"), imposed by applicable securities legislation in the jurisdiction in which it resides, confirms that no representation has been made to it by or on behalf of the Company with respect thereto, acknowledges that it is aware of the characteristics of the Purchased Securities, the risks relating to an investment therein and of the fact that it may not be able to resell the Purchased Securities except in accordance with limited exemptions under applicable securities legislation and regulatory policies until expiry of the applicable hold period, which will be at least four months from the Closing Date, and in compliance with the other requirements of applicable law;

(b)

it has not received nor has it requested, nor does it have any need to receive, any document describing the business and affairs of the Company and it has not become aware of any advertisement with respect to the Offering or the distribution of the Units by the Company;

(c)

it has not relied upon any verbal or written representation as to fact or otherwise made by or on behalf of the Company, other than as contained in this Subscription Agreement;

(d)

the Subscriber is resident in the jurisdiction set forth in this Subscription Agreement as the "Subscriber's Address" below the Subscriber's signature as set forth on the first page hereof and any act, solicitation, conduct or negotiation directly or indirectly in furtherance of the purchase and sale of the Units hereunder (whether to the Subscriber or to any beneficial purchaser for whom it may be acting) has occurred only in such jurisdiction and in the Province of British Columbia;

(e)

the Subscriber is purchasing the Units as principal for its own account and not for the benefit of any other person;

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(f)

the Subscriber is an "accredited investor", as such term is defined in National Instrument 45-106 entitled "Prospectus and Registration Exemptions" promulgated under the Securities Act (British Columbia) (which definition is reproduced in Exhibit "2" to Schedule "A" and Exhibit "1" to Schedule "B" attached hereto) and has concurrently executed and delivered a representation letter in the form attached as Schedule "A" to this Subscription Agreement provided that the Subscriber is a resident of the United States or in the form of attached as Schedule "B" to this Subscription Agreement provided that the Subscriber is a resident of any province in Canada;

(g)

if the Subscriber is a resident of the United States, the Subscriber is an "Accredited Investor" as defined in Rule 501 of Regulation D under the U.S. Securities Act of 1933 (the "U.S. Securities Act") and has concurrently executed and delivered a representation letter in the form attached as Schedule "A" to this Subscription Agreement; or, if the Subscriber is not an Accredited Investor within that meaning and as such the Subscriber was not offered the Units in the United States and, at the time this Agreement was executed on behalf of the Subscriber, the Subscriber was outside the United States;

(h)

it is aware that the Purchased Securities have not been registered under the United States Securities Act of 1933 (the "1933 Act") and that the Purchased Securities may not be offered or sold in the United States without registration under the 1933 Act or compliance with requirements of an exemption from registration;

(i)

it undertakes and agrees that it will not offer or sell the Purchased Securities in the United States unless such securities are registered under the 1933 Act and the securities laws of all applicable states of the United States or an exemption from such registration requirements is available, and further that it will not resell the Purchased Securities, except in accordance with the provisions of applicable securities legislation, regulations, rules, policies and orders and stock exchange rules of any kind whatsoever (the "Securities Rules");

(j)

if the Subscriber is a company or body corporate that is a valid and subsisting corporation, it has the necessary corporate capacity and authority to execute and deliver this Subscription Agreement and to take all actions required pursuant hereto and certifies that all necessary approvals by its directors, shareholders, partners, members or otherwise has been given;

(k)

if the Subscriber is an individual, it is of the full age of majority and is legally competent to execute this Subscription Agreement and take all action pursuant hereto;

(l)

this Subscription Agreement has been duly and validly authorized, executed and delivered by the Subscriber and, upon acceptance by the Company, will constitute a legal, valid, binding and enforceable obligation of the Subscriber, except as enforcement may be limited by bankruptcy, insolvency, reorganization or other laws of general applicability relating to or affecting creditors’ rights and relating to general principals of equity;

(m)

it has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and it is able to bear the economic risk of loss of its investment;

(n)

it understands that the Purchased Securities will be subject to a "hold period" and possibly other resale restrictions under applicable securities legislation and the policies of the TSX Venture Exchange (the “Exchange”) and may not be resold until the expiry of such hold period except in accordance with limited exemptions under applicable securities legislation and regulatory policies and that the Company may cause a legend to such effect to be placed on the certificates representing the Purchased Securities.  The

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Subscriber acknowledges that it is aware that until the expiry of all such "hold periods" and resale restrictions, (i) such securities cannot be traded through the facilities of the Exchange since the certificate is not freely transferable and consequently is not "good delivery" in settlement of transactions on the Exchange; and (ii) the Exchange would deem the selling security holder to be responsible for any loss incurred on a sale made by him in such securities;

(o)

no representation has been made to it regarding the present or future value of the Purchased Securities;

(p)

it is aware that it is purchasing the Units hereunder pursuant to the appropriate exemptions (the "Exemptions") from the requirement to provide the Subscriber with a prospectus and sell the Units through a person registered to sell securities or equivalent requirements under the Securities Rules and as a result:

(i)

it is restricted from using most of the civil remedies available under the Securities Rules;

(ii)

there is no government or other insurance covering the Purchased Securities;

(iii)

it will not receive information that would otherwise be required to be provided to it under the Securities Rules;

(iv)

there are risks associated with the Purchased Securities;

(v)

the Company is relieved of certain obligations that would otherwise apply under the Securities Rules;

(vi)

there are restrictions on the Subscriber's ability to resell the Purchased Securities and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Purchased Securities;

(vii)

no securities commission or similar regulatory authority has reviewed or passed on the merits of the Purchased Securities or the Offering; and

(viii)

the Subscriber acknowledges that the Company has advised the Subscriber that the Company is relying on the Exemptions and, as a consequence of acquiring the Units pursuant to the Exemptions, certain protections, rights and remedies provided by the Securities Rules, including statutory rights of recission or damages, will not be available to the Subscriber;

(q)

it understands that the sale and delivery of the Units is conditional upon such sale being exempt from the requirements as to the filing of a prospectus or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus;

(r)

if required by Securities Rules or orders or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Company in filing, such reports, undertakings and other documents with respect to the issue or continued ownership of the Purchased Securities as may be required;

(s)

it will comply with all applicable Securities Rules concerning the purchasing, holding and resale or other disposition of the Purchased Securities, including the execution and filing of any required private placement reports by the Company.  In particular, the Subscriber will not resell or otherwise transfer or dispose of any of the Purchased Securities except in accordance with the provisions of all applicable Securities Rules;

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(t)

in the case of a subscription by it for Units acting as agent for a disclosed principal, it is duly authorized to execute and deliver this Subscription Agreement and all other necessary documentation in connection with such subscription on behalf of such principal and this Subscription Agreement has been duly authorized, executed and delivered by or on behalf of, and constitutes a legal, valid and binding agreement of, such principal; and

(u)

the Subscriber acknowledges that it has been encouraged to obtain independent legal, income tax and investment advice with respect to its subscription for Units and accordingly, has had the opportunity to acquire an understanding of the meanings of all terms contained herein relevant to the Subscriber for purposes of giving representations, warranties and covenants under this Subscription Agreement.

3.

Representation, Warranties and Covenants of the Company

3.1

The Company represents, warrants and covenants to the Subscriber (and acknowledges that the Subscriber is relying thereon) as at the date hereof and as at the Closing Time (as such term is defined below) that:

(a)

the Company is a valid and subsisting corporation duly incorporated and in good standing under the laws of British Columbia;

(b)

the Company has taken, or prior to the Closing Date will take, all necessary corporate action to authorize the execution, delivery and performance of this Subscription Agreement, including the issuance of the Purchased Securities, and upon execution of this Subscription Agreement by the Company, this Subscription Agreement shall be duly executed by and shall constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with the terms hereof;

(c)

at Closing Time, the Common Shares forming part of the Purchased Securities will be issued as fully paid and non-assessable securities and the Warrants will be duly and validly created, authorized and issued and the Warrant Shares will be duly and validly authorized, allotted and reserved for issuance, and such Common Shares and the Warrant Shares will, upon exercise in accordance with the certificates representing the Warrants, be issued as fully paid and non-assessable securities;

(d)

the authorized capital of the Company is unlimited, of which 33,905,950 is issued and outstanding. The outstanding shares of the Company are fully paid and non-assessable;

(e)

all annual information forms, financial statements, information circulars, press releases, material change reports and other documents filed by or on behalf of the Company within the past twelve (12) months with the Exchange and/or the applicable securities regulatory authorities were true and correct in all material respects and did not contain any misrepresentation (as such term is defined in the Securities Act (British Columbia)) as at the respective dates of such filings;

(f)

there is no action, proceeding or investigation pending or, to the Company’s knowledge, threatened by or against or affecting the Company or its subsidiaries, if any, at law or in equity or before any international, federal, provincial, state, municipal or other governmental department, commission, board or agency, domestic or foreign, which could reasonably be expected to materially adversely affect the Company or the condition of the Company or which questions the validity of the issuance of the Purchased Securities or any action taken or to be taken by the Company in connection with this Subscription Agreement;

(g)

the Company is a "reporting issuer" as such term is defined in the Securities Act (British Columbia) and the Securities Act (Alberta) (collectively the "Securities Acts"); the

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Company has been a reporting issuer under each of the Securities Acts for more than 12 months; and the Company is not in default of any requirement of the Securities Acts or the rules, regulations and policies made thereunder;

(h)

the Company agrees to use reasonable commercial efforts to file all reports required to be filed by the Company with the Securities and Exchange Commission under the 1934 Act, as soon as practicable following the filing of its audited financial statements for the year ending December 31, 2006 in Canada;

(i)

the Company has good and sufficient right and authority to enter into this Subscription Agreement and to complete its transactions contemplated under this Subscription Agreement on the terms and conditions set forth herein;

(j)

the Common Shares and Warrant Shares  form part of a class of shares which are listed and posted for trading on the Exchange and prior to the Closing Date, the Exchange will have accepted notice of the issuance of the Common Shares and Warrant Shares and shall have approved the listing of the Common Shares and Warrant Shares, subject only to the Company filing final documentation and the payment of additional listing fees;

(k)

the Company shall, as soon as possible, use commercially reasonable efforts to file a registration statement on Form S-1 (or such form of registration statement as is then available to effect a registration of the Shares and Warrant Shares) to register under the 1933 Act to enable the resale of the Common Shares and the Warrant Shares by the Subscriber from time to time;

(l)

the Company has no knowledge of any "material change" (as such term is defined in the Securities Act (British Columbia) relating to the Company which has not been publicly disclosed;

(m)

to the best of its knowledge, the execution and delivery of this Subscription Agreement, the performance of its obligations under this Agreement and the completion of its transactions contemplated under this Subscription Agreement will not conflict with, or result in the breach of or the acceleration of any indebtedness under, or constitute default under, the constating documents of the Company or any indenture, mortgage, agreement, lease, license or other instrument or any kind whatsoever to which the Company is a party or by which it is bound, or any judgment or order of any kind whatsoever or any Court or administrative body of any kind whatsoever by which it is bound; and

(n)

if the Subscriber desires to sell any Common Shares in compliance with Rule 144 under the 1933 Act and in compliance with applicable state securities laws, the Company agrees to use its best efforts to cause an opinion letter of U.S. counsel to be delivered to the Company’s transfer agent within five (5) business days of the Subscriber’s request and delivery of documentation reasonably requested by U.S. counsel, and the Company agrees to use its best efforts cause the transfer agent to remove the restrictive U.S. legend, subject to applicable requirements of the 1933 Act and state securities laws.

4.

Closing

4.1

The Subscriber agrees to deliver to the Company not later than 10:00 a.m. (the “Closing Time”) (Vancouver time) on November , 2006 (or on any amended Closing Date of which the Subscriber receives notice):

(a)

this duly completed and executed Subscription Agreement;

(b)

one manually signed and completed copy of the accredited investor certificate in the form attached to this Subscription Agreement as Schedule "A" or Schedule “B”, as applicable;

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(c)

if the Subscriber is not an individual, one manually signed and completed copy of the Exchange's Corporate Placee Registration Form in the form attached to this Subscription Agreement as Schedule "C", if applicable;

(d)

if the Subscriber is a non-U.S. Purchaser, one manually signed and completed copy of the Regulation S Registration letter attached as Schedule “D” to this Subscription Agreement; and

(e)

a certified cheque or bank draft or wire transfer in the amount of the aggregate subscription price set forth on the face page of this Subscription Agreement made payable to "Midway Gold Corp.".

4.2

The sale and issuance of the Units will be completed at the offices of Davis & Company LLP, Suite 2800, 666 Burrard Street, Vancouver, British Columbia, V6C 2Z7 on or before 10:00 a.m. Vancouver time on November , 2006 (the "Closing Date") or such other place, time or date as the Company may determine (such other date also being referred to as the Closing Date), provided that the Company shall not be required to complete the sale and issuance of the Purchased Securities unless the Subscriber shall have complied with Section 2 hereof, the conditions set forth in Section 4.4 hereof have been met or waived and the Company has received all of the regulatory approvals required for such issuance.  The obligation of the Subscriber to complete the purchase of the Purchased Securities shall be conditional on the Subscriber receiving a legal opinion from cou nsel to the Company on closing in form and substance satisfactory to the Subscriber, acting reasonably, with respect to such matters as the Subscriber may reasonably request.

4.3

The Company shall be entitled to rely on delivery of a facsimile copy of executed subscriptions, and acceptance by the Company of such facsimile subscriptions shall be legally effective to create a valid and binding agreement between the Subscriber and the Company in accordance with the terms hereof.

4.4

The obligations of the Subscriber and the Company to complete the purchase and sale of the Units as contemplated hereby shall be conditional upon receipt of all regulatory approvals necessary to the purchase and sale of the Units on or before the Closing Date.  In the event that this condition has not been met or waived by the Company prior to the Closing Date, the Subscriber shall not be required to purchase, and the Company shall not be required to issue and sell, any Purchased Securities, and any subscription funds received by the Company will be returned promptly to the Subscriber without interest thereon or deduction therefrom.

4.5

Promptly upon closing of the Offering, the Company will send by courier, certificates evidencing the Common Shares and the Warrants subscribed for hereunder, in accordance with the Delivery Instructions set out in the cover page hereof.

5.

General

5.1

The representations, warranties and covenants of the Subscriber herein are made with the intent that they be relied upon by the Company in determining the suitability of a purchaser of Units and the Subscriber agrees to indemnify the Company and its directors and officers against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur caused or arising from reliance thereon.  The Subscriber undertakes to promptly notify the Company of any change in any statement or other information relating to the Subscriber set forth herein which takes place prior to the Closing Date.

5.2

The contract arising out of this Subscription Agreement and all documents relating thereto shall be governed by and construed in accordance with the laws of the Province of British Columbia.

5.3

Time shall be of the essence hereof.

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5.4

This Subscription Agreement represents the entire agreement of the parties hereto relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein.

5.5

If any provision of this Subscription Agreement is determined to be void or unenforceable in whole or in part, it shall be deemed not to affect or impair the validity of any other provision of this agreement and such void or unenforceable provision shall be severable from this agreement.

5.6

The covenants, representations and warranties contained herein shall survive the closing of the transactions contemplated hereby.

5.7

The Subscriber (on its own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) acknowledges and consents to the fact that the Company is collecting the Subscriber's (and any beneficial purchaser's) personal information for the purposes of completing the Subscriber's subscription.  The Subscriber (on is own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) acknowledges and consents to the Company retain the personal information for as long as permitted or required by applicable law or business practices.  The Subscriber (on is own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) further acknowledges and consents to the fact the Company may be required by applicable securities laws, stock exchange rules, and investment dealers association rules to provide regu latory authorities any personal information provided by the Subscriber respecting itself (and any beneficial purchaser).  The Subscriber represents and warrants that it has the authority to provide the contents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers.

5.8

The Subscriber acknowledges and agrees that all costs incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the sale of the Purchased Securities to the Subscriber shall be borne by the Subscriber.

5.9

In this Subscription Agreement (including attachments), references to "$" are to Canadian dollars.

SCHEDULE "A"

REPRESENTATION LETTER

FOR UNITED STATES PURCHASERS

To:

Midway Gold Corp.

In connection with the purchase by the undersigned subscriber (the "Subscriber") of Units (as defined in the subscription agreement) of Midway Gold Corp. (the "Company"), the Subscriber hereby represents, warrants, covenants and certifies to the Company that the Subscriber is purchasing the Units as principal for its own account, is a resident of the United States and is an "accredited investor" as defined in Rule 501 of Regulation D under the U.S. Securities Act of 1933 (the "U.S. Securities Act") by virtue of satisfying one of the indicated criteria as set out in Exhibit "1" to this Representation Letter.

In addition, if Subscriber is a resident of the State of New York, the Subscriber represents that it also qualifies as an "institutional buyer," which may include a "qualified institutional buyer" as defined in Rule 144A under the U.S. Securities Act.

The Subscriber further represents, warrants, covenants and certifies that it is purchasing the Units as principal for its own account, for investment purposes only, and not with a view towards their resale or distribution, and the Subscriber has no present intention of selling or granting any participation in or otherwise distributing any of the Units in a manner contrary to the U.S. Securities Act or any applicable U.S. state securities law, and the Subscriber does not have any contract, understanding, agreement, or arrangement with any person to sell, transfer, or grant participation to such person, or to any third person, with respect to the Units or any portion thereof.

The Subscriber acknowledges that (A) the Units and the underlying securities are and will be "restricted securities" as defined in Rule 144 promulgated under the U.S. Securities Act; (B) neither the Units nor the underlying securities may be sold or otherwise transferred in the U.S. unless they have been first registered under the U.S. Securities Act and all applicable state securities laws, or unless the Subscriber shall have first delivered to the Company a written opinion of counsel (which counsel and opinion shall be reasonable satisfactory to the Company), to the effect that the proposed sale or transfer of the securities is exempt from the registration provisions of the U.S. Securities Act and all applicable state securities laws; and (C) upon the original issuance of the Units (and any underlying securities into which the Units are convertible or exercisable), and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, the certificates representing the Units will bear a restrictive securities legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR ANY STATE SECURITIES LAWS.  THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) IF OUTSIDE THE UNITED STATES, IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, OR (C) IF WITHIN THE UNITED STATES, EITHER (1) PURSUANT TO AN AVAILABLE EXEMPTION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UPON RECEIPT BY THE COMPANY OF A LEGAL OPINION (IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY) TO SUCH EFFECT, OR (2) PURSUANT TO AN EFFECTIVE RE GISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT FOR SUCH SECURITIES. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD

- 2 -

DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

In addition, the Subscriber hereby represents, warrants, covenants and certifies to the Company that the Subscriber is an "accredited investor" within the meaning of National Instrument 45-106 by virtue of satisfying one of the indicated criteria as set out in Exhibit "2" to this Representation Letter.

Dated at ____________________________________, this _________ day of November, 2006.

Name of Subscriber

Signature

If the Subscriber is a corporation, office or title of signatory

EXHIBIT "1"

"accredited investor" means:

(a)

A bank as defined in Section 3(a)(2) of the U.S. Securities Act whether acting in its individual or fiduciary capacity; or

(b)

A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or

(c)

A broker or dealer registered pursuant to Section 15 of the U.S. Exchange Act, as amended; or

(d)

An insurance company as defined in Section 2(13) of the U.S. Securities Act; or

(e)

An investment company registered under the U.S. Investment Company Act of 1940; or

(f)

A business development company as defined in Section 2(1)(48) of the U.S. Investment Company Act of 1940; or

(g)

A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the U.S. Small Business Investment Act of 1958; or

(h)

A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of U.S.$5,000,000; or

(i)

An employee benefit plan within the meaning of the U.S. Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of U.S.$5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are Accredited Investors; or

(j)

A private business development company as defined in Section 202(a)(22) or the U.S. Investment Advisers Act of 1940; or

(k)

A corporation, a partnership, an organization described in Section 501(c)(3) of the U.S. Internal Revenue Code, or a Massachusetts or similar business trust, not formed for the specific purpose of acquiring the Units, with total assets in excess of U.S.$5,000,000; or

(l)

A director, executive officer or general partner of the Company; or

(m)

A natural person whose individual net worth (defined as the excess of total assets over total liabilities), or joint net worth with that person's spouse, at the time of his purchase exceeds U.S.$1,000,000; or

(n)

A natural person who had an individual income(*) in excess of U.S.$200,000 in each of the two most recent years or joint income with that person's spouse in excess of U.S.$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

(o)

A trust, with total assets in excess of U.S.$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described under the U.S. Securities Act Rule 506(b)(2)(ii); or

(p)

An entity in which all of the equity owners are Accredited Investors.

EXHIBIT "2"

"accredited investor" means:

(a)

a Canadian financial institution, or a Schedule III of the Bank Act (Canada),

(b)

the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada),

(c)

a subsidiary of any person referred to in paragraphs (a) or (b) if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary,

(d)

a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),

(e)

an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d),

(f)

the government of Canada or jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or jurisdiction of Canada,

(g)

a municipality, public board or commission in Canada, and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec,

(h)

any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government,

(i)

a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada,

(j)

an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000,

(k)

an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year,

(l)

an individual who, either alone or with a spouse, has net assets of at least $5,000,000,

(m)

a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements,

(n)

an investment fund that distributes or has distributed its securities only to

(i)

a person that is or was an accredited investor at the time of distribution,

(ii)

a person that acquires or acquired securities in the circumstances referred to in                            sections 2.10 and 2.19 of National Instrument 45-106, or

(iii)

a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 of NI 45-106.

(o)

an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

(p)

a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be,

- 2 -

(q)

a person acting on behalf of a fully managed account managed by that person, if that person

(i)

is registered or authorized to carry on business as an advisor or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

(ii)

in Ontario, is purchasing a security that is not a security of an investment fund.

(r)

a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility advisor or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on securities being traded,

(s)

an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) in form and function,

(t)

a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,

(u)

an investment fund that is advised by a person registered as an advisor or a person that is exempt from registration as an advisor, or

(v)

a person that is recognized or designated by the securities regulatory authority or except in Ontario and Québec, the regulator as

(i)

an accredited investor, or

(ii)

an exempt purchaser in Alberta or British Columbia after this NI 45-106 comes into force.

"Canadian financial institution" means

(a)

an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or

(b)

a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

"control person" means:

(a)

a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the Corporation, or

(b)

each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the issuer,

and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of the Corporation, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the Corporation.

"financial assets" means:

(c)

cash,

(d)

securities, or

(e)

a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purpose of securities legislation.

"non-redeemable investment fund" has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure Obligations;

"person" means:

(a)

an individual,

(b)

a corporation,

- 3 -

(c)

a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and

(d)

an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative.

"related liabilities" means:

(a)

liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

(b)

liabilities that are secured by financial assets.

"subsidiary" means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

SCHEDULE "B"

REPRESENTATION LETTER

FOR CANADIAN PURCHASERS

TO:

Midway Gold Corp. (the "Company")

In connection with the purchase by the undersigned subscriber (the "Subscriber") of Units (as defined in the subscription agreement) of the Company, the Subscriber hereby represents, warrants, covenants and certifies to the Company that the Subscriber is resident in (circle place of residency) British Columbia, Alberta, Saskatchewan, Manitoba, Ontario or Quebec and is an "accredited investor" within the meaning of National Instrument 45-106 by virtue of satisfying one of the indicated criteria as set out in Exhibit "1" to this Representation Letter.

Dated at _____________________________, this _______ day of _________________________, 2006.

Name of Subscriber

Signature

If the Subscriber is a corporation, office or title of signatory

EXHIBIT "1"

"accredited investor" means:

(a)

a Canadian financial institution, or a Schedule III of the Bank Act (Canada),

(b)

the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada),

(c)

a subsidiary of any person referred to in paragraphs (a) or (b) if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary,

(d)

a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),

(e)

an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d),

(f)

the government of Canada or jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or jurisdiction of Canada,

(g)

a municipality, public board or commission in Canada, and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec,

(h)

any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government,

(i)

a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada,

(j)

an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000,

(k)

an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year,

(l)

an individual who, either alone or with a spouse, has net assets of at least $5,000,000,

(m)

a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements,

(n)

an investment fund that distributes or has distributed its securities only to

(a)

a person that is or was an accredited investor at the time of distribution,

(b)

a person that acquires or acquired securities in the circumstances referred to in sections 2.10 and 2.19 of National Instrument 45-106, or

(c)

a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 of NI 45-106.

(o)

an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

- 2 -

(p)

a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be,

(q)

a person acting on behalf of a fully managed account managed by that person, if that person

(a)

is registered or authorized to carry on business as an advisor or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

(b)

in Ontario, is purchasing a security that is not a security of an investment fund.

(r)

a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility advisor or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on securities being traded,

(s)

an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) in form and function,

(t)

a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,

(u)

an investment fund that is advised by a person registered as an advisor or a person that is exempt from registration as an advisor, or

(v)

a person that is recognized or designated by the securities regulatory authority or except in Ontario and Québec, the regulator as

(a)  an accredited investor, or

(b)  exempt purchaser in Alberta or British Columbia after this NI 45-106 comes into force.

"Canadian financial institution" means

(f)

an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or

(g)

a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

"control person" means:

(h)

a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the Corporation, or

(i)

each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of the Corporation to affect materially the control of the issuer,

and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of the Corporation, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the Corporation.

"financial assets" means:

(j)

cash,

(k)

securities, or

(l)

a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purpose of securities legislation.

"non-redeemable investment fund" has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure Obligations;

"person" means:

(m)

an individual,

- 3 -

(n)

a corporation,

(o)

a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and

(p)

an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative.

"related liabilities" means:

(a)

liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

(b)

liabilities that are secured by financial assets.

"subsidiary" means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

SCHEDULE "C"

FORM 4C

CORPORATE PLACEE REGISTRATION FORM

Where subscribers to a Private Placement are not individuals, the following information about the placee must be provided.  This Form will remain on file with the Exchange.  The corporation, trust, portfolio manager or other entity (the "Placee") need only file it on a one time basis, and it will be referenced for all subsequent Private Placements in which it participates.  If any of the information provided in this Form changes, the Placee must notify the Exchange prior to participating in further placements with Exchange listed companies.  If as a result of the Private Placement, the Placee becomes an Insider of the Issuer, Insiders of the Placee are reminded that they must file a Personal Information Form (2A) or, if applicable, Declarations, with the Exchange.

1.  Placee Information:

(a)  Name:  

(b)  Complete Address:  

(c)  Jurisdiction of Incorporation or Creation:  

2.  (a)  Is the Placee purchasing securities as a portfolio manager (Yes/No)?  

(b)  Is the Placee carrying on business as a portfolio manager outside of Canada (Yes/No)?  

3.  If the answer to 2(b) above was "Yes", the undersigned certifies that:

(a)  It is purchasing securities of an Issuer on behalf of managed accounts for which it is making the investment decision to purchase the securities and has full discretion to purchase or sell securities for such accounts without requiring the client's express consent to a transaction;

(b)  it carries on the business of managing the investment portfolios of clients through discretionary authority granted by those clients (a "portfolio manager" business) in _________________ [jurisdiction], and it is permitted by law to carry on a portfolio manager business in that jurisdiction;

(c)  it was not created solely or primarily for the purpose of purchasing securities of the Issuer;

(d)  the total asset value of the investment portfolios it manages on behalf of clients is not less than $20,000,000; and

(e)  it has no reasonable grounds to believe, that any of the directors, senior officers and other insiders of the Issuer, and the persons that carry on investor relations activities for the Issuer has a beneficial interest in any of the managed accounts for which it is purchasing

4.  If the answer to 2(a) above was "No", please provide the names and addresses of control persons of the Placee

- 3 -

Name City Province or State Country

The undersigned acknowledges that it is bound by the provisions of applicable Securities Law, including provisions concerning the filing of insider reports and reports of acquisitions [See for example, sections 87 and 111 of the Securities Act (British Columbia) and sections 176 and 182 of the Securities Act (Alberta)].

Acknowledgement - Personal Information

"Personal Information" means any information about an identifiable individual, and includes information contained in sections 1, 2 and 4, as applicable, of this Form.

The undersigned hereby acknowledges and agrees that it has obtained the express written consent of each individual to:

(a)

the disclosure of Personal Information by the undersigned to the Exchange (as defined in Appendix 6B) pursuant to this Form; and

(b)

the collection, use and disclosure of Personal Information by the Exchange for the purposes described in Appendix 6B or as otherwise identified by the Exchange, from time to time.

Dated at

 on

, 2006.

(Name of Purchaser - please print)

(Authorized Signature)

(Official Capacity - please print)

(please print name of individual whose signature appear

above)

- 4 -

SCHEDULE "D"

REGULATION S REPRESENTATION LETTER

FOR NON-U.S. PURCHASERS

To:

Midway Gold Corp.

In connection with the purchase by the undersigned subscriber (the "Subscriber") of Units of Midway Gold Corp. (the "Company") pursuant to a subscription agreement between the Subscriber and the Company dated the date hereof (the “Subscription Agreement”), the Subscriber hereby represents, warrants, covenants and certifies to the Company that:

1.

The Subscriber is aware that the Purchased Securities have not been registered under the United States Securities Act of 1933 (the "1933 Act") and that the Purchased Securities may not be offered or sold in the United States without registration under the 1933 Act or compliance with requirements of an exemption from registration.  

2.  

The Subscriber, and if applicable, each person for whose account it is purchasing the Units (i) is not a “U.S. person”, as defined in Regulation S under the 1933 Act; (ii) is not purchasing the Units for the account or benefit of a “U.S. person”; and (iii) was not offered any of the Units in the United States, did not receive any materials relating to the offer of the Units in the United States, and did not execute the Subscription Agreement or any other materials relating to the purchase of the Units in the United States.

3.  

The Subscriber understands that the Common Shares issuable upon purchase of the Units and the Common Shares issuable on the exercise of the Warrants are “restricted securities,” as such term is defined under Rule 144 of the 1933 Act, and may not be offered, sold, transferred, pledged, or hypothecated to any person, except in accordance with Regulation S, pursuant to registration under the 1933 Act, or pursuant to an available exemption from registration.  The Common Shares and Warrant Shares will bear the following legend:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) WITHIN THE UNITED STATES, IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT IN ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) OUTSIDE THE UNITED STATES, IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AN D THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY A DECLARATION, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS.

4.

The Subscriber agrees not to engage in hedging transactions prior to the expiration of the one-year distribution compliance period set forth in Rule 903(b)(3) of Regulation S under the 1933 Act with regard to the Purchased Securities, and agrees that the Company may refuse to register any transfer of the securities not made in accordance with Regulation S, pursuant to a registration under the 1933 Act or pursuant to an exemption from such registration.

5.

Capitalized terms used but not defined herein shall have the meanings given to them in the Subscription Agreement.

- 5 -

6.

The Subscriber is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the 1933 Act.

Dated at ____________________________________, this _________ day of November, 2006.

Name of Subscriber

Signature

If the Subscriber is a corporation, office or title of signatory

THIS IS NOT A PUBLIC DOCUMENT

EX-5.1

	Exhibit 5.1
FROM THE OFFICE OF	Stuart Morrow
DIRECT LINE	604.643.2948
DIRECT FAX	604.605.3547
E-MAIL	sbmorrow@davis.ca
FILE NUMBER	34946-10002

July 31, 2007

Midway Gold Corp.
Unit 1 - 15782 Marine Drive
White Rock, British Columbia
V4B 1E6

Dear Sirs/Madams:

Re:

Registration Statement on Form S-1

We have acted as counsel to Midway Gold Corp., a British Columbia corporation (the “Company”), continuously since its incorporation on May 14, 1996 and acted as counsel in connection the issuance by the Company of 3,725,000 units on May 18, 2006 and 2,000,000 units on November 14, 2006. In both cases, each unit comprised one common share in the capital of the Company (the “Shares”) and one share purchase warrant (the “Warrants”), each two such Warrants entitling the holder to purchase one additional Share, as disclosed in the Registration Statement on Form S-1 to be filed by the Company with the Securities and Exchange Commission on or about August 2, 2007, under the U.S. Securities Act of 1933, as amended (the “Registration Statement”).

We have examined originals or copies, certified or otherwise identified to our satisfaction, of such public and corporate records, certificates and documents relating to the Company as we have deemed necessary or relevant for the purpose of the opinions hereinafter set forth.

In giving this opinion, we have examined such documents and records of the Company and have reviewed such questions of law, as we have deemed relevant or necessary as the basis for the opinions hereinafter given.  In examining such documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as certified, conformed or photostatic copies or facsimiles and the authenticity of all originals of such documents.

This opinion relates only to the laws of the Province of British Columbia and the federal laws of Canada applicable therein.  We express no opinion as to the laws of any other jurisdiction.

Based upon the foregoing and subject to the qualifications hereinafter expressed, we are of the opinion that:

(a)

the Shares have been legally issued, fully paid, and are non-assessable shares in the capital of the Company; and

(b)

with respect to the Shares to be issued upon the exercise of any of the Warrants after (i) the Warrants have been exercised in accordance with their terms and (ii) the applicable warrant exercise price for the Shares to be issued has been received by the Company, such Shares will be legally issued, fully paid, and are non-assessable shares in the capital of the Company.

We hereby consent to the filing and publication of this Opinion with the Registration Statement and the reference to our firm under the heading “Legal Matters” in the Prospectus which forms part of the Registration Statement.  

Yours truly,

/s/ Davis LLP

Davis LLP

2800 Park Place, 666 Burrard Street

Vancouver, B.C. V6C 2Z7

EX-10.1

OPTION AMENDMENT AGREEMENT

THIS AGREEMENT is dated for reference the 2nd day of November, 2004.

BETWEEN:

PAUL G. SCHMIDT and MARY ANN SCHMIDT of 7934 Wagon Wheel Road, Morrison, Colorado 80465 and THOMAS C. PATTON and LINDA SUE PATTON of 9086 Chickadee Way, Blaine, Washington 98230

(individually “Schmidt” and “Patton”, respectively, and collectively, the “Optionors”)

OF THE FIRST PART

AND

MIDWAY GOLD CORP. and its wholly-owned subsidiary, REX EXPLORATION CORP., both bodies corporate incorporated pursuant to the laws of British Columbia and both having offices at 2800 – 666 Burrard Street, Vancouver, British Columbia, V6C 2Z7

(individually, “Midway” and “Rex”, respectively, and collectively, the “Optionees”)

OF THE SECOND PART

WHEREAS:

A.

Rex, Schmidt and Patton entered into an option agreement dated July 2, 2001, in respect of the 135 mineral claims comprising the Midway Property, as defined therein (the “Option Agreement”), which was amended by an Option Extension Agreement dated May 31, 2002 among the Optionors and Rex, and an Amending Agreement dated October 11, 2002 (the "Amending Agreement"), among the Optionors and the Optionees, under which the Optionors granted the Optionees an option to acquire an additional 312 mining claims which, together with the original 135 claims now comprise the "Property" under the Option Agreement, as set forth in the Amended and Restated Schedule A to the Amending Agreement (which, for convenience, has been attached as Schedule "B" to this Agreement);

B.

The Optionors and Optionees have now agreed to further amend the Option Agreement, on the terms and subject to the conditions set out in this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of $10 now paid by each of the Optionees to each of the Optionors, the receipt and sufficiency of which is hereby expressly acknowledged, and of the mutual promises, covenants, conditions, representations and warranties herein set out, the parties hereto agree as follows:

- 2 -

INTERPRETATION

1.1

For the purposes of this Agreement, including the recitals and any schedules hereto, unless otherwise defined herein, all capitalized terms shall have the meaning ascribed to them in the Option Agreement, as amended to date.

1.2

In this Agreement, all dollar amounts are expressed in lawful currency of the United States of America.

1.3

The titles to the respective Articles hereof shall not be deemed to be a part of this Agreement but shall be regarded as having been used for convenience only.

1.4

Words used herein importing the singular number shall include the plural, and vice-versa, and words importing the masculine gender shall include the feminine and neuter genders, and vice-versa, and words importing persons shall include firms, partnerships and corporations.

2.

AMENDMENT OF OPTION AND PAYMENT TERMS

2.1

The Optionees shall have the option to purchase the Property on payment to the Optionors of $200,000 on or before August 15, 2005.  On receipt of the payment of $200,000, the Optionors shall transfer all right, title and interest in and to the Property to and in the name of "MGC Resources Inc." (a wholly-owned subsidiary of Midway), free and clear of any liens, claims, charges or encumbrances whatsoever, forthwith and to diligently take all other steps to execute such documents and instruments and make such filings as may be necessary or advisable to give effect to the lawful transfer and conveyance of the Property to MGC Resources Inc., or as may otherwise be directed by Midway.

2.2

Upon completion of the conveyance to MGC Resources Inc. of the Property, the Optionees agree, jointly and severally, to make the following payments to the Optionors (to Schmidt as to 50%, and to Patton as to 50%):

(a)

on or before August 15, 2006, the sum of $250,000, as an advance upon the Royalties payable from Commercial Production on the Property;

(b)

on or before August 15, 2007, the sum of $250,000, as an advance upon the Royalties payable from Commercial Production on the Property; and

(c)

on or before August 15, 2008, and annually thereafter, on the anniversary of that date, the sum of $300,000, as an advance upon the Royalties payable from Commercial Production on the Property;

all of such advances being referred to as “Advances”.

2.3

All Royalties payable to the Optionors (or their assigns) shall be calculated from commencement of Commercial Production in accordance with Schedule “B” in the Option Agreement (which, for convenience, has been attached as Schedule "A" to this Agreement).  All Advances paid by the Optionees under section 2.2 above shall be credited against the Royalties otherwise payable from Commercial Production on the Property.  For greater certainty, from August 15, 2008 forward, the Optionors shall be entitled to receive an aggregate of $300,000 of Advances, until the start of Commercial Production, or $300,000 of Royalties after the start of Commercial Production, or a combination of both, annually.  However, after the start of Commercial Production, any additional Royalties payable to the Optionors (beyond the annual payments of $300,000)

- 3 -

will be reduced by the amount of all Advances paid to the Optionors, until such time as all Advances have been set off against Royalties payable to the Optionors.

2.4

Royalties shall be payable to the Optionors on all Commercial Production from the Property and, accordingly, the definition of "Royalty" in the Option Agreement is hereby amended to read as follows:

"Royalty means that sliding scale royalty or charge on Net Smelter Returns on all Commercial Production from the Property, as described in Schedule "B" hereto."

2.5

If at any time the Optionees determine, in their sole discretion, that Commercial Production from the Property is not viable, they may discontinue the payments to the Optionors of the Advances, or the Royalties, as the case may be, at which time the Optionees shall have no further obligation to pay advances or Royalties to the Optionors.  If requested by the Optionors or their assigns, the Optionees shall then reconvey title to the Property, free and clear of liens, claims and encumbrances, to the Optionors or the Optionors' assigns.

3.

VESTING OF INTEREST

3.1

Forthwith upon payment of $200,000 to the Optionors, on or before August 15, 2005, an undivided one hundred percent (100%) right, title and interest in and to the Property, subject only to the Royalty, shall vest, and shall be deemed for all purposes hereof to have vested, in the Optionees.

3.2

The parties acknowledge the right and privilege of the Optionors and Optionees to file, register and/or to otherwise deposit a copy of this Option Amendment Agreement in the appropriate recording office for the jurisdiction in which the Property is located, and with any other governmental agencies to give third parties notice of this Agreement, and hereby agree, each with the others, to do or cause to be done all acts or things reasonably necessary to effect such filing, registration or deposit.

4.

NOTICE

4.1

Any notice, direction, or other instrument required or permitted to be given under this Agreement shall be in writing and shall be given by the delivery of same or by mailing same by prepaid registered or certified mail or by sending same by telegram, telex, telecommunication or other similar form of communication, in each case addressed to the intended recipient at the address of the respective party set out on the first page hereof.

4.2

Any notice, direction, or other instrument aforesaid will, if delivered, be deemed to have been given and received on the day it was delivered, and if mailed, be deemed to have been given and received on the fifth business day following the day of mailing, except in the event of disruption of the postal service in which event notice will be deemed to be received only when actually received and, if sent by telegram, telecommunication or other similar form of communication, be deemed to have been given and received on the day it was actually received.

4.3

Any party may at any time give notice in writing to the others of any change of address, and from and after the giving of such notice, the address therein specified will be deemed to be the address of such party for the purposes of giving notice hereunder.

- 4 -

5.

FURTHER ASSURANCES

5.1

Each of the parties covenants and agrees, from time to time and at all times, to do all such further acts and execute and deliver all such further deeds, documents and assurances as may be reasonably required in order to fully perform and carry out the terms and intent of this Agreement.

6.

ASSIGNMENT

6.1

The Optionees, or either of them, may at any time assign all or any portion of their respective interests to a related party, and in particular, to MGC Resources Inc., but shall give notice of any such assignment (other than an assignment to MGC Resources Inc.) to the Optionors and, to the extent of such assignment, the Optionees shall be relieved of obligations under this Agreement. Any assignment made by the Optionees to a party other than MGC Resources Inc. shall require the prior consent of the Optionors, such consent not to be unreasonably withheld.

7.

TIME OF THE ESSENCE

7.1

Time shall be of the essence in the performance of this Agreement.

8.

ENUREMENT

8.1

This Agreement shall enure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.

9.

DEFAULT

9.1

If a party (the “Defaulting Party”) is in default of any requirement herein set forth, the party affected by such default (the “Non-Defaulting Party”) shall give written notice to all other parties within thirty (30) days of becoming aware of such default, specifying the default, and the Defaulting Party shall not lose any rights under this Agreement, nor shall the Agreement or the Option terminate, nor shall the Non-Defaulting Party have any rights, remedies or cause of action pursuant to this Agreement, or otherwise hereunder as a result of such default, unless within thirty (30) days after the giving of notice of default by the Non-Defaulting Party, the Defaulting Party has failed to cure the default by the appropriate performance, and if the Defaulting Party fails within such period to cure such default, the Non-Defaulting Party shall only then be entitled to seek any remedy it may have on account of such default.< /P>

10.

SEVERABILITY

10.1

If any one or more of the provisions contained herein should be invalid, illegal or unenforceable in any respect in any jurisdiction, the validity, legality and enforceability of such provisions shall not in any way be affected or impaired thereby in any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

11.

AMENDMENT

11.1

The Option Agreement, as amended to date, and as amended by this Agreement, continues to be in full force and effect.  In the event of any ambiguity or conflict between the terms of this Agreement and those of the Option Agreement, the terms and conditions of this Agreement shall govern.

- 5 -

11.2

This Agreement may not be changed orally but only by an agreement in writing, signed by the party against which enforcement, waiver, change, modification or discharge is sought.

12.

GOVERNING LAW AND ARBITRATION

12.1

This Agreement shall be governed by and interpreted in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein and the parties hereby irrevocably attorn to the jurisdiction of the Courts of the Province of British Columbia for all purposes of interpretation, application and enforcement of this Agreement.

13.

EXECUTION AND COUNTERPARTS

13.1

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

SIGNED, SEALED AND DELIVERED by PAUL G. SCHMIDT and MARY ANN SCHMIDT, both in the presence of:


Signature


Address


Occupation ))))))))))))



PAUL G. SCHMIDT



MARY ANN SCHMIDT

SIGNED, SEALED AND DELIVERED by THOMAS C. PATTON and LINDA SUE PATTON in the presence of:


Signature


Address


Occupation ))))))))))))



THOMAS C. PATTON



LINDA SUE PATTON

MIDWAY GOLD CORP.
Authorized Signatory REX EXPLORATION CORP.
Authorized Signatory

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SCHEDULE "A"

NET SMELTER RETURNS

1.

As additional consideration the Optionee acknowledges and agrees that its interest in the Property shall, upon Commercial Production, be subject to a royalty or charge of a sliding scale Net Smelter Returns in favour of the Optionors as follows:

London Metal Exchange Price (Au)

Royalty

$300 or less

2%

$300 - $399 (incl.)

3%

$400 - $499 (incl.)

4%

$500-$599(incl.)

5%

$600 - $699 (incl.)

6%

$700 or greater

7%

2.

For the purpose of this Agreement, "Net Smelter Returns" shall mean the actual proceeds received by the Optionee from a smelter or other place of sale or treatment with respect to all ore removed by the Optionee from the Property upon Commercial Production as evidenced by its returns or settlement sheets after deducting from the said proceeds all loading, freight or other transportation costs from the shipping point to the smelter or other place of sale or treatment but without any other deduction whatsoever.

3.

Net Smelter Returns due and payable to the Optionors hereunder shall be paid within thirty (30) days after receipt of the said actual proceeds by the Optionee.

4.

Within ninety (90) days after the end of each fiscal year of the Optionee during which the Property was in Commercial Production, the records relating to the calculation of Net Smelter Returns during that fiscal year shall be audited and any adjustments shall be made forthwith. The audited statements shall be delivered to the Optionors who shall have sixty (60) days after receipt of such statements to question in writing their accuracy and, failing such question, the statements shall be deemed correct.

5.

The Optionors or their representatives duly appointed in writing shall have the right at all reasonable times, upon written request, to inspect such books and financial records of the Optionee as are relevant to the determination of Net Smelter Returns and at their own expense, to make copies thereof.

SCHEDULE "B"

MIDWAY PROPERTY

EX-10.2

EX-10.3

EX-10.4

EX-10.5

EX-10.6

MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE

THIS MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE ("Agreement") is made effective as of the 25 day of April, 2006 ("Effective Date"), between LAMONTE J. DUFFY ("Lessor"), and MGC RESOURCES INC., a Nevada corporation ("Lessee").

RECITALS

.

Lessor is the owner of the unpatented lode mining claims described in Exhibit A attached hereto, which claims are located in Pershing County, Nevada (the "Premises").

.

Lessor desires to lease the Premises to Lessee and to grant Lessee an option to purchase the Premises upon the terms and conditions herein set forth.

C.

Lessee desires to lease the Premises from Lessor and to hold an option to purchase the Premises upon the terms and conditions herein set forth.

AGREEMENT

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee (the "Parties" and individually a "Party") agree as follows:

1.  RIGHTS GRANTED

Lessor hereby grants, demises, leases and lets to Lessee and its successors and assigns the following rights, powers and privileges:

.

Premises.  The Premises, and all rights, improvements, privileges, hereditaments, and appurtenances, including all ores, minerals, waste dumps, tailings materials and mineral rights belonging or in any way appertaining to the Premises.

.

Mining Rights, Land Use and Access.  Subject only to any limitations imposed by federal, state and local regulations, the free, exclusive, unrestricted and uninterrupted right of access, ingress and egress to the Premises and the right to enter upon and occupy the Premises for all purposes reasonably incident to exploring for, developing, mining (by underground mining, surface mining, strip mining or any other surface or subsurface method, including any method later developed), extracting, milling, smelting, refining, stockpiling, storing, processing, removing and marketing therefrom all ores, metals, minerals, mineral products (including intermediate products) and materials of every nature or sort ("Mineral Substances"), and the right to place, construct, maintain, use and thereafter remove such structures, facilities, equipment, roadways, haulageways, utility lines, reservoirs and waterways, and other improve ments as may be necessary, useful or convenient for the full enjoyment of all of the rights granted under this Agreement.  Lessee shall have sole and exclusive custody, possession, ownership and control of all ore, rock, drill core and other Mineral Substances extracted or removed from the Premises and may sell or otherwise dispose thereof.  In the exercise of such rights, Lessee shall be subject only to compliance with applicable statutes, rules, regulations and the terms of this Agreement.  These rights are also granted and may be utilized conjunctively or independently for the purpose or in the course of carrying on exploration, development or mining operations on any other properties in which Lessee may have or acquire any right or interest.

.

Cross Mining.  The right, if it so desires, to mine and remove any Mineral Substances existing on, in or under the Premises through or by means of shafts, openings or pits which may be sunk or made upon adjoining and nearby properties, and the right to store any Mineral Substances from the Premises upon any such properties.  In addition, Lessee may use the Premises conjunctively or independently for any shafts, openings, pits and storage areas sunk or made for the mining, removal and/or stockpiling of any Mineral Substances from any adjoining or nearby properties.  Mineral Substances taken from the Premises shall at all times be kept entirely separate and distinct from any other ore or concentrated product until the same are measured and sampled so that the rights of Lessor shall be at all times preserved and protected.

.

Commingling.  The right to commingle ore removed from the Premises or products derived therefrom after treatment, with other ore or products, before or after concentration or beneficiation, so long as the data necessary to determine the weight, grade, and recoverability of both the ore removed from the Premises or products derived therefrom and the ore or products with which it is commingled are obtained by Lessee.  Lessee shall then use that data to determine Lessor's interest in minerals, metals and/or other products extracted from ores or products so mixed. Such data and determinations shall be acquired and completed in accordance with generally accepted industry practices.

E.

Water Rights.  Any and all of Lessor’s water rights on, about, under or appurtenant to the Premises or to which the Premises are riparian.

F.

Deposit of Waste Materials.  The right to temporarily or permanently deposit on or off the Premises tailings, waste rock, overburden, surface stripping materials, process solutions and all other materials originating from the Premises or from adjoining or nearby properties, even if the sole use of the Premises may be for the placement of such materials.

G.

Treatment.  The right, at Lessee’s election and in any manner it deems fit, to beneficiate, concentrate, smelt, refine, and otherwise process or treat on or off the Premises any Mineral Substances taken from the Premises or from adjoining or nearby properties by any physical or chemical method or methods.  In exercising this right, Mineral Substances may be removed to a plant or plants existing, established or maintained upon the Premises or elsewhere.

H.

Amendment and Relocation of Claims.  The right, in Lessee's sole discretion, to amend or relocate as unpatented mining claims or mill sites, in the name of Lessor, any unpatented mining claims or mill sites included in the Premises.  If Lessee undertakes any such amendment or relocation, Lessee shall use its best efforts to complete the same in compliance with applicable statutes and regulations but shall not be liable to Lessor for any act (or failure to act) by it or any of its agents in connection with the amendment or relocation of mining claims or mill sites unless such act (or omission) arises from gross negligence or is made in bad faith.

I.

Option to Purchase.  An exclusive option to purchase the Premises pursuant to the provisions of Section 11.

2.  TERM

.

Term.  The term of this Agreement shall commence as of the Effective Date and shall continue for a period of ten years thereafter unless sooner terminated or surrendered in the manner herein provided.  Lessee may extend this Agreement for an additional ten years (subject to such sooner termination or surrender) by giving notice to Lessor prior to the end of the initial ten-year period.  If at the end of the initial term or extended term Lessee is engaged in Mining Operations (as defined below), the term of this Agreement shall automatically continue for so long thereafter as Lessee continues to be engaged in Mining Operations, but the cessation of any such operations shall not cause this Agreement to terminate prior to the end of the initial or extended term or cause Lessee to lose its right to extend the term as herein provided.

.

Definition of Mining Operations.  For purposes of this Agreement "Mining Operations" shall include, but shall not be limited to, development, extraction, processing, leaching or sale of ores, concentrates or derivatives retrieved through leaching of ores, produced from the Premises.  Activities off the Premises shall constitute Mining Operations when they are conducted in connection with an integrated mining operation involving the Premises and other properties in which Lessee holds an interest.  Development includes activities, including permitting, carried on diligently and in good faith preparatory to commencing or resuming operations at a mine. Lessee shall be deemed to be actively engaged in Mining Operations so long as all such operations, once begun, do not cease for a period of more than 180 consecutive days.  In the event Lessee is actively engaged in Mining Operations at the end of the initial or extended term but at any time is unable to obtain a satisfactory market or a satisfactory price for Mineral Substances and as a result suspends mining, processing or marketing operations from time to time, then Mining Operations shall not be deemed to have ceased and this Agreement shall not expire or terminate provided that Lessee notifies Lessor of such loss of market or inability to obtain a satisfactory price and diligently attempts to market Mineral Substances at a satisfactory price and recommence operations.  Mining Operations shall not be deemed to have ceased if once begun they are interrupted through Force Majeure in accordance with Section 8.  If Mining Operations have not commenced at the end of the initial or extended term because of Force Majeure conditions, the primary term shall be extended until such Force Majeure conditions cease.

.

Continuation After Mining Operations.  If, at the end of the initial or extended term, Lessee is not conducting or has ceased Mining Operations, but is utilizing the Premises in support of Mining Operations on other lands, then this Agreement shall continue in force as to the lands subject to such uses and such expansions thereof as may reasonably be contemplated, as designated in good faith by Lessee, and the payment provided in Section 3.A shall be rental for such uses.

3.  PAYMENTS TO LESSOR

.

Advance Royalty.  Subject to Lessee’s right to terminate this Agreement, Lessee shall pay the following amounts annually to Lessor as advance royalty:

$12,000.00 upon execution of the Agreement (for year 1 of the Agreement)

$24,000.00 for year 2 of the Agreement

$36,000.00 for year 3 of the Agreement, and

$36,000.00 for each year thereafter until Lessee commences the payment of production

royalties pursuant to Section 3.B.

Except as to the payment made upon execution of this Agreement, advance royalty payments shall be paid annually on or before the beginning of each anniversary of the Effective Date.  All advance royalty payments shall be deductible cumulatively as a credit against actual production royalties payable to Lessor pursuant to Section 3.B and shall be credited toward the Purchase Price (as defined in Section 11.A below).  Lessee’s obligation to make advance royalty payments shall cease upon the earliest of: (i) exercise by Lessee of its option to purchase the Premises pursuant to Section 11.B; (ii) the commencement of production royalty payments pursuant to Section 3.B; or (iii) termination of this Agreement under Section 6.

B.

Production Royalty.  Lessee shall pay Lessor a production royalty of three percent (3.0%) of the Net Smelter Returns of Mineral Substances produced from the Premises and sold.  Net Smelter Returns means the proceeds actually received, or deemed to have been received in the case of refined gold and silver as described in Section 3.B(1) below, from the sale or deemed sale of Mineral Substances produced from the Premises, less the charges described in Section 3.B(2) below.  All production royalty payments shall be credited toward the Purchase Price.

(1)

If Lessee sells refined gold or silver, Lessee will be deemed to have received proceeds from the sale thereof equal to the number of ounces of refined gold or silver outturned to Lessee’s account during the calendar quarter multiplied in the case of gold by the average daily London Bullion Brokers P.M. Gold Fixing during such calendar quarter and in the case of silver by the average of the daily Handy & Harmon Noon Silver Quotation during the calendar quarter.  The average price for a calendar quarter shall be determined by dividing the sum of all daily prices posted during the calendar quarter by the number of days that prices were posted.  The posted price shall be obtained from the Wall Street Journal, Reuters, E&MJ or other industry-accepted source.  Lessee shall have the right to market and sell to third parties refined gold and silver in any manner it chooses, including the sale of su ch refined gold and silver on the commodity market.  In this regard, Lessor shall have no right to participate in any gains and/or profits or obligation to suffer any losses accruing to Lessee as a result of forward sales, options trading, commodities futures trading or similar transactions.

(2)

Charges to be deducted from proceeds in determining Net Smelter Returns are the following:

(a)

all costs, charges and expenses paid or incurred by Lessee for treatment in the smelting and refining processes (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs, penalties and other processor deductions);

(b)

all costs, charges and expenses paid or incurred by Lessee for transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay and forwarding expenses incurred by reason of or in the course of such transportation) of Mineral Substances from the Premises to the place or places of treatment and thence to the place or places of sale;

(c)

sales and brokerage costs on Mineral Substances for which the royalty is payable; and

(d)

sales, use, severance, net proceeds of mine, and ad valorem taxes applicable under local, state and federal law and any other tax or governmental levy or fee relating to the Mineral Substances for which the royalty is payable (other than taxes based upon income).

(3)

Royalties shall accrue quarterly (based on calendar quarters) and shall become due and payable by Lessee prior to the end of the month following the end of each quarter.  Royalty payments shall be accompanied by pertinent information in sufficient detail to explain the calculation of the royalty payment.

(4)

All statements for royalties rendered to Lessor by Lessee during any quarter shall conclusively be presumed to be true and correct after one year following the end of such quarter unless within said one-year period Lessor takes written exception thereto and makes a claim on Lessee for adjustment.  No adjustment favorable to Lessee shall be made unless it is made within the same prescribed period.

(5)

Lessor, upon notice in writing to Lessee, shall have the right to audit Lessee’s accounts and records relating to the payment of the royalty for any calendar quarter within the one-year period following the end of such calendar quarter; provided, however, the making of any audit shall not extend the time for the taking of written exception to and the adjustment of accounts as provided for in the paragraph above.  All audits shall be conducted by Lessor at the office of Lessee where the relevant books and records are maintained and such audit shall be conducted during normal business hours.

(6)

If a royalty, production fee, or other payment based upon production is subsequently imposed by the United States on Mineral Substances produced from any unpatented mining claims included in the Premises (whether or not such claims are converted to some other form of property interest), the amount payable to the United States shall be deducted from the royalty payable to Lessor for such Mineral Substances pursuant to this Section 3.B, provided, however, that the royalty paid to Lessor shall not be less than the amount that would be payable to Lessor hereunder at a royalty rate of one percent (1.0%).

C.

Place of Payment.  All payments shall be made in accordance with Section 9 below.

D.

No Royalty on Test Materials.  Lessee shall have the right to mine and market amounts of Mineral Substances reasonably necessary for sampling, assaying, metallurgical testing and evaluation of the mineral potential of the Premises without incurring any obligation to make production royalty payments.

4.  TITLE MATTERS

.

Representations and Warranties.  Lessor covenants and warrants to Lessee, which covenants and warranties shall survive any termination of this Agreement, as follows:

(1)

Lessor is the owner of the Premises free and clear of any defects, liens, claims, demands, burdens or encumbrances, subject only to the paramount title of the United States.

(2)

Lessor has the right, power and capacity to enter into and perform this Agreement and all transactions contemplated herein and any corporate or other actions required to authorize it to enter into and perform this Agreement have been properly taken.

(3)

To Lessor's best knowledge, the unpatented mining claims included in the Premises have been properly located and maintained in conformance with applicable federal, state and local laws.

(4)

To Lessor's best knowledge, all lands covered by the claims included in the Premises were open to location when such claims were located and there are no conflicts with claims owned by other parties.

(5)

Lessee shall have quiet and peaceable possession of the Premises.

(6)

Lessor will defend its title to the Premises against all persons who may claim the same.

(7)

Lessor has not committed, nor will Lessor in the future commit, any act or acts that will encumber or cause a lien to be placed against the Premises except subject and subordinate to the terms of this Agreement.

(8)

Lessor has no knowledge or information indicating:

(a)

that hazardous substances from any source (mining or otherwise) have been released on the Premises; or

(b)

that any underground or above-ground site of historic or current mining operations on the Premises could cause or constitute a release or threat of release of hazardous substances into the environment; or

(c)

that any part of the Premises has been included or proposed for inclusion on the National Priorities List (40 C.F.R. Section 300 App. B); or

(d)

that any part of the Premises has been studied or proposed for study by the Environmental Protection Agency and/or any state regulatory agency; or

(e)

that any site of historic or current mining, milling and/or smelting workings on the Premises is presently in such condition as to potentially raise liability to the past, present or future owner(s) and/or operator(s) of the Premises pursuant to the Comprehensive Environmental Response, Compensation and Liability Act and amending statutes ("CERCLA"); or

(f)

that any reclamation obligations for prior operations on the Premises are unsatisfied.

B.

Title Defects, Defense and Protection.  Lessee may at any time cause a title search to be made covering all or any part of the Premises.  Lessor shall provide Lessee with any abstracts and other evidences of title in Lessor's possession or control.  If, (1) in the opinion of Lessee, Lessor’s title to all or any part of the Premises is defective or less than as represented in Section 4.A; or (2) Lessor's title is contested or questioned by any person or entity and Lessor is unable or unwilling to promptly correct the alleged defects, Lessee may, without obligation and without waiver of any remedies of Lessee, attempt to perfect or defend Lessor's title.  In that event, Lessor shall execute all documents and shall take such other actions as are reasonably necessary to assist Lessee in its efforts to perfect or defend Lessor’s title, time being of the essence.  If title is less than represented in Sec tion 4.A, then the costs and expenses of perfecting or defending title shall be a credit against subsequent payments to be made by Lessee to Lessor under this Agreement.  Any improvement or perfection of title to the Premises shall inure to the benefit of Lessee in the same manner and to the same extent as if such improvement or perfection had been made prior to the execution of this Agreement.

C.

Lesser Interest.  All payments payable to Lessor hereunder (including the Purchase Price) are based upon Lessor’s warranted ownership of the entire undivided interest in minerals included within the boundaries of the Premises.  If Lessor is found to own less than 100% of the mineral interest in the Premises (i.e., if Lessor’s interest is the same in all claims or parcels included in the Premises but less than 100%), then Lessor’s actual interest shall be its actual percentage interest in the Premises.  If Lessor’s interest varies as to separate portions of the Premises, then Lessor’s actual interest shall be determined on a net acreage basis by multiplying the acreage in each distinct claim or parcel within the Premises by Lessor’s fractional interest therein and then computing Lessor’s interest on the net acres actually owned by Lessor as a proportion of the total acreage ori ginally warranted to be owned by Lessor.  In either of such events, all payments payable to Lessor hereunder other than production royalty payments shall be reduced accordingly.  If Lessor’s title to any of the Premises from which production is made is less than 100%, then the production royalty payable pursuant to Section 3.B shall be reduced to the same proportion as the undivided right and title actually owned by Lessor bears to the entire undivided right and title to the portion of the Premises from which such production is made.  Such reductions in payments shall not waive or eliminate any other rights or remedies Lessee may have in connection with the extent of Lessor's actual interest in the Premises.

D.

Patenting of Claims.  If the existing governmental moratorium on patenting of unpatented mining claims is discontinued, then upon request of Lessee at any time during the term of this Agreement, Lessor agrees to undertake to obtain a patent to any or all of the mining claims that are subject to this Agreement, as designated by Lessee.  Lessee shall prepare all documents, compile all data and comply in all respects with applicable law, all at the expense of Lessee.  Lessor shall execute any documents required for this purpose and shall cooperate fully with Lessee in the patent application, process and proceedings, time being of the essence.  If Lessor begins patent proceedings and Lessee thereafter requests Lessor to discontinue such proceedings or if this Agreement is terminated while patent proceedings are pending, Lessee shall have no further obligation with respect thereto except to pay any unpaid expenses acc rued in such proceedings prior to its request to discontinue, or prior to termination, whichever comes first.

E.

Conversion of Claims.  If during the term of this Agreement federal or state laws are changed or enacted to provide for some alternative basis for holding mining or mining-related rights in public lands, Lessee, in its sole and exclusive discretion, may make such location, filing or application for claim, license or permit in Lessor's name as may be required or permitted by such new or modified laws with respect to the ground covered by the Premises.  Lessor gives Lessee full power and authority as Lessor’s attorney-in-fact to make such location, filing or application.  Any such claim, license or permit shall be subject to this Agreement.

5.  OBLIGATIONS OF LESSEE

.

Protection from Liens.  Lessee shall keep title to the Premises free and clear from any liens, claims and encumbrances (other than liens for taxes not yet due and delinquent) arising from its operations hereunder.  Lessee shall pay for all labor performed upon or material furnished to the Premises at the request of Lessee and shall keep the Premises free and clear from liens of mechanics or materialmen in connection with services performed and material supplied at Lessee’s request.  Lessee shall, however, have the right in good faith to contest the validity of any lien, claim or liability and shall not be required to remove any such lien, claim or liability so long as Lessee is contesting the validity or the amount thereof.  The foregoing provisions shall not restrict Lessee from placing a mortgage, trust deed or other lien upon its interest in the Premises for financing purposes.

.

Indemnification and Insurance.  Lessee shall protect Lessor against any damages arising out of Lessee’s operations on the Premises and shall indemnify Lessor against liability resulting from Lessee’s operations on the Premises; provided, however, that Lessor or any agent acting on its behalf, or any breach of warranty by Lessor, shall not have been a contributing cause to the event giving rise to any such damages.  Lessee shall carry liability insurance with reasonable policy limits protecting Lessor against damages arising out of Lessee's operations on the Premises.

.

Taxes and Assessments.  Except as provided below, Lessee shall pay promptly before delinquency all taxes and assessments that may be assessed during the term of this Agreement upon the Premises resulting from Lessee's activities and products derived therefrom.  However, Lessee shall always have the right to contest, in the courts or otherwise, either in its own name or in the name of Lessor, the validity or amount of any such taxes or assessments, or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof, before it shall be required to pay such taxes or assessments.  Notwithstanding the foregoing, Lessee shall not permit any part of the Premises to be conveyed and title lost as the result of nonpayment of such taxes and assessments.  Lessee shall provide Lessor with copies of all receipts evidencing payment of such taxes and asses sments.  If Lessor should receive tax bills or claims that are the responsibility of Lessee, Lessor shall promptly forward such bills or claims to Lessee for appropriate action.  Lessee shall pay the above-referenced taxes that are assessed from the Effective Date of this Agreement to its date of termination.  Nothing in this paragraph shall be construed to obligate Lessee to pay that portion of any tax based upon an assessment of improvements or structures made or placed on the Premises by Lessor.  Lessee shall not be liable for any taxes levied on or measured by Lessor's income or based upon payments made to Lessor by Lessee under this Agreement.

.

Compliance with Laws and Regulations.  Lessee shall perform all of its operations on the Premises in a good and workmanlike manner and in compliance with all applicable federal, state and local laws and regulations pertaining to environmental protection, reclamation and bonding.  Specifically, Lessee shall comply with all permitting and other regulatory requirements set forth by the U.S. Bureau of Land Management, the U.S. Forest Service, the U.S. Environmental Protection Agency, and applicable state agencies.  Lessee shall have no obligations with respect to prior operations or preexisting conditions on the Premises.

.

Right of Access to the Premises.  During the term of this Agreement Lessee shall allow Lessor and representatives of Lessor, at their sole risk and expense, access to the Premises for the purposes of viewing or inspecting Lessee’s operations, at times which, in Lessee’s discretion, do not unreasonably interfere with its operations.  Lessor and Lessor’s representatives agree to indemnify, protect, save and hold harmless Lessee and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employees, agents and corporate affiliates (if any) from and against any and all losses, costs, damages, expenses, attorney fees, claims, demands, liabilities, suits and actions of every kind and character that may be imposed upon or incurred by Lessee and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employee s, agents or corporate affiliates (if any) on account of, or arising directly or indirectly from, Lessor’s rights under this Section 5.E.

.

Delivery of Data.  Upon termination of this Agreement, Lessee shall furnish Lessor within a reasonable time and without warranty or liability one set of copies of all available noninterpretive data pertaining to the Premises and developed or prepared by or for Lessee, and shall authorize and permit Lessor to take possession of any available core derived from the Premises, whether or not such core is stored on the Premises; provided, however, that Lessee shall in no event be liable to Lessor for availability of or damage to any such core or for the accuracy, reliability or completeness of any data furnished to Lessor.  The provisions of this Section 5.F shall not apply if the Agreement is terminated pursuant to Lessee’s exercise of its option to purchase the Premises.  Lessor shall assume all risks stemming from reliance upon such data by itself and by third parties after disclosure thereof by Lessor and shall ind emnify and hold harmless Lessee as to any claims made by such third parties.

.

Assessment Work and Maintenance Fees.  Commencing with the annual assessment work year beginning September 1, 2006 and subject to Lessee’s right under Section 6.B to terminate this Agreement as to all or a portion of the Premises, Lessee shall perform any required annual assessment work and make all payments required to maintain all unpatented mining claims included in the Premises (provided the same are still subject to this Agreement), and shall timely file with the Bureau of Land Management and record with the county in which said claims are located for each assessment year affidavits of labor, notices of intent to hold, and any other documents necessary to maintain said claims pursuant to state and federal law; provided, however, that Lessee shall not be required to undertake or compete such work or make such payments for the assessment year during which this Agreement is terminated (or for any subsequent assessment ye ar) if termination occurs prior to July 1 of said assessment year.

H.

No Obligation to Mine.  Subject to Section 5.G, nothing in this Agreement shall impose any obligation or covenant, express or implied, upon Lessee to conduct any exploration, development or mining operations upon the Premises, it being the intent of the Parties that Lessee shall have sole discretion to determine the technical and economic feasibility, timing, method, manner and rate of conducting any such operations.  Only the express duties and obligations provided under this Agreement shall be binding upon Lessee.  The nature, manner and extent of all exploration, development, mining and other operations, if any, shall be matters to be determined solely within the discretion of Lessee.

6.  TERMINATION

.

Termination by Lessor.  In the event Lessor considers that Lessee has not complied with any obligation hereunder, Lessor shall notify Lessee setting out specifically in what respect it is claimed that Lessee has breached this Agreement.  If the alleged breach is not cured within 60 days after notice is given, or if Lessee has not within that time either commenced to cure the alleged breach and does not thereafter diligently complete such cure, or challenges the legitimacy of the allegation, Lessor may terminate this Agreement by delivering to Lessee written notice of such termination; provided, however, that in the event Lessee challenges the legitimacy of the allegation, Lessee may give written notice to Lessor within such 60-day period setting forth such fact.  If Lessor gives written notice within 15 days of Lessee's notice that Lessor rejects Lessee’s position, then this Agreement shall not be terminable by L essor until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Lessee shall satisfy such judgment within 30 days following its entry (or if an appeal of such judgment is taken, following its affirmation by the highest court to which such an appeal is made).  Failure of Lessor to give such notice shall constitute agreement by Lessor that Lessee is not in default.  Lessor shall not be entitled to terminate this Agreement for any default which by its nature is not retroactively curable if Lessee has used its best efforts to cure such a default to the extent practical or if Lessee has paid Lessor damages for such default where damages are an appropriate remedy.  Lessor shall have no right to terminate this Agreement except as expressly provided in this Section 6.A, and termination of this Agreement shall be the sole remedy of Lessor.  Neither the service of any notice nor the performance of any acts by L essee intended to meet any such alleged breach shall be deemed an admission or presumption that Lessee has failed to perform all of its obligations under this Agreement.  Notwithstanding the foregoing provisions of this Section 6.A, this Agreement may not be terminated, in whole or in part, by less than all the individuals and/or entities included within the term “Lessor.”

.

Termination by Lessee.  Lessee shall have the right to terminate this Agreement at any time with respect to all or any part of the Premises by giving Lessor written notice of such termination.  Partial termination shall not cause a reduction in the payments prescribed in Section 3.A or in the Purchase Price established in Section 11.A.  Upon such termination, all right, title and interest of Lessee under this Agreement shall terminate with respect to the Premises affected.  Lessee shall be relieved of all further obligations set forth in this Agreement as to the Premises affected except those obligations, if any, which have accrued prior to such termination.  Subject to the provisions of Section 5.G, any taxes, assessments and governmental charges for which Lessee was responsible prior to termination shall be prorated as of the termination date.  Exercise by Lessee of its option to purchase the Premises shall constitute a termination of this Agreement by Lessee as to all of the Premises.

.

Release.  Following termination of this Agreement, as to all or a part of the Premises, Lessee shall promptly deliver to Lessor a fully executed release of this Agreement, in recordable form, as to those of the Premises that are affected, if so requested by Lessor.  The provisions of this Section 6.C shall not apply to termination through exercise of Lessee’s option to purchase the Premises.

.

Reclamation; Removal of Property.  Upon termination of this Agreement, Lessee shall have a continuing right to enter upon the Premises to complete required reclamation.  Lessee shall have a period of one year after the date of termination in which to enter upon and remove from the Premises all of its machinery, buildings, structures, facilities, equipment and other property of every nature and description erected, placed or situated thereon, except foundations of a permanent nature and supports, track and pipe placed in shafts, drifts or openings in the Premises.  Any property of Lessee not removed by the end of this one-year period shall become the property of Lessor; however, Lessee does not warrant the condition or safety of any such property.  Lessee shall have the right to keep a watchman on the Premises during this one-year period.  The provisions of this Section 6.D shall not apply to termination thro ugh exercise of Lessee’s option to purchase the Premises.

7.  LIENS

In the event that Lessor fails to promptly pay, when due, taxes, mortgages or other liens levied against the Premises and payable by Lessor, Lessee shall have the right (but shall not be obligated) to pay such past due amounts and, if Lessee does so, Lessee shall be subrogated to all the rights of the holders thereof and Lessor shall reimburse Lessee for all such payments and for all related costs and expenses paid or incurred by Lessee (including, without limitation, related attorney fees) within three months after the same are paid or incurred by Lessee.  Any payments due Lessor under this Agreement may be credited by reimbursements due Lessee under this Section.  The provisions of this Section shall survive termination of this Agreement.

8.  FORCE MAJEURE

Lessee shall not be liable for failure to perform any of its obligations, other than making payments due under Section 3, during any period in which performance is prevented, in whole or in part, by causes herein termed Force Majeure.  For purposes of this Agreement, the term "Force Majeure" shall include labor disputes; acts of God; action of the elements, including inclement weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules, regulations, orders, directives and requests of governmental bodies or agencies; delay, failure or inability of suppliers or transporters of materials, parts, supplies, services or equipment or by contractors' or subcontractors' shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; judgments or orders of any court or agency; inabilit y to obtain on reasonably acceptable terms or in reasonably acceptable time any public or private licenses, permits or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or future violation of federal, state or local environmental standard; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot; civil strife; fire; explosion; or any other cause whether similar or dissimilar to the foregoing, except for the inability to meet financial commitments.  If Lessee desires to invoke the provisions of this Section, Lessee shall give notice of the commencement of the circumstances giving rise to such Force Majeure.  The time for discharging Lessee’s obligations with respect to the prevented performance, or the time within which Lessee must undertake or complete any activity, shall then be extended for the period of Force Majeure.

9.  NOTICES AND AGENTS

A.

Notices.  Any required notice or communication shall be in writing and shall be effective when personally delivered (including delivery by express courier service) to the following addresses or when addressed as follows and deposited, postage prepaid, and certified with return receipt requested, in the United States mail:

If to Lessor:

Lamonte J. Duffy

P.O. Box 1227

Lovelock, Nevada 89419

If to Lessee:

MGC Resources Inc.

Attn: Alan Branham, President

2778 Spokane Creek Road

East Helena, Montana 59635

Either Party may, by notice to the other given as aforesaid, change its mailing address for future notices.

B.

Designation of Agent for Lessor.  If ever there is more than one owner and/or authorized payee of or as to Lessor’s interest, such multiple owners and/or payees shall designate an authorized agent to receive all payments hereunder from Lessee and to give and receive notices pursuant to this Agreement.  Lessee may satisfy its payment obligations hereunder by tendering one check to said agent for the benefit of all of such multiple owners and/or payees, and responsibility for disbursing such payments among said persons shall rest exclusively with said agent.  Any change in said agent shall be effective only if made in writing and signed by each of the persons constituting Lessor.  In the event of any dispute among such multiple owners and/or payees concerning entitlement to such payments, Lessee may tender its payments into an escrow account for the benefit of such persons as may be entitled thereto at a bank of Lessee’s choice located in the county in which the Premises are situated, and notify such persons that such an account has been established, with the costs of establishing and maintaining the escrow account deductible from Lessee’s payments.  Such escrowed payments shall be deemed to be a sufficient tender of payment by Lessee for all purposes hereunder.

C.

Payments After a Transfer of Interest.  In the event payments should be made to other parties because of any authorized transfer of the interest of any of the persons constituting Lessor, payments tendered to Lessor’s designated agent, or to the party making the transfer if only one party constitutes Lessor, shall conclusively be deemed payment to the transferee until Lessee receives notice and evidence satisfactory to it from both the agent (if applicable) and the transferor that the transferor's interest has been transferred and that payments should be made to the transferee or the transferee’s designated agent.

10.  CONFIDENTIALITY

Lessor shall not, without the express written consent of Lessee, disclose any information concerning the terms of this Agreement or operations conducted under this Agreement (except information and data that is generally available to the public), nor issue any press releases concerning such information.  However, if Lessor contemplates transferring its interest to a third party, it shall have the right to disclose such information to that party if it first obtains an agreement in writing from such third party, satisfactory to Lessee after review in advance, providing that the third party shall hold confidential the information furnished to it.

11.  OPTION TO PURCHASE PREMISES

A.

Grant of Option.  Lessor hereby grants to Lessee and its successors and assigns, while this Agreement remains in effect, the sole and exclusive option (the “Option”) to purchase the Premises for a total purchase price of Six Hundred Thousand Dollars ($600,000.00) (the "Purchase Price").  Lessee shall be entitled to a credit against the Purchase Price for all amounts previously paid under the provisions of Sections 3.A and 3.B above.  Exercise of the Option shall terminate Lessee’s obligation to make any further royalty payments under Section 3.B.

B.

Exercise of Option.  Lessee may exercise the Option by giving Lessor written notice thereof at any time while this Agreement is still in effect.  Exercise of the Option shall be effective upon delivery of said notice, as provided in Section 9.A.  Upon exercise of the Option by Lessee, the Parties shall be bound to complete the closing of the sale of the Premises to Lessee as provided herein.  The notice shall specify a time and place for closing the sale and purchase of the Premises.  The closing shall be held not more than 30 days from the date of the notice, at a time and place reasonably convenient to the Parties.  At the closing, Lessor shall execute and deliver to Lessee a good and sufficient deed acceptable to Lessee, in recordable form, in which Lessor will grant to Lessee title to the Premises free and clear of all liens, encumbrances, reservations, restrictions and other exceptions to ti tle arising by, through or under Lessor.  Upon delivery to Lessee of the deed, Lessee shall pay and deliver to Lessor the balance of the Purchase Price still due (if any) after deducting the amounts provided for in Section 11.A.  Upon completion of the closing, this Agreement, and all rights and obligations of the Parties hereunder, shall terminate, except such rights and obligations hereunder as may then have accrued and remain unpaid or unsatisfied.

C.

Escrow of Deed.  Lessor will, at Lessee’s written request and at Lessee’s expense, provide an executed deed for deposit in escrow (with an escrow agent and subject to an escrow agreement reasonably acceptable to the Parties) for delivery upon exercise of the Option and payment of the balance of the Purchase Price in the event the Option is exercised by Lessee.

12.  MISCELLANEOUS

A.

Cooperation by Lessor.  Lessor shall execute all documents and otherwise cooperate with Lessee as needed in connection with the conduct of operations on the Premises, including the acquisition of governmental permits, post-mining reclamation approvals, water rights, and other rights and privileges related to operations on the Premises and reclamation thereof.  In that regard, Lessor agrees not to protest, challenge or otherwise oppose any water right or operational permit filings that Lessee may make to facilitate operations or proposed operations on or in connection with the Premises.

B.

Sharing of Data by Lessor.  Lessor shall, upon execution of this Agreement, provide or make available to Lessee any available technical and title information and drill core and other samples (such as cuttings, pulps, drill logs, assay results, feasibility reports, etc.) concerning the Premises which are in Lessor’s possession or control.  Similarly, Lessor shall, as soon as possible, provide or make available to Lessee any such information and samples that Lessor may acquire subsequent to the execution of this Agreement, whether obtained personally or from third parties.

C.

Relationship of the Parties.  Nothing contained herein shall be deemed to constitute either Party, in its capacity as such, the partner, agent or legal representative of the other Party, or to create any partnership, mining partnership or other partnership relationship, or fiduciary relationship between them, for any purpose whatsoever.  Except as expressly provided in this Agreement, each Party shall have the free, unrestricted and independent right to engage in and receive the full benefits of any and all business endeavors of any sort whatsoever outside the Premises or outside the scope of this Agreement, whether or not competitive with the endeavors contemplated herein, without consulting the other or inviting or allowing the other therein.

D.

Transfers.  Lessor and Lessee and their respective successors shall have the right to assign or otherwise transfer their respective interests in this Agreement in whole or in part provided that the assignee agrees in writing to assume all, or a portion of all if applicable, obligations of Lessor or Lessee hereunder, as the case may be.  No such transfer shall be effective against the non-transferring Party until that Party receives written notice of the transfer in accordance with Section 9.A.

.

Binding Effect.  Subject to the provisions of Section 12.D above, the provisions of this Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, personal representatives, beneficiaries, successors and assigns.

.

Memorandum of Agreement.  This Agreement may be recorded at the election of Lessee.  Upon execution of this Agreement, the Parties shall also execute a short form of this Agreement (the "Memorandum of Mineral Lease Agreement and Option to Purchase") which shall be recorded in the office of the recorder of each county wherein all or part of the Premises are located.  The execution and recording of the Memorandum of Mineral Lease Agreement and Option to Purchase shall not limit, increase or in any manner affect any of the terms of this Agreement, or any rights, interests or obligations of the Parties.

.

Construction of Agreement.  This Agreement and its exhibit constitute the entire understanding of the Parties with respect to the Premises, all previous agreements, promises, representations, negotiations, writings and understandings between the Parties concerning the Premises being expressly rescinded.  Except for obligations of good faith and fair dealing, there are no terms or conditions, express or implied, other than herein stated.  This Agreement shall be subject to all valid and applicable provisions of statutory or common law, rules and regulations.  Should this Agreement or any of its provisions or operations be found to be contrary to any such valid law, rule or regulation, the latter shall be deemed to control and this Agreement shall be regarded as modified accordingly.  Subject to the preceding sentence, no modification or alteration of this Agreement shall be effective unless made in writing an d executed by the Parties with the same formality as this Agreement.  Wherever the term "including" is used herein, it shall be deemed to mean "including without limitation," and wherever the phrase "shall include" is used herein, it shall mean "shall include without limitation."

.

Headings.  The headings used herein are for convenience only and shall be disregarded in construing and enforcing this Agreement.

.

Multiple Counterparts.  This Agreement may be executed in multiple counterparts and all counterparts taken together shall be deemed to constitute one and the same document.

.

Rule Against Perpetuities.  The Parties do not intend nor desire for this Agreement to violate the common law Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land.  If any provision of this Agreement does or would violate the Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land, then this Agreement shall not be deemed void or voidable, but shall be interpreted in such a way as to maintain and carry out the Parties' objectives to the fullest extent possible by law.

.

Applicable Law.  This Agreement shall be construed, interpreted and governed by the laws of the State of Nevada.

.

Attorney Fees.  In the event either Party brings any action or proceeding for damages or equitable relief against the other Party for an alleged breach or default of any provision of this Agreement to recover monies due or to enforce, protect or establish any right or remedy of either Party under this Agreement, the prevailing Party shall be entitled to recover as a part of such action or proceeding reasonable attorney fees and court costs.

.

Disputes.  Disputes or differences between the Parties shall not interrupt performance of this Agreement or the continuation of operations hereunder.  In the event of any dispute or difference, operations may be continued and payments may be made hereunder in the same manner as prior to such dispute or difference.  In case of suit, adverse claim, dispute or question as to the ownership of the Premises or production royalties, or any interest therein, Lessee may, in its sole discretion, deposit the payment (or the portion of the payment in dispute, if less than the whole payment is in dispute) into an escrow account and Lessee shall not be held in default in payment thereof until such suit, claim, dispute or question has been finally disposed of.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth in the acknowledgements below, but effective as of the Effective Date.

Lessor:

“Lamonte J. Duffy”

LAMONTE J. DUFFY

Lessee:

MGC RESOURCES INC., a Nevada

corporation

By “Alan Branham”

Alan Branham, President

STATE OF NEVADA

)

: ss.

COUNTY OF

)

On this ______ day of April, 2006, personally appeared before me, a Notary Public, LAMONTE J. DUFFY, who acknowledged that he executed the above instrument.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

STATE OF MONTANA

)

) ss.

COUNTY OF LEWIS AND CLARK

)

On this ______ day of April, 2006, personally appeared before me, a Notary Public, Alan Branham, the President of MGC RESOURCES INC., a Nevada corporation, who acknowledged that he executed the above instrument on behalf of said corporation.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

EXHIBIT A

“Premises”

The following 12 unpatented lode mining claims located within Section 4, Township 28 North, Range 34 East, MDM, Pershing County, Nevada:

Claim Name

BLM Serial Number

Recording Data

(Book/Page)

Duffy #5

828705

365/239

Duffy #6

828706

365/240

Duffy #7

828707

365/241

Duffy #8

828708

365/242

SV 315

SV 316

SV 317

SV 318

SV 337

SV 338

SV 339

SV 340

EX-10.7

EX-10.8

MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE

THIS MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE ("Agreement") is made effective as of the 18 day of July, 2006 ("Effective Date"), between DAVE ROWE and RANDALL STOEBERL (collectively, "Lessor"), and MGC RESOURCES INC., a Nevada corporation ("Lessee").

RECITALS

.

Lessor is the owner of the unpatented lode mining claims described in Exhibit A attached hereto, which claims are located in Pershing County, Nevada (the "Premises").

.

Lessor desires to lease the Premises to Lessee and to grant Lessee an option to purchase the Premises upon the terms and conditions herein set forth.

C.

Lessee desires to lease the Premises from Lessor and to hold an option to purchase the Premises upon the terms and conditions herein set forth.

AGREEMENT

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee (the "Parties" and individually a "Party") agree as follows:

1.  RIGHTS GRANTED

Lessor hereby grants, demises, leases and lets to Lessee and its successors and assigns the following rights, powers and privileges:

.

Premises.  The Premises, and all rights, improvements, privileges, hereditaments, and appurtenances, including all ores, minerals, waste dumps, tailings materials and mineral rights belonging or in any way appertaining to the Premises.

.

Mining Rights, Land Use and Access.  Subject only to any limitations imposed by federal, state and local regulations, the free, exclusive, unrestricted and uninterrupted right of access, ingress and egress to the Premises and the right to enter upon and occupy the Premises for all purposes reasonably incident to exploring for, developing, mining (by underground mining, surface mining, strip mining or any other surface or subsurface method, including any method later developed), extracting, milling, smelting, refining, stockpiling, storing, processing, removing and marketing therefrom all ores, metals, minerals, mineral products (including intermediate products) and materials of every nature or sort ("Mineral Substances"), and the right to place, construct, maintain, use and thereafter remove such structures, facilities, equipment, roadways, haulageways, utility lines, reservoirs and waterways, and other improve ments as may be necessary, useful or convenient for the full enjoyment of all of the rights granted under this Agreement.  Lessee shall have sole and exclusive custody, possession, ownership and control of all ore, rock, drill core and other Mineral Substances extracted or removed from the Premises and may sell or otherwise

MGC-033.doc

dispose thereof.  In the exercise of such rights, Lessee shall be subject only to compliance with applicable statutes, rules, regulations and the terms of this Agreement.  These rights are also granted and may be utilized conjunctively or independently for the purpose or in the course of carrying on exploration, development or mining operations on any other properties in which Lessee may have or acquire any right or interest.

.

Cross Mining.  The right, if it so desires, to mine and remove any Mineral Substances existing on, in or under the Premises through or by means of shafts, openings or pits which may be sunk or made upon adjoining and nearby properties, and the right to store any Mineral Substances from the Premises upon any such properties.  In addition, Lessee may use the Premises conjunctively or independently for any shafts, openings, pits and storage areas sunk or made for the mining, removal and/or stockpiling of any Mineral Substances from any adjoining or nearby properties.  Mineral Substances taken from the Premises shall at all times be kept entirely separate and distinct from any other ore or concentrated product until the same are measured and sampled so that the rights of Lessor shall be at all times preserved and protected.

.

Commingling.  The right to commingle ore removed from the Premises or products derived therefrom after treatment, with other ore or products, before or after concentration or beneficiation, so long as the data necessary to determine the weight, grade, and recoverability of both the ore removed from the Premises or products derived therefrom and the ore or products with which it is commingled are obtained by Lessee.  Lessee shall then use that data to determine Lessor's interest in minerals, metals and/or other products extracted from ores or products so mixed. Such data and determinations shall be acquired and completed in accordance with generally accepted industry practices.

E.

Water Rights.  Any and all of Lessor’s water rights on, about, under or appurtenant to the Premises or to which the Premises are riparian.

F.

Deposit of Waste Materials.  The right to temporarily or permanently deposit on or off the Premises tailings, waste rock, overburden, surface stripping materials, process solutions and all other materials originating from the Premises or from adjoining or nearby properties, even if the sole use of the Premises may be for the placement of such materials.

G.

Treatment.  The right, at Lessee’s election and in any manner it deems fit, to beneficiate, concentrate, smelt, refine, and otherwise process or treat on or off the Premises any Mineral Substances taken from the Premises or from adjoining or nearby properties by any physical or chemical method or methods.  In exercising this right, Mineral Substances may be removed to a plant or plants existing, established or maintained upon the Premises or elsewhere.

H.

Amendment and Relocation of Claims.  The right, in Lessee's sole discretion, to amend or relocate as unpatented mining claims or mill sites, in the name of Lessor, any unpatented mining claims or mill sites included in the Premises.  If Lessee undertakes any such amendment or relocation, Lessee shall use its best efforts to complete the same in compliance with applicable statutes and regulations but shall not be liable to Lessor for any act (or failure to act) by it or any of its agents in connection with the amendment or relocation of mining claims or mill sites unless such act (or omission) arises from gross negligence or is made in bad faith.

2

MGC 033.doc

I.

Option to Purchase.  An exclusive option to purchase the Premises pursuant to the provisions of Section 11.

2.  TERM

.

Term.  The term of this Agreement shall commence as of the Effective Date and shall continue for a period of ten years thereafter unless sooner terminated or surrendered in the manner herein provided.  Lessee may extend this Agreement for an additional ten years (subject to such sooner termination or surrender) by giving notice to Lessor prior to the end of the initial ten-year period.  If at the end of the initial term or extended term Lessee is engaged in Mining Operations (as defined below), the term of this Agreement shall automatically continue for so long thereafter as Lessee continues to be engaged in Mining Operations, but the cessation of any such operations shall not cause this Agreement to terminate prior to the end of the initial or extended term or cause Lessee to lose its right to extend the term as herein provided.

.

Definition of Mining Operations.  For purposes of this Agreement "Mining Operations" shall include, but shall not be limited to, development, extraction, processing, leaching or sale of ores, concentrates or derivatives retrieved through leaching of ores, produced from the Premises.  Activities off the Premises shall constitute Mining Operations when they are conducted in connection with an integrated mining operation involving the Premises and other properties in which Lessee holds an interest.  Development includes activities, including permitting, carried on diligently and in good faith preparatory to commencing or resuming operations at a mine. Lessee shall be deemed to be actively engaged in Mining Operations so long as all such operations, once begun, do not cease for a period of more than 180 consecutive days.  In the event Lessee is actively engaged in Mining Operations at the end of the initial or extended term but at any time is unable to obtain a satisfactory market or a satisfactory price for Mineral Substances and as a result suspends mining, processing or marketing operations from time to time, then Mining Operations shall not be deemed to have ceased and this Agreement shall not expire or terminate provided that Lessee notifies Lessor of such loss of market or inability to obtain a satisfactory price and diligently attempts to market Mineral Substances at a satisfactory price and recommence operations.  Mining Operations shall not be deemed to have ceased if once begun they are interrupted through Force Majeure in accordance with Section 8.  If Mining Operations have not commenced at the end of the initial or extended term because of Force Majeure conditions, the primary term shall be extended until such Force Majeure conditions cease.

.

Continuation After Mining Operations.  If, at the end of the initial or extended term, Lessee is not conducting or has ceased Mining Operations, but is utilizing the Premises in support of Mining Operations on other lands, then this Agreement shall continue in force as to the lands subject to such uses and such expansions thereof as may reasonably be contemplated, as designated in good faith by Lessee, and the payment provided in Section 3.A shall be rental for such uses.

3.  PAYMENTS TO LESSOR

.

Advance Royalty.  Subject to Lessee’s right to terminate this Agreement, Lessee shall pay the following amounts annually to Lessor as advance royalty:

$10,000.0 upon execution of the Agreement (for year 1 of the Agreement),

3

MGC 033.doc

$15,000.00 for year 2 of the Agreement, and

$20,000.00 for each year thereafter until Lessee commences the payment of production

royalties pursuant to Section 3.B.

Except as to the payment made upon execution of this Agreement, advance royalty payments shall be paid annually on or before the beginning of each anniversary of the Effective Date.  All advance royalty payments shall be deductible cumulatively as a credit against actual production royalties payable to Lessor pursuant to Section 3.B and shall be credited toward the Purchase Price (as defined in Section 11.A below).  Lessee’s obligation to make advance royalty payments shall cease upon the earliest of: (i) exercise by Lessee of its option to purchase the Premises pursuant to Section 11.B; (ii) the commencement of production royalty payments pursuant to Section 3.B; or (iii) termination of this Agreement under Section 6.

B.

Production Royalty.  Lessee shall pay Lessor a production royalty of three percent (3.0%) of the Net Smelter Returns of Mineral Substances produced from the Premises and sold.  Net Smelter Returns means the proceeds actually received, or deemed to have been received in the case of refined gold and silver as described in Section 3.B(1) below, from the sale or deemed sale of Mineral Substances produced from the Premises, less the charges described in Section 3.B(2) below.  All production royalty payments shall be credited toward the Purchase Price.

(1)

If Lessee sells refined gold or silver, Lessee will be deemed to have received proceeds from the sale thereof equal to the number of ounces of refined gold or silver outturned to Lessee's account during the calendar quarter multiplied in the case of gold by the average daily London Bullion Brokers P.M. Gold Fixing during such calendar quarter and in the case of silver by the average of the daily Handy & Harmon Noon Silver Quotation during the calendar quarter.  The average price for a calendar quarter shall be determined by dividing the sum of all daily prices posted during the calendar quarter by the number of days that prices were posted.  The posted price shall be obtained from the Wall Street Journal, Reuters, E&MJ or other industry-accepted source.  Lessee shall have the right to market and sell to third parties refined gold and silver in any manner it chooses, including the sale of such re fined gold and silver on the commodity market.  In this regard, Lessor shall have no right to participate in any gains and/or profits or obligation to suffer any losses accruing to Lessee as a result of forward sales, options trading, commodities futures trading or similar transactions.

(2)

Charges to be deducted from proceeds in determining Net Smelter Returns are the following:

(a)

all costs, charges and expenses paid or incurred by Lessee for treatment in the smelting and refining processes (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs, penalties and other processor deductions);

(b)

all costs, charges and expenses paid or incurred by Lessee for transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay and forwarding expenses incurred by reason of or in the course of such transportation) of

4

MGC 033.doc

Mineral Substances from the Premises to the place or places of treatment and thence to the place or places of sale;

(c)

sales and brokerage costs on Mineral Substances for which the royalty is payable; and

(d)

sales, use, severance, net proceeds of mine, and ad valorem taxes applicable under local, state and federal law and any other tax or governmental levy or fee relating to the Mineral Substances for which the royalty is payable (other than taxes based upon income).

(3)

Royalties shall accrue quarterly (based on calendar quarters) and shall become due and payable by Lessee prior to the end of the month following the end of each quarter.  Royalty payments shall be accompanied by pertinent information in sufficient detail to explain the calculation of the royalty payment.

(4)

All statements for royalties rendered to Lessor by Lessee during any quarter shall conclusively be presumed to be true and correct after one year following the end of such quarter unless within said one-year period Lessor takes written exception thereto and makes a claim on Lessee for adjustment.  No adjustment favorable to Lessee shall be made unless it is made within the same prescribed period.

(5)

Lessor, upon notice in writing to Lessee, shall have the right to audit Lessee's accounts and records relating to the payment of the royalty for any calendar quarter within the one-year period following the end of such calendar quarter; provided, however, the making of any audit shall not extend the time for the taking of written exception to and the adjustment of accounts as provided for in the paragraph above.  All audits shall be conducted by Lessor at the office of Lessee where the relevant books and records are maintained and such audit shall be conducted during normal business hours.

(6)

If a royalty, production fee, or other payment based upon production is subsequently imposed by the United States on Mineral Substances produced from any unpatented mining claims included in the Premises (whether or not such claims are converted to some other form of property interest), the amount payable to the United States shall be deducted from the royalty payable to Lessor for such Mineral Substances pursuant to this Section 3.B, provided, however, that the royalty paid to Lessor shall not be less than the amount that would be payable to Lessor hereunder at a royalty rate of one percent (1.0%).

C.

Place of Payment.  All payments shall be made in accordance with Section 9 below.

D.

No Royalty on Test Materials.  Lessee shall have the right to mine and market amounts of Mineral Substances reasonably necessary for sampling, assaying, metallurgical testing and evaluation of the mineral potential of the Premises without incurring any obligation to make production royalty payments.

4.  TITLE MATTERS

.

Representations and Warranties.  Lessor covenants and warrants to Lessee, which

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covenants and warranties shall survive any termination of this Agreement, as follows:

(1)

Lessor is the owner of the Premises free and clear of any defects, liens, claims, demands, burdens or encumbrances, subject only to the paramount title of the United States.

(2)

Lessor has the right, power and capacity to enter into and perform this Agreement and all transactions contemplated herein and any corporate or other actions required to authorize it to enter into and perform this Agreement have been properly taken.

(3)

To Lessor's best knowledge, the unpatented mining claims included in the Premises have been properly located and maintained in conformance with applicable federal, state and local laws.

(4)

To Lessor's best knowledge, all lands covered by the claims included in the Premises were open to location when such claims were located and there are no conflicts with claims owned by other parties.

(5)

Lessee shall have quiet and peaceable possession of the Premises.

(6)

Lessor will defend its title to the Premises against all persons who may claim the same.

(7)

Lessor has not committed, nor will Lessor in the future commit, any act or acts that will encumber or cause a lien to be placed against the Premises except subject and subordinate to the terms of this Agreement.

(8)

Lessor has no knowledge or information indicating:

(a)

that hazardous substances from any source (mining or otherwise) have been released on the Premises; or

(b)

that any underground or above-ground site of historic or current mining operations on the Premises could cause or constitute a release or threat of release of hazardous substances into the environment; or

(c)

that any part of the Premises has been included or proposed for inclusion on the National Priorities List (40 C.F.R. Section 300 App. B); or

(d)

that any part of the Premises has been studied or proposed for study by the Environmental Protection Agency and/or any state regulatory agency; or

(e)

that any site of historic or current mining, milling and/or smelting workings on the Premises is presently in such condition as to potentially raise liability to the past, present or future owner(s) and/or operator(s) of the Premises pursuant to the Comprehensive Environmental Response, Compensation and Liability Act and amending statutes ("CERCLA"); or

(f)

that any reclamation obligations for prior operations on the Premises

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are unsatisfied.

B.

Title Defects, Defense and Protection.  Lessee may at any time cause a title search to be made covering all or any part of the Premises.  Lessor shall provide Lessee with any abstracts and other evidences of title in Lessor's possession or control.  If, (1) in the opinion of Lessee, Lessor's title to all or any part of the Premises is defective or less than as represented in Section 4.A; or (2) Lessor's title is contested or questioned by any person or entity and Lessor is unable or unwilling to promptly correct the alleged defects, Lessee may, without obligation and without waiver of any remedies of Lessee, attempt to perfect or defend Lessor's title.  In that event, Lessor shall execute all documents and shall take such other actions as are reasonably necessary to assist Lessee in its efforts to perfect or defend Lessor's title, time being of the essence.  If title is less than represented in Section 4.A, then the costs and expenses of perfecting or defending title shall be a credit against subsequent payments to be made by Lessee to Lessor under this Agreement.  Any improvement or perfection of title to the Premises shall inure to the benefit of Lessee in the same manner and to the same extent as if such improvement or perfection had been made prior to the execution of this Agreement.

C.

Lesser Interest.  All payments payable to Lessor hereunder (including the Purchase Price) are based upon Lessor's warranted ownership of the entire undivided interest in minerals included within the boundaries of the Premises.  If Lessor is found to own less than 100% of the mineral interest in the Premises (i.e., if Lessor's interest is the same in all claims or parcels included in the Premises but less than 100%), then Lessor's actual interest shall be its actual percentage interest in the Premises.  If Lessor's interest varies as to separate portions of the Premises, then Lessor's actual interest shall be determined on a net acreage basis by multiplying the acreage in each distinct claim or parcel within the Premises by Lessor's fractional interest therein and then computing Lessor's interest on the net acres actually owned by Lessor as a proportion of the total acreage originally warranted to be owned by Le ssor.  In either of such events, all payments payable to Lessor hereunder other than production royalty payments shall be reduced accordingly.  If Lessor's title to any of the Premises from which production is made is less than 100%, then the production royalty payable pursuant to Section 3.B shall be reduced to the same proportion as the undivided right and title actually owned by Lessor bears to the entire undivided right and title to the portion of the Premises from which such production is made.  Such reductions in payments shall not waive or eliminate any other rights or remedies Lessee may have in connection with the extent of Lessor's actual interest in the Premises.

D.

Patenting of Claims.  If the existing governmental moratorium on patenting of unpatented mining claims is discontinued, then upon request of Lessee at any time during the term of this Agreement, Lessor agrees to undertake to obtain a patent to any or all of the mining claims that are subject to this Agreement, as designated by Lessee.  Lessee shall prepare all documents, compile all data and comply in all respects with applicable law, all at the expense of Lessee.  Lessor shall execute any documents required for this purpose and shall cooperate fully with Lessee in the patent application, process and proceedings, time being of the essence.  If Lessor begins patent proceedings and Lessee thereafter requests Lessor to discontinue such proceedings or if this Agreement is terminated while patent proceedings are pending, Lessee shall have no further obligation with respect thereto except to pay any unpaid expenses acc rued in such proceedings prior to its request to discontinue, or prior to termination, whichever comes first.

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E.

Conversion of Claims.  If during the term of this Agreement federal or state laws are changed or enacted to provide for some alternative basis for holding mining or mining-related rights in public lands, Lessee, in its sole and exclusive discretion, may make such location, filing or application for claim, license or permit in Lessor's name as may be required or permitted by such new or modified laws with respect to the ground covered by the Premises.  Lessor gives Lessee full power and authority as Lessor's attorney-in-fact to make such location, filing or application.  Any such claim, license or permit shall be subject to this Agreement.

5.  OBLIGATIONS OF LESSEE

.

Protection from Liens.  Lessee shall keep title to the Premises free and clear from any liens, claims and encumbrances (other than liens for taxes not yet due and delinquent) arising from its operations hereunder.  Lessee shall pay for all labor performed upon or material furnished to the Premises at the request of Lessee and shall keep the Premises free and clear from liens of mechanics or materialmen in connection with services performed and material supplied at Lessee's request.  Lessee shall, however, have the right in good faith to contest the validity of any lien, claim or liability and shall not be required to remove any such lien, claim or liability so long as Lessee is contesting the validity or the amount thereof.  The foregoing provisions shall not restrict Lessee from placing a mortgage, trust deed or other lien upon its interest in the Premises for financing purposes.

.

Indemnification and Insurance.  Lessee shall protect Lessor against any damages arising out of Lessee's operations on the Premises and shall indemnify Lessor against liability resulting from Lessee's operations on the Premises; provided, however, that Lessor or any agent acting on its behalf, or any breach of warranty by Lessor, shall not have been a contributing cause to the event giving rise to any such damages.  Lessee shall carry liability insurance with reasonable policy limits protecting Lessor against damages arising out of Lessee's operations on the Premises.

.

Taxes and Assessments.  Except as provided below, Lessee shall pay promptly before delinquency all taxes and assessments that may be assessed during the term of this Agreement upon the Premises resulting from Lessee's activities and products derived therefrom.  However, Lessee shall always have the right to contest, in the courts or otherwise, either in its own name or in the name of Lessor, the validity or amount of any such taxes or assessments, or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof, before it shall be required to pay such taxes or assessments.  Notwithstanding the foregoing, Lessee shall not permit any part of the Premises to be conveyed and title lost as the result of nonpayment of such taxes and assessments.  Lessee shall provide Lessor with copies of all receipts evidencing payment of such taxes and asses sments.  If Lessor should receive tax bills or claims that are the responsibility of Lessee, Lessor shall promptly forward such bills or claims to Lessee for appropriate action.  Lessee shall pay the above-referenced taxes that are assessed from the Effective Date of this Agreement to its date of termination.  Nothing in this paragraph shall be construed to obligate Lessee to pay that portion of any tax based upon an assessment of improvements or structures made or placed on the Premises by Lessor.  Lessee shall not be liable for any taxes levied on or measured by Lessor's income or based upon payments made to Lessor by Lessee under this Agreement.

.

Compliance with Laws and Regulations.  Lessee shall perform all of its operations

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on the Premises in a good and workmanlike manner and in compliance with all applicable federal, state and local laws and regulations pertaining to environmental protection, reclamation and bonding.  Specifically, Lessee shall comply with all permitting and other regulatory requirements set forth by the U.S. Bureau of Land Management, the U.S. Forest Service, the U.S. Environmental Protection Agency, and applicable state agencies.  Lessee shall have no obligations with respect to prior operations or preexisting conditions on the Premises.

.

Right of Access to the Premises.  During the term of this Agreement Lessee shall allow Lessor and representatives of Lessor, at their sole risk and expense, access to the Premises for the purposes of viewing or inspecting Lessee's operations, at times which, in Lessee's discretion, do not unreasonably interfere with its operations.  Lessor and Lessor's representatives agree to indemnify, protect, save and hold harmless Lessee and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employees, agents and corporate affiliates from and against any and all losses, costs, damages, expenses, attorney fees, claims, demands, liabilities, suits and actions of every kind and character that may be imposed upon or incurred by Lessee and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employees, agents or corporate a ffiliates on account of, or arising directly or indirectly from, Lessor's rights under this Section 5.E.

.

Delivery of Data.  Upon termination of this Agreement, Lessee shall furnish Lessor within a reasonable time and without warranty or liability one set of copies of all available noninterpretive data pertaining to the Premises and developed or prepared by or for Lessee, and shall authorize and permit Lessor to take possession of any available core derived from the Premises, whether or not such core is stored on the Premises; provided, however, that Lessee shall in no event be liable to Lessor for availability of or damage to any such core or for the accuracy, reliability or completeness of any data furnished to Lessor.  The provisions of this Section 5.F shall not apply if the Agreement is terminated pursuant to Lessee's exercise of its option to purchase the Premises.  Lessor shall assume all risks stemming from reliance upon such data by itself and by third parties after disclosure thereof by Lessor and shall indemnif y and hold harmless Lessee as to any claims made by such third parties.

.

Assessment Work and Maintenance Fees.  Commencing with the annual assessment work year beginning September 1, 2006 and subject to Lessee’s right under Section 6.B to terminate this Agreement as to all or a portion of the Premises, Lessee shall perform any required annual assessment work and make all payments required to maintain all unpatented mining claims included in the Premises (provided the same are still subject to this Agreement), and shall timely file with the Bureau of Land Management and record with the county in which said claims are located for each assessment year affidavits of labor, notices of intent to hold, and any other documents necessary to maintain said claims pursuant to state and federal law; provided, however, that Lessee shall not be required to undertake or compete such work or make such payments for the assessment year during which this Agreement is terminated (or for any subsequent assessment ye ar) if termination occurs prior to July 1 of said assessment year.

H.

No Obligation to Mine.  Subject to Section 5.G, nothing in this Agreement shall impose any obligation or covenant, express or implied, upon Lessee to conduct any exploration, development or mining operations upon the Premises, it being the intent of the Parties that Lessee shall have sole discretion to determine the technical and economic feasibility, timing, method,

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manner and rate of conducting any such operations.  Only the express duties and obligations provided under this Agreement shall be binding upon Lessee.  The nature, manner and extent of all exploration, development, mining and other operations, if any, shall be matters to be determined solely within the discretion of Lessee.

6.  TERMINATION

.

Termination by Lessor.  In the event Lessor considers that Lessee has not complied with any obligation hereunder, Lessor shall notify Lessee setting out specifically in what respect it is claimed that Lessee has breached this Agreement.  If the alleged breach is not cured within 60 days after notice is given, or if Lessee has not within that time either commenced to cure the alleged breach and does not thereafter diligently complete such cure, or challenges the legitimacy of the allegation, Lessor may terminate this Agreement by delivering to Lessee written notice of such termination; provided, however, that in the event Lessee challenges the legitimacy of the allegation, Lessee may give written notice to Lessor within such 60-day period setting forth such fact.  If Lessor gives written notice within 15 days of Lessee's notice that Lessor rejects Lessee's position, then this Agreement shall not be terminable by Lessor until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Lessee shall satisfy such judgment within 30 days following its entry (or if an appeal of such judgment is taken, following its affirmation by the highest court to which such an appeal is made).  Failure of Lessor to give such notice shall constitute agreement by Lessor that Lessee is not in default.  Lessor shall not be entitled to terminate this Agreement for any default which by its nature is not retroactively curable if Lessee has used its best efforts to cure such a default to the extent practical or if Lessee has paid Lessor damages for such default where damages are an appropriate remedy.  Lessor shall have no right to terminate this Agreement except as expressly provided in this Section 6.A, and termination of this Agreement shall be the sole remedy of Lessor.  Neither the service of any notice nor the performance of any acts by Lessee intended to meet any such alleged breach shall be deemed an admission or presumption that Lessee has failed to perform all of its obligations under this Agreement.  Notwithstanding the foregoing provisions of this Section 6.A, this Agreement may not be terminated, in whole or in part, by less than all the individuals and/or entities included within the term "Lessor."

.

Termination by Lessee.  Lessee shall have the right to terminate this Agreement at any time with respect to all or any part of the Premises by giving Lessor written notice of such termination.  Partial termination shall not cause a reduction in the payments prescribed in Section 3.A or in the Purchase Price established in Section 11.A.  Upon such termination, all right, title and interest of Lessee under this Agreement shall terminate with respect to the Premises affected.  Lessee shall be relieved of all further obligations set forth in this Agreement as to the Premises affected except those obligations, if any, which have accrued prior to such termination.  Subject to the provisions of Section 5.G, any taxes, assessments and governmental charges for which Lessee was responsible prior to termination shall be prorated as of the termination date.  Exercise by Lessee of its option to purchase the Premises shall constitute a termination of this Agreement by Lessee as to all of the Premises.

.

Release.  Following termination of this Agreement, as to all or a part of the Premises, Lessee shall promptly deliver to Lessor a fully executed release of this Agreement, in recordable form, as to those of the Premises that are affected, if so requested by Lessor.  The

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provisions of this Section 6.C shall not apply to termination through exercise of Lessee’s option to purchase the Premises.

.

Reclamation; Removal of Property.  Upon termination of this Agreement, Lessee shall have a continuing right to enter upon the Premises to complete required reclamation.  Lessee shall have a period of one year after the date of termination in which to enter upon and remove from the Premises all of its machinery, buildings, structures, facilities, equipment and other property of every nature and description erected, placed or situated thereon, except foundations of a permanent nature and supports, track and pipe placed in shafts, drifts or openings in the Premises.  Any property of Lessee not removed by the end of this one-year period shall become the property of Lessor; however, Lessee does not warrant the condition or safety of any such property.  Lessee shall have the right to keep a watchman on the Premises during this one-year period.  The provisions of this Section 6.D shall not apply to termination thro ugh exercise of Lessee’s option to purchase the Premises.

7.  LIENS

In the event that Lessor fails to promptly pay, when due, taxes, mortgages or other liens levied against the Premises and payable by Lessor, Lessee shall have the right (but not the obligation) to pay such past due amounts and, if Lessee does so, Lessee shall be subrogated to all the rights of the holders thereof and Lessor shall reimburse Lessee for all such payments and for all related costs and expenses paid or incurred by Lessee (including, without limitation, related attorney fees) within three months after the same are paid or incurred by Lessee.  Any payments due Lessor under this Agreement may be credited by reimbursements due Lessee under this Section.  The provisions of this Section shall survive termination of this Agreement.

8.  FORCE MAJEURE

Lessee shall not be liable for failure to perform any of its obligations, other than making payments due under Section 3, during any period in which performance is prevented, in whole or in part, by causes herein termed Force Majeure.  For purposes of this Agreement, the term "Force Majeure" shall include labor disputes; acts of God; action of the elements, including inclement weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules, regulations, orders, directives and requests of governmental bodies or agencies; delay, failure or inability of suppliers or transporters of materials, parts, supplies, services or equipment or by contractors' or subcontractors' shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; judgments or orders of any court or agency; inabilit y to obtain on reasonably acceptable terms or in reasonably acceptable time any public or private licenses, permits or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or future violation of federal, state or local environmental standard; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot; civil strife; fire; explosion; or any other cause whether similar or dissimilar to the foregoing, except for the inability to meet financial commitments.  If Lessee desires to invoke the provisions of this Section, Lessee shall give notice of the commencement of the circumstances giving rise to such Force Majeure.  The time for discharging Lessee's obligations with respect to the prevented performance, or the time within which Lessee must undertake or complete any activity, shall then be extended for

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the period of Force Majeure.

9.  NOTICES AND AGENTS

A.

Notices.  Any required notice or communication shall be in writing and shall be effective when personally delivered (including delivery by express courier service) to the following addresses or when addressed as follows and deposited, postage prepaid, and certified with return receipt requested, in the United States mail:

If to Lessor:

Dave Rowe

5900 Feedlot Road

Winnemucca, Nevada 89445

If to Lessee:

MGC Resources Inc.

Attn:  Alan Branham, President

2778 Spokane Creek Road

East Helena, Montana 59635

Either Party may, by notice to the other given as aforesaid, change its mailing address for future notices.

B.

Designation of Agent for Lessor.  Dave Rowe is hereby designated as Lessor’s agent to receive from Lessee all payments due or payable to Lessor under the terms of this Agreement and all such payments may be made payable to Dave Rowe and tendered by mailing or delivering the same to his address as set forth in Section 9.A above.  Lessee shall have no obligation to allocate or apportion any payment made hereunder among the parties constituting Lessor, it being said agent’s obligation to properly do so after payment is made to the agent by Lessee.  The parties constituting Lessor, by their execution of this Agreement, consent to the payment provisions set forth herein.  All data required of Lessee under this Agreement shall likewise be provided to said agent, who in turn shall be responsible for disbursing said data among the parties constituting Lessor as those parties may see fit.  Any change in sai d agent shall be effective only if made in writing and signed by each of the persons constituting Lessor.  In the event of any dispute among multiple owners and/or payees concerning entitlement to such payments, Lessee may tender its payments into an escrow account for the benefit of such persons as may be entitled thereto at a bank of Lessee’s choice located in the county in which the Premises are situated, and notify such persons that such an account has been established, with the costs of establishing and maintaining the escrow account deductible from Lessee’s payments.  Such escrowed payments shall be deemed to be a sufficient tender of payment by Lessee for all purposes hereunder.

C.

Payments After a Transfer of Interest.  In the event payments should be made to other parties because of any authorized transfer of the interest of any of the persons constituting Lessor, payments tendered to Lessor's designated agent, or to the party making the transfer if only one party constitutes Lessor, shall conclusively be deemed payment to the transferee until Lessee receives notice and evidence satisfactory to it from both the agent (if applicable) and the transferor that the transferor's interest has been transferred and that payments should be made to the transferee or the transferee’s designated agent.

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10.  CONFIDENTIALITY

Lessor shall not, without the express written consent of Lessee, disclose any information concerning the terms of this Agreement or operations conducted under this Agreement (except information and data that is generally available to the public), nor issue any press releases concerning such information.  However, if Lessor contemplates transferring its interest to a third party, it shall have the right to disclose such information to that party if it first obtains an agreement in writing from such third party, satisfactory to Lessee after review in advance, providing that the third party shall hold confidential the information furnished to it.

11.  OPTION TO PURCHASE PREMISES

A.

Grant of Option.  Lessor hereby grants to Lessee and its successors and assigns, while this Agreement remains in effect, the sole and exclusive option (the “Option”) to purchase the Premises for a total purchase price of Six Hundred Thousand Dollars ($600,000.00) (the "Purchase Price").  Lessee shall be entitled to a credit against the Purchase Price for all amounts previously paid under the provisions of Sections 3.A and 3.B above.  Exercise of the Option shall terminate Lessee’s obligation to make any further royalty payments under Section 3.B.

B.

Exercise of Option.  Lessee may exercise the Option by giving Lessor written notice thereof at any time while this Agreement is still in effect.  Exercise of the Option shall be effective upon delivery of said notice, as provided in Section 9.A.  Upon exercise of the Option by Lessee, the Parties shall be bound to complete the closing of the sale of the Premises to Lessee as provided herein.  The notice shall specify a time and place for closing the sale and purchase of the Premises.  The closing shall be held not more than 30 days from the date of the notice, at a time and place reasonably convenient to the Parties.  At the closing, Lessor shall execute and deliver to Lessee a good and sufficient deed acceptable to Lessee, in recordable form, in which Lessor will grant to Lessee title to the Premises free and clear of all liens, encumbrances, reservations, restrictions and other exceptions to ti tle arising by, through or under Lessor.  Upon delivery to Lessee of the deed, Lessee shall pay and deliver to Lessor the balance of the Purchase Price still due (if any) after deducting the amounts provided for in Section 11.A.  Upon completion of the closing, this Agreement, and all rights and obligations of the Parties hereunder, shall terminate, except such rights and obligations hereunder as may then have accrued and remain unpaid or unsatisfied.

C.

Escrow of Deed.  Lessor will, at Lessee’s written request and at Lessee’s expense, provide an executed deed for deposit in escrow (with an escrow agent and subject to an escrow agreement reasonably acceptable to the Parties) for delivery upon exercise of the Option and payment of the balance of the Purchase Price in the event the Option is exercised by Lessee.

12.  MISCELLANEOUS

A.

Cooperation by Lessor.  Lessor shall execute all documents and otherwise cooperate with Lessee as needed in connection with the conduct of operations on the Premises, including the acquisition of governmental permits, post-mining reclamation approvals, water rights, and other rights and privileges related to operations on the Premises and reclamation thereof.  In that regard, Lessor agrees not to protest, challenge or otherwise oppose any water right or operational permit filings that Lessee may make to facilitate operations or proposed operations on or in connection

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with the Premises.

B.

Sharing of Data by Lessor.  Lessor shall, upon execution of this Agreement, provide or make available to Lessee any available technical and title information and drill core and other samples (such as cuttings, pulps, drill logs, assay results, feasibility reports, etc.) concerning the Premises which are in Lessor's possession or control.  Similarly, Lessor shall, as soon as possible, provide or make available to Lessee any such information and samples that Lessor may acquire subsequent to the execution of this Agreement, whether obtained personally or from third parties.

C.

Relationship of the Parties.  Nothing contained herein shall be deemed to constitute either Party, in its capacity as such, the partner, agent or legal representative of the other Party, or to create any partnership, mining partnership or other partnership relationship, or fiduciary relationship between them, for any purpose whatsoever.  Except as expressly provided in this Agreement, each Party shall have the free, unrestricted and independent right to engage in and receive the full benefits of any and all business endeavors of any sort whatsoever outside the Premises or outside the scope of this Agreement, whether or not competitive with the endeavors contemplated herein, without consulting the other or inviting or allowing the other therein.

D.

Transfers.  Lessor and Lessee and their respective successors shall have the right to assign or otherwise transfer their respective interests in this Agreement in whole or in part provided that the assignee agrees in writing to assume all, or a portion of all if applicable, obligations of Lessor or Lessee hereunder, as the case may be.  No such transfer shall be effective against the non-transferring Party until that Party receives written notice of the transfer in accordance with Section 9.A.

.

Binding Effect.  Subject to the provisions of Section 12.D above, the provisions of this Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, personal representatives, beneficiaries, successors and assigns.

.

Memorandum of Agreement.  This Agreement may be recorded at the election of Lessee.  Upon execution of this Agreement, the Parties shall also execute a short form of this Agreement (the "Memorandum of Mineral Lease Agreement and Option to Purchase") which shall be recorded in the office of the recorder of each county wherein all or part of the Premises are located.  The execution and recording of the Memorandum of Mineral Lease Agreement and Option to Purchase shall not limit, increase or in any manner affect any of the terms of this Agreement, or any rights, interests or obligations of the Parties.

.

Construction of Agreement.  This Agreement and its exhibit constitute the entire understanding of the Parties with respect to the Premises, all previous agreements, promises, representations, negotiations, writings and understandings between the Parties concerning the Premises being expressly rescinded.  Except for obligations of good faith and fair dealing, there are no terms or conditions, express or implied, other than herein stated.  This Agreement shall be subject to all valid and applicable provisions of statutory or common law, rules and regulations.  Should this Agreement or any of its provisions or operations be found to be contrary to any such valid law, rule or regulation, the latter shall be deemed to control and this Agreement shall be regarded as modified accordingly.  Subject to the preceding sentence, no modification or alteration of this Agreement shall be effective unless made in writing an d executed by the Parties with the

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same formality as this Agreement.  Wherever the term "including" is used herein, it shall be deemed to mean "including without limitation," and wherever the phrase "shall include" is used herein, it shall mean "shall include without limitation."

.

Headings.  The headings used herein are for convenience only and shall be disregarded in construing and enforcing this Agreement.

.

Multiple Counterparts.  This Agreement may be executed in multiple counterparts and all counterparts taken together shall be deemed to constitute one and the same document.

.

Rule Against Perpetuities.  The Parties do not intend nor desire for this Agreement to violate the common law Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land.  If any provision of this Agreement does or would violate the Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land, then this Agreement shall not be deemed void or voidable, but shall be interpreted in such a way as to maintain and carry out the Parties' objectives to the fullest extent possible by law.

.

Applicable Law.  This Agreement shall be construed, interpreted and governed by the laws of the State of Nevada.

.

Attorney Fees.  In the event either Party brings any action or proceeding for damages or equitable relief against the other Party for an alleged breach or default of any provision of this Agreement to recover monies due or to enforce, protect or establish any right or remedy of either Party under this Agreement, the prevailing Party shall be entitled to recover as a part of such action or proceeding reasonable attorney fees and court costs.

.

Disputes.  Disputes or differences between the Parties shall not interrupt performance of this Agreement or the continuation of operations hereunder.  In the event of any dispute or difference, operations may be continued and payments may be made hereunder in the same manner as prior to such dispute or difference.  In case of suit, adverse claim, dispute or question as to the ownership of the Premises or production royalties, or any interest therein, Lessee may, in its sole discretion, deposit the payment (or the portion of the payment in dispute, if less than the whole payment is in dispute) into an escrow account and Lessee shall not be held in default in payment thereof until such suit, claim, dispute or question has been finally disposed of.

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15

MGC 033.doc

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth in the acknowledgements below, but effective as of the Effective Date.

Lessor:

“Dave Rowe”

DAVE ROWE

“Randall Stoeberl”

RANDALL STOEBERL

Lessee:

MGC RESOURCES INC., a Nevada

corporation

By _”Alan Branham”

Alan Branham, President

16

MGC 033.doc

STATE OF NEVADA

)

: ss.

COUNTY OF

)

On this ______ day of July, 2006, personally appeared before me, a Notary Public, DAVE ROWE, who acknowledged that he executed the above instrument.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

STATE OF NEVADA

)

: ss.

COUNTY OF

)

On this ______ day of July, 2006, personally appeared before me, a Notary Public, RANDALL STOEBERL, who acknowledged that he executed the above instrument.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

17

MGC 033.doc

STATE OF MONTANA

)

) ss.

COUNTY OF LEWIS AND CLARK

)

On this ______ day of July, 2006, personally appeared before me, a Notary Public, Alan Branham, the President of MGC RESOURCES INC., a Nevada corporation, who acknowledged that he executed the above instrument on behalf of said corporation.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

18

MGC 033.doc

EXHIBIT A

“Premises”

The following 97 unpatented lode mining claims located within Sections 5 and 6, Township 28 North, Range 35 East; Sections 25 and 36, Township 29 North, Range 34 East; and Sections 29, 30, 31 and 32, Township 29 North, Range 35 East; MDM, Pershing County, Nevada:

Claim Name

BLM Serial Number

Location Date

PS 1

(not yet filed)

April 20, 2006

PS 2

(not yet filed)

April 20, 2006

PS 3

(not yet filed)

April 20, 2006

PS 4

(not yet filed)

April 20, 2006

PS 5

(not yet filed)

April 20, 2006

PS 6

(not yet filed)

April 20, 2006

PS 7

(not yet filed)

April 20, 2006

PS 8

(not yet filed)

April 20, 2006

PS 9

(not yet filed)

April 20, 2006

PS 10

(not yet filed)

April 20, 2006

PS 11

(not yet filed)

April 20, 2006

PS 12

(not yet filed)

April 20, 2006

PS 13

(not yet filed)

April 20, 2006

PS 14

(not yet filed)

April 20, 2006

PS 15

(not yet filed)

April 20, 2006

PS 16

(not yet filed)

April 20, 2006

PS 17

(not yet filed)

April 20, 2006

PS 18

(not yet filed)

April 20, 2006

PS 19

(not yet filed)

April 20, 2006

PS 20

(not yet filed)

April 20, 2006

PS 21

(not yet filed)

April 20, 2006

PS 22

(not yet filed)

April 20, 2006

PS 23

(not yet filed)

April 20, 2006

PS 24

(not yet filed)

May 17, 2006

PS 25

(not yet filed)

May 17, 2006

PS 26

(not yet filed)

May 17, 2006

PS 27

(not yet filed)

May 17, 2006

PS 28

(not yet filed)

April 20, 2006

PS 29

(not yet filed)

April 20, 2006

PS 30

(not yet filed)

April 20, 2006

PS 31

(not yet filed)

April 20, 2006

PS 32

(not yet filed)

April 20, 2006

PS 33

(not yet filed)

April 20, 2006

PS 34

(not yet filed)

May 17, 2006

PS 35

(not yet filed)

May 17, 2006

PS 36

(not yet filed)

May 17, 2006

PS 37

(not yet filed)

May 17, 2006

19

MGC 033.doc

PS 38

(not yet filed)

May 17, 2006

PS 39

(not yet filed)

May 17, 2006

PS 40

(not yet filed)

May 17, 2006

PS 41

(not yet filed)

May 17, 2006

PS 42

(not yet filed)

April 20, 2006

PS 43

(not yet filed)

April 20, 2006

PS 44

(not yet filed)

April 20, 2006

PS 45

(not yet filed)

April 20, 2006

PS 46

(not yet filed)

April 20, 2006

PS 47

(not yet filed)

April 20, 2006

PS 48

(not yet filed)

April 20, 2006

PS 49

(not yet filed)

April 20, 2006

PS 50

(not yet filed)

April 20, 2006

PS 51

(not yet filed)

April 20, 2006

PS 52

(not yet filed)

April 20, 2006

PS 53

(not yet filed)

April 20, 2006

PS 54

(not yet filed)

April 20, 2006

PS 55

(not yet filed)

April 20, 2006

PS 56

(not yet filed)

April 20, 2006

PS 57

(not yet filed)

April 20, 2006

PS 58

(not yet filed)

April 20, 2006

PS 59

(not yet filed)

April 20, 2006

PS 60

(not yet filed)

April 20, 2006

PS 61

(not yet filed)

April 20, 2006

PS 62

(not yet filed)

April 20, 2006

PS 63

(not yet filed)

April 20, 2006

PS 64

(not yet filed)

April 20, 2006

PS 65

(not yet filed)

April 20, 2006

PS 66

(not yet filed)

April 20, 2006

PS 67

(not yet filed)

April 20, 2006

PS 68

(not yet filed)

April 20, 2006

PS 69

(not yet filed)

April 20, 2006

PS 70

(not yet filed)

April 20, 2006

PS 71

(not yet filed)

April 20, 2006

PS 72

(not yet filed)

April 20, 2006

PS 73

(not yet filed)

April 20, 2006

PS 74

(not yet filed)

April 20, 2006

PS 75

(not yet filed)

April 20, 2006

PS 76

(not yet filed)

April 20, 2006

PS 77

(not yet filed)

April 20, 2006

PS 78

(not yet filed)

April 20, 2006

PS 79

(not yet filed)

April 20, 2006

PS 80

(not yet filed)

April 20, 2006

PS 81

(not yet filed)

April 20, 2006

PS 82

(not yet filed)

April 20, 2006

PS 83

(not yet filed)

April 20, 2006

PS 84

(not yet filed)

April 20, 2006

20

MGC 033.doc

PS 85

(not yet filed)

April 20, 2006

PS 86

(not yet filed)

April 20, 2006

PS 87

(not yet filed)

April 20, 2006

PS 88

(not yet filed)

April 20, 2006

PS 89

(not yet filed)

April 20, 2006

PS 90

(not yet filed)

April 20, 2006

PS 91

(not yet filed)

April 20, 2006

PS 92

(not yet filed)

April 20, 2006

PS 93

(not yet filed)

April 20, 2006

PS 94

(not yet filed)

April 20, 2006

PS 95

(not yet filed)

April 20, 2006

PS 96

(not yet filed)

April 20, 2006

PS 97

(not yet filed)

April 20, 2006

21

MGC 033.doc

EX-10.9

MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE

THIS MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE (“Agreement”) is made effective as of the 25 day of October, 2006 (“Effective Date”), between LAMONTE J. DUFFY (“Lessor”) and MGC RESOURCES INC., a Nevada corporation (“Lessee”).

RECITALS

.

Lessor is the owner of the unpatented lode mining claims described in Exhibit A attached hereto, which claims are located in Pershing County, Nevada (the “Premises”).

.

Lessor desires to lease the Premises to Lessee and to grant Lessee an option to purchase the Premises upon the terms and conditions herein set forth.

C.

Lessee desires to lease the Premises from Lessor and to hold an option to purchase the Premises upon the terms and conditions herein set forth.

AGREEMENT

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee (the “Parties” and individually a “Party”) agree as follows:

1.  RIGHTS GRANTED

.

Grant of Lease.  Lessor hereby leases exclusively to Lessee and its successors and assigns the Premises, and all rights, improvements, privileges, hereditaments, and appurtenances, including all ores, minerals, waste dumps, tailings materials and mineral rights belonging or in any way appertaining to the Premises, subject to the provisions of this Agreement.

B.

Rights of Lessee.  Lessee shall have the following rights in respect of the Premises:

1.

Mining, Land Use and Access.  Subject only to any limitations imposed by federal, state and local regulations, the free, exclusive, unrestricted and uninterrupted right of access, ingress and egress to the Premises and the right to enter upon and occupy the Premises for all purposes reasonably incident to exploring for, developing, mining (by underground mining, surface mining, strip mining or any other surface or subsurface method, including any method later developed), extracting, milling, smelting, refining, stockpiling, storing, processing, removing and marketing therefrom all ores, metals, minerals, mineral products (including intermediate products) and materials of every nature or sort (“Mineral Substances”), and the right to place, construct, maintain, use and thereafter remove such structures, facilities, equipment, roadways, haulageways, utility lines, reservoirs and waterways, and other improvements as may be necessary, useful or convenient for the full enjoyment of all of the rights granted under this Agreement.  Lessee shall have sole and exclusive custody, possession, ownership and control of all ore, rock, drill core and

MGC-038-1.doc

other Mineral Substances extracted or removed from the Premises and may sell or otherwise dispose thereof.  In the exercise of such rights, Lessee shall be subject only to compliance with applicable statutes, rules, regulations and the terms of this Agreement.  These rights are also granted and may be utilized conjunctively or independently for the purpose or in the course of carrying on exploration, development or mining operations on any other properties in which Lessee may have or acquire any right or interest.

2.

Cross Mining.  The right, if it so desires, to mine and remove any Mineral Substances existing on, in or under the Premises through or by means of shafts, openings or pits which may be sunk or made upon adjoining and nearby properties, and the right to store any Mineral Substances from the Premises upon any such properties.  In addition, Lessee may use the Premises conjunctively or independently for any shafts, openings, pits and storage areas sunk or made for the mining, removal and/or stockpiling of any Mineral Substances from any adjoining or nearby properties.  Mineral Substances taken from the Premises shall at all times be kept entirely separate and distinct from any other ore or concentrated product until the same are measured and sampled so that the rights of Lessor shall be at all times preserved and protected.

3.

Commingling.  The right to commingle ore removed from the Premises or products derived therefrom after treatment, with other ore or products, before or after concentration or beneficiation, so long as the data necessary to determine the weight, grade, and recoverability of both the ore removed from the Premises or products derived therefrom and the ore or products with which it is commingled are obtained by Lessee.  Lessee shall then use that data to determine Lessor’s interest in minerals, metals and/or other products extracted from ores or products so mixed.  Such data and determinations shall be acquired and completed in accordance with generally accepted industry practices.

4.

Water Rights.  Any and all of Lessor’s water rights on, about, under or appurtenant to the Premises or to which the Premises are riparian.

5.

Deposit of Waste Materials.  The right to temporarily or permanently deposit on or off the Premises tailings, waste rock, overburden, surface stripping materials, process solutions and all other materials originating from the Premises or from adjoining or nearby properties, even if the sole use of the Premises may be for the placement of such materials.

6.

Treatment.  The right, at Lessee’s election and in any manner it deems fit, to beneficiate, concentrate, smelt, refine, and otherwise process or treat on or off the Premises any Mineral Substances taken from the Premises or from adjoining or nearby properties by any physical or chemical method or methods.  In exercising this right, Mineral Substances may be removed to a plant or plants existing, established or maintained upon the Premises or elsewhere.

7.

Amendment and Relocation of Claims.  The right, in Lessee’s sole discretion, to amend or relocate as unpatented mining claims or mill sites, in the name of Lessor, any unpatented mining claims or mill sites included in the Premises.  If Lessee undertakes any such amendment or relocation, Lessee shall use its best efforts to complete the same in compliance with applicable statutes and regulations but shall not be liable to Lessor for any act (or failure to act) by it or any of its agents in connection with the amendment or relocation of mining claims or mill sites unless such act (or omission) arises from gross negligence or is made in bad faith.

2

MGC-038-1.doc

C.

Purchase Option.  Lessee and its successors and assigns shall have an exclusive option to purchase the Premises pursuant to the provisions of Section 11 below.

D.

Lessor’s Reserved Right to Metal Detect for Gold.  Lessor reserves the right to use a metal detector, at Lessor’s sole risk and expense, to search for and recover not more than 100 ounces of gold from the Premises, provided such operations do not interfere with Lessee’s operations hereunder.  Lessor agrees to indemnify, protect, save and hold harmless Lessee and its affiliated and direct and indirect parent corporations and entities and all of their respective officers, directors, employees, shareholders, partners, agents and representatives (the “Lessee Indemnitees”) from and against any claims, liabilities and damages (including attorney fees) arising out of or resulting from such operations by Lessor on the Premises.  The rights reserved by Lessor pursuant to this Section 1.D shall terminate upon exercise of the Option granted herein as to those parts of the Premises for which the Op tion is exercised.

2.  TERM

.

Term.  The term of this Agreement shall commence as of the Effective Date and shall continue for a period of ten years thereafter unless sooner terminated or surrendered in the manner herein provided.  Lessee may extend this Agreement for an additional ten years (subject to such sooner termination or surrender) by giving notice to Lessor prior to the end of the initial ten-year period.  If at the end of the initial term or extended term Lessee is engaged in Mining Operations (as defined below), the term of this Agreement shall automatically continue for so long thereafter as Lessee continues to be engaged in Mining Operations, but the cessation of any such operations shall not cause this Agreement to terminate prior to the end of the initial or extended term or cause Lessee to lose its right to extend the term as herein provided.

.

Definition of Mining Operations.  For purposes of this Agreement “Mining Operations” shall include, but shall not be limited to, development, extraction, processing, leaching or sale of ores, concentrates or derivatives retrieved through leaching of ores, produced from the Premises.  Activities off the Premises shall constitute Mining Operations when they are conducted in connection with an integrated mining operation involving the Premises and other properties in which Lessee holds an interest.  Development includes activities, including permitting, carried on diligently and in good faith preparatory to commencing or resuming operations at a mine. Lessee shall be deemed to be actively engaged in Mining Operations so long as all such operations, once begun, do not cease for a period of more than 180 consecutive days.  In the event Lessee is actively engaged in Mining Operations at the end of the initial or extended term but at any time is unable to obtain a satisfactory market or a satisfactory price for Mineral Substances and as a result suspends mining, processing or marketing operations from time to time, then Mining Operations shall not be deemed to have ceased and this Agreement shall not expire or terminate provided that Lessee notifies Lessor of such loss of market or inability to obtain a satisfactory price and diligently attempts to market Mineral Substances at a satisfactory price and recommence operations.  Mining Operations shall not be deemed to have ceased if once begun they are interrupted through Force Majeure in accordance with Section 8.  If Mining Operations have not commenced at the end of the initial or extended term because of Force Majeure conditions, the primary term shall be extended until such Force Majeure conditions cease.

3

MGC-038-1.doc

.

Continuation After Mining Operations.  If, at the end of the initial or extended term, Lessee is not conducting or has ceased Mining Operations, but is utilizing the Premises in support of Mining Operations on other lands, then this Agreement shall continue in force as to the lands subject to such uses and such expansions thereof as may reasonably be contemplated, as designated in good faith by Lessee, and the payment provided in Section 3.A shall be rental for such uses.

3.  PAYMENTS TO LESSOR

.

Advance Royalty.  Subject to Lessee’s right to terminate this Agreement, Lessee shall pay the following amounts annually to Lessor as advance royalty:

$6,000.00 upon execution of the Agreement (for year 1 of the Agreement),

$12,000.00 for year 2 of the Agreement,

$20,000.00 for year 3 of the Agreement, and

$25,000.00 for each year thereafter until Lessee commences the payment of production

royalties pursuant to Section 3.B.

Except as to the payment made upon execution of this Agreement, advance royalty payments shall be paid annually on or before the beginning of each anniversary of the Effective Date.  All advance royalty payments shall be deductible cumulatively as a credit against actual production royalties payable to Lessor pursuant to Section 3.B and shall be credited toward the Purchase Price (as defined in Section 11.A below).  Lessee’s obligation to make advance royalty payments shall cease or be proportionately reduced, as the case may be, upon the earliest of: (i) exercise by Lessee of its Option to purchase the Premises pursuant to Section 11.B; (ii) the commencement of production royalty payments pursuant to Section 3.B (with the provision that if, in any given year, such production ever results in payment to Lessor of less than the amount that would otherwise be payable to Lessor as advance royalty for the year, then Lessor shall be entitled to an end-of-year payment in the amount of the difference between the amount actually received that year in production royalties and the amount that would otherwise be payable to Lessor as advance royalty for the year); or (iii) termination of this Agreement under Section 6.

B.

Production Royalty.  Lessee shall pay Lessor a production royalty of three percent (3.0%) of the Net Smelter Returns of Mineral Substances produced from the Premises and sold.  “Net Smelter Returns” means the proceeds actually received, or deemed to have been received in the case of refined gold and silver as described in Section 3.B(1) below, from the sale or deemed sale of Mineral Substances produced from the Premises, less the charges described in Section 3.B(2) below.  All production royalty payments shall be credited toward the Purchase Price.

(1)

If Lessee sells refined gold or silver, Lessee will be deemed to have received proceeds from the sale thereof equal to the number of ounces of refined gold or silver outturned to Lessee’s account during the calendar quarter multiplied in the case of gold by the average daily London Bullion Brokers P.M. Gold Fixing during such calendar quarter and in the case of silver by the average of the daily Handy & Harmon Noon Silver Quotation during the calendar quarter.  The average price for a calendar quarter shall be determined by dividing the sum of all daily prices

4

MGC-038-1.doc

posted during the calendar quarter by the number of days that prices were posted.  The posted price shall be obtained from the Wall Street Journal, Reuters, E&MJ or other industry-accepted source.  Lessee shall have the right to market and sell to third parties refined gold and silver in any manner it chooses, including the sale of such refined gold and silver on the commodity market.  In this regard, Lessor shall have no right to participate in any gains and/or profits or obligation to suffer any losses accruing to Lessee as a result of forward sales, options trading, commodities futures trading or similar transactions.

(2)

Charges to be deducted from proceeds in determining Net Smelter Returns are the following:

(a)

all costs, charges and expenses paid or incurred by Lessee for treatment in the smelting and refining processes (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs, penalties and other processor deductions);

(b)

all costs, charges and expenses paid or incurred by Lessee for transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay and forwarding expenses incurred by reason of or in the course of such transportation) of Mineral Substances from the Premises to the place or places of treatment and thence to the place or places of sale;

(c)

sales and brokerage costs on Mineral Substances for which the royalty is payable; and

(d)

sales, use, severance, net proceeds of mine, and ad valorem taxes applicable under local, state and federal law and any other tax or governmental levy or fee relating to the Mineral Substances for which the royalty is payable (other than taxes based upon income).

(3)

Royalties shall accrue quarterly (based on calendar quarters) and shall become due and payable by Lessee prior to the end of the month following the end of each quarter.  Royalty payments shall be accompanied by pertinent information in sufficient detail to explain the calculation of the royalty payment.

(4)

All statements for royalties rendered to Lessor by Lessee during any quarter shall conclusively be presumed to be true and correct after one year following the end of such quarter unless within said one-year period Lessor takes written exception thereto and makes a claim on Lessee for adjustment.  No adjustment favorable to Lessee shall be made unless it is made within the same prescribed period.

(5)

Lessor, upon notice in writing to Lessee, shall have the right to audit Lessee’s accounts and records relating to the payment of the royalty for any calendar quarter within the one-year period following the end of such calendar quarter; provided, however, the making of any audit shall not extend the time for the taking of written exception to and the adjustment of accounts as provided for in the paragraph above.  All audits shall be conducted by Lessor at the office of Lessee where the relevant books and records are maintained and such audit shall be conducted during normal business hours.

5

MGC-038-1.doc

(6)

If a royalty, production fee, or other payment based upon production is subsequently imposed by the United States on Mineral Substances produced from any unpatented mining claims included in the Premises (whether or not such claims are converted to some other form of property interest), the amount payable to the United States shall be deducted from the royalty payable to Lessor for such Mineral Substances pursuant to this Section 3.B, provided, however, that the royalty paid to Lessor shall not be less than the amount that would be payable to Lessor hereunder at a royalty rate of one percent (1.0%).

C.

Place of Payment.  All payments shall be made in accordance with Section 9 below.

D.

No Royalty on Test Materials.  Lessee shall have the right to mine and market amounts of Mineral Substances reasonably necessary for sampling, assaying, metallurgical testing and evaluation of the mineral potential of the Premises without incurring any obligation to make production royalty payments.

4.  TITLE MATTERS

.

Representations and Warranties.  Lessor covenants and warrants to Lessee, which covenants and warranties shall survive any termination of this Agreement, as follows:

(1)

Lessor is the owner of the Premises free and clear of any defects, liens, claims, demands, burdens or encumbrances, subject only to the paramount title of the United States.

(2)

Lessor has the right, power and capacity to enter into and perform this Agreement and all transactions contemplated herein and any corporate or other actions required to authorize it to enter into and perform this Agreement have been properly taken.

(3)

To Lessor’s best knowledge, the unpatented mining claims included in the Premises have been properly located and maintained in conformance with applicable federal, state and local laws.

(4)

To Lessor’s best knowledge, all lands covered by the claims included in the Premises were open to location when such claims were located and there are no conflicts with claims owned by other parties.

(5)

Lessee shall have quiet and peaceable possession of the Premises.

(6)

Lessor will defend its title to the Premises against all persons who may claim the same.

(7)

Lessor has not committed, nor will Lessor in the future commit, any act or acts that will encumber or cause a lien to be placed against the Premises except subject and subordinate to the terms of this Agreement.

(8)

Lessor has no knowledge or information indicating:

6

MGC-038-1.doc

(a)

that hazardous substances from any source (mining or otherwise) have been released on the Premises; or

(b)

that any underground or above-ground site of historic or current mining operations on the Premises could cause or constitute a release or threat of release of hazardous substances into the environment; or

(c)

that any part of the Premises has been included or proposed for inclusion on the National Priorities List (40 C.F.R. Section 300 App. B); or

(d)

that any part of the Premises has been studied or proposed for study by the Environmental Protection Agency and/or any state regulatory agency; or

(e)

that any site of historic or current mining, milling and/or smelting workings on the Premises is presently in such condition as to potentially raise liability to the past, present or future owner(s) and/or operator(s) of the Premises pursuant to the Comprehensive Environmental Response, Compensation and Liability Act and amending statutes (“CERCLA”); or

(f)

that any reclamation obligations for prior operations on the Premises are unsatisfied.

B.

Title Defects, Defense and Protection.  Lessee may at any time cause a title search to be made covering all or any part of the Premises.  Lessor shall provide Lessee with any abstracts and other evidences of title in Lessor’s possession or control.  If, (1) in the opinion of Lessee, Lessor’s title to all or any part of the Premises is defective or less than as represented in Section 4.A; or (2) Lessor’s title is contested or questioned by any person or entity and Lessor is unable or unwilling to promptly correct the alleged defects, Lessee may, without obligation and without waiver of any remedies of Lessee, attempt to perfect or defend Lessor’s title.  In that event, Lessor shall execute all documents and shall take such other actions as are reasonably necessary to assist Lessee in its efforts to perfect or defend Lessor’s title, time being of the essence.  If title is less than rep resented in Section 4.A, then the costs and expenses of perfecting or defending title shall be a credit against subsequent payments to be made by Lessee to Lessor under this Agreement.  Any improvement or perfection of title to the Premises shall inure to the benefit of Lessee in the same manner and to the same extent as if such improvement or perfection had been made prior to the execution of this Agreement.

C.

Lesser Interest.  All payments payable to Lessor hereunder (including the Purchase Price) are based upon Lessor’s warranted ownership of the entire undivided interest in minerals included within the boundaries of the Premises.  If Lessor is found to own less than 100% of the mineral interest in the Premises (i.e., if Lessor’s interest is the same in all claims or parcels included in the Premises but less than 100%), then Lessor’s actual interest shall be its actual percentage interest in the Premises.  If Lessor’s interest varies as to separate portions of the Premises, then Lessor’s actual interest shall be determined on a net acreage basis by multiplying the acreage in each distinct claim or parcel within the Premises by Lessor’s fractional interest therein and then computing Lessor’s interest on the net acres actually owned by Lessor as a proportion of the total acreage ori ginally warranted to be owned by Lessor.  In either of such events, all payments payable to Lessor hereunder other than production royalty payments shall be reduced accordingly.  If

7

MGC-038-1.doc

Lessor’s title to any of the Premises from which production is made is less than 100%, then the production royalty payable pursuant to Section 3.B shall be reduced to the same proportion as the undivided right and title actually owned by Lessor bears to the entire undivided right and title to the portion of the Premises from which such production is made.  Such reductions in payments shall not waive or eliminate any other rights or remedies Lessee may have in connection with the extent of Lessor’s actual interest in the Premises.

D.

Patenting of Claims.  If the existing governmental moratorium on patenting of unpatented mining claims is discontinued, then upon request of Lessee at any time during the term of this Agreement, Lessor agrees to undertake to obtain a patent to any or all of the mining claims that are subject to this Agreement, as designated by Lessee.  Lessee shall prepare all documents, compile all data and comply in all respects with applicable law, all at the expense of Lessee.  Lessor shall execute any documents required for this purpose and shall cooperate fully with Lessee in the patent application, process and proceedings, time being of the essence.  If Lessor begins patent proceedings and Lessee thereafter requests Lessor to discontinue such proceedings or if this Agreement is terminated while patent proceedings are pending, Lessee shall have no further obligation with respect thereto except to pay any unpaid expenses acc rued in such proceedings prior to its request to discontinue, or prior to termination, whichever comes first.

E.

Conversion of Claims.  If during the term of this Agreement federal or state laws are changed or enacted to provide for some alternative basis for holding mining or mining-related rights in public lands, Lessee, in its sole and exclusive discretion, may make such location, filing or application for claim, license or permit in Lessor’s name as may be required or permitted by such new or modified laws with respect to the ground covered by the Premises.  Lessor gives Lessee full power and authority as Lessor’s attorney-in-fact to make such location, filing or application.  Any such claim, license or permit shall be subject to this Agreement.

5.  OBLIGATIONS OF LESSEE

.

Protection from Liens.  Lessee shall keep title to the Premises free and clear from any liens, claims and encumbrances (other than liens for taxes not yet due and delinquent) arising from its operations hereunder.  Lessee shall pay for all labor performed upon or material furnished to the Premises at the request of Lessee and shall keep the Premises free and clear from liens of mechanics or materialmen in connection with services performed and material supplied at Lessee’s request.  Lessee shall, however, have the right in good faith to contest the validity of any lien, claim or liability and shall not be required to remove any such lien, claim or liability so long as Lessee is contesting the validity or the amount thereof.  The foregoing provisions shall not restrict Lessee from placing a mortgage, trust deed or other lien upon its interest in the Premises for financing purposes.

.

Indemnification and Insurance.  Lessee shall protect Lessor against any damages arising out of Lessee’s operations on the Premises and shall indemnify Lessor against liability resulting from Lessee’s operations on the Premises; provided, however, that Lessor or any agent acting on its behalf, or any breach of warranty by Lessor, shall not have been a contributing cause to the event giving rise to any such damages.  Lessee shall carry liability insurance with reasonable policy limits protecting Lessor against damages arising out of Lessee’s operations on the Premises.

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.

Taxes and Assessments.  Except as provided below, Lessee shall pay promptly before delinquency all taxes and assessments that may be assessed during the term of this Agreement upon the Premises resulting from Lessee’s activities and products derived therefrom.  However, Lessee shall always have the right to contest, in the courts or otherwise, either in its own name or in the name of Lessor, the validity or amount of any such taxes or assessments, or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof, before it shall be required to pay such taxes or assessments.  Notwithstanding the foregoing, Lessee shall not permit any part of the Premises to be conveyed and title lost as the result of nonpayment of such taxes and assessments.  Lessee shall provide Lessor with copies of all receipts evidencing payment of such taxes and assessments.  If Lessor should receive tax bills or claims that are the responsibility of Lessee, Lessor shall promptly forward such bills or claims to Lessee for appropriate action.  Lessee shall pay the above-referenced taxes that are assessed from the Effective Date of this Agreement to its date of termination.  Nothing in this paragraph shall be construed to obligate Lessee to pay that portion of any tax based upon an assessment of improvements or structures made or placed on the Premises by Lessor.  Lessee shall not be liable for any taxes levied on or measured by Lessor’s income or based upon payments made to Lessor by Lessee under this Agreement.

.

Compliance with Laws and Regulations.  Lessee shall perform all of its operations on the Premises in a good and workmanlike manner and in compliance with all applicable federal, state and local laws and regulations pertaining to environmental protection, reclamation and bonding.  Specifically, Lessee shall comply with all permitting and other regulatory requirements set forth by the U.S. Bureau of Land Management, the U.S. Forest Service, the U.S. Environmental Protection Agency, and applicable state agencies.  Lessee shall have no obligations with respect to prior operations or preexisting conditions on the Premises.

.

Right of Access to the Premises.  During the term of this Agreement Lessee shall allow Lessor and representatives of Lessor, at their sole risk and expense, access to the Premises for the purposes of viewing or inspecting Lessee’s operations, at times which, in Lessee’s discretion, do not unreasonably interfere with its operations.  Lessor, on behalf of itself and its representatives, agrees to indemnify, protect, save and hold harmless the Lessee Indemnitees from and against any and all losses, costs, damages, expenses, attorney fees, claims, demands, liabilities, suits and actions of every kind and character that may be imposed upon or incurred by any of the Lessee Indemnitees on account of, or arising directly or indirectly from, Lessor’s rights under this Section 5.E.

.

Delivery of Data.  Upon termination of this Agreement, Lessee shall furnish Lessor within a reasonable time and without warranty or liability one set of copies of all available noninterpretive data pertaining to the terminated portion of the Premises and developed or prepared by or for Lessee (unless such data has previously been furnished by Lessee to Lessor), and shall authorize and permit Lessor to take possession of any available core derived from the terminated portion of the Premises, whether or not such core is stored on the Premises; provided, however, that Lessee shall in no event be liable to Lessor for availability of or damage to any such core or for the accuracy, reliability or completeness of any data furnished to Lessor.  The provisions of this Section 5.F shall not apply if the termination occurs from Lessee’s exercise of its Option to purchase the Premises.  Lessor shall assume all risks stemming from reliance upon such data by itself and by third parties after disclosure thereof by Lessor and shall indemnify and hold harmless the Lessee Indemnitees as to such risks and as to any claims made by such third parties.

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.

Assessment Work and Maintenance Fees.  Commencing with the annual assessment work year beginning September 1, 2007 and subject to Lessee’s right under Section 6.B to terminate this Agreement as to all or a portion of the Premises, Lessee shall perform any required annual assessment work and make all payments required to maintain all unpatented mining claims included in the Premises (provided the same are still subject to this Agreement), and shall timely file with the Bureau of Land Management and record with the county in which said claims are located for each assessment year affidavits of labor, notices of intent to hold, and any other documents necessary to maintain said claims pursuant to state and federal law; provided, however, that Lessee shall not be required to undertake or compete such work or make such payments for the assessment year during which this Agreement is terminated (or for any subsequent assessment ye ar) if termination occurs prior to July 1 of said assessment year.

H.

No Obligation to Mine.  Subject to Section 5.G, nothing in this Agreement shall impose any obligation or covenant, express or implied, upon Lessee to conduct any exploration, development or mining operations upon the Premises, it being the intent of the Parties that Lessee shall have sole discretion to determine the technical and economic feasibility, timing, method, manner and rate of conducting any such operations.  Only the express duties and obligations provided under this Agreement shall be binding upon Lessee.  The nature, manner and extent of all exploration, development, mining and other operations, if any, shall be matters to be determined solely within the discretion of Lessee.

6.  TERMINATION

.

Termination by Lessor.  In the event Lessor considers that Lessee has not complied with any obligation hereunder, Lessor shall notify Lessee setting out specifically in what respect it is claimed that Lessee has breached this Agreement.  If the alleged breach is not cured within 60 days after notice is given, or if Lessee has not within that time either commenced to cure the alleged breach and does not thereafter diligently complete such cure, or challenges the legitimacy of the allegation, Lessor may terminate this Agreement by delivering to Lessee written notice of such termination; provided, however, that in the event Lessee challenges the legitimacy of the allegation, Lessee may give written notice to Lessor within such 60-day period setting forth such fact.  If Lessor gives written notice within 15 days of Lessee’s notice that Lessor rejects Lessee’s position, then this Agreement shall not be terminable by Lessor until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Lessee shall satisfy such judgment within 30 days following its entry (or if an appeal of such judgment is taken, following its affirmation by the highest court to which such an appeal is made).  Failure of Lessor to give such notice shall constitute agreement by Lessor that Lessee is not in default.  Lessor shall not be entitled to terminate this Agreement for any default which by its nature is not retroactively curable if Lessee has used its best efforts to cure such a default to the extent practical or if Lessee has paid Lessor damages for such default where damages are an appropriate remedy.  Lessor shall have no right to terminate this Agreement except as expressly provided in this Section 6.A, and termination of this Agreement shall be the sole remedy of Lessor.  Neither the service of any notice nor the performance of any acts by Lessee intended to meet any such alleged breach shall be deemed an admission or presumption that Lessee has failed to perform all of its obligations under this Agreement.  Notwithstanding the foregoing provisions of this Section 6.A, this Agreement may not be terminated, in whole or in part, by less than all the individuals and/or

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entities included within the term “Lessor.”

.

Termination by Lessee.  Lessee shall have the right to terminate this Agreement at any time with respect to all or any part of the Premises by giving Lessor written notice of such termination.  Partial termination of less than all of the mining claims constituting the Premises shall result in a proportionate reduction in the advance royalty payments prescribed in Section 3.A and in the Purchase Price established in Section 11.A.  Upon such termination, all right, title and interest of Lessee under this Agreement shall terminate with respect to the Premises affected.  Lessee shall be relieved of all further obligations set forth in this Agreement as to the Premises affected except those obligations, if any, which have accrued prior to such termination.  Subject to the provisions of Section 5.G, any taxes, assessments and governmental charges for which Lessee was responsible prior to termination shall be prora ted as of the termination date.  Exercise by Lessee of its Option to purchase the Premises shall constitute a termination of this Agreement by Lessee as to that portion of the Premises for which the Option is exercised.

.

Release.  Following termination of this Agreement, as to all or a part of the Premises, Lessee shall promptly deliver to Lessor a fully executed release of this Agreement, in recordable form, as to the affected Premises, if so requested by Lessor.  The provisions of this Section 6.C shall not apply to any part of the Premises acquired by Lessee through exercise of Lessee’s Option to purchase the Premises.

.

Reclamation; Removal of Property.  Upon termination of this Agreement, Lessee shall have a continuing right to enter upon the Premises to complete required reclamation.  Lessee shall have a period of one year after the date of termination in which to enter upon and remove from the Premises all of its machinery, buildings, structures, facilities, equipment and other property of every nature and description erected, placed or situated thereon, except foundations of a permanent nature and supports, track and pipe placed in shafts, drifts or openings in the Premises.  Any property of Lessee not removed by the end of this one-year period shall become the property of Lessor; however, Lessee does not warrant the condition or safety of any such property.  Lessee shall have the right to keep a watchman on the Premises during this one-year period.  The provisions of this Section 6.D shall not apply to any part of the Premises acquired by Lessee through exercise of Lessee’s Option to purchase the Premises.

7.  LIENS

In the event that Lessor fails to promptly pay, when due, taxes, mortgages or other liens levied against the Premises and payable by Lessor, Lessee shall have the right (but shall not be obligated) to pay such past due amounts and, if Lessee does so, Lessee shall be subrogated to all the rights of the holders thereof and Lessor shall reimburse Lessee for all such payments and for all related costs and expenses paid or incurred by Lessee (including related attorney fees) within three months after the same are paid or incurred by Lessee.  Any payments due Lessor under this Agreement may be credited by reimbursements due Lessee under this Section.  The provisions of this Section shall survive termination of this Agreement.

8.  FORCE MAJEURE

Lessee shall not be liable for failure to perform any of its obligations, other than making

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payments due under Section 3, during any period in which performance is prevented, in whole or in part, by causes herein termed Force Majeure.  For purposes of this Agreement, the term “Force Majeure” shall include labor disputes; acts of God; action of the elements, including inclement weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules, regulations, orders, directives and requests of governmental bodies or agencies; delay, failure or inability of suppliers or transporters of materials, parts, supplies, services or equipment or by contractors’ or subcontractors’ shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; judgments or orders of any court or agency; inability to obtain on reasonably acceptable terms or in reasonably acce ptable time any public or private licenses, permits or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or future violation of federal, state or local environmental standard; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot; civil strife; fire; explosion; or any other cause whether similar or dissimilar to the foregoing, except for the inability to meet financial commitments.  If Lessee desires to invoke the provisions of this Section, Lessee shall give notice of the commencement of the circumstances giving rise to such Force Majeure.  The time for discharging Lessee’s obligations with respect to the prevented performance, or the time within which Lessee must undertake or complete any activity, shall then be extended for the period of Force Majeure.

9.  NOTICES AND AGENTS

A.

Notices.  Any required notice or communication shall be in writing and shall be effective when personally delivered (including delivery by express courier service) to the following addresses or when addressed as follows and deposited, postage prepaid, and certified with return receipt requested, in the United States mail:

If to Lessor:

Lamonte J. Duffy

P.O. Box 1227

Lovelock, Nevada 89419

If to Lessee:

MGC Resources Inc.

Attn: Alan Branham, President

2778 Spokane Creek Road

East Helena, Montana 59635

Either Party may, by notice to the other given as aforesaid, change its mailing address for future notices.

B.

Designation of Agent for Lessor.  If ever there is more than one owner and/or authorized payee of or as to Lessor’s interest, such multiple owners and/or payees shall designate an authorized agent to receive all payments hereunder from Lessee and to give and receive notices pursuant to this Agreement.  Lessee may satisfy its payment obligations hereunder by tendering one check to said agent for the benefit of all of such multiple owners and/or payees, and responsibility for disbursing such payments among said persons shall rest exclusively with said agent.  Any change in said agent shall be effective only if made in writing and signed by each of the persons constituting Lessor.  In the event of any dispute among such multiple owners and/or payees

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concerning entitlement to such payments, Lessee may tender its payments into an escrow account for the benefit of such persons as may be entitled thereto at a bank of Lessee’s choice located in the county in which the Premises are situated, and notify such persons that such an account has been established, with the costs of establishing and maintaining the escrow account deductible from Lessee’s payments.  Such escrowed payments shall be deemed to be a sufficient tender of payment by Lessee for all purposes hereunder.

C.

Payments After a Transfer of Interest.  In the event payments should be made to other parties because of any authorized transfer of the interest of any of the persons constituting Lessor, payments tendered to Lessor’s designated agent, or to the party making the transfer if only one party constitutes Lessor, shall conclusively be deemed payment to the transferee until Lessee receives notice and evidence satisfactory to it from both the agent (if applicable) and the transferor that the transferor’s interest has been transferred and that payments should be made to the transferee or the transferee’s designated agent.

10.  CONFIDENTIALITY

Lessor shall not, without the express written consent of Lessee, disclose any information concerning the terms of this Agreement or operations conducted under this Agreement (except information and data that is generally available to the public), nor issue any press releases concerning such information.  However, if Lessor contemplates transferring its interest to a third party, it shall have the right to disclose such information to that party if it first obtains an agreement in writing from such third party, satisfactory to Lessee after review in advance, providing that the third party shall hold confidential the information furnished to it.

11.  OPTION TO PURCHASE PREMISES

A.

Grant of Option.  Lessor hereby grants and conveys to Lessee and its successors and assigns, while this Agreement remains in effect, the sole and exclusive option (the “Option”) to purchase all or part of the mining claims constituting the Premises for a purchase price of One Hundred Thousand Dollars ($100,000.00) per claim (the “Purchase Price”), which Option may be exercised by Lessee repeatedly if the exercise applies to less than all of the Premises.  Lessee shall be entitled to a credit against the Purchase Price for all amounts previously paid under the provisions of Sections 3.A and 3.B above.  Exercise of the Option shall terminate Lessee’s obligation to make any further royalty payments under Section 3.B with respect to those claims for which the Option is exercised, and shall result in a proportionate reduction in the advance royalty payments prescribed in Sectio n 3.A.

B.

Exercise of Option.  Lessee may, from time to time, exercise the Option by giving Lessor written notice thereof at any time while this Agreement remains in effect, which notice shall specify the portion of the Premises for which the Option is exercised.  Exercise of the Option shall be effective upon delivery of said notice, as provided in Section 9.A.  Upon such exercise, the Parties shall be bound to complete the closing of the purchase and sale of the relevant portion of the Premises as provided herein.  The notice shall also specify a time and place for closing the purchase and sale of the relevant portion of the Premises.  The closing shall be held not more than 30 days from the date of the notice, at a time and place reasonably convenient to the Parties.  At the closing, Lessor shall execute and deliver to Lessee a good and sufficient deed acceptable to Lessee, in

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recordable form, in which Lessor will grant to Lessee title to the relevant portion of the Premises free and clear of all liens, encumbrances, reservations, restrictions and other exceptions to title arising by, through or under Lessor.  Upon delivery to Lessee of the deed, Lessee shall pay and deliver to Lessor the appropriate Purchase Price that is due (if any) after deducting the amounts provided for in Section 11.A.  Upon completion of the closing, this Agreement, and all rights and obligations of the Parties hereunder, shall terminate with respect to that portion of the Premises acquired by Lessee, except for such rights and obligations hereunder as may then have accrued and remain unpaid or unsatisfied.

12.  L&S PLACER CLAIM

A.

L&S Placer Claim.  Lessor is also the owner of the L & S unpatented placer mining claim, BLM Serial No. NMC819231, located in the NW¼ of Section 8, Township 28 North, Range 34 East, MDM, in Pershing County, Nevada (the “L&S Placer Claim”).  Except as otherwise provided in Section 12.D below, if Lessor or any of his successors or assigns (hereafter “Owner”) desire to sell, grant, assign, lease, transfer, convey, surrender, abandon or otherwise commit or dispose of (hereafter “Transfer”) all or any part of their interest in the L&S Placer Claim, Lessee shall have a preemptive right to acquire such interest as provided in this Section 12.

B.

Preemptive Right.  An Owner intending to Transfer all or any part of its interest in the L&S Placer Claim shall promptly notify Lessee of its intentions.  The notice shall state the price and all other pertinent terms and conditions of the intended Transfer, and shall be accompanied by a copy of the offer or agreement or plan for sale, lease, abandonment, etc. as the case may be.  Lessee shall have 30 days from the date such notice is delivered to notify the Owner whether it elects to acquire the offered interest at the same price and on the same terms and conditions as set forth in the notice.  If Lessee does so elect, the Transfer to Lessee shall be consummated promptly after notice of such election is delivered to the Owner.

C.

Transfer to Third Party.  If Lessee fails to so elect within said 30-day period, the Owner shall have 90 days following the expiration of such period to consummate the Transfer to a third party at the price and on the terms and conditions offered by the Owner to Lessee in the notice required in Section 12.B.

D.

Revival of Preemptive Right.  If the Owner fails to consummate the Transfer to a third party within said 90-day period, Lessee’s preemptive right in such offered interest shall be deemed to be revived.  Any subsequent proposal to Transfer such interest shall be conducted in accordance with all of the procedures set forth in the preceding portion of this Section 12.

E.

Exceptions to Preemptive Right.  This Section 12 shall not apply to the following:

1.

A Transfer by will or through inheritance of all or any part of an Owner’s interest in the L&S Placer Claim upon the death of that Owner;

2.

Incorporation of an Owner, or corporate merger, consolidation, amalgamation or reorganization of an Owner by which the surviving entity shall possess substantially all of the stock, or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of that Owner; or

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3.

The grant by an Owner of a security interest in any interest in the L&S Placer Claim by mortgage, deed of trust, pledge, lien or other encumbrance, so long as such security interest is at all times subject and subordinate to the terms of this Agreement.

F.

Access to and Development of Premises.  Lessor hereby grants to Lessee and its representatives, for so long as this Agreement remains in effect, the right to enter upon, cross over, improve, disturb and utilize the L&S Placer Claim to the full extent necessary or convenient for Lessee to exercise the rights and privileges granted to Lessee herein with respect to the Premises.

13.  MISCELLANEOUS

A.

Cooperation by Lessor.  Lessor shall execute all documents and otherwise cooperate with Lessee as needed in connection with the conduct of operations on the Premises, including the acquisition of governmental permits, post-mining reclamation approvals, water rights, and other rights and privileges related to operations on the Premises and reclamation thereof.  In that regard, Lessor agrees not to protest, challenge or otherwise oppose any water right or operational permit filings that Lessee may make to facilitate operations or proposed operations on or in connection with the Premises.

B.

Sharing of Data by Lessor.  Lessor shall, upon execution of this Agreement, provide or make available to Lessee any available technical and title information and drill core and other samples (such as cuttings, pulps, drill logs, assay results, feasibility reports, etc.) concerning the Premises which are in Lessor’s possession or control.  Similarly, Lessor shall, as soon as possible, provide or make available to Lessee any such information and samples that Lessor may acquire subsequent to the execution of this Agreement, whether obtained personally or from third parties.

C.

Relationship of the Parties.  Nothing contained herein shall be deemed to constitute either Party, in its capacity as such, the partner, agent or legal representative of the other Party, or to create any partnership, mining partnership or other partnership relationship, or fiduciary relationship between them, for any purpose whatsoever.  Except as expressly provided in this Agreement, each Party shall have the free, unrestricted and independent right to engage in and receive the full benefits of any and all business endeavors of any sort whatsoever outside the Premises or outside the scope of this Agreement, whether or not competitive with the endeavors contemplated herein, without consulting the other or inviting or allowing the other therein.

D.

Transfers.  Lessor and Lessee and their respective successors shall have the right to assign or otherwise transfer their respective interests in this Agreement in whole or in part provided that the assignee agrees in writing to assume all, or a portion of all if applicable, obligations of Lessor or Lessee hereunder, as the case may be.  No such transfer shall be effective against the non-transferring Party until that Party receives written notice of the transfer in accordance with Section 9.A.

.

Binding Effect.  Subject to the provisions of Section 13.D above, the provisions of this Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, personal representatives, beneficiaries, successors and assigns.

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.

Memorandum of Agreement.  This Agreement may be recorded at the election of Lessee.  At Lessee’s request, the Parties shall also execute a short form of this Agreement (the “Memorandum of Mineral Lease Agreement and Option to Purchase”) which may be recorded in the office of the recorder of each county wherein all or part of the Premises are located.  The execution and recording of the Memorandum of Mineral Lease Agreement and Option to Purchase shall not limit, increase or in any manner affect any of the terms of this Agreement, or any rights, interests or obligations of the Parties.

.

Construction of Agreement.  This Agreement constitutes the entire understanding of the Parties with respect to the Premises and the L&S Placer Claim, all previous agreements, promises, representations, negotiations, writings and understandings between the Parties concerning the Premises and the L&S Placer Claim being expressly rescinded.  Except for obligations of good faith and fair dealing, there are no terms or conditions, express or implied, other than herein stated.  This Agreement shall be subject to all valid and applicable provisions of statutory or common law, rules and regulations.  Should this Agreement or any of its provisions or operations be found to be contrary to any such valid law, rule or regulation, the latter shall be deemed to control and this Agreement shall be regarded as modified accordingly.  Subject to the preceding sentence, no modification or alteration of this Agreement s hall be effective unless made in writing and executed by the Parties with the same formality as this Agreement.  Wherever the term “including” is used herein, it shall be deemed to mean “including without limitation,” and wherever the phrase “shall include” is used herein, it shall mean “shall include without limitation.”

.

Headings.  The headings used herein are for convenience only and shall be disregarded in construing and enforcing this Agreement.

.

Multiple Counterparts.  This Agreement may be executed in multiple counterparts and all counterparts taken together shall be deemed to constitute one and the same document.

.

Rule Against Perpetuities.  The Parties do not intend nor desire for this Agreement to violate the common law Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land.  If any provision of this Agreement does or would violate the Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land, then this Agreement shall not be deemed void or voidable, but shall be interpreted in such a way as to maintain and carry out the Parties’ objectives to the fullest extent possible by law.

.

Applicable Law.  This Agreement shall be construed, interpreted and governed by the laws of the State of Nevada.

.

Attorney Fees.  In the event either Party brings any action or proceeding for damages or equitable relief against the other Party for an alleged breach or default of any provision of this Agreement to recover monies due or to enforce, protect or establish any right or remedy of either Party under this Agreement, the prevailing Party shall be entitled to recover as a part of such action or proceeding reasonable attorney fees and court costs.

.

Disputes.  Disputes or differences between the Parties shall not interrupt

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performance of this Agreement or the continuation of operations hereunder.  In the event of any dispute or difference, operations may be continued and payments may be made hereunder in the same manner as prior to such dispute or difference.  In case of suit, adverse claim, dispute or question as to the ownership of the Premises or production royalties, or of any interest therein or hereunder, Lessee may, in its sole discretion, deposit the payment (or the portion of the payment in dispute, if less than the whole payment is in dispute) into an escrow account and Lessee shall not be held in default in payment thereof until such suit, claim, dispute or question has been finally disposed of.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth in the acknowledgements below, but effective as of the Effective Date.

Lessor:

“Lamonte J. Duffy”

LAMONTE J. DUFFY

Lessee:

MGC RESOURCES INC., a Nevada

corporation

By “Alan Branham”

Alan Branham, President

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STATE OF NEVADA

)

: ss.

COUNTY OF

)

On this ______ day of October, 2006, personally appeared before me, a Notary Public, LAMONTE J. DUFFY, who acknowledged that he executed the above instrument.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

STATE OF MONTANA

)

) ss.

COUNTY OF LEWIS AND CLARK

)

On this ______ day of October, 2006, personally appeared before me, a Notary Public, Alan Branham, the President of MGC RESOURCES INC., a Nevada corporation, who acknowledged that he executed the above instrument on behalf of said corporation.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

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EXHIBIT A

“Premises”

The following six unpatented lode mining claims located within Sections 5 and 8, Township 28 North, Range 34 East, MDM, Pershing County, Nevada:

Claim Name

BLM Serial Number

Recording Data

(Book/Page)

Duffy #15

NMC935482

413/317

Duffy #16

NMC935483

413/318

Duffy #17

NMC935484

413/319

Duffy #18

NMC935485

413/320

Duffy #19

NMC935486

413/321

L&S

NMC846972

374/206

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EX-10.10

MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE

THIS MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE (“Agreement”) is made effective as of the 30th day of October, 2006 (“Effective Date”), between DALE CHABINO and DIANA CHABINO (collectively, “Lessor”) and MGC RESOURCES INC., a Nevada corporation (“Lessee”).

RECITALS

.

Lessor is the owner of the unpatented mining claims described in Exhibit A attached hereto, which claims are located in Pershing County, Nevada (the “Premises”).

.

Lessor desires to lease the Premises to Lessee and to grant Lessee an option to purchase the Premises upon the terms and conditions herein set forth.

C.

Lessee desires to lease the Premises from Lessor and to hold an option to purchase the Premises upon the terms and conditions herein set forth.

AGREEMENT

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee (the “Parties” and individually a “Party”) agree as follows:

1.  RIGHTS GRANTED

.

Grant of Lease.  Lessor hereby leases exclusively to Lessee and its successors and assigns the Premises, and all rights, improvements, privileges, hereditaments, and appurtenances, including all ores, minerals, waste dumps, tailings materials and mineral rights belonging or in any way appertaining to the Premises, subject to the provisions of this Agreement.

B.

Rights of Lessee.  Lessee shall have the following rights in respect of the Premises:

1.

Mining, Land Use and Access.  Subject only to any limitations imposed by federal, state and local regulations, the free, exclusive, unrestricted and uninterrupted right of access, ingress and egress to the Premises and the right to enter upon and occupy the Premises for all purposes reasonably incident to exploring for, developing, mining (by underground mining, surface mining, strip mining or any other surface or subsurface method, including any method later developed), extracting, milling, smelting, refining, stockpiling, storing, processing, removing and marketing therefrom all ores, metals, minerals, mineral products (including intermediate products) and materials of every nature or sort (“Mineral Substances”), and the right to place, construct, maintain, use and thereafter remove such structures, facilities, equipment, roadways, haulageways, utility lines, reservoirs and waterways, and other improvements as may be necessary, useful or convenient for the full enjoyment of all of the rights granted under this Agreement.  Lessee shall have sole and exclusive custody, possession, ownership and control of all ore, rock, drill core and

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other Mineral Substances extracted or removed from the Premises and may sell or otherwise dispose thereof.  In the exercise of such rights, Lessee shall be subject only to compliance with applicable statutes, rules, regulations and the terms of this Agreement.  These rights are also granted and may be utilized conjunctively or independently for the purpose or in the course of carrying on exploration, development or mining operations on any other properties in which Lessee may have or acquire any right or interest.

2.

Cross Mining.  The right, if it so desires, to mine and remove any Mineral Substances existing on, in or under the Premises through or by means of shafts, openings or pits which may be sunk or made upon adjoining and nearby properties, and the right to store any Mineral Substances from the Premises upon any such properties.  In addition, Lessee may use the Premises conjunctively or independently for any shafts, openings, pits and storage areas sunk or made for the mining, removal and/or stockpiling of any Mineral Substances from any adjoining or nearby properties.  Mineral Substances taken from the Premises shall at all times be kept entirely separate and distinct from any other ore or concentrated product until the same are measured and sampled so that the rights of Lessor shall be at all times preserved and protected.

3.

Commingling.  The right to commingle ore removed from the Premises or products derived therefrom after treatment, with other ore or products, before or after concentration or beneficiation, so long as the data necessary to determine the weight, grade, and recoverability of both the ore removed from the Premises or products derived therefrom and the ore or products with which it is commingled are obtained by Lessee.  Lessee shall then use that data to determine Lessor’s interest in minerals, metals and/or other products extracted from ores or products so mixed.  Such data and determinations shall be acquired and completed in accordance with generally accepted industry practices.

4.

Water Rights.  Any and all of Lessor’s water rights on, about, under or appurtenant to the Premises or to which the Premises are riparian.

5.

Deposit of Waste Materials.  The right to temporarily or permanently deposit on or off the Premises tailings, waste rock, overburden, surface stripping materials, process solutions and all other materials originating from the Premises or from adjoining or nearby properties, even if the sole use of the Premises may be for the placement of such materials.

6.

Treatment.  The right, at Lessee’s election and in any manner it deems fit, to beneficiate, concentrate, smelt, refine, and otherwise process or treat on or off the Premises any Mineral Substances taken from the Premises or from adjoining or nearby properties by any physical or chemical method or methods.  In exercising this right, Mineral Substances may be removed to a plant or plants existing, established or maintained upon the Premises or elsewhere.

7.

Amendment and Relocation of Claims.  The right, in Lessee’s sole discretion, to amend or relocate as unpatented mining claims or mill sites, in the name of Lessor, any unpatented mining claims or mill sites included in the Premises.  If Lessee undertakes any such amendment or relocation, Lessee shall use its best efforts to complete the same in compliance with applicable statutes and regulations but shall not be liable to Lessor for any act (or failure to act) by it or any of its agents in connection with the amendment or relocation of mining claims or mill sites unless such act (or omission) arises from gross negligence or is made in bad faith.

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C.

Purchase Option.  Lessee and its successors and assigns shall have an exclusive option to purchase the Premises pursuant to the provisions of Section 11 below.

D.

Lessor’s Reserved Right to Metal Detect for Gold.  Lessor reserves the right to use a metal detector, at Lessor’s sole risk and expense, to search for and recover not more than 100 ounces of gold from the Premises, provided such operations do not interfere with Lessee’s operations hereunder.  Lessor agrees to indemnify, protect, save and hold harmless Lessee and its affiliated and direct and indirect parent corporations and entities and all of their respective officers, directors, employees, shareholders, partners, agents and representatives (the “Lessee Indemnitees”) from and against any claims, liabilities and damages (including attorney fees) arising out of or resulting from such operations by Lessor on the Premises.  The rights reserved by Lessor pursuant to this Section 1.D shall terminate upon exercise of the Option granted herein as to those parts of the Premises for which the Op tion is exercised.

2.  TERM

.

Term.  The term of this Agreement shall commence as of the Effective Date and shall continue for a period of ten years thereafter unless sooner terminated or surrendered in the manner herein provided.  Lessee may extend this Agreement for an additional ten years (subject to such sooner termination or surrender) by giving notice to Lessor prior to the end of the initial ten-year period.  If at the end of the initial term or extended term Lessee is engaged in Mining Operations (as defined below), the term of this Agreement shall automatically continue for so long thereafter as Lessee continues to be engaged in Mining Operations, but the cessation of any such operations shall not cause this Agreement to terminate prior to the end of the initial or extended term or cause Lessee to lose its right to extend the term as herein provided.

.

Definition of Mining Operations.  For purposes of this Agreement “Mining Operations” shall include, but shall not be limited to, development, extraction, processing, leaching or sale of ores, concentrates or derivatives retrieved through leaching of ores, produced from the Premises.  Activities off the Premises shall constitute Mining Operations when they are conducted in connection with an integrated mining operation involving the Premises and other properties in which Lessee holds an interest.  Development includes activities, including permitting, carried on diligently and in good faith preparatory to commencing or resuming operations at a mine. Lessee shall be deemed to be actively engaged in Mining Operations so long as all such operations, once begun, do not cease for a period of more than 180 consecutive days.  In the event Lessee is actively engaged in Mining Operations at the end of the initial or extended term but at any time is unable to obtain a satisfactory market or a satisfactory price for Mineral Substances and as a result suspends mining, processing or marketing operations from time to time, then Mining Operations shall not be deemed to have ceased and this Agreement shall not expire or terminate provided that Lessee notifies Lessor of such loss of market or inability to obtain a satisfactory price and diligently attempts to market Mineral Substances at a satisfactory price and recommence operations.  Mining Operations shall not be deemed to have ceased if once begun they are interrupted through Force Majeure in accordance with Section 8.  If Mining Operations have not commenced at the end of the initial or extended term because of Force Majeure conditions, the primary term shall be extended until such Force Majeure conditions cease.

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.

Continuation After Mining Operations.  If, at the end of the initial or extended term, Lessee is not conducting or has ceased Mining Operations, but is utilizing the Premises in support of Mining Operations on other lands, then this Agreement shall continue in force as to the lands subject to such uses and such expansions thereof as may reasonably be contemplated, as designated in good faith by Lessee, and the payment provided in Section 3.A shall be rental for such uses.

3.  PAYMENTS TO LESSOR

.

Advance Royalty.  Subject to Lessee’s right to terminate this Agreement, Lessee shall pay the following amounts annually to Lessor as advance royalty:

$2,000.00 upon execution of the Agreement (for year 1 of the Agreement),

$4,000.00 for year 2 of the Agreement,

$5,000.00 for year 3 of the Agreement, and

$6,000.00 for each year thereafter until Lessee commences the payment of production

royalties pursuant to Section 3.B.

Except as to the payment made upon execution of this Agreement, advance royalty payments shall be paid annually on or before the beginning of each anniversary of the Effective Date.  All advance royalty payments shall be deductible cumulatively as a credit against actual production royalties payable to Lessor pursuant to Section 3.B and shall be credited toward the Purchase Price (as defined in Section 11.A below).  Lessee’s obligation to make advance royalty payments shall cease or be proportionately reduced, as the case may be, upon the earliest of: (i) exercise by Lessee of its Option to purchase the Premises pursuant to Section 11.B; (ii) the commencement of production royalty payments pursuant to Section 3.B; or (iii) termination of this Agreement under Section 6.

B.

Production Royalty.  Lessee shall pay Lessor a production royalty of three percent (3.0%) of the Net Smelter Returns of Mineral Substances produced from the Premises and sold.  “Net Smelter Returns” means the proceeds actually received, or deemed to have been received in the case of refined gold and silver as described in Section 3.B(1) below, from the sale or deemed sale of Mineral Substances produced from the Premises, less the charges described in Section 3.B(2) below.  All production royalty payments shall be credited toward the Purchase Price.

(1)

If Lessee sells refined gold or silver, Lessee will be deemed to have received proceeds from the sale thereof equal to the number of ounces of refined gold or silver outturned to Lessee’s account during the calendar quarter multiplied in the case of gold by the average daily London Bullion Brokers P.M. Gold Fixing during such calendar quarter and in the case of silver by the average of the daily Handy & Harmon Noon Silver Quotation during the calendar quarter.  The average price for a calendar quarter shall be determined by dividing the sum of all daily prices posted during the calendar quarter by the number of days that prices were posted.  The posted price shall be obtained from the Wall Street Journal, Reuters, E&MJ or other industry-accepted source.  Lessee shall have the right to market and sell to third parties refined gold and silver in any manner it chooses, including the sale of su ch refined gold and silver on the commodity market.  In this regard, Lessor shall have no right to participate in any gains and/or profits or obligation to suffer any losses

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accruing to Lessee as a result of forward sales, options trading, commodities futures trading or similar transactions.

(2)

Charges to be deducted from proceeds in determining Net Smelter Returns are the following:

(a)

all costs, charges and expenses paid or incurred by Lessee for treatment in the smelting and refining processes (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs, penalties and other processor deductions);

(b)

all costs, charges and expenses paid or incurred by Lessee for transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay and forwarding expenses incurred by reason of or in the course of such transportation) of Mineral Substances from the Premises to the place or places of treatment and thence to the place or places of sale;

(c)

sales and brokerage costs on Mineral Substances for which the royalty is payable; and

(d)

sales, use, severance, net proceeds of mine, and ad valorem taxes applicable under local, state and federal law and any other tax or governmental levy or fee relating to the Mineral Substances for which the royalty is payable (other than taxes based upon income).

(3)

Royalties shall accrue quarterly (based on calendar quarters) and shall become due and payable by Lessee prior to the end of the month following the end of each quarter.  Royalty payments shall be accompanied by pertinent information in sufficient detail to explain the calculation of the royalty payment.

(4)

All statements for royalties rendered to Lessor by Lessee during any quarter shall conclusively be presumed to be true and correct after one year following the end of such quarter unless within said one-year period Lessor takes written exception thereto and makes a claim on Lessee for adjustment.  No adjustment favorable to Lessee shall be made unless it is made within the same prescribed period.

(5)

Lessor, upon notice in writing to Lessee, shall have the right to audit Lessee’s accounts and records relating to the payment of the royalty for any calendar quarter within the one-year period following the end of such calendar quarter; provided, however, the making of any audit shall not extend the time for the taking of written exception to and the adjustment of accounts as provided for in the paragraph above.  All audits shall be conducted by Lessor at the office of Lessee where the relevant books and records are maintained and such audit shall be conducted during normal business hours.

(6)

If a royalty, production fee, or other payment based upon production is subsequently imposed by the United States on Mineral Substances produced from any unpatented mining claims included in the Premises (whether or not such claims are converted to some other form of property interest), the amount payable to the United States shall be deducted from the

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royalty payable to Lessor for such Mineral Substances pursuant to this Section 3.B, provided, however, that the royalty paid to Lessor shall not be less than the amount that would be payable to Lessor hereunder at a royalty rate of one percent (1.0%).

C.

Place of Payment.  All payments shall be made in accordance with Section 9 below.

D.

No Royalty on Test Materials.  Lessee shall have the right to mine and market amounts of Mineral Substances reasonably necessary for sampling, assaying, metallurgical testing and evaluation of the mineral potential of the Premises without incurring any obligation to make production royalty payments.

4.  TITLE MATTERS

.

Representations and Warranties.  Lessor covenants and warrants to Lessee, which covenants and warranties shall survive any termination of this Agreement, as follows:

(1)

Lessor is the owner of the Premises free and clear of any defects, liens, claims, demands, burdens or encumbrances, subject only to the paramount title of the United States.

(2)

Lessor has the right, power and capacity to enter into and perform this Agreement and all transactions contemplated herein and any corporate or other actions required to authorize it to enter into and perform this Agreement have been properly taken.

(3)

To Lessor’s best knowledge, the unpatented mining claims included in the Premises have been properly located and maintained in conformance with applicable federal, state and local laws.

(4)

To Lessor’s best knowledge, all lands covered by the claims included in the Premises were open to location when such claims were located and there are no conflicts with claims owned by other parties.

(5)

Lessee shall have quiet and peaceable possession of the Premises.

(6)

Lessor will defend its title to the Premises against all persons who may claim the same.

(7)

Lessor has not committed, nor will Lessor in the future commit, any act or acts that will encumber or cause a lien to be placed against the Premises except subject and subordinate to the terms of this Agreement.

(8)

Lessor has no knowledge or information indicating:

(a)

that hazardous substances from any source (mining or otherwise) have been released on the Premises; or

(b)

that any underground or above-ground site of historic or current mining operations on the Premises could cause or constitute a release or threat of release of

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hazardous substances into the environment; or

(c)

that any part of the Premises has been included or proposed for inclusion on the National Priorities List (40 C.F.R. Section 300 App. B); or

(d)

that any part of the Premises has been studied or proposed for study by the Environmental Protection Agency and/or any state regulatory agency; or

(e)

that any site of historic or current mining, milling and/or smelting workings on the Premises is presently in such condition as to potentially raise liability to the past, present or future owner(s) and/or operator(s) of the Premises pursuant to the Comprehensive Environmental Response, Compensation and Liability Act and amending statutes (“CERCLA”); or

(f)

that any reclamation obligations for prior operations on the Premises are unsatisfied.

B.

Title Defects, Defense and Protection.  Lessee may at any time cause a title search to be made covering all or any part of the Premises.  Lessor shall provide Lessee with any abstracts and other evidences of title in Lessor’s possession or control.  If, (1) in the opinion of Lessee, Lessor’s title to all or any part of the Premises is defective or less than as represented in Section 4.A; or (2) Lessor’s title is contested or questioned by any person or entity and Lessor is unable or unwilling to promptly correct the alleged defects, Lessee may, without obligation and without waiver of any remedies of Lessee, attempt to perfect or defend Lessor’s title.  In that event, Lessor shall execute all documents and shall take such other actions as are reasonably necessary to assist Lessee in its efforts to perfect or defend Lessor’s title, time being of the essence.  If title is less than rep resented in Section 4.A, then the costs and expenses of perfecting or defending title shall be a credit against subsequent payments to be made by Lessee to Lessor under this Agreement.  Any improvement or perfection of title to the Premises shall inure to the benefit of Lessee in the same manner and to the same extent as if such improvement or perfection had been made prior to the execution of this Agreement.

C.

Lesser Interest.  All payments payable to Lessor hereunder (including the Purchase Price) are based upon Lessor’s warranted ownership of the entire undivided interest in minerals included within the boundaries of the Premises.  If Lessor is found to own less than 100% of the mineral interest in the Premises (i.e., if Lessor’s interest is the same in all claims or parcels included in the Premises but less than 100%), then Lessor’s actual interest shall be its actual percentage interest in the Premises.  If Lessor’s interest varies as to separate portions of the Premises, then Lessor’s actual interest shall be determined on a net acreage basis by multiplying the acreage in each distinct claim or parcel within the Premises by Lessor’s fractional interest therein and then computing Lessor’s interest on the net acres actually owned by Lessor as a proportion of the total acreage ori ginally warranted to be owned by Lessor.  In either of such events, all payments payable to Lessor hereunder other than production royalty payments shall be reduced accordingly.  If Lessor’s title to any of the Premises from which production is made is less than 100%, then the production royalty payable pursuant to Section 3.B shall be reduced to the same proportion as the undivided right and title actually owned by Lessor bears to the entire undivided right and title to the portion of the Premises from which such production is made.  Such reductions in payments shall not waive or eliminate any other rights or remedies Lessee may have in connection with the extent

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of Lessor’s actual interest in the Premises.

D.

Patenting of Claims.  If the existing governmental moratorium on patenting of unpatented mining claims is discontinued, then upon request of Lessee at any time during the term of this Agreement, Lessor agrees to undertake to obtain a patent to any or all of the mining claims that are subject to this Agreement, as designated by Lessee.  Lessee shall prepare all documents, compile all data and comply in all respects with applicable law, all at the expense of Lessee.  Lessor shall execute any documents required for this purpose and shall cooperate fully with Lessee in the patent application, process and proceedings, time being of the essence.  If Lessor begins patent proceedings and Lessee thereafter requests Lessor to discontinue such proceedings or if this Agreement is terminated while patent proceedings are pending, Lessee shall have no further obligation with respect thereto except to pay any unpaid expenses acc rued in such proceedings prior to its request to discontinue, or prior to termination, whichever comes first.

E.

Conversion of Claims.  If during the term of this Agreement federal or state laws are changed or enacted to provide for some alternative basis for holding mining or mining-related rights in public lands, Lessee, in its sole and exclusive discretion, may make such location, filing or application for claim, license or permit in Lessor’s name as may be required or permitted by such new or modified laws with respect to the ground covered by the Premises.  Lessor gives Lessee full power and authority as Lessor’s attorney-in-fact to make such location, filing or application.  Any such claim, license or permit shall be subject to this Agreement.

5.  OBLIGATIONS OF LESSEE

.

Protection from Liens.  Lessee shall keep title to the Premises free and clear from any liens, claims and encumbrances (other than liens for taxes not yet due and delinquent) arising from its operations hereunder.  Lessee shall pay for all labor performed upon or material furnished to the Premises at the request of Lessee and shall keep the Premises free and clear from liens of mechanics or materialmen in connection with services performed and material supplied at Lessee’s request.  Lessee shall, however, have the right in good faith to contest the validity of any lien, claim or liability and shall not be required to remove any such lien, claim or liability so long as Lessee is contesting the validity or the amount thereof.  The foregoing provisions shall not restrict Lessee from placing a mortgage, trust deed or other lien upon its interest in the Premises for financing purposes.

.

Indemnification and Insurance.  Lessee shall protect Lessor against any damages arising out of Lessee’s operations on the Premises and shall indemnify Lessor against liability resulting from Lessee’s operations on the Premises; provided, however, that Lessor or any agent acting on its behalf, or any breach of warranty by Lessor, shall not have been a contributing cause to the event giving rise to any such damages.  Lessee shall carry liability insurance with reasonable policy limits protecting Lessor against damages arising out of Lessee’s operations on the Premises.

.

Taxes and Assessments.  Except as provided below, Lessee shall pay promptly before delinquency all taxes and assessments that may be assessed during the term of this Agreement upon the Premises resulting from Lessee’s activities and products derived therefrom.  However, Lessee shall always have the right to contest, in the courts or otherwise, either in its own name or in the name of Lessor, the validity or amount of any such taxes or assessments, or to take

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such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof, before it shall be required to pay such taxes or assessments.  Notwithstanding the foregoing, Lessee shall not permit any part of the Premises to be conveyed and title lost as the result of nonpayment of such taxes and assessments.  Lessee shall provide Lessor with copies of all receipts evidencing payment of such taxes and assessments.  If Lessor should receive tax bills or claims that are the responsibility of Lessee, Lessor shall promptly forward such bills or claims to Lessee for appropriate action.  Lessee shall pay the above-referenced taxes that are assessed from the Effective Date of this Agreement to its date of termination.  Nothing in this paragraph shall be construed to obligate Lessee to pay that portion of any tax based upon an assessment of improvements or str uctures made or placed on the Premises by Lessor.  Lessee shall not be liable for any taxes levied on or measured by Lessor’s income or based upon payments made to Lessor by Lessee under this Agreement.

.

Compliance with Laws and Regulations.  Lessee shall perform all of its operations on the Premises in a good and workmanlike manner and in compliance with all applicable federal, state and local laws and regulations pertaining to environmental protection, reclamation and bonding.  Specifically, Lessee shall comply with all permitting and other regulatory requirements set forth by the U.S. Bureau of Land Management, the U.S. Forest Service, the U.S. Environmental Protection Agency, and applicable state agencies.  Lessee shall have no obligations with respect to prior operations or preexisting conditions on the Premises.

.

Right of Access to the Premises.  During the term of this Agreement Lessee shall allow Lessor and representatives of Lessor, at their sole risk and expense, access to the Premises for the purposes of viewing or inspecting Lessee’s operations, at times which, in Lessee’s discretion, do not unreasonably interfere with its operations.  Lessor, on behalf of itself and its representatives, agrees to indemnify, protect, save and hold harmless the Lessee Indemnitees from and against any and all losses, costs, damages, expenses, attorney fees, claims, demands, liabilities, suits and actions of every kind and character that may be imposed upon or incurred by any of the Lessee Indemnitees on account of, or arising directly or indirectly from, Lessor’s rights under this Section 5.E.

F.

Delivery of Data.  Upon termination of this Agreement, Lessee shall furnish Lessor within a reasonable time and without warranty or liability one set of copies of all available noninterpretive data pertaining to the terminated portion of the Premises and developed or prepared by or for Lessee (unless such data has previously been furnished by Lessee to Lessor), and shall authorize and permit Lessor to take possession of any available core derived from the terminated portion of the Premises, whether or not such core is stored on the Premises; provided, however, that Lessee shall in no event be liable to Lessor for availability of or damage to any such core or for the accuracy, reliability or completeness of any data furnished to Lessor.  The provisions of this Section 5.F shall not apply if the termination occurs from Lessee’s exercise of its Option to purchase the Premises.  Lessor shall assume all risks stemming from reliance upon such data by itself and by third parties after disclosure thereof by Lessor and shall indemnify and hold harmless the Lessee Indemnitees as to such risks and as to any claims made by such third parties.

.

Assessment Work and Maintenance Fees.  Commencing with the annual assessment work year beginning September 1, 2007 and subject to Lessee’s right under Section 6.B to terminate this Agreement as to all or a portion of the Premises, Lessee shall perform any required annual assessment work and make all payments required to maintain all unpatented mining claims

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included in the Premises (provided the same are still subject to this Agreement), and shall timely file with the Bureau of Land Management and record with the county in which said claims are located for each assessment year affidavits of labor, notices of intent to hold, and any other documents necessary to maintain said claims pursuant to state and federal law; provided, however, that Lessee shall not be required to undertake or compete such work or make such payments for the assessment year during which this Agreement is terminated (or for any subsequent assessment year) if termination occurs prior to July 1 of said assessment year.

H.

No Obligation to Mine.  Subject to Section 5.G, nothing in this Agreement shall impose any obligation or covenant, express or implied, upon Lessee to conduct any exploration, development or mining operations upon the Premises, it being the intent of the Parties that Lessee shall have sole discretion to determine the technical and economic feasibility, timing, method, manner and rate of conducting any such operations.  Only the express duties and obligations provided under this Agreement shall be binding upon Lessee.  The nature, manner and extent of all exploration, development, mining and other operations, if any, shall be matters to be determined solely within the discretion of Lessee.

6.  TERMINATION

.

Termination by Lessor.  In the event Lessor considers that Lessee has not complied with any obligation hereunder, Lessor shall notify Lessee setting out specifically in what respect it is claimed that Lessee has breached this Agreement.  If the alleged breach is not cured within 60 days after notice is given, or if Lessee has not within that time either commenced to cure the alleged breach and does not thereafter diligently complete such cure, or challenges the legitimacy of the allegation, Lessor may terminate this Agreement by delivering to Lessee written notice of such termination; provided, however, that in the event Lessee challenges the legitimacy of the allegation, Lessee may give written notice to Lessor within such 60-day period setting forth such fact.  If Lessor gives written notice within 15 days of Lessee’s notice that Lessor rejects Lessee’s position, then this Agreement shall not be terminable by Lessor until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Lessee shall satisfy such judgment within 30 days following its entry (or if an appeal of such judgment is taken, following its affirmation by the highest court to which such an appeal is made).  Failure of Lessor to give such notice shall constitute agreement by Lessor that Lessee is not in default.  Lessor shall not be entitled to terminate this Agreement for any default which by its nature is not retroactively curable if Lessee has used its best efforts to cure such a default to the extent practical or if Lessee has paid Lessor damages for such default where damages are an appropriate remedy.  Lessor shall have no right to terminate this Agreement except as expressly provided in this Section 6.A, and termination of this Agreement shall be the sole remedy of Lessor.  Neither the service of any notice nor the performance of any acts by Lessee intended to meet any such alleged breach shall be deemed an admission or presumption that Lessee has failed to perform all of its obligations under this Agreement.  Notwithstanding the foregoing provisions of this Section 6.A, this Agreement may not be terminated, in whole or in part, by less than all the individuals and/or entities included within the term “Lessor.”

.

Termination by Lessee.  Lessee shall have the right to terminate this Agreement at any time with respect to all or any part of the Premises by giving Lessor written notice of such termination.  Partial termination of less than all of the mining claims constituting the Premises shall

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result in a proportionate reduction in the advance royalty payments prescribed in Section 3.A and in the Purchase Price established in Section 11.A.  Upon such termination, all right, title and interest of Lessee under this Agreement shall terminate with respect to the Premises affected.  Lessee shall be relieved of all further obligations set forth in this Agreement as to the Premises affected except those obligations, if any, which have accrued prior to such termination.  Subject to the provisions of Section 5.G, any taxes, assessments and governmental charges for which Lessee was responsible prior to termination shall be prorated as of the termination date.  Exercise by Lessee of its Option to purchase the Premises shall constitute a termination of this Agreement by Lessee as to that portion of the Premises for which the Option is exercised.

.

Release.  Following termination of this Agreement, as to all or a part of the Premises, Lessee shall promptly deliver to Lessor a fully executed release of this Agreement, in recordable form, as to the affected Premises, if so requested by Lessor.  The provisions of this Section 6.C shall not apply to any part of the Premises acquired by Lessee through exercise of Lessee’s Option to purchase the Premises.

.

Reclamation; Removal of Property.  Upon termination of this Agreement, Lessee shall have a continuing right to enter upon the Premises to complete required reclamation.  Lessee shall have a period of one year after the date of termination in which to enter upon and remove from the Premises all of its machinery, buildings, structures, facilities, equipment and other property of every nature and description erected, placed or situated thereon, except foundations of a permanent nature and supports, track and pipe placed in shafts, drifts or openings in the Premises.  Any property of Lessee not removed by the end of this one-year period shall become the property of Lessor; however, Lessee does not warrant the condition or safety of any such property.  Lessee shall have the right to keep a watchman on the Premises during this one-year period.  The provisions of this Section 6.D shall not apply to any part of the Premises acquired by Lessee through exercise of Lessee’s Option to purchase the Premises.

7.  LIENS

In the event that Lessor fails to promptly pay, when due, taxes, mortgages or other liens levied against the Premises and payable by Lessor, Lessee shall have the right (but shall not be obligated) to pay such past due amounts and, if Lessee does so, Lessee shall be subrogated to all the rights of the holders thereof and Lessor shall reimburse Lessee for all such payments and for all related costs and expenses paid or incurred by Lessee (including related attorney fees) within three months after the same are paid or incurred by Lessee.  Any payments due Lessor under this Agreement may be credited by reimbursements due Lessee under this Section.  The provisions of this Section shall survive termination of this Agreement.

8.  FORCE MAJEURE

Lessee shall not be liable for failure to perform any of its obligations, other than making payments due under Section 3, during any period in which performance is prevented, in whole or in part, by causes herein termed Force Majeure.  For purposes of this Agreement, the term “Force Majeure” shall include labor disputes; acts of God; action of the elements, including inclement weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules, regulations, orders, directives and requests of governmental bodies or agencies; delay, failure or inability of

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suppliers or transporters of materials, parts, supplies, services or equipment or by contractors’ or subcontractors’ shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; judgments or orders of any court or agency; inability to obtain on reasonably acceptable terms or in reasonably acceptable time any public or private licenses, permits or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or future violation of federal, state or local environmental standard; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot; civil strife; fire; explosion; or any other cause whether similar or dissimilar to the foregoing, except for the inability to meet financial commitments.  If Lessee des ires to invoke the provisions of this Section, Lessee shall give notice of the commencement of the circumstances giving rise to such Force Majeure.  The time for discharging Lessee’s obligations with respect to the prevented performance, or the time within which Lessee must undertake or complete any activity, shall then be extended for the period of Force Majeure.

9.  NOTICES AND AGENTS

A.

Notices.  Any required notice or communication shall be in writing and shall be effective when personally delivered (including delivery by express courier service) to the following addresses or when addressed as follows and deposited, postage prepaid, and certified with return receipt requested, in the United States mail:

If to Lessor:

Dale and Diana Chabino

19633 Hildreth Lane

Stockton, California 95212

If to Lessee:

MGC Resources Inc.

Attn: Alan Branham, President

2778 Spokane Creek Road

East Helena, Montana 59635

Either Party may, by notice to the other given as aforesaid, change its mailing address for future notices.

B.

Designation of Agent for Lessor.  Dale Chabino is hereby designated as Lessor’s agent to receive from Lessee all payments due or payable to Lessor under the terms of this Agreement and all such payments may be made payable to Dale Chabino and tendered by mailing or delivering the same to his address as set forth in Section 9.A above.  Lessee shall have no obligation to allocate or apportion any payment made hereunder among the persons constituting Lessor, it being said agent’s obligation to properly do so after payment is made to the agent by Lessee.  The persons constituting Lessor, by their execution of this Agreement, consent to the payment provisions set forth herein.  All data required of Lessee under this Agreement shall likewise be provided to said agent, who in turn shall be responsible for disbursing said data among the persons constituting Lessor as those persons may see fit.  Any change in said agent shall be effective only if made in writing and signed by each of the persons constituting Lessor.  In the event of any dispute among multiple owners and/or payees concerning entitlement to such payments, Lessee may tender its payments into an escrow account for the benefit of such persons as may be

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entitled thereto at a bank of Lessee’s choice located in the county in which the Premises are situated, and notify such persons that such an account has been established, with the costs of establishing and maintaining the escrow account deductible from Lessee’s payments.  Such escrowed payments shall be deemed to be a sufficient tender of payment by Lessee for all purposes hereunder.

C.

Payments After a Transfer of Interest.  In the event payments should be made to other parties because of any authorized transfer of the interest of any of the persons constituting Lessor, payments tendered to Lessor’s designated agent, or to the party making the transfer if only one party constitutes Lessor, shall conclusively be deemed payment to the transferee until Lessee receives notice and evidence satisfactory to it from both the agent (if applicable) and the transferor that the transferor’s interest has been transferred and that payments should be made to the transferee or the transferee’s designated agent.

10.  CONFIDENTIALITY

Lessor shall not, without the express written consent of Lessee, disclose any information concerning the terms of this Agreement or operations conducted under this Agreement (except information and data that is generally available to the public), nor issue any press releases concerning such information.  However, if Lessor contemplates transferring its interest to a third party, it shall have the right to disclose such information to that party if it first obtains an agreement in writing from such third party, satisfactory to Lessee after review in advance, providing that the third party shall hold confidential the information furnished to it.

11.  OPTION TO PURCHASE PREMISES

A.

Grant of Option.  Lessor hereby grants and conveys to Lessee and its successors and assigns, while this Agreement remains in effect, the sole and exclusive option (the “Option”) to purchase all or part of the mining claims constituting the Premises for a total purchase price of One Hundred Thousand Dollars ($100,000.00) per claim (the “Purchase Price”), which Option may be exercised by Lessee repeatedly if the exercise applies to less than all of the Premises.  Lessee shall be entitled to a credit against the Purchase Price for all amounts previously paid under the provisions of Sections 3.A and 3.B above.  Exercise of the Option shall terminate Lessee’s obligation to make any further royalty payments under Section 3.B with respect to those claims for which the Option is exercised, and shall result in a proportionate reduction in the advance royalty payments prescribed in Section 3.A.

B.

Exercise of Option.  Lessee may, from time to time, exercise the Option by giving Lessor written notice thereof at any time while this Agreement remains in effect, which notice shall specify the portion of the Premises for which the Option is exercised.  Exercise of the Option shall be effective upon delivery of said notice, as provided in Section 9.A.  Upon such exercise, the Parties shall be bound to complete the closing of the purchase and sale of the relevant portion of the Premises as provided herein.  The notice shall also specify a time and place for closing the purchase and sale of the relevant portion of the Premises.  The closing shall be held not more than 30 days from the date of the notice, at a time and place reasonably convenient to the Parties.  At the closing, Lessor shall execute and deliver to Lessee a good and sufficient deed acceptable to Lessee, in recordable form, in which Lessor will grant to Lessee title to the relevant portion of the Premises

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free and clear of all liens, encumbrances, reservations, restrictions and other exceptions to title arising by, through or under Lessor.  Upon delivery to Lessee of the deed, Lessee shall pay and deliver to Lessor the appropriate Purchase Price that is due (if any) after deducting the amounts provided for in Section 11.A.  Upon completion of the closing, this Agreement, and all rights and obligations of the Parties hereunder, shall terminate with respect to that portion of the Premises acquired by Lessee, except for such rights and obligations hereunder as may then have accrued and remain unpaid or unsatisfied.

12.  MISCELLANEOUS

A.

Cooperation by Lessor.  Lessor shall execute all documents and otherwise cooperate with Lessee as needed in connection with the conduct of operations on the Premises, including the acquisition of governmental permits, post-mining reclamation approvals, water rights, and other rights and privileges related to operations on the Premises and reclamation thereof.  In that regard, Lessor agrees not to protest, challenge or otherwise oppose any water right or operational permit filings that Lessee may make to facilitate operations or proposed operations on or in connection with the Premises.

B.

Sharing of Data by Lessor.  Lessor shall, upon execution of this Agreement, provide or make available to Lessee any available technical and title information and drill core and other samples (such as cuttings, pulps, drill logs, assay results, feasibility reports, etc.) concerning the Premises which are in Lessor’s possession or control.  Similarly, Lessor shall, as soon as possible, provide or make available to Lessee any such information and samples that Lessor may acquire subsequent to the execution of this Agreement, whether obtained personally or from third parties.

C.

Relationship of the Parties.  Nothing contained herein shall be deemed to constitute either Party, in its capacity as such, the partner, agent or legal representative of the other Party, or to create any partnership, mining partnership or other partnership relationship, or fiduciary relationship between them, for any purpose whatsoever.  Except as expressly provided in this Agreement, each Party shall have the free, unrestricted and independent right to engage in and receive the full benefits of any and all business endeavors of any sort whatsoever outside the Premises or outside the scope of this Agreement, whether or not competitive with the endeavors contemplated herein, without consulting the other or inviting or allowing the other therein.

D.

Transfers.  Lessor and Lessee and their respective successors shall have the right to assign or otherwise transfer their respective interests in this Agreement in whole or in part provided that the assignee agrees in writing to assume all, or a portion of all if applicable, obligations of Lessor or Lessee hereunder, as the case may be.  No such transfer shall be effective against the non-transferring Party until that Party receives written notice of the transfer in accordance with Section 9.A.

.

Binding Effect.  Subject to the provisions of Section 12.D above, the provisions of this Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, personal representatives, beneficiaries, successors and assigns.

.

Memorandum of Agreement.  This Agreement may be recorded at the election of Lessee.  At Lessee’s request, the Parties shall also execute a short form of this Agreement (the

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“Memorandum of Mineral Lease Agreement and Option to Purchase”) which may be recorded in the office of the recorder of each county wherein all or part of the Premises are located.  The execution and recording of the Memorandum of Mineral Lease Agreement and Option to Purchase shall not limit, increase or in any manner affect any of the terms of this Agreement, or any rights, interests or obligations of the Parties.

.

Construction of Agreement.  This Agreement constitutes the entire understanding of the Parties with respect to the Premises, all previous agreements, promises, representations, negotiations, writings and understandings between the Parties concerning the Premises being expressly rescinded.  Except for obligations of good faith and fair dealing, there are no terms or conditions, express or implied, other than herein stated.  This Agreement shall be subject to all valid and applicable provisions of statutory or common law, rules and regulations.  Should this Agreement or any of its provisions or operations be found to be contrary to any such valid law, rule or regulation, the latter shall be deemed to control and this Agreement shall be regarded as modified accordingly.  Subject to the preceding sentence, no modification or alteration of this Agreement shall be effective unless made in writing and executed by t he Parties with the same formality as this Agreement.  Wherever the term “including” is used herein, it shall be deemed to mean “including without limitation,” and wherever the phrase “shall include” is used herein, it shall mean “shall include without limitation.”

.

Headings.  The headings used herein are for convenience only and shall be disregarded in construing and enforcing this Agreement.

.

Multiple Counterparts.  This Agreement may be executed in multiple counterparts and all counterparts taken together shall be deemed to constitute one and the same document.

.

Rule Against Perpetuities.  The Parties do not intend nor desire for this Agreement to violate the common law Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land.  If any provision of this Agreement does or would violate the Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land, then this Agreement shall not be deemed void or voidable, but shall be interpreted in such a way as to maintain and carry out the Parties’ objectives to the fullest extent possible by law.

.

Applicable Law.  This Agreement shall be construed, interpreted and governed by the laws of the State of Nevada.

.

Attorney Fees.  In the event either Party brings any action or proceeding for damages or equitable relief against the other Party for an alleged breach or default of any provision of this Agreement to recover monies due or to enforce, protect or establish any right or remedy of either Party under this Agreement, the prevailing Party shall be entitled to recover as a part of such action or proceeding reasonable attorney fees and court costs.

.

Disputes.  Disputes or differences between the Parties shall not interrupt performance of this Agreement or the continuation of operations hereunder.  In the event of any dispute or difference, operations may be continued and payments may be made hereunder in the

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same manner as prior to such dispute or difference.  In case of suit, adverse claim, dispute or question as to the ownership of the Premises or production royalties, or of any interest therein or hereunder, Lessee may, in its sole discretion, deposit the payment (or the portion of the payment in dispute, if less than the whole payment is in dispute) into an escrow account and Lessee shall not be held in default in payment thereof until such suit, claim, dispute or question has been finally disposed of.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth in the acknowledgements below, but effective as of the Effective Date.

Lessor:

“Dale Chabino”

DALE CHABINO

“Diana Chabino”

DIANA CHABINO

Lessee:

MGC RESOURCES INC., a Nevada

corporation

By “Alan Branham”

Alan Branham, President

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STATE OF NEVADA

)

: ss.

COUNTY OF

)

On this ______ day of October, 2006, personally appeared before me, a Notary Public, DALE CHABINO, who acknowledged that he executed the above instrument.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

STATE OF NEVADA

)

: ss.

COUNTY OF

)

On this ______ day of October, 2006, personally appeared before me, a Notary Public, DIANA CHABINO, who acknowledged that she executed the above instrument.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

STATE OF MONTANA

)

) ss.

COUNTY OF LEWIS AND CLARK

)

On this ______ day of October, 2006, personally appeared before me, a Notary Public, Alan Branham, the President of MGC RESOURCES INC., a Nevada corporation, who acknowledged that he executed the above instrument on behalf of said corporation.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

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EXHIBIT A

“Premises”

The following two unpatented mining claims located within Section 8, Township 28 North, Range 34 East, and Section 35, Township 29 North, Range 34 East, MDM, Pershing County, Nevada:

Claim Name

BLM Serial Number

Recording Data

Claim Type

(Book/Page)

Freedom #1

NMC785920

325/522

Lode

Freedom #2

NMC780754

325/50

Placer

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EX-10.11

EX-10.12

MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE

THIS MINERAL LEASE AGREEMENT AND OPTION TO PURCHASE (“Agreement”) is made effective as of the 1st day of June, 2007 (“Effective Date”), between GEORGE D. DUFFY JR. (“Lessor”) and MGC RESOURCES INC., a Nevada corporation (“Lessee”).

RECITALS

.

Lessor is the owner of the unpatented lode mining claims described in Exhibit A attached hereto, which claims are located in Pershing County, Nevada (the “Premises”).

.

Lessor desires to lease the Premises to Lessee and to grant Lessee an option to purchase the Premises upon the terms and conditions herein set forth.

C.

Lessee desires to lease the Premises from Lessor and to hold an option to purchase the Premises upon the terms and conditions herein set forth.

AGREEMENT

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee (the “Parties” and individually a “Party”) agree as follows:

1.  RIGHTS GRANTED

.

Grant of Lease.  Lessor hereby leases exclusively to Lessee the Premises, and all rights, improvements, privileges, hereditaments, and appurtenances, including all ores, minerals, waste dumps, tailings materials and mineral rights belonging or in any way appertaining to the Premises, subject to the provisions of this Agreement.

B.

Rights of Lessee.  Lessee shall have the following rights in respect of the Premises:

1.

Access, Exploration and Development.  Subject only to any limitations imposed by federal, state and local regulations, the exclusive right of access, ingress and egress to the Premises and the right to enter upon and occupy the Premises for all purposes reasonably incident to exploring for and developing the Premises and any mineral substances contained therein, including the right to place, construct, maintain, use and thereafter remove such structures, facilities, equipment, roadways, utility lines, and other improvements as may be necessary, useful or convenient for the full enjoyment of all of the rights granted under this Agreement.  Lessee shall have sole and exclusive custody, possession, ownership and control of all ore, rock, drill core and other mineral substances extracted or removed from the Premises for mineral exploration and development purposes; provided, however, that Lessee shall not, without first exerc ising the Option granted herein, commence Commercial Production of mineral substances from the Premises.  For purposes of this Agreement, “Commercial Production” shall mean the removal or processing of more than 100 tons of rock per year from the Premises.  With regard to the first such 100 tons of rock that may be removed from the Premises and processed in connection with bulk testing of ore

MGC-054.doc

from the Premises, Lessor shall be entitled to one-half (50.0%) of any gold recovered from such testing, and the then-current market value of such gold received by Lessor shall be credited toward the Purchase Price (as defined herein) for the Premises.  Thereafter, Lessee shall be entitled to retain all of any gold recovered from any subsequent testing of ore from the Premises.

2.

Deposit of Waste Materials.  The right to temporarily or permanently deposit on or off the Premises tailings, waste rock, overburden, surface stripping materials and all other materials originating from the Premises.

3.

Treatment.  The right, at Lessee’s election and in any manner it deems fit, to beneficiate, concentrate, smelt, refine, and otherwise process or treat on or off the Premises any mineral substances taken from the Premises by any physical or chemical method or methods.

C.

Purchase Option.  Lessee shall have an exclusive option to purchase the Premises pursuant to the provisions of Section 11 below.

2.  TERM

The term of this Agreement shall commence as of the Effective Date and shall continue for a period of ten years thereafter unless sooner terminated or surrendered in the manner herein provided.

3.  PAYMENTS TO LESSOR

.

Monthly Payments.  Subject to Lessee’s right to terminate this Agreement, Lessee shall pay to Lessor One Thousand Dollars ($1,000.00) each month, which payments shall be due by no later than the tenth day of each month.  The first such payment (for the month of June 2007) shall be due by no later than June 10, 2007.  For administrative convenience, Lessee may, in its discretion, pay for more than one month at a time, but if this Agreement is thereafter terminated Lessee shall not be entitled to any refund of any such early payments.

B.

Periodic One-Time Payments.  In addition to the monthly payments required in Section 3.A above, Lessee shall make the following one-time payments to Lessor, provided this Agreement remains in effect at the time such payments are due:

$25,000.00 two years after the Effective Date,

$150,000.00 five years after the Effective Date,

$150,000.00 seven years after the Effective Date, and

$55,000.00 ten years after the Effective Date.

C.

Credit Toward Purchase Price.  All payments made under Sections 3.A and 3.B above shall be credited toward the Purchase Price for the Premises.

D.

Termination of Payment Obligations.  Lessee’s obligation to make the payments

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required under Sections 3.A and 3.B shall cease upon the earlier of: (i) exercise by Lessee of its Option to purchase the Premises pursuant to Section 11.B; or (ii) termination of this Agreement under Section 6.

E.

Place of Payment.  All payments shall be made in accordance with Section 9 below.

4.  TITLE MATTERS

.

Representations and Warranties.  Lessor represents and warrants to Lessee, which representations and warranties shall survive any termination of this Agreement, as follows:

(1)

Lessor is the owner of the Premises free and clear of any defects, liens, claims, demands, burdens or encumbrances, subject only to the paramount title of the United States.

(2)

Lessor has the right and capacity to enter into and perform this Agreement and all transactions contemplated herein.

(3)

To Lessor’s best knowledge, the unpatented mining claims included in the Premises have been properly located and maintained in conformance with applicable federal, state and local laws.

(4)

To Lessor’s best knowledge, all lands covered by the claims included in the Premises were open to location when such claims were located and there are no conflicts with claims owned by other parties.

(5)

Lessee shall have quiet and peaceable possession of the Premises.

(6)

Lessor will defend its title to the Premises against all persons who may claim the same.

(7)

Lessor has not committed, nor will Lessor in the future commit, any act or acts that will encumber or cause a lien to be placed against the Premises except subject and subordinate to the terms of this Agreement.

(8)

Lessor has no knowledge or information indicating the existence of any hazardous substances or environmental contamination on or within the Premises.

B.

Title Defects, Defense and Protection.  Lessee may at any time cause a title search to be made covering all or any part of the Premises.  Lessor shall provide Lessee with any abstracts and other evidences of title in Lessor’s possession or control.  If, (1) in the opinion of Lessee, Lessor’s title to all or any part of the Premises is defective or less than as represented in Section 4.A; or (2) Lessor’s title is contested or questioned by any person or entity and Lessor is unable or unwilling to promptly correct the alleged defects, Lessee may, without obligation and without waiver of any remedies of Lessee, attempt to perfect or defend Lessor’s title.  In that event, Lessor shall execute all documents and shall take such other actions as are reasonably necessary to assist Lessee in its efforts to perfect or defend Lessor’s title, time being of the essence.  If title is less than rep resented in Section 4.A, then the costs and expenses of perfecting or defending title shall be a

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credit against subsequent payments to be made by Lessee to Lessor under this Agreement.  Any improvement or perfection of title to the Premises shall inure to the benefit of Lessee in the same manner and to the same extent as if such improvement or perfection had been made prior to the execution of this Agreement.

C.

Lesser Interest.  All payments payable to Lessor hereunder (including the Purchase Price) are based upon Lessor’s warranted ownership of the entire undivided interest in minerals included within the boundaries of the Premises.  If Lessor is found to own less than 100% of the mineral interest in the Premises (i.e., if Lessor’s interest is the same in all claims or parcels included in the Premises but less than 100%), then Lessor’s actual interest shall be its actual percentage interest in the Premises.  If Lessor’s interest varies as to separate portions of the Premises, then Lessor’s actual interest shall be determined on a net acreage basis by multiplying the acreage in each distinct claim or parcel within the Premises by Lessor’s fractional interest therein and then computing Lessor’s interest on the net acres actually owned by Lessor as a proportion of the total acreage ori ginally warranted to be owned by Lessor.  In either of such events, all payments payable to Lessor hereunder shall be reduced accordingly.  Such reductions in payments shall not waive or eliminate any other rights or remedies Lessee may have in connection with the extent of Lessor’s actual interest in the Premises.

D.

Patenting of Claims.  If the existing governmental moratorium on patenting of unpatented mining claims is discontinued, then upon request of Lessee at any time during the term of this Agreement, Lessor agrees to undertake to obtain a patent to any or all of the mining claims that are subject to this Agreement, as designated by Lessee.  Lessee shall prepare all documents, compile all data and comply in all respects with applicable law, all at the expense of Lessee.  Lessor shall execute any documents required for this purpose and shall cooperate fully with Lessee in the patent application, process and proceedings, time being of the essence.  If Lessor begins patent proceedings and Lessee thereafter requests Lessor to discontinue such proceedings or if this Agreement is terminated while patent proceedings are pending, Lessee shall have no further obligation with respect thereto except to pay any unpaid expenses acc rued in such proceedings prior to its request to discontinue, or prior to termination, whichever comes first.

E.

Conversion of Claims.  If during the term of this Agreement federal or state laws are changed or enacted to provide for some alternative basis for holding mining or mining-related rights in public lands, Lessee, in its sole and exclusive discretion, may make such location, filing or application for claim, license or permit in Lessor’s name as may be required or permitted by such new or modified laws with respect to the ground covered by the Premises.  Lessor gives Lessee full power and authority as Lessor’s attorney-in-fact to make such location, filing or application.  Any such claim, license or permit shall be subject to this Agreement.

5.  OBLIGATIONS OF LESSEE

.

Protection from Liens.  Lessee shall keep title to the Premises free and clear from any liens, claims and encumbrances (other than liens for taxes not yet due and delinquent) arising from its operations hereunder.  Lessee shall pay for all labor performed upon or material furnished to the Premises at the request of Lessee and shall keep the Premises free and clear from liens of mechanics or materialmen in connection with services performed and material supplied at Lessee’s request.  Lessee shall, however, have the right in good faith to contest the validity of any lien, claim

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or liability and shall not be required to remove any such lien, claim or liability so long as Lessee is contesting the validity or the amount thereof.  The foregoing provisions shall not restrict Lessee from placing a mortgage, trust deed or other lien upon its interest in the Premises for financing purposes.

B.

Indemnification and Insurance.  Lessee shall protect Lessor against any damages arising out of Lessee’s operations on the Premises and shall indemnify Lessor against liability resulting from Lessee’s operations on the Premises; provided, however, that Lessor or any agent acting on its behalf, or any breach of warranty by Lessor, shall not have been a contributing cause to the event giving rise to any such damages.  Lessee shall carry liability insurance with reasonable policy limits protecting Lessor against damages arising out of Lessee’s operations on the Premises.

C.

Taxes and Assessments.  Except as provided below, Lessee shall pay promptly before delinquency all taxes that may be assessed during the term of this Agreement upon the Premises resulting from Lessee’s activities thereon.  However, Lessee shall always have the right to contest, in the courts or otherwise, either in its own name or in the name of Lessor, the validity or amount of any such taxes, or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof, before it shall be required to pay such taxes.  Notwithstanding the foregoing, Lessee shall not permit any part of the Premises to be conveyed and title lost as the result of nonpayment of such taxes.  Lessee shall provide Lessor with copies of all receipts evidencing payment of such taxes.  If Lessor should receive tax bills or claims that are the responsibility of Lessee , Lessor shall promptly forward such bills or claims to Lessee for appropriate action.  Lessee shall pay the above-referenced taxes that are assessed from the Effective Date of this Agreement to its date of termination.  Lessee shall not be liable for any taxes levied on or measured by Lessor’s income or based upon payments made to Lessor by Lessee under this Agreement.

D.

Compliance with Laws and Regulations.  Lessee shall perform all of its operations on the Premises in a good and workmanlike manner and in compliance with all applicable federal, state and local laws and regulations pertaining to environmental protection, reclamation and bonding.  Specifically, Lessee shall comply with all permitting and other regulatory requirements set forth by the U.S. Bureau of Land Management, the U.S. Forest Service, the U.S. Environmental Protection Agency, and applicable state agencies.  Lessee shall have no obligations with respect to prior operations or preexisting conditions on the Premises.

E.

Right of Access to the Premises.  During the term of this Agreement Lessee shall allow Lessor and representatives of Lessor, at their sole risk and expense, access to the Premises for the purposes of viewing or inspecting Lessee’s operations, at times which, in Lessee’s discretion, do not unreasonably interfere with its operations.  Lessor, on behalf of itself and its representatives, agrees to indemnify, protect, save and hold harmless Lessee and its affiliated and direct and indirect parent corporations and entities and all of their respective officers, directors, employees, shareholders, partners, agents and representatives (the “Lessee Indemnitees”) from and against any and all losses, costs, damages, expenses, attorney fees, claims, demands, liabilities, suits and actions of every kind that may be imposed upon or incurred by any of the Lessee Indemnitees on account of, or arising directly or indirectly from, Lessor’s rights under this Section 5.E.

F.

Delivery of Data.  Upon termination of this Agreement, Lessee shall furnish Lessor

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within a reasonable time and without warranty or liability one set of copies of all available noninterpretive data pertaining to the Premises and developed or prepared by or for Lessee, and shall authorize and permit Lessor to take possession of any available core derived from the Premises, whether or not such core is stored on the Premises; provided, however, that Lessee shall in no event be liable to Lessor for availability of or damage to any such core or for the accuracy, reliability or completeness of any data furnished to Lessor.  The provisions of this Section 5.F shall not apply if the termination occurs from Lessee’s exercise of its Option to purchase the Premises.  Lessor shall assume all risks stemming from reliance upon such data by itself and by third parties after disclosure thereof by Lessor and shall indemnify and hold harmless the Lessee Indemnitees as to such risks and as to any claims made by su ch third parties.

G.

Assessment Work and Maintenance Fees.  Commencing with the annual assessment work year beginning September 1, 2007 and subject to Lessee’s right under Section 6.B to terminate this Agreement, Lessee shall make all payments required to maintain all unpatented mining claims included in the Premises (provided the same are still subject to this Agreement), and shall timely file with the Bureau of Land Management and record with the county in which said claims are located for each assessment year affidavits of intent to hold and any other documents necessary to maintain said claims pursuant to state and federal law; provided, however, that Lessee shall not be required to make such payments for the assessment year during which this Agreement is terminated (or for any subsequent assessment year) if termination occurs prior to July 1 of said assessment year.

6.  TERMINATION

.

Termination by Lessor.  In the event Lessor considers that Lessee has not complied with any obligation hereunder, Lessor shall notify Lessee setting out specifically in what respect it is claimed that Lessee has breached this Agreement.  If the alleged breach is not cured within 60 days after notice is given, or if Lessee has not within that time either commenced to cure the alleged breach and does not thereafter diligently complete such cure, or challenges the legitimacy of the allegation, Lessor may terminate this Agreement by delivering to Lessee written notice of such termination; provided, however, that in the event Lessee challenges the legitimacy of the allegation, Lessee may give written notice to Lessor within such 60-day period setting forth such fact.  If Lessor gives written notice within 15 days of Lessee’s notice that Lessor rejects Lessee’s position, then this Agreement shall not be terminable by Lessor until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Lessee shall satisfy such judgment within 30 days following its entry (or if an appeal of such judgment is taken, following its affirmation by the highest court to which such an appeal is made).  Failure of Lessor to give such notice shall constitute agreement by Lessor that Lessee is not in default.  Lessor shall not be entitled to terminate this Agreement for any default which by its nature is not retroactively curable if Lessee has used its best efforts to cure such a default to the extent practical or if Lessee has paid Lessor damages for such default where damages are an appropriate remedy.  Lessor shall have no right to terminate this Agreement except as expressly provided in this Section 6.A, and termination of this Agreement shall be the sole remedy of Lessor.  Neither the service of any notice nor the performance of any acts by Lessee intended to meet any such alleged breach shall be deemed an admission or presumption that Lessee has failed to perform all of its obligations under this Agreement.  Notwithstanding the foregoing provisions of this Section 6.A, this Agreement may not be terminated, in whole or in part, by less than all the individuals and/or

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entities included within the term “Lessor.”

.

Termination by Lessee.  Lessee shall have the right to terminate this Agreement at any time by giving Lessor written notice of such termination.  Upon such termination, all right, title and interest of Lessee under this Agreement in the Premises shall terminate.  Lessee shall be relieved of all further obligations set forth in this Agreement except those obligations, if any, which have accrued prior to such termination.  Subject to the provisions of Section 5.G, any taxes and governmental charges for which Lessee was responsible prior to termination shall be prorated as of the termination date.  Exercise by Lessee of its Option to purchase the Premises shall constitute a termination of this Agreement by Lessee.

.

Release.  Following termination of this Agreement, Lessee shall promptly deliver to Lessor a fully executed release of this Agreement, in recordable form, if so requested by Lessor.  The provisions of this Section 6.C shall not apply if this Agreement is terminated through exercise of Lessee’s Option to purchase the Premises.

.

Reclamation; Removal of Property.  Upon termination of this Agreement, Lessee shall have a continuing right to enter upon the Premises to complete required reclamation.  Lessee shall have a period of one year after the date of termination in which to enter upon and remove from the Premises all of its machinery, buildings, structures, facilities, equipment and other property placed or situated thereon.  Any property of Lessee not removed by the end of this one-year period shall become the property of Lessor; however, Lessee does not warrant the condition or safety of any such property.  The provisions of this Section 6.D shall not apply if this Agreement is terminated through exercise of Lessee’s Option to purchase the Premises.

7.  LIENS

In the event that Lessor fails to promptly pay, when due, taxes, mortgages or other liens levied against the Premises and payable by Lessor, Lessee shall have the right (but shall not be obligated) to pay such past due amounts and, if Lessee does so, Lessee shall be subrogated to all the rights of the holders thereof and Lessor shall reimburse Lessee for all such payments and for all related costs and expenses paid or incurred by Lessee (including related attorney fees) within three months after the same are paid or incurred by Lessee.  Any payments due Lessor under this Agreement may be credited by reimbursements due Lessee under this Section.  The provisions of this Section shall survive termination of this Agreement.

8.  FORCE MAJEURE

Lessee shall not be liable for failure to perform any of its obligations, other than making payments due under Section 3, during any period in which performance is prevented, in whole or in part, by causes herein termed Force Majeure.  For purposes of this Agreement, the term “Force Majeure” shall include labor disputes; acts of God; action of the elements, including inclement weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules, regulations, orders, directives and requests of governmental bodies or agencies; delay, failure or inability of suppliers or transporters of materials, parts, supplies, services or equipment or by contractors’ or subcontractors’ shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or

7

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facilities; judgments or orders of any court or agency; inability to obtain on reasonably acceptable terms or in reasonably acceptable time any public or private licenses, permits or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or future violation of federal, state or local environmental standard; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot; civil strife; fire; explosion; or any other cause whether similar or dissimilar to the foregoing, except for the inability to meet financial commitments.  If Lessee desires to invoke the provisions of this Section, Lessee shall give notice of the commencement of the circumstances giving rise to such Force Majeure.  The time for discharging Lessee’s obligations with respect to the prevented performance, or the time within which Lessee must undertake or com plete any activity, shall then be extended for the period of Force Majeure.

9.  NOTICES AND AGENTS

A.

Notices.  Any required notice or communication shall be in writing and shall be effective when personally delivered (including delivery by express courier service) to the following addresses or when addressed as follows and deposited, postage prepaid, and certified with return receipt requested, in the United States mail:

If to Lessor:

George D. Duffy Jr.

P.O. Box 1245

Lovelock, Nevada 89419

If to Lessee:

MGC Resources Inc.

Attn: Alan Branham, President

2778 Spokane Creek Road

East Helena, Montana 59635

Either Party may, by notice to the other given as aforesaid, change its mailing address for future notices.

B.

Designation of Agent for Lessor.  If ever there is more than one owner and/or authorized payee of or as to Lessor’s interest, such multiple owners and/or payees shall designate an authorized agent to receive all payments hereunder from Lessee and to give and receive notices pursuant to this Agreement.  Lessee may satisfy its payment obligations hereunder by tendering one check to said agent for the benefit of all of such multiple owners and/or payees, and responsibility for disbursing such payments among said persons shall rest exclusively with said agent.  Any change in said agent shall be effective only if made in writing and signed by each of the persons constituting Lessor.  In the event of any dispute among such multiple owners and/or payees concerning entitlement to such payments, Lessee may tender its payments into an escrow account for the benefit of such persons as may be entitled thereto at a bank of Lessee’s choice located in the county in which the Premises are situated, and notify such persons that such an account has been established, with the costs of establishing and maintaining the escrow account deductible from Lessee’s payments.  Such escrowed payments shall be deemed to be a sufficient tender of payment by Lessee for all purposes hereunder.

C.

Payments After a Transfer of Interest.  In the event payments should be made to

8

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other parties because of any authorized transfer of the interest of any of the persons constituting Lessor, payments tendered to Lessor’s designated agent, or to the party making the transfer if only one party constitutes Lessor, shall conclusively be deemed payment to the transferee until Lessee receives notice and evidence satisfactory to it from both the agent (if applicable) and the transferor that the transferor’s interest has been transferred and that payments should be made to the transferee or the transferee’s designated agent.

10.  CONFIDENTIALITY

Lessor shall not, without the express written consent of Lessee, disclose any information concerning the terms of this Agreement or operations conducted under this Agreement (except information and data that is generally available to the public), nor issue any press releases concerning such information.  However, if Lessor contemplates transferring its interest to a third party, it shall have the right to disclose such information to that party if it first obtains an agreement in writing from such third party, satisfactory to Lessee after review in advance, providing that the third party shall hold confidential the information furnished to it.

11.  OPTION TO PURCHASE PREMISES

A.

Grant of Option.  Lessor hereby grants to Lessee, while this Agreement remains in effect, the sole and exclusive option (the “Option”) to purchase all of the Premises for a total purchase price of Five Hundred Thousand Dollars ($500,000.00) (the “Purchase Price”).  Lessee shall be entitled to a credit against the Purchase Price for all amounts previously paid under the provisions of Sections 3.A and 3.B above.  Exercise of the Option shall terminate Lessee’s obligation to make any further payments under Sections 3.A and 3.B above.

B.

Exercise of Option.  Lessee may exercise the Option by giving Lessor written notice thereof at any time while this Agreement is still in effect.  Exercise of the Option shall be effective upon delivery of said notice, as provided in Section 9.A.  Upon exercise of the Option by Lessee, the Parties shall be bound to complete the closing of the sale of the Premises to Lessee as provided herein.  The notice shall specify a time and place for closing the purchase and sale of the Premises.  The closing shall be held not more than 30 days from the date of the notice, at a time and place reasonably convenient to the Parties.  At the closing, Lessor shall execute and deliver to Lessee a good and sufficient deed acceptable to Lessee, in recordable form, in which Lessor will grant to Lessee title to the Premises free and clear of all liens, encumbrances, reservations, restrictions and other exceptions to ti tle arising by, through or under Lessor.  Upon delivery to Lessee of the deed, Lessee shall pay and deliver to Lessor the balance of the Purchase Price due after deducting the amounts provided for in Section 11.A.  Upon completion of the closing, this Agreement, and all rights and obligations of the Parties hereunder, shall terminate, except such rights and obligations hereunder as may then have accrued and remain unpaid or unsatisfied.

12.  MISCELLANEOUS

A.

Cooperation by Lessor.  Lessor shall execute all documents and otherwise cooperate with Lessee as needed in connection with the conduct of operations on the Premises, including the acquisition of governmental permits, reclamation approvals, water rights, and other rights and privileges related to operations on the Premises and reclamation thereof.  In that regard, Lessor

9

MGC-054.doc

agrees not to protest, challenge or otherwise oppose any water right or operational permit filings that Lessee may make to facilitate operations or proposed operations on or in connection with the Premises.

B.

Sharing of Data by Lessor.  Lessor shall, upon execution of this Agreement, provide or make available to Lessee any available technical and title information and drill core and other samples (such as cuttings, pulps, drill logs, assay results, feasibility reports, etc.) concerning the Premises which are in Lessor’s possession or control.  Similarly, Lessor shall, as soon as possible, provide or make available to Lessee any such information and samples that Lessor may acquire subsequent to the execution of this Agreement, whether obtained personally or from third parties.

C.

Relationship of the Parties.  Nothing contained herein shall be deemed to constitute either Party, in its capacity as such, the partner, agent or legal representative of the other Party, or to create any partnership, mining partnership or other partnership relationship, or fiduciary relationship between them, for any purpose whatsoever.  Except as expressly provided in this Agreement, each Party shall have the free, unrestricted and independent right to engage in and receive the full benefits of any and all business endeavors of any sort whatsoever outside the Premises or outside the scope of this Agreement, whether or not competitive with the endeavors contemplated herein, without consulting the other or inviting or allowing the other therein.

D.

Transfers.  Lessor and Lessee and their respective successors shall have the right to assign or otherwise transfer their respective interests in this Agreement in whole or in part provided that the assignee agrees in writing to assume all, or a portion of all if applicable, obligations of Lessor or Lessee hereunder, as the case may be.  No such transfer shall be effective against the non-transferring Party until that Party receives written notice of the transfer in accordance with Section 9.A.

.

Binding Effect.  Subject to the provisions of Section 12.D above, the provisions of this Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, personal representatives, beneficiaries, successors and assigns.

.

Memorandum of Agreement.  This Agreement may be recorded at the election of Lessee.  At Lessee’s request, the Parties shall also execute a short form of this Agreement (the “Memorandum of Mineral Lease Agreement and Option to Purchase”) which may be recorded in the office of the recorder of the county wherein the Premises are located.  The execution and recording of the Memorandum of Mineral Lease Agreement and Option to Purchase shall not limit, increase or in any manner affect any of the terms of this Agreement, or any rights, interests or obligations of the Parties.

.

Construction of Agreement.  This Agreement constitutes the entire understanding of the Parties with respect to the Premises, all previous agreements, promises, representations, negotiations, writings and understandings between the Parties concerning the Premises being expressly rescinded.  Except for obligations of good faith and fair dealing, there are no terms or conditions, express or implied, other than herein stated.  No modification or alteration of this Agreement shall be effective unless made in writing and executed by the Parties with the same formality as this Agreement.  Wherever the term “including” is used herein, it shall be deemed to mean “including without limitation,” and wherever the phrase “shall include” is used herein, it shall

10

MGC-054.doc

mean “shall include without limitation.”

H.

Multiple Counterparts.  This Agreement may be executed in multiple counterparts and all counterparts taken together shall be deemed to constitute one and the same document.

I.

Applicable Law.  This Agreement shall be construed, interpreted and governed by the laws of the State of Nevada.

J.

Attorney Fees.  In the event either Party brings any action or proceeding for damages or equitable relief against the other Party for an alleged breach or default of any provision of this Agreement to recover monies due or to enforce, protect, establish or interpret any right or remedy of either Party under this Agreement, the prevailing Party shall be entitled to recover as a part of such action or proceeding reasonable attorney fees and court costs.

K.

Disputes.  Disputes or differences between the Parties shall not interrupt performance of this Agreement or the continuation of operations hereunder.  In the event of any dispute or difference, operations may be continued and payments may be made hereunder in the same manner as prior to such dispute or difference.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth in the acknowledgements below, but effective as of the Effective Date.

Lessor:

GEORGE D. DUFFY JR.

Lessee:

MGC RESOURCES INC., a Nevada

corporation

By _________________________________

Alan Branham, President

11

MGC-054.doc

STATE OF NEVADA

)

: ss.

COUNTY OF

)

On this ______ day of June, 2007, personally appeared before me, a Notary Public, GEORGE D. DUFFY JR., who acknowledged that he executed the above instrument.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

STATE OF MONTANA

)

) ss.

COUNTY OF LEWIS AND CLARK

)

On this ______ day of June, 2007, personally appeared before me, a Notary Public, Alan Branham, the President of MGC RESOURCES INC., a Nevada corporation, who acknowledged that he executed the above instrument on behalf of said corporation.

[seal]

__________________________________________

NOTARY PUBLIC, residing in

__________________________________________

My commission expires:

_____________________

12

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EXHIBIT A

“Premises”

The following two unpatented lode mining claims located within Section 4, Township 28 North, Range 34 East, MDM, Pershing County, Nevada:

Claim Name

BLM Serial Number

Recording Data

(Book/Page)

Duffy #1

NMC811224

348/308

Duffy #2

NMC811225

348/309

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EX-10.13

MIDWAY GOLD CORP.
(the “Company”)

STOCK OPTION PLAN

as adopted by the Board on May 6, 2003

1.

Purpose.  The purpose of this Stock Option Plan (the “Plan”) is to advance the interests of the Company and its shareholders by enhancing the ability of the Company to attract and retain the best available talent and to encourage the highest level of performance by senior officers, key employees, directors and consultants of the Company and of its subsidiaries through ownership of Common Shares in the Company.  This form of Plan supersedes and replaces the terms and conditions of previously granted stock options of the Company (other than their exercise price and expiry date).

2.

Defined Terms.  For the purposes of this Plan, the following terms shall have the following meanings:

(a)

“Applicable Laws” means all relevant provisions of law, including, without limitation, the Securities Act and the rules and regulations thereunder of British Columbia, and the jurisdictions in which Optionees may reside, and all policies, notices, instruments and blanket orders in force from time to time that are applicable to the Company and the Optionees;

(b)

“Board” means the Board of Directors of the Company or any committee duly empowered or authorized to grant options under this Plan;

(c)

“Common Shares” means common shares without par value in the capital of the Company providing such class is listed on the Exchange;

(d)

“Consultant” means, in relation to the Company, a Person or Consultant Company, other than an Employee, Senior Officer or a Director of the Company, that:

(i)

is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or to an affiliate of the Company, other than services provided in relation to a Distribution;

(ii)

provides the services under a written contract between the Company or an affiliate of the Company and the Person or the Consultant Company;

(iii)

in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an affiliate of the Company; and

- 2 -

(iv)

has a relationship with the Company or an affiliate of the Company that enables the Person to be knowledgeable about the business and affairs of the Company;

(e)

“Consultant Company” means a company or partnership of which the Consultant is an employee, shareholder or partner;

(f)

“Director” means a director of the Company as may be elected or appointed from time to time;

(g)

“Discounted Market Price” has the meaning assigned by Exchange Policy 1.1;

(h)

“Disinterested Shareholder Approval” means approval by a majority of the votes cast by all the Company’s shareholders at a duly constituted shareholders’ meeting, excluding votes attached to shares beneficially owned by a Director, Senior Officer, Employee, Management Company Employee or Consultant, and also includes a company, of which 100% of the share capital is beneficially owned by one or more persons who is a service provider;

(i)

“Distribution” means the sale of securities from the Company’s treasury, the sale of securities by a purchaser who acquired securities pursuant to a prospectus exemption, other than in accordance with the resale restrictions of Applicable Laws or the Exchange Policies, or the sale of securities by a control person other than in accordance with the resale restrictions of Applicable Laws or the Exchange Policies;

(j)

“Employee” means:

(i)

a Person who is considered an employee of the Company or its Subsidiary under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and CPP deductions must be made at source);

(ii)

a Person who works full-time for the Company or its Subsidiary providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source; or

(iii)

a Person who works for the Company or its Subsidiary on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source;

(k)

“Exchange” means the TSX Venture Exchange and any successor thereto;

- 3 -

(l)

“Exchange Policies” means the policies of the Exchange, as amended from time to time;

(m)

“Investor Relations Activities” means any activities, by or on behalf of the Company or a shareholder of the Company, that promote or reasonably could be expected to promote the purchase or sale of securities of the Company, but does not include:

(i)

the dissemination of information provided, or records prepared, in the ordinary course of business of the Company

A.

to promote the sale of products or services of the Company; or

B.

to raise public awareness of the Company,

that cannot reasonably be considered to promote the purchase or sale of securities of the Company;

(ii)

activities or communications necessary to comply with the requirements of

A.

applicable Laws,

B.

the Exchange Policies or the by-laws, rules or other regulatory instruments of any other self regulatory body or exchange having jurisdiction over the Company;

(iii)

communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

A.

the communication is only through the newspaper, magazine or publication, and

B.

the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

(iv)

activities or communications that may be otherwise specified by the Exchange;

(n)

“Management Company Employee” means an individual employed by a Person providing management services to the Company, which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Person engaged in Investor Relations Activities;

- 4 -

(o)

“Market Price” means the last closing price per Common Share on the Exchange prior to the Board granting the option;

(p)

“Optionee” means a Person to whom an option to acquire Common Shares has been granted under the terms of the Plan;

(q)

“Person” means company or an individual;

(r)

“Senior Officer” means a duly appointed senior officer of the Company or any Subsidiary;

(s)

“Subsidiary” means any corporation, partnership, joint venture or other entity in which the Company owns or controls, directly or indirectly, not less than 50% of the total voting power or equity interests, and includes a subsidiary of a Subsidiary;

(t)

“Tier 1 Issuer” has the same meaning ascribed thereto under the Exchange Policies; and

(u)

“Tier 2 Issuer” has the same meaning ascribed thereto under the Exchange Policies.

3.

Administration.  The Plan will be administered by the Board.  The Board will have authority, consistent with the Plan:

(a)

to grant options priced in accordance with this Plan;

(b)

to prescribe the form of certificate evidencing grants of options to Optionees and any other instruments required under the Plan and to change such forms from time to time;

(c)

to adopt, amend and rescind rules and regulations for the administration of the Plan, provided however, that except as specified in Section 6(c), if the Common Shares of the Company are listed on the Exchange, no amendment which would increase the maximum number of Common Shares for which options may be granted will be made by the Board without the approval of the Exchange;

(d)

to interpret and administer the Plan and to decide all questions and settle all controversies that may arise in connection with the Plan, all of which decisions of the Board will be final and conclusive;

(e)

to determine who is eligible to receive options pursuant to the eligibility criteria of Section 5; and

(f)

to make all other determinations necessary or advisable for administration of the Plan.

- 5 -

4.

Compliance with Laws.  Transactions under the Plan are intended to comply with the Applicable Laws and the Exchange Policies.  To the extent any provision of the Plan or action by the Board fails to so comply, it will be deemed null and void, to the extent permitted by law and deemed advisable by the Board.

5.

Eligibility.  The Board may from time to time authorize the grant of options to anyone who is at the time of such authorization:

(a)

a Director, Senior Officer, Employee or a company that is wholly-owned by a Director, Senior Officer or Employee; or

(b)

subject to the Applicable Laws and the Exchange Policies, a Consultant or a Consultant Company.

6.

Shares Subject to the Plan.

(a)

Subject to adjustment as provided in Section 6(d):

(i)

the number of Common Shares to be issued or allotted and reserved for issuance from time to time upon the exercise of options granted under the Plan will not at any point in time exceed 10% of the issued and outstanding Common Shares;

(ii)

no more than an aggregate of 5% of the issued and outstanding Common Shares may be granted to any one individual in any 12 month period, unless the Company is a Tier 1 Issuer and has obtained Disinterested Shareholder Approval;

(iii)

no more than an aggregate of 2% of the issued and outstanding Common Shares may be granted to any one Consultant in any 12 month period; and

(iv)

no more than an aggregate of 2% of the issued and outstanding Common Shares may be granted to all Employees conducting Investor Relations Activities, in any 12 month period.

(b)

If any option granted under the Plan expires unexercised or terminates by reason of dismissal of the Optionee for cause, or otherwise is lawfully cancelled without having been exercised, the number of Common Shares that were issuable thereunder will be returned to the Plan within the limits set forth in Section 6(a) and will be eligible for re-issue.

(c)

No options can be granted under the Plan if the Company is designated “Inactive” (as defined in the Exchange Policies) by the Exchange.

(d)

In the event of a stock split, consolidation or reclassification or other change in the Company’s capital, other than an issue of Common Shares or by way of stock dividend, the number and exercise price of options will be adjusted by the Board

- 6 -

to preserve the rights of the participants in this Plan substantially proportionate to those existing prior to such event.

7.

Terms and Conditions of Options.  All options granted under the Plan will be subject to the following terms and conditions:

(a)

The per-share exercise price of each option will be set by the Board at the time of grant and will be not less than the Discounted Market Price of a Common Share;

(b)

An option may be exercised no later than five years from the date it was granted, unless the Company is, at the time of the grant, a Tier 1 Issuer, in which case such option may be exercised no later than 10 years from the date it was granted;

(c)

With the exception of any options granted to a Consultant who performs Investor Relations Activities, all options granted to each Optionee under the Plan will become vested on the grant date, or at such other time as may be established by the Board at the time of the grant in compliance with the Exchange Policies.  The Board will, at the time of grant, determine the vesting date or dates of any options granted to a Consultant who performs Investor Relations Activities provided that such options must vest in stages over 12 months with no more than ¼ of the options vesting in any three-month period.

(d)

Optionees will not exercise options until they have vested;

(e)

Each option granted to an Optionee will be evidenced by the stock option agreement attached as Appendix “A” to this Plan;

(f)

Any exercise of an option must be in writing, signed by the Optionee and delivered or mailed to the Company and payment in full as provided below for the number of Common Shares for which the option is exercised;

(g)

The price of Common Shares purchased on the exercise of an option must be paid in full by cash or certified cheque, payable to the Company;

(h)

No option or any interest therein will be transferable or assignable otherwise than by will or pursuant to the laws of succession;

(i)

An Optionee will have no rights as a shareholder of the Company with respect to any Common Shares covered by any option until such time as and to the extent only that such option has been exercised;

(j)

If any Optionee ceases to be eligible for a grant of options under this Plan for any reason (a “Termination”), except the death of an Optionee or by reason of retirement pursuant to an established retirement policy of the Board or dismissal from employment or service for cause, all options granted to the Optionee under the Plan and then held by the Optionee will, to the extent such options were vested and exercisable immediately prior to Termination, continue to be

- 7 -

exercisable by the Optionee for a period of 90 days following Termination or until the expiration date of the option if earlier;

(k)

If Termination is by reason of retirement pursuant to an established retirement policy of the Board, all options held by the retiring Optionee will become vested and exercisable, to the extent not already vested and exercisable immediately prior to retirement, and they continue to be exercisable until their original expiration date;

(l)

Notwithstanding Section 7(j), any options granted to an Optionee who is engaged in Investor Relations Activities will expire within 30 days after such Optionee ceases to be employed to provide Investor Relations Activities;

(m)

In the event of the death of an Optionee, all options granted to the Optionee under the Plan and held by the Optionee immediately before death will, to the extent such options were vested and exercisable at that time, continue to be exercisable by the legal representative of the Optionee for a period of 1 year following the death of the Optionee or until the expiration date of the option if earlier;

(n)

In the event that the Company proposes to grant options, under this Plan or otherwise, which could result in the grant to Insiders, within a 12 month period, of a number of options exceeding 10% of the Company’s issued shares, the Company shall first obtain such disinterested shareholder approval as may be required by the Exchange;

(o)

If the Company wishes to reduce the exercise price of any outstanding options held by any person who is an “insider” as defined by the Exchange, the Company shall first obtain such disinterested shareholder approval as may be required by the Exchange; and

(p)

In the case of an Optionee being dismissed from employment or service for cause, such Optionee’s Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise the same.

8.

Legend Requirements.

(a)

All options granted to Optionees pursuant to the Plan and any Common Shares issued on the exercise of such options will bear a legend stipulating any resale restrictions as may be prescribed by the Applicable Laws.

(b)

Further, if the Company is a Tier 2 issuer, or the exercise price is set below the Market Price of the Common Shares on the Exchange, the certificate will bear a legend stipulating that the optioned shares are subject to a 4 month Exchange hold period commencing the date of the grant.

9.

Tax Consequences of the Plan.  The Company does not assume responsibility for the income or other tax consequences for Optionees or persons eligible under the Plan and they are advised to consult with their own tax advisors.

- 8 -

10.

Effect of Certain Corporate Transactions.  In the event of a consolidation or merger in which the Company is not the surviving company, or in the event its outstanding shares are converted into securities of another entity or exchanged for other consideration, or in the event of an offer for Common Shares being made by a third party that constitutes a take-over bid as that term is defined in the Securities Act (British Columbia) or would constitute a take-over bid as that term is defined in the Securities Act (British Columbia) but for the fact that the offeree is not in British Columbia, all outstanding options will immediately vest and all options granted to the optionee under this Plan and held by the Optionee will continue to be exercisable after the Company has sent notice to each of the Optionees to exercise the options only for a period of 30 days from the date of such notice or until the expiration of the option, if earlier.  After such time, the options will terminate, provided, however, that if such transaction does not close, all such options will be deemed not to have vested nor expired.

11.

Bona Fide Employee or Consultant.  In respect of any options granted to Employees or Consultants pursuant to the Plan, the Board shall make a determination that such Optionee is, as at the date of the grant of the options, a bona fide Employee or Consultant, as the case may be.

12.

Effective Date of Plan.  The Plan will become effective on the date it receives acceptance by the Exchange, including any shareholder approval required by the Exchange.

13.

Restrictions on Corporate Optionee.  If the Optionee is not an individual, the Optionee will not, for the duration of time that the Optionee is the holder of options granted pursuant to this Plan, effect or permit any transfer of ownership or option of shares of the Optionee or allot and issue further shares of any class of shares of the Optionee to any Person.

14.

Amendments to Plan.  The Board reserves the right, in its absolute discretion, to at any time amend, modify or terminate the Plan.  Subject to Section 15, amendments to the Plan, from time to time, will become effective on the later of the date of the approval of such amendments by the Board and the date of the approval of such amendments by the Exchange.

15.

Prior Approval.  The Plan, and any subsequent amendments thereto, are subject to the prior approval of the Exchange and ratification by the shareholders of the Company at each annual general meeting of the Company, and accordingly so long as the Common Shares are listed on the Exchange, no option granted under the Plan shall be exercised prior to these approvals having been obtained by the Company.

16.

Governing Law.  The Plan will be governed by and construed in accordance with the laws of the Province of British Columbia.

* * * * * * * * * * * * * * * * * * *

Appendix “A”

OPTION AGREEMENT

THIS AGREEMENT dated ·, 200·, is between:

MIDWAY GOLD CORP., a company incorporated under the laws of British Columbia, having its head office at Suite 300, 570 Granville Street, Vancouver, BC.

(the “Company”)

AND

·, of the address set out in Appendix 1

(“Optionee”)

BACKGROUND

A.

The Optionee holds one or more positions described in Section 5 of the Company’s 2003 Stock Option Plan (the “Plan”).

B.

The Company has determined that the Optionee will receive an option (the “Option”) to purchase common shares of the Company (the “Common Shares”) pursuant to the Plan in accordance with the terms of this Agreement.

AGREEMENTS

In consideration of the Optionee holding and continuing to hold one such position and for other good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties agree as follows:

1.

The Company represents that the Optionee is a bona fide [Employee / Consultant / Management Company Employee / Director / Senior Officer] as defined in Section 2 of the Plan.

2.

At the date of grant of the Option, the Company is classified as a Tier l company under the TSX Venture Exchange Policies.

3.

The Company grants to the Optionee the irrevocable option to purchase Common Shares on the following terms and conditions:

(a)

the number of Common Shares under Option, the vesting and expiry of the Option, and the price per share at which the Common Shares may be purchased, are as set out in Appendix 1 to this Agreement; and

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(b)

the grant of the Options evidenced hereby is made subject to the terms and conditions of the Plan, the terms and conditions of which are hereby incorporated by reference into this Agreement.

4.

To exercise this Option, the Optionee must deliver a written notice to the Company specifying the number of Common Shares that the Optionee wishes to acquire, together with cash or certified cheque payable to the Company for the aggregate exercise price.  A certificate representing the Common Shares acquired will be issued by the Company’s transfer agent as soon as practicable thereafter and will bear a minimum 4 month non-transferability legend commencing as of the date of this Agreement.  [Note:  A Tier 1 company may grant stock options without a hold period, provided the exercise price of the options is set at or above the market price of the company’s shares rather than below.]

5.

Time is of the essence of this Agreement.

6.

The exercise of this Option by the Optionee is entirely voluntary and any decision not to exercise this Option or any part of it will not in any way affect the Optionee’s employment or continued employment, and the exercise of this Option or any part of it will not give the Optionee any right to employment or continued employment.

7.

This Agreement will enure to the benefit of the Optionee and the heirs and personal representatives of the Optionee.

8.

The Company may require from the Optionee such investment representation, undertaking or agreement, if any, as the Company may consider necessary in order to comply with applicable laws and the policies of the TSX Venture Exchange.

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9.

This Agreement will be governed and constituted in accordance with the laws of the Province of British Columbia.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

MIDWAY GOLD CORP.


Per:

Authorized Signatory

SIGNED IN THE PRESENCE OF:
Signature
(Print Name)
(Address)
(Occupation) ) ) ) ) ) ) ) ) ) ) ) ) ) l [Name of Optionee] Or if Optionee is not an individual: l[Name of Company] Per:  
l      [Authorized Signatory’s name],
l      [Position]

APPENDIX 1

Optionee Information	Number of Shares Optioned	Price per Share	Vesting Date(s) [If applicable]	Expiry Date
l [Name] l [Position] l [Address] l [Telephone #] l [Fax #]	l	Cdn$l	l	l

EX-10.14

STOCK OPTION PLAN

OPTION AGREEMENT

Without prior written approval of the TSX Venture Exchange  and compliance with all applicable securities legislation, the securities represented by this agreement and any securities issued upon exercise thereof may not be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until , 200 four months and one day after the date of grant.

This Option Agreement is entered into between Pan-Nevada Gold Corporation (previously Castleworth Ventures Inc.) ("the Corporation") and the Optionee named below pursuant to the Pan-Nevada Gold Corporation Stock Option Plan (the "Plan"), a copy of which is attached hereto, and confirms that:

1.

on , 200 (the "Grant Date");

2.

 (the "Optionee");

3.

was granted the option (the "Option") to purchase  Common Shares (the "Option Shares") of the Corporation;

4.

for the price (the "Option Price") of $ per share;

5.

which shall be exercisable ("Vested") as to ;

6.

terminating on the , 200 (the "Expiry Date");

all on the terms and subject to the conditions set out in the Plan.  For greater certainty, once Option Shares have become Vested, they continue to be exercisable until the termination or cancellation thereof as provided in this Option Agreement and the Plan.

By signing this Option Agreement, the Optionee acknowledges that the Optionee has read and understands the Plan and agrees to the terms and conditions of the Plan and this Option Agreement.

IN WITNESS WHEREOF the parties hereto have executed this Option Agreement as of the  day of , 200.

OPTIONEE
Per:
Authorized Signatory

EX-10.15

EMPLOYMENT AGREEMENT
amended and restated as of January 31, 2007

BETWEEN

MIDWAY GOLD CORP., a company incorporated under the laws of the Province of British Columbia, with a registered office located at 2800-666 Burrard Street, Vancouver, BC, V6C 2Z7;

(“Midway”)

AND

MGC RESOURCES INC., a corporation incorporated under the laws of the State of Nevada, with a registered office located at 185 South State Street, Suite 1300, Salt Lake City, Utah 84111;

(“MGC”)

AND

ALAN BRANHAM, Businessman, resident at 2778 Spokane Creek Road, East Helena, Montana 59635;

(the “Executive”)

BACKGROUND

A.

Midway and its wholly-owned subsidiary MGC have offered the Executive employment as President and Chief Executive Officer of both Midway and MGC;

B.

The Executive has been employed by Midway since May 1, 2004; and

C.

The parties now wish to record the altered terms of the Executive’s employment with Midway.

AGREEMENTS

For good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties agree as follows:

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PART 1

EMPLOYMENT

1.1

Title.  Midway and MGC hereby agree to employ the Executive, and the Executive agrees to serve Midway and MGC as a member of the Boards of Directors of Midway and MGC (the “Boards”), and as President and Chief Executive Officer of both corporations, subject to the terms and conditions set forth in this Agreement.

1.2

Duties.  The Executive shall report directly to the Boards and perform those duties which are customary with the position of President and Chief Executive Officer, together with such additional duties as may be established by Midway’s and MGC’s respective Boards.  The Executive shall devote at least 75% of his business time, energy, and skill to the affairs of Midway and MGC and shall discharge his duties honestly, faithfully and to the best of his ability.  The Executive agrees that his hours of work will vary and may be irregular and will be those hours reasonably required to meet the objectives of his employment.

1.3

Avoidance of Conflicts of Interest.  The Executive will comply with all policies and directives regarding conflicts of interest adopted from time to time by the Boards.  The Executive will not serve as a director, officer, employee or agent of or hold any position or office with any corporation, firm, person or entity other than Midway and MGC (the “Outside Interest”) without obtaining prior written approval from the Boards, such approval not to be unreasonably withheld.  Midway and MGC acknowledge and approve of the Executive’s role as an officer and director of Rocky Mountain Resources Corp., a British Columbia company, commencing March 28, 2006.  The Boards may at their sole discretion, require the Executive to resign from any Outside Interest if the Boards are of the opinion that the Outside Interest has resulted in or is reasonably likely to result in a conflict of intere st or otherwise interfere with the Executive’s performance of his duties for Midway and/or MGC.

1.4

Legal Requirements.  The Executive acknowledges that Midway is a publicly traded corporation, engaged, directly and through MGC, in the mineral exploration business, and that, as such, Midway, MGC and their respective directors and officers are bound by a broad range of securities, environmental, labour and other laws, stock exchange rules and other regulatory restrictions and reporting requirements applicable to mineral exploration and public corporations (collectively, the “Legal Requirements”).  The Executive agrees to keep himself informed of the Legal Requirements applicable to Midway, MGC, their respective directors, officers and employees, and to ensure their timely compliance with such Legal Requirements from time to time.

PART 2

CONFIDENTIALITY

2.1

Confidential Data.  The Executive acknowledges that Midway and MGC have, and will have certain trade secrets, products, technology, sales literature and brochures, forms, contracts, customer lists and other information (“Confidential Data”) and the Executive, by virtue of his

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Offices will have access to some or all of the Confidential Data.  The Executive agrees that during the term of employment and any time after, the Executive will not directly or indirectly, other than in the ordinary course of the Executive’s business, disclose to any person or entity any of the Confidential Data.  The Executive acknowledges that the prohibition against disclosure of Confidential Data is in addition to and not in lieu of any rights or remedies which Midway and MGC may have available to them pursuant to the laws of any jurisdiction or at common law.

2.2

Delivery of Materials.  Upon the termination of the Executive’s employment, the Executive will immediately deliver up to Midway and MGC all Confidential Data, documents, papers, materials and other property of or relating to the affairs of Midway and MGC which may then be in the Executive’s possession or under the Executive’s control.

PART 3

REMUNERATION

3.1

Base Compensation.  Commencing February 1, 2006, in consideration for the services of the Executive hereunder MGC will pay the Executive a base salary of USD$12,500 per month, payable in advance and subject to statutory withholdings of applicable taxes, social security contributions and similar deductions.

3.2

Renegotiation.  MGC may, at its Board’s discretion, renegotiate the Executive’s base salary from time to time.

3.3

Stock Options.  On commencement of his employment in May, 2004, Midway granted the Executive 400,000 stock options (the “Options”) issued under the Midway’s stock option plan, a copy of which is attached as Schedule 1 hereto (the “Option Plan”), which Options will be exercisable at the best available price under applicable TSX Venture Exchange pricing policies, and subject to the vesting provisions and other terms and conditions of the Option Plan.

PART 4

BENEFITS

4.1

Group Benefits.  Commencing May 1, 2004 and subject to paragraph 4.2, MGC and Midway will provide the Executive with access to such group insurance, medical services and dental benefits, as are from time to time made available by them from time to time, at their respective Boards’ discretion, to executives of MGC or Midway employed in the United States (the “Policies”).

4.2

Maximum Contribution.  The Executive’s access to the Policies under paragraph 4.1 will be subject to an aggregate maximum monthly contribution of combined premiums and medical savings plans that cover deductions in the plans of up to USD$1,000 by Midway and MGC.  

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4.3

Alternate Coverage.  During the term of this Agreement, Midway and MGC will have the right to discontinue the Executive’s coverage under the Policies, and provide the Executive with comparable insurance or benefits coverage.

PART 5

VACATION

5.1

Vacation.  In addition to those paid holidays recognized by MGC, from time to time, for its employees stationed in the United States, and subject to the provisions of paragraph 5.2, MGC will provide the Executive with an annual paid vacation of four weeks, to be taken when the Executive deems appropriate, but subject to MGC’s operational requirements.

5.2

No Carry Forward.  If the Executive does not use all of the vacation entitlement in a given year (calculated by reference to the anniversary date of this Agreement), the unused vacation benefit will be carried forward into the succeeding year (the “Carry Forward Vacation”); provided, however, that MGC’s obligation to provide vacation as set forth in this paragraph 5.1 shall be reduced by the amount of Carry Forward Vacation, if any.  If the Executive’s employment ceases prior to the end of a given year (calculated by reference to the anniversary date of this Agreement), the Executive’s vacation entitlement for that year will be pro-rated.

PART 6

EXPENSES

6.1

Expenses.  MGC will reimburse the Executive for all reasonable expenses incurred by him in the ordinary course of the performance of his duties as President and Chief Executive Officer of MGC, in accordance with MGC’s policies and subject to review and approval by MGC’s Board from time to time.  

6.2

Vehicle.  MGC will provide the Executive with a vehicle or reasonable vehicle allowance related to the use by the Executive of his vehicle in the performance of his duties hereunder.  

6.3

Reimbursement.  Reimbursement of expenses will be made within thirty days following the Executive’s submission of duly completed expense accounts.  

PART 7

TERMINATION

7.1

Termination for Cause.  Midway and MGC, or either of them, may terminate this Agreement and the Executive’s employment at any time, for just cause, without notice and without liability for damages or loss sustained by the Executive.

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For purposes of this paragraph 7.1, “just cause” shall be defined as: (a) fraud, misappropriation of any money, assets, or other property of MGC and/or Midway, embezzlement, or the like; (b) the Executive is convicted of a felony or other serious crime by any governmental authority or of a crime of moral turpitude, whether classified as a felony or a misdemeanour; (c) the Executive’s violation of any policy of MGC and/or Midway prohibiting the use or possession of illegal drugs or alcohol; (d) a material violation by the Executive of paragraph 2.1 of this Agreement; (e) a material failure by the Executive to perform his duties as required by this Agreement; (f) a material failure by the Executive to co-operate in any investigation conducted and/or undertaken by MGC and/or Midway that has reasonable and legitimate objectives; (g) a material failure by the Executive to comply with a policy or proced ure of MGC and/or Midway, as they presently exist or as they are updated from time to time; (h) the Executive’s death; or (i) the Executive’s disability, as defined below.  With respect to subparagraphs (e) through (g), any act or failure to act by the Executive shall not be deemed material unless the Executive has failed to cure such act or failure to act within thirty (30) days of the date the Executive is provided written notice by MGC and/or Midway of such act or failure to act.

For purposes of this paragraph 7.1, “disability” shall mean any physical or mental incapacitation that results in the Executive’s inability to perform substantially all of his duties and responsibilities for MGC and/or Midway for a total of sixty (60) consecutive working days (as determined in accordance with the US Family and Medical Leave Act, whether or not such act is applicable) or an aggregate of eighty (80) working days during any twelve-month period, as determined by the Board in its good faith judgment.

7.2

Termination Without Cause.  Midway and MGC may terminate this Agreement and the Executive’s employment at any time, without cause and for any or no reason, by providing the Executive thirty days’ written notice of termination.

7.3

Termination Under 7.2.  In the event of the termination of this Agreement and the Executive’s employment by Midway and MGC pursuant to paragraph 7.2 of this Agreement at any time prior to May 1, 2010, MGC will:

(a)

within thirty days of the effective date of termination, pay the Executive an amount equal to twelve (12) months’ base salary and group benefits under paragraph 4.1 in lieu of notice, severance, damages or other payments, less any amount of taxes, premiums or other contributions statutorily required to be deducted therefrom by MGC; and

(b)

if the Executive is eligible to and properly elects continuation coverage pursuant to Sections 601 through 607 of the US Employee Retirement Income Security Act of 1974, as amended (“COBRA”), under a group health plan provided to the Executive under paragraph 4.1 above, MGC will pay the full COBRA premium on behalf of the Executive and his enrolled family members through the earlier of (a) six months following the date of termination; (b) the date the Executive first becomes eligible for coverage under any group health plan maintained by another employer of the Executive or his spouse; or (c) the date such COBRA continuation coverage otherwise terminates as to the Executive under the provisions of any group medical insurance plan provided under paragraph 4.1.  

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Nothing herein shall be deemed to extend the otherwise applicable maximum period in which COBRA continuation coverage is provided or supersede the plan provisions relating to early termination of such COBRA continuation coverage.  

The Executive expressly acknowledges and agrees that no further amounts will be payable to or claimed by him from Midway or MGC in respect of the termination of this Agreement pursuant to paragraph 7.2.  For greater certainty, under no circumstance will compensation for termination be payable to the Executive under both this paragraph 7.3 and paragraph 7.5.

7.4

Termination by Executive.  The Executive’s employment and this Agreement will terminate, without further obligation on the Executive, Midway or MGC, by the Executive giving thirty days’ written notice of resignation, although Midway and MGC may waive this notice in whole or in part.

7.5

Change of Control.

(a)

If at any time during the term of this Agreement there is a change in control of Midway, as defined below, then MGC shall pay to or for the benefit of the Executive amounts equal to those that would have been payable under paragraph 7.3 in the event of a termination under paragraph 7.2, and without regard to whether he continues to be employed by Midway or MGC after such change of control, or not.

(b)

For the purposes of this Agreement:

(i)

a “change of control” of Midway shall mean the occurrence of any of the following events:

A.

less than 60% of the Board of Directors of Midway being composed of Continuing Directors; or

B.

a person (within the meaning of the provisions of the Securities Act (British Columbia) (the “Securities Act”)), alone or with his affiliates, associates or persons with whom such person is acting jointly or in concert (all within the meaning of the Securities Act), becoming, following the date of this Agreement, the beneficial owner (also within the meaning of the Securities Act) of more than 50% of the total voting rights attaching to all classes then outstanding of Midway having under all circumstances the right to vote on any resolution concerning the election of directors; and

(ii)

“Continuing Director” shall mean either:

A.

an individual who is a member of the Board of Directors of Midway on February 1, 2006; or

B.

an individual who becomes a member of the Board of Directors of Midway subsequent to February 1, 2006 at the request of at least a

Davis:1638682.1

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majority of the Continuing Directors who are members of the Board of Directors of Midway at the date that the individual became a member of the Board of Directors of Midway.

7.6

Fair Agreement.  The Executive acknowledges that, having had the opportunity to discuss the contents of this Agreement with independent legal counsel, the arrangements described in this Agreement are fair and reasonable and constitute Midway’s and MGC’s sole obligation to provide notice of termination, severance pay or related compensation to the Executive. In particular, neither Midway nor MGC will have any greater obligation than specified in this Part if the Executive becomes disabled or is otherwise unable to work after the date of termination.

7.7

Midway Guarantee.  Midway guarantees the payment to or for the benefit of the Executive of all amounts payable by MGC to or for the benefit of the Executive, under this Agreement.

7.8

Survival of Part 2.  Regardless of the reason for the termination of this Agreement or the Executive’s employment, Part 2 of this Agreement will remain in effect, and binding on the Executive, after the date of termination.

PART 8

NO ASSIGNMENT

8.1

Non-Delegable Duties.  This is an agreement for the Executive’s personal services.  The duties of the Executive hereunder are personal and may not be delegated or assigned by the Executive.

PART 9

INDEPENDENT LEGAL ADVICE

9.1

Legal Advice.  This Agreement was prepared by Midway’s and MGC’s legal counsel.  The Executive was advised to obtain independent legal advice before signing this Agreement, and, by signing this Agreement, the Executive acknowledges having obtained such legal advice.

PART 10

GOVERNING LAW

10.1

Governing Law.  This Agreement shall be governed by and construed according to the laws of the State of Nevada and the laws of the United States of America applicable in that State.

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10.2

Severability.  Each provision in this Agreement constitutes a separate covenant and is severable from all other such covenants, and if any of them are held by a Court to be invalid, this Agreement will be interpreted as if such invalid provisions were not contained herein.

PART 11

MEDIATION AND ARBITRATION

11.1

Mediation.  The parties will attempt to resolve all disputes concerning the interpretation, application or enforcement of any term of this Agreement by mediated negotiation, and will use their best efforts to agree on the choice of a mediator.

11.2

Arbitration.  If a dispute arises concerning the interpretation, application or enforcement of any term of this Agreement, or that arises from or relates in any respect to the Executive’s employment with MGC and/or Midway, which cannot be resolved by mediation within 90 days after one of the parties notifies the other in writing of an intention to mediate a dispute, the parties will submit the matter to binding arbitration, pursuant to the provisions of the Nevada Uniform Arbitration Act of 2000, to the full extent allowed by law.

PART 12

EFFECTIVE DATE

12.1

Effective Date.  This Agreement was made with effect from and as of May 1, 2004, and amended and restated from and as of January 31, 2007.

PART 13

NOTICES

13.1

Notices.  In this Agreement:

(a)

Any notice or communication required or permitted to be given under this Agreement will be in writing and will be considered to have been given if delivered by hand, transmitted by facsimile transmission or mailed by prepaid registered post in Canada, to the address or facsimile transmission number of each party set out below:

(i)

if to Midway:

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Midway Gold Corp.
Suite 300, 570 Granville Street
Vancouver, BC  V6C 3P1

Attention:

Brian McAlister
Fax Number:

(604) 681-4692

(ii)

if to MGC:

MGC Resources Inc.
185 South State Street, Suite 1300
Salt Lake City, Utah  84111

Fax Number:

(801) 532-7750

(iii)

if to the Executive:

Alan Branham
2778 Spokane Creek Road
East Helena, Montana  59635

or to such other address or facsimile transmission number as any party may designate in the manner set out above.

(b)

Notice or communication will be considered to have been received:

(i)

if delivered by hand during business hours, upon receipt by a responsible representative of the receiver, and if not delivery during business hours, upon the commencement of the next business day;

(ii)

if sent by facsimile transmission during business hours, upon the sender receiving confirmation of the transmission, and if not transmitted during business hours, upon the commencement of the next business day; and

(iii)

if mailed by prepaid registered post in Canada or the United States, upon the fifth business day following posting; except that, in the case of a disruption or an impending or threatened disruption in postal services every notice or communication will be delivered by hand or sent by facsimile transmission.

(c)

For the purposes of this paragraph, business day will not include a Sunday, Saturday or a state-recognized holiday in the State of Nevada.

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PART 14

ENTIRE AGREEMENT

14.1

Entire Agreement.  This Agreement and its Schedules contain the entire agreement between the parties with respect to the Executive’s employment, and they collectively cancel and supersede all prior discussions, agreements and understandings between them, and no amendment or variation of the terms of this Agreement will be effective or binding unless made in writing and signed by both of them.

TO EVIDENCE THEIR AGREEMENT the parties have executed this Agreement effective January 31, 2007.

SIGNED AND DELIVERED by ALAN BRANHAM in the presence of:


(Signature)


(Print Name)


(Address)


(Occupation) )
)
)
)
)
)
)
)
)
)
)
)
)
)
ALAN BRANHAM

MIDWAY GOLD CORP.
By:

Authorized Signatory

MGC RESOURCES INC.
By:

Authorized Signatory

SCHEDULE 1

MIDWAY GOLD CORP.
(the “Company”)

STOCK OPTION PLAN

as adopted by the Board on May 6, 2003

Purpose.  The purpose of this Stock Option Plan (the “Plan”) is to advance the interests of the Company and its shareholders by enhancing the ability of the Company to attract and retain the best available talent and to encourage the highest level of performance by senior officers, key employees, directors and consultants of the Company and of its subsidiaries through ownership of Common Shares in the Company.  This form of Plan supersedes and replaces the terms and conditions of previously granted stock options of the Company (other than their exercise price and expiry date).

Defined Terms.  For the purposes of this Plan, the following terms shall have the following meanings:

“Applicable Laws” means all relevant provisions of law, including, without limitation, the Securities Act and the rules and regulations thereunder of British Columbia, and the jurisdictions in which Optionees may reside, and all policies, notices, instruments and blanket orders in force from time to time that are applicable to the Company and the Optionees;

“Board” means the Board of Directors of the Company or any committee duly empowered or authorized to grant options under this Plan;

“Common Shares” means common shares without par value in the capital of the Company providing such class is listed on the Exchange;

“Consultant” means, in relation to the Company, a Person or Consultant Company, other than an Employee, Senior Officer or a Director of the Company, that:

is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or to an affiliate of the Company, other than services provided in relation to a Distribution;

provides the services under a written contract between the Company or an affiliate of the Company and the Person or the Consultant Company;

in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an affiliate of the Company; and

has a relationship with the Company or an affiliate of the Company that enables the Person to be knowledgeable about the business and affairs of the Company;

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“Consultant Company” means a company or partnership of which the Consultant is an employee, shareholder or partner;

“Director” means a director of the Company as may be elected or appointed from time to time;

“Discounted Market Price” has the meaning assigned by Exchange Policy 1.1;

“Disinterested Shareholder Approval” means approval by a majority of the votes cast by all the Company’s shareholders at a duly constituted shareholders’ meeting, excluding votes attached to shares beneficially owned by a Director, Senior Officer, Employee, Management Company Employee or Consultant, and also includes a company, of which 100% of the share capital is beneficially owned by one or more persons who is a service provider;

“Distribution” means the sale of securities from the Company’s treasury, the sale of securities by a purchaser who acquired securities pursuant to a prospectus exemption, other than in accordance with the resale restrictions of Applicable Laws or the Exchange Policies, or the sale of securities by a control person other than in accordance with the resale restrictions of Applicable Laws or the Exchange Policies;

“Employee” means:

a Person who is considered an employee of the Company or its Subsidiary under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and CPP deductions must be made at source);

a Person who works full-time for the Company or its Subsidiary providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source; or

a Person who works for the Company or its Subsidiary on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source;

“Exchange” means the TSX Venture Exchange and any successor thereto;

“Exchange Policies” means the policies of the Exchange, as amended from time to time;

“Investor Relations Activities” means any activities, by or on behalf of the Company or a shareholder of the Company, that promote or reasonably could be expected to promote the purchase or sale of securities of the Company, but does not include:

the dissemination of information provided, or records prepared, in the ordinary course of business of the Company

to promote the sale of products or services of the Company; or

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to raise public awareness of the Company,

that cannot reasonably be considered to promote the purchase or sale of securities of the Company;

activities or communications necessary to comply with the requirements of

applicable Laws,

the Exchange Policies or the by-laws, rules or other regulatory instruments of any other self regulatory body or exchange having jurisdiction over the Company;

communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

the communication is only through the newspaper, magazine or publication, and

the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

activities or communications that may be otherwise specified by the Exchange;

“Management Company Employee” means an individual employed by a Person providing management services to the Company, which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Person engaged in Investor Relations Activities;

“Market Price” means the last closing price per Common Share on the Exchange prior to the Board granting the option;

“Optionee” means a Person to whom an option to acquire Common Shares has been granted under the terms of the Plan;

“Person” means company or an individual;

“Senior Officer” means a duly appointed senior officer of the Company or any Subsidiary;

“Subsidiary” means any corporation, partnership, joint venture or other entity in which the Company owns or controls, directly or indirectly, not less than 50% of the total voting power or equity interests, and includes a subsidiary of a Subsidiary;

“Tier 1 Issuer” has the same meaning ascribed thereto under the Exchange Policies; and

“Tier 2 Issuer” has the same meaning ascribed thereto under the Exchange Policies.

Administration.  The Plan will be administered by the Board.  The Board will have authority, consistent with the Plan:

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to grant options priced in accordance with this Plan;

to prescribe the form of certificate evidencing grants of options to Optionees and any other instruments required under the Plan and to change such forms from time to time;

to adopt, amend and rescind rules and regulations for the administration of the Plan, provided however, that except as specified in Section 6(c), if the Common Shares of the Company are listed on the Exchange, no amendment which would increase the maximum number of Common Shares for which options may be granted will be made by the Board without the approval of the Exchange;

to interpret and administer the Plan and to decide all questions and settle all controversies that may arise in connection with the Plan, all of which decisions of the Board will be final and conclusive;

to determine who is eligible to receive options pursuant to the eligibility criteria of Section 5; and

to make all other determinations necessary or advisable for administration of the Plan.

Compliance with Laws.  Transactions under the Plan are intended to comply with the Applicable Laws and the Exchange Policies.  To the extent any provision of the Plan or action by the Board fails to so comply, it will be deemed null and void, to the extent permitted by law and deemed advisable by the Board.

Eligibility.  The Board may from time to time authorize the grant of options to anyone who is at the time of such authorization:

a Director, Senior Officer, Employee or a company that is wholly-owned by a Director, Senior Officer or Employee; or

subject to the Applicable Laws and the Exchange Policies, a Consultant or a Consultant Company.

Shares Subject to the Plan.

Subject to adjustment as provided in Section 6(d):

the number of Common Shares to be issued or allotted and reserved for issuance from time to time upon the exercise of options granted under the Plan will not at any point in time exceed 10% of the issued and outstanding Common Shares;

no more than an aggregate of 5% of the issued and outstanding Common Shares may be granted to any one individual in any 12 month period, unless the Company is a Tier 1 Issuer and has obtained Disinterested Shareholder Approval;

no more than an aggregate of 2% of the issued and outstanding Common Shares may be granted to any one Consultant in any 12 month period; and

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no more than an aggregate of 2% of the issued and outstanding Common Shares may be granted to an Employee conducting Investor Relations Activities, in any 12 month period.

If any option granted under the Plan expires unexercised or terminates by reason of dismissal of the Optionee for cause, or otherwise is lawfully cancelled without having been exercised, the number of Common Shares that were issuable thereunder will be returned to the Plan within the limits set forth in Section 6(a) and will be eligible for re-issue.

No options can be granted under the Plan if the Company is designated “Inactive” (as defined in the Exchange Policies) by the Exchange.

In the event of a stock split, consolidation or reclassification or other change in the Company’s capital, other than an issue of Common Shares or by way of stock dividend, the number and exercise price of options will be adjusted by the Board to preserve the rights of the participants in this Plan substantially proportionate to those existing prior to such event.

Terms and Conditions of Options.  All options granted under the Plan will be subject to the following terms and conditions:

The per-share exercise price of each option will be set by the Board at the time of grant and will be not less than the Discounted Market Price of a Common Share;

An option may be exercised no later than five years from the date it was granted, unless the Company is, at the time of the grant, a Tier 1 Issuer, in which case such option may be exercised no later than 10 years from the date it was granted;

With the exception of any options granted to a Consultant who performs Investor Relations Activities, all options granted to each Optionee under the Plan will become vested on the grant date, or at such other time as may be established by the Board at the time of the grant in compliance with the Exchange Policies.  The Board will, at the time of grant, determine the vesting date or dates of any options granted to a Consultant who performs Investor Relations Activities provided that such options must vest in stages over 12 months with no more than ¼ of the options vesting in any three-month period.

Optionees will not exercise options until they have vested;

Each option granted to an Optionee will be evidenced by the stock option agreement attached as Appendix “A” to this Plan;

Any exercise of an option must be in writing, signed by the Optionee and delivered or mailed to the Company and payment in full as provided below for the number of Common Shares for which the option is exercised;

The price of Common Shares purchased on the exercise of an option must be paid in full by cash or certified cheque, payable to the Company;

- 6 -

No option or any interest therein will be transferable or assignable otherwise than by will or pursuant to the laws of succession;

An Optionee will have no rights as a shareholder of the Company with respect to any Common Shares covered by any option until such time as and to the extent only that such option has been exercised;

If any Optionee ceases to be eligible for a grant of options under this Plan for any reason (a “Termination”), except the death of an Optionee or by reason of retirement pursuant to an established retirement policy of the Board or dismissal from employment or service for cause, all options granted to the Optionee under the Plan and then held by the Optionee will, to the extent such options were vested and exercisable immediately prior to Termination, continue to be exercisable by the Optionee for a period of 90 days following Termination or until the expiration date of the option if earlier;

If Termination is by reason of retirement pursuant to an established retirement policy of the Board, all options held by the retiring Optionee will become vested and exercisable, to the extent not already vested and exercisable immediately prior to retirement, and they continue to be exercisable until their original expiration date;

Notwithstanding Section 7(j), any options granted to an Optionee who is engaged in Investor Relations Activities will expire within 30 days after such Optionee ceases to be employed to provide Investor Relations Activities;

In the event of the death of an Optionee, all options granted to the Optionee under the Plan and held by the Optionee immediately before death will, to the extent such options were vested and exercisable at that time, continue to be exercisable by the legal representative of the Optionee for a period of 1 year following the death of the Optionee or until the expiration date of the option if earlier;

If the Company wishes to reduce the exercise price of any outstanding options held by any person who is an “insider” as defined by the Exchange, the Company shall first obtain such disinterested shareholder approval as may be required by the Exchange; and

In the case of an Optionee being dismissed from employment or service for cause, such Optionee’s Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise the same.

Legend Requirements.

All options granted to Optionees pursuant to the Plan and any Common Shares issued on the exercise of such options will bear a legend stipulating any resale restrictions as may be prescribed by the Applicable Laws.

Further, if the Company is a Tier 2 issuer, or the exercise price is set below the Market Price of the Common Shares on the Exchange, the certificate will bear a legend stipulating that the optioned shares are subject to a 4 month Exchange hold period commencing the date of the grant.

- 7 -

Tax Consequences of the Plan.  The Company does not assume responsibility for the income or other tax consequences for Optionees or persons eligible under the Plan and they are advised to consult with their own tax advisors.

Effect of Certain Corporate Transactions.  In the event of a consolidation or merger in which the Company is not the surviving company, or in the event its outstanding shares are converted into securities of another entity or exchanged for other consideration, or in the event of an offer for Common Shares being made by a third party that constitutes a take-over bid as that term is defined in the Securities Act (British Columbia) or would constitute a take-over bid as that term is defined in the Securities Act (British Columbia) but for the fact that the offeree is not in British Columbia, all outstanding options will immediately vest and all options granted to the optionee under this Plan and held by the Optionee will continue to be exercisable after the Company has sent notice to each of the Optionees to exercise the options only for a period of 30 days from the date o f such notice or until the expiration of the option, if earlier.  After such time, the options will terminate, provided, however, that if such transaction does not close, all such options will be deemed not to have vested nor expired.

Bona Fide Employee or Consultant.  In respect of any options granted to Employees or Consultants pursuant to the Plan, the Board shall make a determination that such Optionee is, as at the date of the grant of the options, a bona fide Employee or Consultant, as the case may be.

Effective Date of Plan.  The Plan will become effective on the date it receives acceptance by the Exchange, including any shareholder approval required by the Exchange.

Restrictions on Corporate Optionee.  If the Optionee is not an individual, the Optionee will not, for the duration of time that the Optionee is the holder of options granted pursuant to this Plan, effect or permit any transfer of ownership or option of shares of the Optionee or allot and issue further shares of any class of shares of the Optionee to any Person.

Amendments to Plan.  The Board reserves the right, in its absolute discretion, to at any time amend, modify or terminate the Plan.  Subject to Section 15, amendments to the Plan, from time to time, will become effective on the later of the date of the approval of such amendments by the Board and the date of the approval of such amendments by the Exchange.

Prior Approval.  The Plan, and any subsequent amendments thereto, are subject to the prior approval of the Exchange and ratification by the shareholders of the Company at each annual general meeting of the Company, and accordingly so long as the Common Shares are listed on the Exchange, no option granted under the Plan shall be exercised prior to these approvals having been obtained by the Company.

Governing Law.  The Plan will be governed by and construed in accordance with the laws of the Province of British Columbia.

* * * * * * * * * * * * * * * * * * *

Appendix “A”

OPTION AGREEMENT

THIS AGREEMENT dated ·, 200·, is between:

MIDWAY GOLD CORP., a company incorporated under the laws of British Columbia, having its head office at Suite 300, 570 Granville Street, Vancouver, BC.

(the “Company”)

AND

·, of the address set out in Appendix 1

(“Optionee”)

BACKGROUND

D.

The Optionee holds one or more positions described in Section 5 of the Company’s 2003 Stock Option Plan (the “Plan”).

E.

The Company has determined that the Optionee will receive an option (the “Option”) to purchase common shares of the Company (the “Common Shares”) pursuant to the Plan in accordance with the terms of this Agreement.

AGREEMENTS

In consideration of the Optionee holding and continuing to hold one such position and for other good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties agree as follows:

1.

The Company represents that the Optionee is a bona fide [Employee / Consultant / Management Company Employee / Director / Senior Officer] as defined in Section 2 of the Plan.

2.

At the date of grant of the Option, the Company is classified as a Tier l company under the TSX Venture Exchange Policies.

3.

The Company grants to the Optionee the irrevocable option to purchase Common Shares on the following terms and conditions:

the number of Common Shares under Option, the vesting and expiry of the Option, and the price per share at which the Common Shares may be purchased, are as set out in Appendix 1 to this Agreement; and

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the grant of the Options evidenced hereby is made subject to the terms and conditions of the Plan, the terms and conditions of which are hereby incorporated by reference into this Agreement.

To exercise this Option, the Optionee must deliver a written notice to the Company specifying the number of Common Shares that the Optionee wishes to acquire, together with cash or certified cheque payable to the Company for the aggregate exercise price.  A certificate representing the Common Shares acquired will be issued by the Company’s transfer agent as soon as practicable thereafter and will bear a minimum 4 month non-transferability legend commencing as of the date of this Agreement.  [Note:  A Tier 1 company may grant stock options without a hold period, provided the exercise price of the options is set at or above the market price of the company’s shares rather than below.]

Time is of the essence of this Agreement.

The exercise of this Option by the Optionee is entirely voluntary and any decision not to exercise this Option or any part of it will not in any way affect the Optionee’s employment or continued employment, and the exercise of this Option or any part of it will not give the Optionee any right to employment or continued employment.

This Agreement will enure to the benefit of the Optionee and the heirs and personal representatives of the Optionee.

The Company may require from the Optionee such investment representation, undertaking or agreement, if any, as the Company may consider necessary in order to comply with applicable laws and the policies of the TSX Venture Exchange.

- 3 -

This Agreement will be governed and constituted in accordance with the laws of the Province of British Columbia.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

MIDWAY GOLD CORP.


Per:

Authorized Signatory

SIGNED IN THE PRESENCE OF:
Signature
(Print Name)
(Address)
(Occupation) ) ) ) ) ) ) ) ) ) ) ) ) ) l [Name of Optionee] Or if Optionee is not an individual: l[Name of Company] Per:  
l      [Authorized Signatory’s name],
l      [Position]

APPENDIX 1

Optionee Information	Number of Shares Optioned	Price per Share	Vesting Date(s) [If applicable]	Expiry Date
l [Name] l [Position] l [Address] l [Telephone #] l [Fax #]	l	Cdn$l	l	l

EX-10.16

Consulting Agreement

This agreement made as of November 15 , 2006

Among:

Midway Gold Corporation

Suite 300 – 570 Granville Street

Vancouver, B.C. V6C 3P1

(the "Company")

And:

Doris Meyer, businesswoman

1893 Ocean Surf Place

Surrey, B.C. V4A 9P1

("Meyer")

And:

Golden Oak Corporate Services Ltd.

The Old Mill, Unit 1

15782 Marine Drive

White Rock, B.C. V4B 1E6

(the "Contractor")

WHEREAS:

A.

The Company wishes to contract the services to be provided by the Contractor and to enter into this Agreement pursuant to which the Contractor will (i) provide to the Company the services a Chief Financial Officer and a Corporate Secretary would provide, in addition to administrative and bookkeeping services and (ii) make Meyer available to provide such services to the Company on behalf of the Contractor.

NOW THEREFORE in consideration of the premises and of the mutual covenants hereinafter set forth it is mutually agreed by and between the parties as follows:

1.

SERVICES

1.1

Effective November 15 , 2006 the Company hereby engages the Contractor to provide the following services (the “Services”) to the Company:

(a)

the services a Chief Financial Officer would provide, including those described on Schedule A;

(b)

the services a Corporate Secretary would provide, including those described on Schedule A;

(c)

administrative services; and

(d)

bookkeeping services.

- 2 -

1.2

The Company acknowledges that Meyer is a key employee of the Contractor and has been designated by the Contractor, with the approval of the Company, to act as Chief Financial Officer and Corporate Secretary of the Company and Contractor will render the Services to the Company.  The Contractor will cause Meyer to, and Meyer will provide the Services on behalf of the Contractor.  

1.3

The Contractor will be an independent contractor and not a servant, employee or agent of the Company.  The Company may from time to time give any instructions to the Contractor it considers necessary in connection with the provision of Services, but the Contractor will not be subject to the control of the Company in respect of the manner in which such instructions are carried out.

1.4

The Contractor will comply with all applicable laws, rules and regulations and will pay any and all taxes, unemployment insurance premiums, Canada Pension Plan premiums or contributions, Workers Compensation assessments, and any other statutorily prescribed payment or assessment of any nature that are payable by virtue of the employment relationship between the Contractor and its employees including Meyer.

2.

TERM

2.1

This Agreement, unless terminated, shall be for an initial term of one year and shall continue annually thereafter.  It is contemplated that this Agreement will be renewed thereafter upon mutual agreement for subsequent annual terms subject to the termination notice period, or payment in lieu of termination notice, of not less than 90 days provided for in Section 5.1.

3.

CONTRACT FEES

3.1

The Contractor shall be paid an annual service fee (herein the "Service Fee") of Cdn$90,000 payable in equal monthly installments in advance, commencing with a half month installment on November 15, 2006 and a full monthly installment on December 1, 2006 and continuing on the first day of each month thereafter, together with any provincial or goods and services tax applicable.  If activities of the Company increase and are not expected to be of a recurring nature and require additional time then Company and Contractor may negotiate one time additional fees to cover the increased activity.  

3.2

The Company will pay its administration costs directly.  The Company will reimburse all costs incurred by Contractor on behalf of the Company actually, reasonably and properly incurred by Contractor in furtherance of or in connection with the business of the Company, including a share of Contractor’s office supplies and expenses.  Contractor will be reimbursed for all such expenses incurred and paid by it within 5 days from the date it submits such statements and vouchers in respect thereto as are reasonably requested by the Company (“Expense Account”).  

3.3

The Company will reimburse all pre-approved travel and out-of-pocket expenses actually, reasonably and properly incurred by the Contractor in furtherance of or in connection with the business of the Company and its subsidiaries.  The Contractor will be reimbursed for all such expenses incurred and paid by it within 5 days from the date it

- 3 -

submits such statements and vouchers in respect thereto as are reasonably requested by the Company.

3.4

Subject to the approval of the Company’s Board of Directors, the Company will grant to Meyer an option to purchase common shares of the Company, in a number commensurate with the offices of Chief Financial Officer and Corporate Secretary, pursuant to the Company’s Stock Option Plan

4.

DUTIES OF THE CONTRACTOR

4.1

In providing the Services on behalf of the Contractor, Meyer will throughout the term of this Agreement:

(a)

serve as Chief Financial Officer and Corporate Secretary of the Company and its subsidiaries and perform the duties outlined on Schedule A to this Agreement; and

(b)

report to the Company’s Chief Executive Officer and will be subject to the control and direction of the Board and will devote her best efforts to the advancement of the Company's interests as an officer, with expert advice and outside consultant services provided by and paid for by the Company as required by Meyer and as pre-authorized by the Chief Executive Officer.  

4.2

In no event, shall Meyer be assigned duties which would involve unreasonable personal hazard, nor without her consent shall she be assigned duties which would necessitate prolonged absences from, or changes in the place of, her residence.

4.3

The Company consents to the Contractor and Meyer engaging in business with companies that operate in the same field of activities as the Company and its subsidiaries and the Contractor and Meyer may accept employment with or render services to other mining companies, subject to Meyer’s fiduciary obligations as an officer of the Company.  If the Company regards such engagement or employment as directly competitive with the interests of the Company, it will advise Meyer and the Contractor and ask them to discontinue the engagement or the employment or terminate this Agreement.

4.4

The Contractor and Meyer jointly and severally covenant and agree not to use in any way or to disclose any confidential information with respect to the business or affairs of the Company except as may be necessary or desirable to further the business interests of the Company.  This obligation shall survive the expiry or termination of this Agreement.

4.5

Upon termination of this Agreement the Contractor shall return to the Company any property, documentation or confidential information which is the property of the Company.

5.

TERMINATION

This Agreement may only be terminated during the term or continuance of this Agreement in the following manner and in the following circumstances:

- 4 -

5.1

This Agreement may be terminated by the Company with 90 days’ notice, or, at the option of the Company, the Contractor shall be paid in lieu of notice, the Service Fee in effect at the time of notice of termination for any portion of the 90 day notice period.  This Agreement may be terminated by the Contractor with 90 days’ notice to the Company.

5.2

The Company may terminate this Agreement, effective immediately on notice in writing of such termination to the Contractor, upon the death of Meyer or after Meyer has become incapable for any reason, in the view of the Company, acting reasonably, of performing the Services on behalf of the Contractor.

5.3

The Company may terminate this Agreement at any time, effective immediately on notice of such termination to the Contractor:

(a)

for failure of the Contractor to provide Services to the satisfaction of the Company, acting reasonably;

(b)

if Meyer or any other of the personnel of the Contractor who perform the Services  on behalf of the Contractor do anything or fail to do anything which, if such personnel were employees of the Company, would be cause for dismissal.  For the purposes of this Agreement “cause” includes any act of omission or commission sufficient at law or involving fraud, dishonesty, willful disobedience, immoderate use of alcohol, use of non-medical drugs, incompetence, breach of duty of good faith and fidelity, moral turpitude, gross negligence or gross misconduct and any criminal act, theft or dishonesty by the Contractor or Meyer, resulting directly or indirectly in personal gain to the Contractor or Meyer at the Company’s expense; or any offence for which Meyer is charged and convicted under Section 138(1) of the Securities Act, S.B.C. 1985, c.83.

5.5

Upon any termination of this Agreement, the Contractor will have no claim against the Company for damages, or otherwise except in respect of payment of the Service Fee pursuant to Section 3.1 to the effective date of termination, or payment in lieu of notice in accordance with Section 5.1.

6.

MISCELLANEOUS

6.1

All notices, consents, specifications and other determinations required, permitted or contemplated hereby shall be in writing, and, if intended for the Contractor and/or Meyer, shall be delivered at Meyer’s normal place of business as set forth on page 1 of this Agreement or at such other address as the Contractor may advise by notice in writing to the Company, and if intended for the Company shall be delivered to the Chief Executive Officer of the Company at its office address in Vancouver, B.C. as set forth on page 1 of this Agreement or at such other address as the Company may advise by notice in writing to the Contractor.

6.2

This Agreement may not be assigned by either party provided that if the Company merges into or consolidates or amalgamates with, or transfers substantially all of its assets to, another corporation or business entity, this Agreement will run to the benefit of

- 5 -

and be assigned to the Company’s successors resulting from such merger, consolidation or transfer.

6.3

The parties hereto undertake to do, sign, execute and deliver such other things, deeds or documents accessory or useful for the purpose of giving full effect to this Agreement.

6.4

This Agreement shall be deemed to have been made in and shall be construed in accordance with the laws of British Columbia.

6.5

No consent or waiver, express or implied, of the Company of the Contractor to or of any breach of default by the other of them in the performance of the other of its obligations under this Agreement will be deemed or construed to be a consent or waiver to or of any other breach or default of the same or any other obligation of the other party.  Failure on the party of any party to complain of any act or failure to act of the other of them, or to declare the other party in default regardless of how long such failure continues, will not constitute a waiver by such party of its rights under this Agreement or of the right to then or subsequently declare a default.

6.6

The Contractor will not, at any time, hold itself out as the agent or representative of the Company except if and as expressly permitted in this Agreement, and will not incur any obligations or liabilities or enter into any agreements for or on behalf of the Company except with the prior written consent of the Company.

6.7

This Agreement, constitutes the entire agreement between the parties hereto relating to the subject matter hereof and supersedes all prior discussions, commitments and other agreements.

6.7

Should any provision or provisions of this Agreement be illegal or not enforceable, it or they shall be considered separate and severable from this Agreement, and the remaining provisions of this Agreement shall remain in force and be binding upon the parties hereto as though the provision or provisions had never been included.

6.8

Time is of the essence in this Agreement.

The balance of this page is left intentionally blank.

- 6 -

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the date first above written.

MIDWAY GOLD CORPORATION

per:

/s/ Alan Branham

Authorized Signatory

Midway Gold Corporation

SIGNED, WITNESSED AND DELIVERED

)

by Doris Meyer in the presence of:

)

)

)

Name

Geri Burnett

)

Doris Meyer

)

Address

Unit 1 – 15782 Marine Drive, White Rock,B.C.

)

)

Occupation

Corporate Compliance Officer

)

GOLDEN OAK CORPORATE SERVICES LTD.

per:

/s/ Doris Meyer

Authorized signatory

- 7 -

Schedule A

Position Description

Corporate Secretary

Responsible for keeping or causing to be kept the corporate records of the Company, make or cause to be made all required corporate filings for the Company and perform other duties to the office.

Chief Financial Officer

Accountable for planning, directing and administering the Company’s financial accounting resources, including treasury, financial planning and control, insurance, audit, computer systems to attain the financial objectives based on the overall corporate business plan approved by the Company’s Board of Directors.

EX-10.17

CONSULTING AGREEMENT

THIS AGREEMENT dated for reference April 12, 2007 (the “Effective Date”)

BETWEEN:

AMELIA INVESTMENTS LTD(the “Consultant”)

AND:

MIDWAY GOLD CORP. (the “Company”)

WHEREAS:

A.

The Company has agreed to retain the Consultant to provide consulting and advisory services in connection with the business of the Company (the “Services”) as and when required by the Board of Directors of the Company (the “Board”) and the Consultant agrees to provide such Services to the Company, in accordance with the terms and conditions contained herein;

B.

The Consultant is an independent contractor and is not an employee of or partner or joint venturer with the Company.

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the promises and the respective covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto covenant and agree as follows:

ARTICLE 1
DEFINITIONS AND INTERPRETATION

1.1

Definitions

In this Agreement, including the recitals and any schedules, the following words and expressions have the following meanings unless the context otherwise requires:

(a)

“Confidential Information” means all information or data pertaining to the Company which may before or after the date of this Agreement come within the knowledge of the Consultant or which may be developed by the Consultant or any subsidiary or affiliate of the Consultant or any employee of any of them in connection to the Services or the Company including, without limiting the generality of the foregoing, all information or data regarding manufacturing

processes, programs, plants, products, costs, equipment, operations, distribution, marketing or customers relating to the products, all technical information, procedures, processes, diagrams, specifications, improvements, formulations, plans, data, test or assay results or analysis and all documents delivered by the Company or any affiliate or Client which are marked as confidential or as proprietary information sourced from Midway and is affiliates.

1.2

Entire Agreement

This Agreement supersedes all previous invitations, proposals, letters, correspondence, negotiations, promises, agreements, covenants, conditions, representations and warranties with respect to the subject matter of this Agreement. There is no representation, warranty, collateral term or condition affecting this Agreement for which any party can be held responsible in any way, other than as expressed in writing in this Agreement.

1.3

Amendments

No change or modification of this Agreement will be valid unless it is in writing and signed by each party to this Agreement.  

1.4

Invalidity of Particular Provision

It is intended that all of the provisions of this Agreement will be fully binding and effective between the parties.  In the event that any particular provision or provisions or a part of one or more is found to be void, voidable or unenforceable for any reason whatsoever, then the particular provision or provisions or part of the provision will be deemed severed from the remainder of this Agreement.  The other provisions of this Agreement will not be affected by the severance and will remain in full force and effect.

1.5

Governing Law

This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable in such Province.

ARTICLE 2

SERVICES

2.1

Services

The Consultant agrees to perform the Services using his best efforts and in accordance with any additional instructions which may be given by the Company from time to time.  The Consultant will report to and take direction from the Chief Executive Officer of the Company. The Consultant will ensure that all Services are performed under the direction of Dr.

E. Kelly Hyslop, unless the Company has given prior written approval for any Services to be performed by others.

2.2

Standards

The Consultant will perform the Services in accordance with the standards of care, skill and diligence of an experienced professional in the Consultant's field and in a competent and efficient manner.

2.3

Timing

The Consultant agrees to diligently perform the Services in accordance with the time available to the Consultant at its discretion, and in accordance with the Company’s  reasonable requirements communicated to the Consultant from time to time.

ARTICLE 3

REMUNERATION

3.1

Remuneration

The remuneration of the Consultant shall be at the rate and on the terms specified by the Board and agreed to by the Consultant from time to time and shall be calculated with reference to the complexity of the Services provided and to typical rates provided to similarly qualified professionals in the Consultant’s field for similar work in Canada.  The Consultant shall invoice the Company monthly for the Services provided.  The Company shall remit funds for payment of the invoice within 30 days of receipt.

3.2

Stock Options

The Company hereby acknowledges the prior grant to Dr. E. Kelly Hyslop, of the following options, in his capacity, at the respective dates of grant, as a director of the Company, all of which remain vested in favour of the Consultant on the same terms and conditions as provided under the Company’s Stock Option Plan dated May 12, 2005:

(a)

100,000 options exercisable at $1.24 per share and expiring on September 5, 2009;

(b)

50,000 options exercisable at $1.30 per share and expiring on June 24, 2010; and

(c)

50,000 options exercisable at $2.53 per share and expiring on June 15, 2011.

Dr. E. Kelly Hyslop remains eligible for the grant of new options by the Company from time to time, at the discretion of the Board.

3.3

Expenses

The Consultant shall be reimbursed for all reasonable traveling and other out-of-pocket expenses actually and properly incurred by it in connection with its duties hereunder provided that such expenses have been pre-approved by the Company.  The Consultant will invoice the Company for such expenses monthly in arrears, attaching receipts.  All such invoices will be payable by the Company within 30 days.  

3.4

Consultant Not Employee

The parties agree that the Consultant and employees, servants, agents, consultants, administrators, successors and assigns of the Consultant are not employees of the Company and, as such, save as required by law, there shall be no deductions for any statutory withholdings such as income tax, Canada Pension Plan, Unemployment Insurance or Worker’s Compensation.

3.5

No Participation in Plans

The Consultant and its employees, servants, agents, consultants, administrators, successors and assigns shall not be entitled to participate in any medical, dental, extended health or group life insurance plans of the Company.

3.6

No Partnership

This Agreement will not be construed as creating a partnership, joint venture or agency relationship between the parties or any other form of legal association, which would

impose liability upon one party for any act or failure to act by the other party other than as stipulated in this Agreement.  

ARTICLE 4
CONFIDENTIALITY AND COMPLIANCE

4.1

General Obligation of Confidentiality

The Consultant acknowledges that the Confidential Information consists entirely of information and knowledge which is the exclusive property of the Company or its subsidiaries and affiliates or clients or persons from whom the Company has obtained its rights.  The Consultant will treat the Confidential Information obtained by him in strict confidence both during the term and after termination of this Agreement, and will during not disclose the Confidential Information made available to him unless otherwise required by law, except as previously approved by the Company, or set out in Article 4.2 hereof.  The Consultant will protect such Confidential Information from disclosure by exercising a standard of care as may reasonably be expected to preserve its secret and confidential nature.  All documents containing Confidential Information are the property of the Company. The Consultant will not use the Confi dential Information for any purpose other than as contemplated by this Agreement.

4.2

Exceptions

Any obligations specified in this Article will not apply to the following:

(a)

any information which is presently in the public domain;

(b)

any information which subsequently becomes part of the public domain through no fault of the Consultant or any officer, director, employee or agent of the Consultant; or

(c)

any information which is required to be disclosed by a court of competent jurisdiction.

ARTICLE 5

FUTURE DEALINGS

5.1                   Future dealings

Notwithstanding any other part of this Agreement, the Company acknowledges that the Consultant, his affiliates, or any of his employees, servants, agents, administrators,

successors and assigns are entitled to contact and have business dealings with individuals and entities who the Consultant previously dealt with during his tenure with Company and Company undertakes not to restrain or prevent the Consultant from such contact or dealings, provided that the Consultant maintains confidentiality as agreed to in Article 4.

ARTICLE 6
TERM

6.1                   Term

This Agreement will take effect on the Effective Date and will continue in full force and effect unless terminated by one of the parties in accordance with this Agreement.

6.2                 Termination

                      Notwithstanding any other provision of this Agreement, the Consultant or the Company may from the commencement of this Agreement give one month’s advance written notice to the other of its intention to terminate this Agreement and on the expiration of such period this Agreement shall be terminated. Any remuneration payable hereunder shall be paid up to the date of such termination.

6.3

    The termination of the Consultant’s engagement to perform the Services shall not relieve either party of any unfulfilled monetary or other obligation created under this Agreement except as otherwise specifically provided by this Agreement or otherwise agreed to in writing by the parties including the requirement to maintain confidentiality pursuant to Article 4 hereof.

6.4              Conflicts of Interest

The Company and the Consultant are aware that Consultant may be involved in the management or direction of other public companies.  From time to time, situations may arise where the Company and the Consultant could be deemed to have conflicts of interest.  Both parties agree that either party may choose to recuse itself from participation in or use expertise in these instances.  Both parties agree to use their best efforts to identify potential conflicts where they arise, or are likely to arise, and discuss their handling as early as practicable.

ARTICLE 7
GENERAL

7.1                    Arbitration

                         All disputes arising out of or in connection with this contract, or in respect of any defined legal relationship associated therewith or derived therefrom, shall be referred to and

finally resolved by arbitration under the Rules of the British Columbia International Commercial Arbitration Centre.  The appointing authorities shall be the British Columbia International Commercial Arbitration Centre.  The case shall be administered by the British Columbia International Commercial Arbitration Centre in accordance with its “Procedures for Cases Under the BCICAC Rules”.  The place of arbitration shall be Vancouver, British Columbia, Canada.

7.2                    Notices

                         Any notice, direction, request or other communication required or contemplated by any provision of this Agreement shall be given in writing and shall be given by delivering or faxing same to the Company or the Consultant, as the case may be, as follows:

To the Consultant at:

Dr. E. Kelly Hyslop

Knockeen, Goleen

W. Cork

Ireland

To the Company at:

Attention:  Alan D. Branham

Unit 1- 15782 Marine Drive

White Rock, BC, V6B 1E6

Telephone No.

(406) 475-3462

Fax No.:

(406) 475-9596

                           Any such notice, direction, request or other communication shall be deemed to have been given or made on the date on which it was delivered or, in the case of fax, on the next business day after receipt of transmission.  Either party may change its fax number or address for service from time to time by notice in accordance with the foregoing.

7.3                   Assignment

                        This Agreement is not assignable in whole or in part by the Consultant without the prior written consent of the Company.  Any attempt to assign any of the rights, or to delegate any of the duties or obligations of this Agreement without such written consent is void.

7.4                   Waiver

                        No failure or delay on the part of any party in exercising any power or right under this Agreement will operate as a waiver of such power or right, nor will any single or partial exercise of any such right or power preclude any further or other exercise of such right or power under this Agreement.  No modification or waiver of any provision of this Agreement and no consent to any departure by any party from any provision of this Agreement will be effective unless it is in writing.  Any such waiver or consent will be effective only in the specific instance and for the specific purpose for which it was given.  No notice to or demand on any party in any  circumstances will entitle such party to any other or further notice or demand in similar or other circumstances.

7.5                   Enurement

                        Subject to the restrictions on transfer contained in this Agreement, this Agreement shall enure to the benefit of and be binding on the parties and their respective heirs, executors, administrators, successors and assigns.

AS WITNESS WHEREOF, the parties hereto have executed this Agreement on ______________________.

AMELIA INVESTMENTS LTD.
(“Consultant”)

Per:

      Dr. E. Kelly Hyslop,

MIDWAY GOLD CORP.
(“Company”)

Per:

       Alan Branham, President and CEO

EX-10.18

CONSULTING AGREEMENT

THIS AGREEMENT dated for reference April 12, 2007 (the “Effective Date”)

BETWEEN:

JOHN E. WATSON (the “Consultant”)

AND:

MIDWAY GOLD CORP. (the “Company”)

RECITALS:

A.

The Company has agreed to retain the services of the Consultant to provide the consulting services described in Schedule “A” attached hereto (the “Services”) and the Consultant agrees to provide such services to the Company, in accordance with the terms and conditions contained herein;

B.

The Consultant is an independent contractor and is not an employee of or partner or joint venturer with the Company;

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the promises and the respective covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto covenant and agree as follows:

ARTICLE 1
DEFINITIONS AND INTERPRETATION

1.1

Definitions

In this Agreement, including the recitals and any schedules, the following words and expressions have the following meanings unless the context otherwise requires:

(a)

“Confidential Information” means all information or data which may before or after the date of this Agreement come within the knowledge of the Consultant or which may be developed by the Consultant in connection to the Services or the Company including, without limiting the generality of the foregoing, all information or data regarding manufacturing processes, programs, plants, products, costs, equipment, operations, distribution, marketing or customers relating to the products, all technical information, procedures, processes, diagrams, specifications, improvements, formulations, plans, data, test or assay results or analysis and all documents delivered by the Company or any affiliate which are marked as confidential or as proprietary information.

 John Watson Consulting Agreement

1.2

Entire Agreement

This Agreement supersedes all previous invitations, proposals, letters, correspondence, negotiations, promises, agreements, covenants, conditions, representations and warranties with respect to the subject matter of this Agreement. There is no representation, warranty, collateral term or condition affecting this Agreement for which any party can be held responsible in any way, other than as expressed in writing in this Agreement.

1.3

Amendments

No change or modification of this Agreement will be valid unless it is in writing and signed by each party to this Agreement.  

1.4

Invalidity of Particular Provision

It is intended that all of the provisions of this Agreement will be fully binding and effective between the parties.  In the event that any particular provision or provisions or a part of one or more is found to be void, voidable or unenforceable for any reason whatsoever, then the particular provision or provisions or part of the provision will be deemed severed from the remainder of this Agreement.  The other provisions of this Agreement will not be affected by the severance and will remain in full force and effect.

1.5

Governing Law

This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable in such Province.

ARTICLE 2

SERVICES

2.1

Services

The Consultant agrees to perform the Services in accordance with this Agreement and in accordance with any additional instructions which may be given by the Company from time to time.  The Consultant will report to and take direction from the Chief Executive Officer of the Company, or any senior executive of the Company. The Consultant will perform all Services personally unless the Company has given prior written approval for any Services to be performed by others.

2.2

Standards

The Consultant will perform the Services in accordance with the standards of care, skill and diligence of an experienced professional in the Consultant's field and in a competent and efficient manner.

 John Watson Consulting Agreement

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2.3

Timing

The Consultant agrees to diligently perform the Services in accordance with any specific time requirements set by the Company or, in the absence of any specific time requirements, in accordance with the Company’s  reasonable requirements communicated to the Consultant from time to time.

ARTICLE 3

REMUNERATION

3.1

Remuneration

The remuneration of the Consultant shall be at the rate and or the terms specified in Schedule “B” hereto.

3.2

Stock Options

The Company hereby acknowledges the prior grant to the Consultant of the following options which remain in full force and effect in favour of the Consultant subject to the exchange ratio under the Amended and Restated Arrangement Agreement with Midway Gold Corp. dated February 26, 2007:  

(a)

56,000 options exercisable at $1.43 per share and expiring on August 11, 2007;

(b)

84,000 options exercisable at $1.43 per share and expiring on February 11, 2008; and

(c)

42,000 options exercisable at $1.07 per share and expiring on October 11, 2008.

This clause shall survive the expiration and termination of this Agreement for any reason.

3.3

Expenses

The Consultant shall be reimbursed for all reasonable traveling and other out-of-pocket expenses actually and properly incurred by it in connection with its duties hereunder provided that such expenses have been pre-approved in writing by the Company.  The Consultant will invoice the Company for such expenses monthly in arrears, attaching receipts.  All such invoices will be payable by the Company within 30 days.  

3.4

Consultant Not Employee

The parties agree that the Consultant and employees, servants, agents, consultants, administrators, successors and assigns of the Consultant are not employees of the Company and, as such, save as required by law, there shall be no deductions for any statutory withholdings such as income tax, Canada Pension Plan, Unemployment Insurance or Worker’s Compensation.

 John Watson Consulting Agreement

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3.5

Statutory Withholdings

The Consultant agrees to make and remit all statutory withholdings as may be required by it in respect of the Consultant’s employees, servants, agents, consultants, administrators, successors and assigns who may be involved in performance of the Services for the Company. At the request of the Company, the Consultant shall provide to the Company satisfactory evidence of such statutory withholdings having been made.

3.6

No Participation in Plans

The Consultant and its employees, servants, agents, consultants, administrators, successors and assigns shall not be entitled to participate in any medical, dental, extended health or group life insurance plans of the Company.

3.7

No Partnership

This Agreement will not be construed as creating a partnership, joint venture or agency relationship between the parties or any other form of legal association, which would impose liability upon one party for any act or failure to act by the other party other than as stipulated in this Agreement.  

ARTICLE 4
CONFIDENTIALITY AND COMPLIANCE

4.1

General Obligation of Confidentiality

The Consultant acknowledges that the Confidential Information consists entirely of information and knowledge which is the exclusive property of the Company or its subsidiaries and affiliates or clients or persons from whom the Company has obtained its rights.  The Consultant will treat the Confidential Information obtained by him in strict confidence both during the term and after termination of this Agreement, and will during not disclose the Confidential Information made available to him unless otherwise required by law, except as previously approved by the Company, or set out in Article 4.2 hereof.  The Consultant will protect such Confidential Information from disclosure by exercising a standard of care as may reasonably be expected to preserve its secret and confidential nature.  All documents containing Confidential Information are the property of the Company.  Without limiting the generality of the foregoing, the Consultant hereby transfers to the Company the property rights in all documents which now or hereafter may contain the Confidential Information. The Consultant will not use the Confidential Information for any purpose other than as contemplated by this Agreement.

4.2

Exceptions

Any obligations specified in this Article will not apply to the following:

(a)

any information which is presently in the public domain;

 John Watson Consulting Agreement

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(b)

any information which subsequently becomes part of the public domain through no fault of the Consultant or any officer, director, employee or agent of the Consultant; or

(c)

any information which is required to be disclosed by a court of competent jurisdiction.

ARTICLE 5

FUTURE DEALINGS

5.1                   Future dealings

Notwithstanding any other part of this Agreement, the Company acknowledges that the Consultant, his affiliates, or any of his  employees, servants, agents, administrators, successors and assigns are entitled to contact and have business dealings with individuals and entities who the Consultant previously dealt with during his tenure with Company and Company undertakes not to restrain or prevent the Consultant from such contact or dealings, provided that the Consultant maintains confidentiality as agreed to in Article 4.

ARTICLE 6
INDEMNITY

6.1                   Indemnity

The Consultant will defend, indemnify and save harmless the Company from and against all actions, proceedings, demands, claims, liabilities, losses, damages, judgments, costs and expenses including, without limiting the generality of the foregoing, legal fees and disbursements on a solicitor and his own client basis (together with all applicable taxes) which the Company may be liable to pay or any liability that the Company may incur to any authority for source deductions, goods and services tax and any other remittance obligations arising with respect to payment to the Consultant pursuant to this Agreement.

ARTICLE 7
TERM

7.1                  Term

This Agreement will take effect on the Effective Date and will continue in full force and effect unless terminated by one of the parties in accordance with this Agreement.

7.2                 Termination

                      Notwithstanding any other provision of this Agreement, the Consultant or the Company may from the commencement of this Agreement give one month’s advance written notice to the other of its intention to terminate this Agreement and on the expiration of such

 John Watson Consulting Agreement

- 5 -

period this Agreement shall be terminated.  Such notice may expire on any day of the month and any remuneration payable hereunder shall be paid up to the date of such termination.

7.3

          The termination of the Consultant’s engagement to perform the Services shall not relieve either party of any unfulfilled monetary or other obligation created under this Agreement except as otherwise specifically provided by this Agreement or otherwise agreed to in writing by the parties including the requirement to maintain confidentiality pursuant to Article 4 hereof.

7.4                  Conflicts of Interest

The Company and the Consultant are aware that Consultant may be involved in the management or direction of other public companies.  From time to time, situations may arise where the Company and the Consultant could be deemed to have conflicts of interest.  Both parties agree that either party may choose to recuse itself from participation in or use expertise in these instances.  Both parties agree to use their best efforts to identify potential conflicts where they arise, or are likely to arise, and discuss their handling as early as practicable.

ARTICLE 8
GENERAL

8.1                   Arbitration

                       All disputes arising out of or in connection with this contract, or in respect of any defined legal relationship associated therewith or derived therefrom, shall be referred to and finally resolved by arbitration under the Rules of the British Columbia International Commercial Arbitration Centre.  The appointing authorities shall be the British Columbia International Commercial Arbitration Centre.  The case shall be administered by the British Columbia International Commercial Arbitration Centre in accordance with its “Procedures for Cases Under the BCICAC Rules”.  The place of arbitration shall be Vancouver, British Columbia, Canada.

8.2                    Notices

                       Any notice, direction, request or other communication required or contemplated by any provision of this Agreement shall be given in writing and shall be given by delivering or faxing same to the Company or the Consultant, as the case may be, as follows:

To the Consultant at:

John E. Watson

P. O. Box 187

Evergreen, CO 80437  USA

Fax No.:

(303) 679-3018

 John Watson Consulting Agreement

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To the Company at:

Attention:  Alan D. Branham

Unit 1- 15782 Marine Drive

White Rock, BC, V6B 1E6

Telephone No.:

(406) 475-3462

Fax No.:

(406) 475-9596

                           Any such notice, direction, request or other communication shall be deemed to have been given or made on the date on which it was delivered or, in the case of fax, on the next business day after receipt of transmission.  Either party may change its fax number or address for service from time to time by notice in accordance with the foregoing.

8.3                   Assignment

                        This Agreement is not assignable in whole or in part by the Consultant without the prior written consent of the Company.  Any attempt to assign any of the rights, or to delegate any of the duties or obligations of this Agreement without such written consent is void.

8.4                   Waiver

                        No failure or delay on the part of any party in exercising any power or right under this Agreement will operate as a waiver of such power or right, nor will any single or partial exercise of any such right or power preclude any further or other exercise of such right or power under this Agreement.  No modification or waiver of any provision of this Agreement and no consent to any departure by any party from any provision of this Agreement will be effective unless it is in writing.  Any such waiver or consent will be effective only in the specific instance and for the specific purpose for which it was given.  No notice to or demand on any party in any circumstances will entitle such party to any other or further notice or demand in similar or other circumstances.

 John Watson Consulting Agreement

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8.5                   Enurement

                        Subject to the restrictions on transfer contained in this Agreement, this Agreement shall enure to the benefit of and be binding on the parties and their respective heirs, executors, administrators, successors and assigns.

IN WITNESS WHEREOF the parties have executed this Agreement.

MIDWAY GOLD CORP. Per: Alan Branham, Director
SIGNED, SEALED & DELIVERED by JOHN E. WATSON in the presence of: Signature of Witness Name:   Address:   Occupation:	) ) ) ) ) ) ) ) ) ) ) ) )

 John Watson Consulting Agreement

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SCHEDULE “A”

SERVICES

The Consultant covenants and agrees with the Company to provide the following Services:

1.

Subject always to the general or specific instructions and directions of the Company as communicated by the President of the Company or any other senior officer of the Company, the Consultant shall use his best efforts to:

(a)

advise the Company, its personnel, officers and directors, as requested, on technical and management issues; and

(b)

perform the Services in a diligent and efficient manner, for not less than 10 hours per week, for up to six months from the Effective Date of this Agreement.

2.

The Consultant's obligations hereunder are solely to provide the Services and to report directly to the President of the Company.

3.

The Consultant may be called upon to advise on issues relating to any property or landholding obtained prior to this Agreement or obtained independent of the Consultant.  

4.

The term "Services" specifically excludes:

(a)

assisting in the seeking, identification or negotiation of new mineral prospects; and

(b)

arranging for underwriters and brokers in connection with the issuance from treasury of securities of the Company for sale to the public.

It does not exclude, however, assisting in the structuring or analysis of contemplated financings of the Company.

 John Watson Consulting Agreement

SCHEDULE “B”

CONSIDERATION

In consideration for the Services, the Consultant shall be paid the following:

1.

Following the execution of this Agreement, the Company shall pay by cheque to the Consultant a sum of money equal to the number of hours of Consultants time used during each month times US$100 per hour, in arrears.  Consultant shall invoice the Company for the hours incurred and attach documentation of all out-of-pocket expenses for reimbursement.  The Company shall remit funds for payment of the invoice within 15 days of receipt.

 John Watson Consulting Agreement

EX-14.1

Midway Gold Corp.

Code of Business Conduct and Ethics

This Code embodies the commitment of Midway Gold Corp. (the “Company”) to conduct our business in accordance with all applicable laws, rules and regulations with high ethical standards.  All officers, employees, and directors (individually, a “Person” and collectively, “Persons”) are expected to adhere to the principles and procedures set forth in this Code.  This Code is separate and apart from, and in addition to, any policies the Company may have in effect, from time to time, relating to our employees, officers and Directors.

This Code strives to promulgate integrity, deter wrongdoing, and promote the following objectives:

1.

Avoidance of conflicts of interest

A “conflict of interest" occurs when a Person's private interest interferes with the interests of the Company.

Any Person who is aware of a material transaction or relationship that could reasonably be expected to give rise to a conflict of interest should discuss the matter promptly with a member of the Audit Committee of our Board.

In particular, a Person must never use or attempt to use his or her position at the Company to obtain any improper personal benefit for himself or herself, for his or her family members, or for any other person, including loans or guarantees of obligations, from any person or entity.  All Persons will avoid situations in which their personal interests conflicts or might appear to conflict with their duties to the Company, unless the situations have been disclosed to, and approved or waived by, the Company.

2.

Protection and proper use of corporate assets

All Persons will, to the best of their abilities, protect the Company’s assets and resources and help achieve the responsible use and control of these assets and resources employed or entrusted in relation to one’s work, duties and responsibilities.

All Persons are prohibited, without the consent of the Nominating and Corporate Governance Committee:

v

from taking for themselves opportunities that are discovered through the use of Company property, information or their position; or

v

using Company property information or their position for personal gain.

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3.

Confidentiality of corporate information

Many persons have access to corporate or personnel information which is sensitive or confidential.  Information such as personnel records, payroll records, business strategies, financial and competitive information is all confidential and, in some cases, subject to protection by privacy law.  Release of such information is potentially harmful to the Company and employees.  In some cases, it is illegal.  Persons must use extreme care when dealing with confidential, personal or sensitive information.  Such information must not be released to anyone inside or outside of the Company who is not authorized or legally entitled to receive it, and must not be used or disclosed for any reason except for legitimate business purposes.

4.

Fair dealings with the Company’s security holders, customers, suppliers, competitors and employees

All Persons are to treat fairly and with respect those they have dealings with; and be honest with the Company, others in its employ, its suppliers, customers, stakeholders, and members of the communities in which it carries on its operations.

All Persons are to refrain from disparaging competitors or their products and should not improperly seek competitor’s confidential information nor take improper or unlawful advantage of others in its business dealings.

5.

Compliance with laws, rules and regulations

It is Company policy to comply with all applicable laws, rules and regulations.  It is the responsibility of each Person to adhere to the standards and restrictions imposed by those laws, rules and regulations.  If a Person is not aware or familiar with the laws, rules or regulations that apply specifically to our business, he or she must request such information from a member of the Audit Committee.

No Person may interfere with or seek to improperly influence, directly or indirectly, the auditing of our financial results or records.

It is both illegal and against Company policy for any Person who is aware of material non-public information relating to the Company, or any other private or governmental issuer of securities, to buy or sell any securities of those issuers, or recommend that another person buy, sell or hold the securities of those issuers.  Any Person who is uncertain about the legal rules involving his or her purchase or sale of any Company securities, or any securities in issuers with which he or she is familiar by virtue of his or her work for the Company, should consult with a member of the Audit Committee before making any such purchase or sale.

Persons operating outside of Canada have a special responsibility to know and obey the laws and regulations of countries where they act for the Company.  Customs vary throughout the world, but all Persons must uphold the integrity of the Company in other nations diligently.

6.

Reporting of any illegal or unethical behaviour

Our Personnel should strive to identify and raise potential issues before they lead to problems, and should ask about the application of this Code whenever in doubt.  Any Person who becomes aware

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of any existing or potential violation of this Code should promptly notify a member of the Audit Committee of our Board.  Acting through our Board, we will take such disciplinary or preventive action, as we deem appropriate to address any existing or potential violation of this Code brought to our attention.

Retaliation in any form against a Person who reports a violation of this Code or of the law in good faith, or who assists in the investigation of the reported violation, is itself a serious violation of this Code.  Acts of retaliation should be reported immediately to a member of the Audit Committee.

7.

Company records and accounting practices

The integrity of the Company’s records and financial reporting is critical to its ongoing success.  All assets, liabilities and transactions must be accurately and completely reported in the books and supported by necessary documentation.  No asset, liability or transaction is to be concealed from management or from the Company’s auditors.

Use of the Company’s funds for unlawful or improper purposes is prohibited.

All transactions must be authorized and executed in accordance with Company policy and the instructions of management.  Appropriate accounting and financial policies, procedures, controls and audit processes must be maintained.

Regardless of their position in the organization, Persons are expected to follow internal policies and procedures designed to protect the integrity of corporate data and the confidentiality and privacy of all information to which they have access by reason of their employment with the Company.  This includes adherence to procedures related to security of computer systems.

All Persons are encouraged to question and report transactions which appear to be contrary to established policies and procedures.

Amendment, Modification and Waiver

This Code may be amended or modified by the Board from time to time.  Waivers of this Code may only be granted by the Board or a committee of the Board with specific delegated authority.

Approved by the Board:  June 15, 2006

EX-23.1

Exhibit 23.1

Consent of Todd Wakefield

Reference is made to the Registration Statement under the U.S. Securities Act of 1933, as amended, on Form S-1 of Midway Gold Corp. (the “Company”) as filed with the Securities and Exchange Commission on August 2, 2007.

I hereby consent to the references to my name under the heading “Description of the Business – Properties – Spring Valley Property – Mineral Resources & Reserves” in the Company’s Registration Statement on Form S-1 which the Company used, or directly quoted from, in preparing summaries concerning the Company’s mineral resources which appear in such Registration Statement.

Todd Wakefield

/s/ Todd Wakefield

August 2, 2007

EX-23.2

Exhibit 23.2

Consent of Gordon Seibel

Reference is made to the Registration Statement under the U.S. Securities Act of 1933, as amended, on Form S-1 of Midway Gold Corp. (the “Company”) as filed with the Securities and Exchange Commission on August 2, 2007.

I hereby consent to the references to my name under the heading “Description of the Business – Properties – Spring Valley Property – Mineral Resources & Reserves” in the Company’s Registration Statement on Form S-1 which the Company used, or directly quoted from, in preparing summaries concerning the Company’s mineral resources which appear in such Registration Statement.

Gordon Seibel

/s/ Gordon Seibel

August 2, 2007

EX-23.4

Exhibit 23.4

Consent of Michael M. Gustin

Reference is made to the Registration Statement under the U.S. Securities Act of 1933, as amended, on Form S-1 of Midway Gold Corp. (the “Company”) as filed with the Securities and Exchange Commission on August 2, 2007.

I hereby consent to the references to my name under the heading “Description of the Business – Properties – Midway Property – Mineral Resources & Reserves” and under the heading of “Description of the Business – Properties – Pan Property – Mineral Resources & Reserves” in the Company’s Registration Statement on Form S-1 which the Company used, or directly quoted from, in preparing summaries concerning the Company’s mineral resources which appear in such Registration Statement.

Michael M. Gustin

/s/ Michael M. Gustin

August 2, 2007

EX-23.5

Exhibit 23.5

Consent of Steven Ristorcelli

Reference is made to the Registration Statement under the U.S. Securities Act of 1933, as amended, on Form S-1 of Midway Gold Corp. (the “Company”) as filed with the Securities and Exchange Commission on August 2, 2007.

I hereby consent to the references to my name under the heading “Description of the Business – Properties – Midway Property – Mineral Resources & Reserves” in the Company’s Registration Statement on Form S-1 which the Company used, or directly quoted from, in preparing summaries concerning the Company’s mineral resources which appear in such Registration Statement.

Steven Ristorcelli

/s/ Steven Ristorcelli

August 2, 2007

EX-23.6

Exhibit 23.6

Consent of Mine Development Associates

Reference is made to the Registration Statement under the U.S. Securities Act of 1933, as amended, on Form S-1 of Midway Gold Corp. (the “Company”) as filed with the Securities and Exchange Commission on August 2, 2007.

I hereby consent to the references to my name under the heading “Description of the Business – Properties – Midway Property – Mineral Resources & Reserves” and under the heading of “Description of the Business – Properties – Pan Property – Mineral Resources & Reserves” in the Company’s Registration Statement on Form S-1 which the Company used, or directly quoted from, in preparing summaries concerning the Company’s mineral resources which appear in such Registration Statement.

Mine Development Associates

/s/ Mine Development Associates

August 2, 2007

EX-23.7

Exhibit 23.7

DAVIDSON & COMPANY LLP _{Chartered Accountants} ^{A Partnership of Incorporated Professionals}

CONSENT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

We consent to the use of our report dated July 24, 2006 relating to the consolidated financial statements of Pan-Nevada Gold Corporation (formerly Castleworth Ventures Inc.), which appears in the Registration Statement on Form S-1 and the related prospectus for Midway Gold Corp., for the registration of shares of Midway Gold Corp.  

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants
August  2, 2007

A Member of SC INTERNATIONAL

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6

Telephone (604) 687-0947  Fax (604) 687-6172

EX-23.8

Exhibit 23.8

Consent of Independent Registered Public Accounting Firm

We consent to the use of our report dated March 30, 2007, with respect to the consolidated balance sheets of Midway Gold Corp. as of December 31, 2006 and 2005 and the related consolidated statement of operations and deficit and cash flows for the each of the years in the three year period ended December 31, 2006 included herein.  

/s/ KPMG LLP

KPMG LLP

Chartered Accountants

Vancouver, British Columbia, Canada

August 2, 2007

EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints each of Alan D. Branham and Doris Meyer as his or her attorney-in-fact and agent, with the full power of substitution and resubstitution and full power to act without the other, for them in any and all capacities, to sign any and all amendments, including post-effective amendments, and any registration statement relating to the same offering as this registration that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, to this registration statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

Name	Title	Date
/s/ Brian J. McAlister  Brian J. McAlister	Director	August 1, 2007
/s/ Brian E. Bayley  Brian E. Bayley	Director	August 1, 2007
/s/ George T. Hawes George T. Hawes	Director	August 1, 2007
/s/ William M. Sheriff William M. Sheriff	Director	August 1, 2007
/s/ William A. Lupien  William A. Lupien	Director	August 1, 2007