Midway Gold (TSX:MDW,NYSEMKT:MDW) has already faced difficulties at its Nevada-based Pan mine, and based on its most recent news, its troubles are far from over.
Last week, the company issued a corporate update regarding its current capital structure and existing debt obligations, noting that it is reviewing alternative financing proposals to replace its senior debt. It has also formed a special committee to explore strategic partnerships, asset sale opportunities and debt refinancing options in order to enhance shareholder value. While that might sound promising, the decision follows a string of unfortunate events at Pan, which just began producing this past March. Here's a look at what's been going on at Midway and what may be in store for the company. Pan mine problems When Midway provided a construction update for Pan in September 2014, it said it expected first gold to be poured there in late Q4. The company then provided another progress report in November 2014, stating that Pan was in late-stage construction and that the first pour was expected in late January 2015. However, the first pour at the mine came much later, at the end of March 2015. Unfortunately, delayed production has proven to be the least of Midway's problems. Earlier this month, the company announced the results of modeling work at Pan, including an updated resource estimate for the mine. Pan's average gold grade came in 15 percent lower than expected, and as a result the measured and indicated resource fell 36 percent, or 284,500 ounces from a 2011 feasibility study. Some of the measured and indicated resource was shifted into the inferred category, now consists of 141,000 ounces, or 13.9 million tonnes at 0.31 g/t gold.