**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

| **x**                                            |   | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                    SECURITIES EXCHANGE ACT OF 1934**  |
|--------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------|
| **For the quarterly period ended June 30, 2008** |
| **OR**                                           |
| **o**                                            |   | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                    SECURITIES EXCHANGE ACT OF 1934** |

**For        the transition period from**                                **to**                                

 

 

**Commission file number: 333-145141**

 

 

**MIDWAY GOLD CORP.**

(Exact        Name of Registrant as Specified in its Charter)

| **British Columbia**                                                              |   | **98-0459178**                       |
|-----------------------------------------------------------------------------------|--------|--------------------------------------|
| (State of other jurisdiction of incorporation or                    organization) |   | (I.R.S. Employer Identification No.) |
|                                                                              |   |                                 |
| **Unit 1 – 15782 Marine Drive**                                             |   |                                 |
| **White Rock, British Columbia, Canada**                                          |   | **V4B 1E6**                          |
| (Address of Principal Executive Offices)                                          |   | (Zip Code)                           |

 

**(604) 536-2711**

(Registrant’s Telephone Number, including Area Code)

 

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(Former        name, former address and former fiscal year, if changed since last report)

 

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Indicate by check mark whether the registrant (1) has filed all reports        required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during        the preceding 12 months (or for such shorter period that the Registrant was required to        file such reports), and (2) has been subject to the filing requirements for the past 90        days.    Yes              No

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Indicate        by check mark whether the registrant is a large accelerated filer, an accelerated filer, or        a non-accelerated filer. See definition of “accelerated filer and large accelerated        filer” in Rule 12b-2 of the Exchange Act (Check one):

| Large                accelerated filer | Accelerated                filer | Non-accelerated                filer | Smaller                Reporting Company |
|----------------------------------------|----------------------------------|--------------------------------------|------------------------------------------|

         

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| Indicate by check mark whether the Registrant is a shell company                    (as defined in Rule 12b-2 of the Exchange Act)                       Yes                        No |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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Number of Shares outstanding at        August 1, 2008     52,321,664

 

**TABLE        OF CONTENTS**

 

|   | **PART I – FINANCIAL INFORMATION.** | **1**                                                                                                           |   |
|--------|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------|--------|
|   | Item 1.                                   | Financial Statements.                                                                                           | 1      |   |
|   | Item 2.                                   | Management's Discussion and Analysis of Financial Condition and                    Results of  Operations. | 25     |   |
|   | Item 3.                                   | Quantitative and Qualitative Disclosures about Market                    Risk.                                  | 38     |   |
|   | Item 4.                                   | Controls and Procedures.                                                                                        | 39     |   |
|   | **PART II – OTHER INFORMATION.**    | **39**                                                                                                          |   |
|   | Item 1.                                   | Legal Proceedings.                                                                                              | 39     |   |
|   | Item 1A.                                  |  Risk Factors.                                                                                             | 39     |   |
|   | Item 2.                                   | Unregistered Sale of Equity Securities and Use of                    Proceeds.                                  | 39     |   |
|   | Item 3.                                   | Default Upon Senior Securities.                                                                                 | 39     |   |
|   | Item 4.                                   | Submission of Matters to a Vote of Security Holders.                                                            | 40     |   |
|   | Item 5.                                   | Other information.                                                                                              | 40     |   |
|   | Item 6.                                   | Exhibits.                                                                                                       | 41     |   |
|   | **SIGNATURE**                             | **42**                                                                                                          |   |
|        |                                           |                                                                                                                 |        |  |  |  |  |  |

 

i

 

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**EXPLANATORY NOTE**

 

All        references to “$” in this report means the Canadian dollar. All references to        “US$” refers to the U.S. dollar, and unless otherwise indicated all currency        amounts in this report are stated in Canadian dollars.

 

 

ii

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**PART I –        FINANCIAL INFORMATION**

**Item 1.           Financial Statements.**

MIDWAY GOLD CORP.        (An exploration stage company)        CONSOLIDATED INTERIM BALANCE SHEETS        (Expressed in Canadian dollars)

|                                                                                                                  |
|------------------------------------------------------------------------------------------------------------------|
||
|                                                                                                                  |
||
| Assets                                                                                                           |   |   |   |  |   |   |  |   |
| Current assets:                                                                                                  |   |   |
|         Cash                and cash equivalents                         |   |   | **$** | **4,330,950** |   | $ | 8,325,280 |   |
|         Amounts                receivable                                |   |   | ** ** | **88,019** |   |   | 108,364 |   |
|         Prepaid                expenses                                  |   |   | ** ** | **94,755** |   |   | 89,462 |   |
|                                                                                                                  |
|                                                                                                             |   |   | ** ** | **4,513,724** |   |   | 8,523,106 |   |
| Investments (note                3)                                                                              |   |   | ** ** | **593,000** |   |   | 850,000 |   |
| Reclamation                deposit                                                                               |   |   | ** ** | **433,424** |   |   | 349,239 |   |
| Equipment (note                4)                                                                                |   |   | ** ** | **279,943** |   |   | 237,326 |   |
| Mineral properties (note                5)                                                                       |   |   | ** ** | **48,574,045** |   |   | 47,452,905 |   |
|                                                                                                                  |
|                                                                                                             |   |   | **$** | **54,394,136** |   | $ | 57,412,576 |   |
|                                                                                                                  |
| Liabilities and                stockholders' equity                                                              |   |   |
| Current                liabilities                                                                               |   |   |
|         Accounts                payable and accrued liabilities          |   |   | **$** | **1,516,744** |   | $ | 518,424 |   |
| Future income tax                liability                                                                       |   |   | ** ** | **7,966,959** |   |   | 8,201,067 |   |
| Stockholders' equity (note                6)                                                                     |   |   |
|         Common                stock authorized - unlimited, no par value |   |   |
|         Issued                - 51,446,664 (2007 - 49,682,664)           |   |   | ** ** | **84,391,669** |   |   | 80,507,539 |   |
|         Additional                paid in capital                        |   |   | ** ** | **5,211,359** |   |   | 5,375,624 |   |
|         Accumulated                other comprehensive loss              |   |   | ** ** | **(377,000** | **)** |   | (120,000 | ) |
|         Deficit                accumulated during the exploration stage  |   |   | ** ** | **(44,315,595** | **)** |   | (37,070,078 | ) |
|                                                                                                                  |
|                                                                                                             |   |   | ** ** | **44,910,433** |   |   | 48,693,085 |   |
|                                                                                                                  |
|                                                                                                             |   |   | **$** | **54,394,136** |   | $ | 57,412,576 |   |
|                                                                                                                  |
| Nature of operations (note                1)                                                                     |   |   |
| Commitments (note                5)                                                                              |   |   |
| Contingency (note                8)                                                                              |   |   |
| Subsequent events ( notes                5(b), 8 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.

1

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MIDWAY GOLD CORP.        (An exploration stage company)        CONSOLIDATED INTERIM STATEMENTS OF        OPERATIONS (Expressed in Canadian dollars) (unaudited

|                                                                                              |
|----------------------------------------------------------------------------------------------|
||
|                                                                                              |
| Expenses                                                                                     |   |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|      Consulting                                                     |   |   | **$** | **23,836** |   | $ | 45,061 |   | **$** | **49,945** |   | $ | 49,029 |   | $ | 349,860 |   |
|      Depreciation                                                   |   |   | ** ** | **32,793** |   |   | 15,902 |   | ** ** | **60,721** |   |   | 25,849 |   |   | 424,690 |   |
|      Gain on sale of                subsidiary                      |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | (2,806,312 | ) |
|      Interest and                bank charges                       |   |   | ** ** | **1,024** |   |   | 1,143 |   | ** ** | **2,216** |   |   | 3,008 |   |   | 819,543 |   |
|      Investor                relations                              |   |   | ** ** | **45,864** |   |   | 30,723 |   | ** ** | **89,535** |   |   | 114,387 |   |   | 992,092 |   |
|      Legal, audit                and accounting                     |   |   | ** ** | **93,767** |   |   | 78,337 |   | ** ** | **142,604** |   |   | 111,921 |   |
|      Management                fees                                 |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 265,000 |   |
|      Mineral                exploration expenditures (schedule)     |   |   | ** ** | **3,984,331** |   |   | 3,420,538 |   | ** ** | **6,321,363** |   |   | 4,407,548 |   |   | 40,096,169 |   |
|      Mineral                property interests written off (note 5) |   |   | ** ** | **65,454** |   |   | — |   | ** ** | **65,454** |   |   | — |   |   | 90,643 |   |
|      Office and                administration (note 7)              |   |   | ** ** | **45,734** |   |   | 5,832 |   | ** ** | **82,170** |   |   | 43,380 |   |   | 997,360 |   |
|      Salaries and                benefits                           |   |   | ** ** | **332,857** |   |   | 376,167 |   | ** ** | **622,117** |   |   | 632,626 |   |   | 5,498,532 |   |
|      Transfer agent                and filing fees                  |   |   | ** ** | **37,092** |   |   | 21,038 |   | ** ** | **71,120** |   |   | 27,630 |   |   | 334,869 |   |
|      Travel                                                         |   |   | ** ** | **42,498** |   |   | 42,781 |   | ** ** | **86,946** |   |   | 61,864 |   |   | 619,057 |   |
|                                                                                              |
| Operating loss                                                                               |   |   | ** ** | **4,705,250** |   |   | 4,037,522 |   | ** ** | **7,594,191** |   |   | 5,477,242 |   |   | 49,064,397 |   |
|                                                                                              |
| Other income                (expenses):                                                      |   |   |
|      Foreign                exchange gain (loss)                    |   |   | ** ** | **56,705** |   |   | 549,439 |   | ** ** | **(207,313** | **)** |   | 526,776 |   |   | 1,098,983 |   |
|      Interest                income                                 |   |   | ** ** | **29,887** |   |   | 84,340 |   | ** ** | **93,756** |   |   | 161,697 |   |   | 803,482 |   |
|      Loss on sale of                equipment                       |   |   | ** ** | **(1,769** | **)** |   | — |   | ** ** | **(1,769** | **)** |   | — |   |   | (2,884 | ) |
|      Investment                write down                           |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | (30,000 | ) |
|      Other                income                                    |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 87,221 |   |
|                                                                                              |
|                                                                                         |   |   | ** ** | **84,823** |   |   | 633,779 |   | ** ** | **(115,326** | **)** |   | 688,473 |   |   | 1,956,802 |   |
|                                                                                              |
| Net loss before income                tax                                                    |   |   |
|                                                                                         |   |   | ** ** | **4,620,427** |   |   | 3,403,743 |   | ** ** | **7,709,517** |   |   | 4,788,769 |   |   | 47,107,595 |   |
|      Income tax                recovery                             |   |   | ** ** | **359,000** |   |   | — |   | ** ** | **464,000** |   |   | — |   |   | 2,792,000 |   |
|                                                                                              |
| Net loss                                                                                     |   |   | **$** | **4,261,427** |   | $ | 3,403,743 |   | **$** | **7,245,517** |   | $ | 4,788,769 |   | $ | 44,315,595 |   |
|                                                                                              |
| Basic and diluted loss per                share                                              |   |   | **$** | **0.08** |   | $ | 0.08 |   | **$** | **0.14** |   | $ | 0.12 |   |   |  |   |
| Weighted average number of                shares                                             |   |   | ** ** | **50,259,961** |   |   | 43,645,268 |   | ** ** | **50,035,549** |   |   | 39,823,515 |   |   |  |   |
|                                                                                              |

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

2

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MIDWAY GOLD CORP.        (An exploration stage company)        CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS        (Expressed in Canadian dollars)        (unaudited)

|                                                                                                               |
|---------------------------------------------------------------------------------------------------------------|
||
|                                                                                                               |
| Cash provided by                (used in):                                                                    |   |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Operating                activities:                                                                          |   |   |
|      Net                loss                                                         |   |   | **$** | **(4,261,427** | **)** | $ | (3,403,743 | ) | **$** | **(7,245,517** | **)** | $ | (4,788,769 | ) | $ | (44,315,595 | ) |
|                                                                                                               |
|      Items not                involving cash:                                        |   |   |
|          Depreciation                                            |   |   | ** ** | **32,793** |   |   | 15,902 |   | ** ** | **60,721** |   |   | 25,849 |   |   | 424,690 |   |
|          Stock-based                compensation                 |   |   | ** ** | **192,471** |   |   | 296,519 |   | ** ** | **334,476** |   |   | 473,779 |   |   | 4,817,341 |   |
|          Unrealized                foreign exchange loss (gain)  |   |   | ** ** | **(59,563** | **)** |   | (591,786 | ) | ** ** | **229,892** | ** ** |   | (590,000 | ) |   | (1,276,328 | ) |
|          Unrealized                loss on investment            |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 30,000 |   |
|          Non-cash                interest expense                |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 234,765 |   |
|          Income                tax recovery                      |   |   | ** ** | **(359,000** | **)** |   | — |   | ** ** | **(464,000** | **)** |   | — |   |   | (2,792,000 | ) |
|          Gain                on sale of subsidiary               |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | (2,806,312 | ) |
|          Loss                on sale of equipment                |   |   | ** ** | **1,769** |   |   | — |   | ** ** | **1,769** |   |   | — |   |   | 2,884 |   |
|          Write                off of mineral property interests  |   |   | ** ** | **65,454** |   |   | — |   | ** ** | **65,454** |   |   | — |   |   | 90,643 |   |
|      Change in                non-cash working capital items:                        |   |   |
|          Amounts                receivable                       |   |   | ** ** | **3,507** |   |   | 66,491 |   | ** ** | **20,345** |   |   | (23,966 | ) |   | (71,515 | ) |
|          Prepaid                expenses                         |   |   | ** ** | **68,862** |   |   | 23,419 |   | ** ** | **(5,293** | **)** |   | (227,674 | ) |   | (114,797 | ) |
|          Accounts                payable and accrued liabilities |   |   | ** ** | **22,843** |   |   | 1,169,341 |   | ** ** | **388,532** |   |   | 990,918 |   |   | 1,001,961 |   |
|                                                                                                               |
|                                                                                                          |   |   | ** ** | **(4,292,291** | **)** |   | (2,423,857 | ) | ** ** | **(6,613,621** | **)** |   | (4,139,863 | ) |   | (44,774,263 | ) |
|                                                                                                          |
| Investment                activities:                                                                         |   |   |
|      Proceeds on                sale of subsidiary                                   |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 254,366 |   |
|      Proceeds on                sale of equipment                                    |   |   | ** ** | **919** |   |   | 101,638 |   | ** ** | **919** |   |   | (159,277 | ) |   | 1,613 |   |
|      Proceeds on                sale of mineral property                             |   |   | ** ** | **—** |   |   | (64,854 | ) | ** ** | **—** |   |   | (128,700 | ) |   | 233,459 |   |
|      Mineral                property acquisitions                                    |   |   | ** ** | **(115,524** | **)** |   | — |   | ** ** | **(488,306** | **)** |   | — |   |   | (16,722,830 | ) |
|      Deferred                acquisition costs                                       |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | (23,316 | ) |
|      Purchase of                equipment                                            |   |   | ** ** | **(31,322** | **)** |   | — |   | ** ** | **(106,026** | **)** |   | — |   |   | (1,692,633 | ) |
|      Reclamation                deposit                                              |   |   | ** ** | **(20,181** | **)** |   | (76,606 | ) | ** ** | **(84,185** | **)** |   | (76,606 | ) |   | (848,807 | ) |
|                                                                                                               |
|                                                                                                          |   |   | ** ** | **(166,108** | **)** |   | (39,822 | ) | ** ** | **(677,598** | **)** |   | (364,583 | ) |   | (18,798,148 | ) |
|                                                                                                          |
| Financing                activities:                                                                          |   |   |
|      Advance from                Red Emerald Ltd.                                    |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 12,010,075 |   |
|      Common stock                issued, net of issue costs                          |   |   | ** ** | **2,922,628** |   |   | 5,127,347 |   | ** ** | **3,296,889** |   |   | 5,472,697 |   |   | 49,568,681 |   |
|      Convertible                debenture                                            |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 6,324,605 |   |
|                                                                                                               |
|                                                                                                          |   |   | ** ** | **2,922,628** |   |   | 5,127,347 |   | ** ** | **3,296,889** |   |   | 5,472,697 |   |   | 67,903,361 |   |
|                                                                                                          |
| (Decrease) increase in                cash                                                                    |   |   | ** ** | **(1,535,771** | **)** |   | 2,663,668 |   | ** ** | **(3,994,330** | **)** |   | 968,251 |   |   | 4,330,950 |   |
|                                                                                                          |
| Cash and cash equivalents,                beginning of period                                                 |   |   | ** ** | **5,866,721** |   |   | 6,873,422 |   | ** ** | **8,325,280** |   |   | 8,568,839 |   |   | — |   |
|                                                                                                               |
| Cash and cash equivalents,                end of period                                                       |   |   | **$** | **4,330,950** |   | $ | 9,537,090 |   | **$** | **4,330,950** |   | $ | 9,537,090 |   | $ | 4,330,950 |   |
|                                                                                                               |
| Non-cash financing and                investing activities:                                                   |   |   |
|      Securities                issued for mineral property                           |   |   | **$** | **—** |   | $ | 27,028,505 |   | **$** | **88,500** |   | $ | 27,028,505 |   |   |  |   |
|      Mineral                property costs included in accounts                      |   |   | ** ** | **609,788** |   |   | — |   | ** ** | **609,788** |   |   | — |   |   |  |   |
|      payable                                                                         |   |   |
|      Fair value of                stock options exercised                            |   |   | ** ** | **—** |   |   | 351,533 |   | ** ** | **289,336** |   |   | 351,533 |   |   |  |   |
|      Fair value of                share purchase warrants exercised                  |   |   | ** ** | **209,405** |   |   | 379,115 |   | ** ** | **209,405** |   |   | 379,115 |   |   |  |   |
|      Future income                tax liability on mineral property                  |   |   |
|      acquistion                                                                      |   |   | ** ** | **—** |   |   | 10,170,000 |   | ** ** | **—** |   |   | 10,170,000 |   |   |  |   |

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

3

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MIDWAY GOLD CORP.        (An exploration stage company)        CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS        (Expressed in Canadian dollars) (unaudited)

|                                                                                   |
|-----------------------------------------------------------------------------------|
||
|                                                                                   |
| Net loss for the                period before other comprehensive loss            |   |   | ** ** | **4,261,427** |   |   | 3,403,743 |   | ** ** | **7,245,517** |   |   | 4,788,769 |   |
|      Unrealized                (gain) loss on investment |   |   | ** ** | **(42,000** | **)** |   | — |   | ** ** | **257,000** |   |   | — |   |
|                                                                                   |
| Comprehensive                loss                                                 |   |   | **$** | **4,219,427** |   | $ | 3,403,743 |   | **$** | **7,502,517** |   | $ | 4,788,769 |   |
|                                                                                   |

MIDWAY GOLD CORP.        (An exploration stage company)        CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY        (Expressed in Canadian dollars) (unaudited)

|                                                                                                   |
|---------------------------------------------------------------------------------------------------|
||
|                                                                                                   |
| **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, carried forward**                                    | ** ** | ** ** |   | 16,953,250 |   |   | 14,924,576 |   |   | 562,954 |   |   | — |   |   | (10,412,648 | ) |   | 5,074,882 |   |

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

4

----

MIDWAY GOLD CORP.        (An exploration stage company)        CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY        (Expressed in Canadian dollars) (unaudited)

|                                                                                                   |
|---------------------------------------------------------------------------------------------------|
||
|                                                                                                   |
| **Balance,                December 31, 2002 brought forward**                                     |   |   |   | 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**                                                     | ** ** | ** ** |   | 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 |   |
| Shares issued:                                                                                    |   |   |
|        Private                placement                        |   |   |   | 2,000,000 |   |   | 5,400,000 |   |   | — |   |   | — |   |   | — |   |   | 5,400,000 |   |
|        Pan-Nevada                acquisition                   |   |   |   | 7,764,109 |   |   | 25,000,431 |   |   | 2,028,074 |   |   | — |   |   | — |   |   | 27,028,505 |   |
|        Exercise                of stock options                |   |   |   | 595,000 |   |   | 1,485,415 |   |   | (694,515 | ) |   | — |   |   | — |   |   | 790,900 |   |
|        Exercise                of share purchase warrants      |   |   |   | 3,395,605 |   |   | 10,777,930 |   |   | (2,081,407 | ) |   | — |   |   | — |   |   | 8,696,523 |   |
|        Share                issue costs                        |   |   |   | — |   |   | (28,000 | ) |   | — |   |   | — |   |   | — |   |   | (28,000 | ) |
| Stock based                compensation                                                           |   |   |   | — |   |   | — |   |   | 1,502,912 |   |   | — |   |   | — |   |   | 1,502,912 |   |
| Unrealized loss on                investments                                                     |   |   |   | — |   |   | — |   |   | — |   |   | (120,000 | ) |   | — |   |   | (120,000 | ) |
| Net loss                                                                                          |   |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (10,666,106 | ) |   | (10,666,106 | ) |
|                                                                                                   |
| **Balance, December 31,                2007**                                                     | ** ** | ** ** |   | 49,682,664 |   |   | 80,507,539 |   |   | 5,375,624 |   |   | (120,000 | ) |   | (37,070,078 | ) |   | 48,693,085 |   |
| Shares issued:                                                                                    |   |   |
|        Private                placement                        |   |   |   | 1,421,500 |   |   | 2,843,000 |   |   | — |   |   | — |   |   | — |   |   | 2,843,000 |   |
|        Acquisition                of mineral property interest |   |   |   | 30,000 |   |   | 88,500 |   |   | — |   |   | — |   |   | — |   |   | 88,500 |   |
|        Exercise                of stock options                |   |   |   | 204,000 |   |   | 665,086 |   |   | (289,336 | ) |   | — |   |   | — |   |   | 375,750 |   |
|        Exercise                of share purchase warrants      |   |   |   | 108,500 |   |   | 364,404 |   |   | (209,405 | ) |   | — |   |   | — |   |   | 154,999 |   |
|        Share                issue costs                        |   |   |   | — |   |   | (76,860 | ) |   | — |   |   | — |   |   | — |   |   | (76,860 | ) |
| Stock based                compensation                                                           |   |   |   | — |   |   | — |   |   | 334,476 |   |   | — |   |   | — |   |   | 334,476 |   |
| Unrealized loss on                investments                                                     |   |   |   | — |   |   | — |   |   | — |   |   | (257,000 | ) |   | — |   |   | (257,000 | ) |
| Net loss                                                                                          |   |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (7,245,517 | ) |   | (7,245,517 | ) |
|                                                                                                   |
| **Balance, June 30,                2008**                                                         | ** ** | ** ** |   | 51,446,664 |   | $ | 84,391,669 |   | $ | 5,211,359 |   | $ | (377,000 | ) | $ | (44,315,595 | ) | $ | 44,910,433 |   |
|                                                                                                   |

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

5

----

MIDWAY GOLD CORP.        (An exploration stage company)        SCHEDULE OF MINERAL EXPLORATION EXPENDITURES        (Expressed in Canadian dollars) (unaudited)

|                                                                                       |
|---------------------------------------------------------------------------------------|
||
|                                                                                       |
| Exploration                costs incurred are summarized as follows:                  |   |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| **Midway project**                                                                    |   |   |
|      Assays and                analysis                      |   |   | **$** | **56,921** |   | $ | 344 |   | **$** | **56,921** |   | $ | 11,698 |   | $ | 306,398 |   |
|      Communication                                           |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 9,513 |   |
|      Drilling                                                |   |   | ** ** | **21,277** |   |   | 187,959 |   | ** ** | **477,456** |   |   | 197,206 |   |   | 2,042,150 |   |
|      Engineering and                consulting               |   |   | ** ** | **100,238** |   |   | 527,323 |   | ** ** | **298,511** |   |   | 669,848 |   |   | 3,705,902 |   |
|      Environmental                                           |   |   | ** ** | **23,220** |   |   | 4,490 |   | ** ** | **35,681** |   |   | 18,275 |   |   | 179,656 |   |
|      Field office                and supplies                |   |   | ** ** | **10,052** |   |   | 14,612 |   | ** ** | **35,460** |   |   | 30,512 |   |   | 177,824 |   |
|      Legal                                                   |   |   | ** ** | **9,145** |   |   | 21,493 |   | ** ** | **16,674** |   |   | 21,493 |   |   | 55,419 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **511** |   |   | 168 |   | ** ** | **3,272** |   |   | 2,400 |   |   | 336,173 |   |
|      Reclamation                costs                        |   |   | ** ** | **—** |   |   | 180 |   | ** ** | **422** |   |   | 180 |   |   | 27,766 |   |
|      Reproduction                and drafting                |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 20,803 |   |
|      Salaries and                labour                      |   |   | ** ** | **70,655** |   |   | 47,209 |   | ** ** | **158,421** |   |   | 88,324 |   |   | 370,808 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **17,897** |   |   | 26,873 |   | ** ** | **45,402** |   |   | 66,817 |   |   | 358,787 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **309,916** |   |   | 830,651 |   | ** ** | **1,128,220** |   |   | 1,106,753 |   |   | 7,591,199 |   |
|                                                                                  |  |
| **Spring Valley                project**                                              | ** ** | ** ** |
|      Assays and                analysis                      |   |   | ** ** | **435,414** |   |   | 264,689 |   | ** ** | **529,363** |   |   | 409,641 |   |   | 3,041,949 |   |
|      Communication                                           |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 10,307 |   |
|      Drilling                                                |   |   | ** ** | **1,561,045** |   |   | 1,337,171 |   | ** ** | **2,105,566** |   |   | 1,554,769 |   |   | 9,601,888 |   |
|      Engineering and                consulting               |   |   | ** ** | **88,610** |   |   | 9,618 |   | ** ** | **244,740** |   |   | 110,319 |   |   | 2,319,715 |   |
|      Environmental                                           |   |   | ** ** | **3,853** |   |   | 98,713 |   | ** ** | **8,521** |   |   | 135,171 |   |   | 294,261 |   |
|      Equipment                rental                         |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 64,651 |   |
|      Field office                and supplies                |   |   | ** ** | **37,731** |   |   | 35,485 |   | ** ** | **71,931** |   |   | 62,140 |   |   | 492,176 |   |
|      Legal                                                   |   |   | ** ** | **53,454** |   |   | 39,972 |   | ** ** | **79,070** |   |   | 77,626 |   |   | 245,704 |   |
|      Operator                fee                             |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 108,339 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **8,085** |   |   | 7,105 |   | ** ** | **8,558** |   |   | 7,263 |   |   | 363,241 |   |
|      Reclamation                costs                        |   |   | ** ** | **790** |   |   | 608 |   | ** ** | **3,275** |   |   | 608 |   |   | 70,900 |   |
|      Reproduction                and drafting                |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | 791 |   |   | 29,724 |   |
|      Salaries and                labour                      |   |   | ** ** | **162,470** |   |   | 152,194 |   | ** ** | **294,329** |   |   | 194,790 |   |   | 891,078 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **74,698** |   |   | 69,567 |   | ** ** | **120,074** |   |   | 123,123 |   |   | 761,134 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **2,426,150** |   |   | 2,015,122 |   | ** ** | **3,465,427** |   |   | 2,676,241 |   |   | 18,295,067 |   |
|                                                                                  |  |
| **Pan project**                                                                       | ** ** | ** ** |
|      Assays and                analysis                      |   |   | ** ** | **170,586** |   |   | 2,462 |   | ** ** | **191,597** |   |   | 2,462 |   |   | 525,299 |   |
|      Drilling                                                |   |   | ** ** | **559,671** |   |   | 381,812 |   | ** ** | **569,288** |   |   | 381,812 |   |   | 1,222,581 |   |
|      Engineering and                consulting               |   |   | ** ** | **134,569** |   |   | 44,093 |   | ** ** | **213,295** |   |   | 44,093 |   |   | 305,630 |   |
|      Environmental                                           |   |   | ** ** | **2,195** |   |   | 1,516 |   | ** ** | **9,069** |   |   | 1,516 |   |   | 14,688 |   |
|      Field office                and supplies                |   |   | ** ** | **11,084** |   |   | 22,182 |   | ** ** | **18,568** |   |   | 22,182 |   |   | 58,704 |   |
|      Legal                                                   |   |   | ** ** | **—** |   |   | — |   | ** ** | **86** |   |   | — |   |   | 8,419 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **513** |   |   | 824 |   | ** ** | **7,173** |   |   | 824 |   |   | 131,251 |   |
|      Reclamation                costs                        |   |   | ** ** | **—** |   |   | 1,435 |   | ** ** | **—** |   |   | 1,435 |   |   | 46,303 |   |
|      Reproduction                and drafting                |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 5,738 |   |
|      Salaries and                labour                      |   |   | ** ** | **102,454** |   |   | 38,974 |   | ** ** | **172,989** |   |   | 38,974 |   |   | 469,853 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **22,247** |   |   | 54,179 |   | ** ** | **25,420** |   |   | 54,179 |   |   | 115,850 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **1,003,319** |   |   | 547,477 |   | ** ** | **1,207,485** |   |   | 547,477 |   |   | 2,904,316 |   |
|                                                                                  |  |
| **Maggie Creek                project**                                               | ** ** | ** ** |
|      Environmental                                           |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 197 |   |
|      Field office                and supplies                |   |   | ** ** | **117** |   |   | — |   | ** ** | **4,412** |   |   | — |   |   | 4,630 |   |
|      Legal                                                   |   |   | ** ** | **461** |   |   | — |   | ** ** | **461** |   |   | — |   |   | 461 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **—** |   |   | — |   | ** ** | **8** |   |   | — |   |   | 14,275 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **578** |   |   | — |   | ** ** | **4,881** |   |   | — |   |   | 19,563 |   |
|                                                                                  |  |
|      Sub-total                balance carried forward        |   |   | ** ** | **3,739,963** |   |   | 3,393,250 |   | ** ** | **5,806,013** |   |   | 4,330,471 |   |   | 28,810,145 |   |

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

6

----

MIDWAY GOLD CORP.        (An exploration stage company)        SCHEDULE OF MINERAL EXPLORATION EXPENDITURES – CONTINUED        (Expressed in Canadian dollars) (unaudited)

|                                                                                       |
|---------------------------------------------------------------------------------------|
||
|                                                                                       |
|                                                                                       |
|      Sub-total                balance brought forward        |   |   | ** ** | **3,739,963** |   |   | 3,393,250 |   | ** ** | **5,806,013** |   |   | 4,330,471 |   |   | 28,810,145 |   |
| **Thunder Mountain                project**                                           | ** ** | ** ** |
|      Assays and                analysis                      |   |   | ** ** | **5,959** |   |   | — |   | ** ** | **5,959** |   |   | — |   |   | 14,568 |   |
|      Drilling                                                |   |   | ** ** | **—** |   |   | — |   | ** ** | **35,396** |   |   | — |   |   | 77,956 |   |
|      Engineering and                consulting               |   |   |   | — |   |   | — |   | ** ** | **—** |   |   | — |   |   | 705 |   |
|      Environmental                                           |   |   | ** ** | **—** |   |   | — |   | ** ** | **108** |   |   | — |   |   | 1,717 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 12,453 |   |
|      Reclamation                costs                        |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 2,377 |   |
|      Salaries and                labour                      |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 503 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **—** |   |   | — |   | ** ** | **55** |   |   | — |   |   | 55 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **5,959** |   |   | — |   | ** ** | **41,518** |   |   | — |   |   | 110,334 |   |
|                                                                                  |  |
| **Afgan project**                                                                     | ** ** | ** ** |
|      Assays and                analysis                      |   |   | ** ** | **—** |   |   | — |   | ** ** | **12,808** |   |   | — |   |   | 19,641 |   |
|      Drilling                                                |   |   | ** ** | **—** |   |   | — |   | ** ** | **3,025** |   |   | — |   |   | 69,131 |   |
|      Engineering and                consulting               |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 10,833 |   |
|      Environmental                                           |   |   | ** ** | **4,665** |   |   | — |   | ** ** | **4,665** |   |   | — |   |   | 4,665 |   |
|      Field office                and supplies                |   |   | ** ** | **789** |   |   | — |   | ** ** | **1,033** |   |   | — |   |   | 2,937 |   |
|      Legal                                                   |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 3,351 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 29,159 |   |
|      Reclamation                costs                        |   |   | ** ** | **—** |   |   | — |   | ** ** | **3,795** |   |   | — |   |   | 4,332 |   |
|      Salaries and                labour                      |   |   | ** ** | **—** |   |   | — |   | ** ** | **107** |   |   | — |   |   | 10,481 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **14** |   |   | — |   | ** ** | **276** |   |   | — |   |   | 6,128 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **5,468** |   |   | — |   | ** ** | **25,709** |   |   | — |   |   | 160,658 |   |
|                                                                                  |  |
| **Gold Rock                project**                                                  | ** ** | ** ** |
|      Assays and                analysis                      |   |   | ** ** | **22,085** |   |   | — |   | ** ** | **22,085** |   |   | — |   |   | 25,681 |   |
|      Drilling                                                |   |   | ** ** | **62,933** |   |   | — |   | ** ** | **96,168** |   |   | — |   |   | 96,168 |   |
|      Engineering and                consulting               |   |   | ** ** | **42,145** |   |   | — |   | ** ** | **72,814** |   |   | — |   |   | 98,193 |   |
|      Environmental                                           |   |   | ** ** | **—** |   |   | — |   | ** ** | **534** |   |   | — |   |   | 534 |   |
|      Field office                and supplies                |   |   | ** ** | **5,784** |   |   | — |   | ** ** | **8,838** |   |   | — |   |   | 12,509 |   |
|      Legal                                                   |   |   | ** ** | **—** |   |   | — |   | ** ** | **1,374** |   |   | — |   |   | 11,526 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **—** |   |   | — |   | ** ** | **64,502** |   |   | — |   |   | 88,281 |   |
|      Reproduction                and drafting                |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 339 |   |
|      Salaries and                labour                      |   |   | ** ** | **31,680** |   |   | — |   | ** ** | **34,990** |   |   | — |   |   | 34,990 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **11,499** |   |   | — |   | ** ** | **15,701** |   |   | — |   |   | 19,013 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **176,126** |   |   | — |   | ** ** | **317,006** |   |   | — |   |   | 387,234 |   |
|                                                                                  |  |
| **Burnt Canyon                project**                                               | ** ** | ** ** |
|      Assays and                analysis                      |   |   | ** ** | **13,282** |   |   | — |   | ** ** | **21,921** |   |   | — |   |   | 21,921 |   |
|      Engineering and                consulting               |   |   | ** ** | **7,369** |   |   | — |   | ** ** | **23,158** |   |   | — |   |   | 23,158 |   |
|      Field office                and supplies                |   |   | ** ** | **32** |   |   | — |   | ** ** | **81** |   |   | — |   |   | 405 |   |
|      Legal                                                   |   |   | ** ** | **1,929** |   |   | — |   | ** ** | **2,215** |   |   | — |   |   | 2,215 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **—** |   |   | — |   | ** ** | **8,535** |   |   | — |   |   | 8,535 |   |
|      Salaries and                labour                      |   |   | ** ** | **—** |   |   | — |   | ** ** | **2,923** |   |   | — |   |   | 2,923 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **616** |   |   | — |   | ** ** | **1,380** |   |   | — |   |   | 2,697 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **23,228** |   |   | — |   | ** ** | **60,213** |   |   | — |   |   | 61,854 |   |
|                                                                                  |  |
| **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 accommodation |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 21,124 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 443,587 |   |
|                                                                                  |  |
|      Sub-total                balance carried forward        |   |   | ** ** | **3,950,744** |   |   | 3,393,250 |   | ** ** | **6,250,459** |   |   | 4,330,471 |   |   | 29,973,812 |   |

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

7

----

MIDWAY GOLD CORP.        (An exploration stage company)        SCHEDULE OF MINERAL EXPLORATION EXPENDITURES – CONTINUED        (Expressed in Canadian dollars) (unaudited)

|                                                                                       |
|---------------------------------------------------------------------------------------|
||
|                                                                                       |
|      Sub-total                balance brought forward        |   |   | ** ** | **3,950,744** |   |   | 3,393,250 |   | ** ** | **6,250,459** |   |   | 4,330,471 |   |   | 29,973,812 |   |
| **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 accommodation |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 7,255 |   |
|      Recoveries                                              |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | (40,000 | ) |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 217,327 |   |
|                                                                                  |  |
| **Ruby Violet                project**                                                | ** ** | ** ** |
|      Assays and                analysis                      |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 20,499 |   |
|      Communication                                           |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 108,762 |   |
|      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 accommodation |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 392,031 |   |
|      Utilities and                water                      |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 59,425 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 9,098,663 |   |
|                                                                                  |  |
| **Maiden Gold                project**                                                | ** ** | ** ** |
|      Engineering and                consulting               |   |   | ** ** | **1,785** |   |   | — |   | ** ** | **1,785** |   |   | — |   |   | 1,785 |   |
|      Field office                and supplies                |   |   | ** ** | **189** |   |   | — |   | ** ** | **189** |   |   | — |   |   | 189 |   |
|      Legal and                accounting                     |   |   | ** ** | **9,888** |   |   | — |   | ** ** | **9,888** |   |   | — |   |   | 9,888 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **42** |   |   | — |   | ** ** | **42** |   |   | — |   |   | 42 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **17** |   |   | — |   | ** ** | **17** |   |   | — |   |   | 17 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **11,921** |   |   | — |   | ** ** | **11,921** |   |   | — |   |   | 11,921 |   |
|                                                                                  |  |
| Property                investigations                                                |   |   |
|      Assays and                analysis                      |   |   | ** ** | **11,230** |   |   | 5,201 |   | ** ** | **16,840** |   |   | 10,854 |   |   | 157,873 |   |
|      Drilling                                                |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | — |   |   | 169,129 |   |
|      Engineering and                consulting               |   |   | ** ** | **5,022** |   |   | — |   | ** ** | **10,482** |   |   | 31,985 |   |   | 205,162 |   |
|      Environmental                                           |   |   | ** ** | **—** |   |   | 7,477 |   | ** ** | **5,132** |   |   | 7,477 |   |   | 22,761 |   |
|      Field office                and supplies                |   |   | ** ** | **212** |   |   | 2,078 |   | ** ** | **1,269** |   |   | 2,930 |   |   | 16,968 |   |
|      Legal                                                   |   |   | ** ** | **(2,347** | **)** |   | — |   | ** ** | **772** |   |   | — |   |   | 1,064 |   |
|      Property                maintenance and taxes           |   |   | ** ** | **1,274** |   |   | — |   | ** ** | **1,274** |   |   | 5,096 |   |   | 110,374 |   |
|      Reclamation                costs                        |   |   | ** ** | **239** |   |   | 90 |   | ** ** | **1,471** |   |   | 90 |   |   | 2,639 |   |
|      Reproduction                and drafting                |   |   | ** ** | **—** |   |   | — |   | ** ** | **—** |   |   | 1,172 |   |   | 4,942 |   |
|      Salaries and                labour                      |   |   | ** ** | **—** |   |   | 1,140 |   | ** ** | **—** |   |   | 3,674 |   |   | 3,674 |   |
|      Travel,                transportation and accommodation |   |   | ** ** | **6,036** |   |   | 11,302 |   | ** ** | **21,743** |   |   | 13,799 |   |   | 99,860 |   |
|                                                                                  |  |
|                                                                                  |   |   | ** ** | **21,666** |   |   | 27,288 |   | ** ** | **58,983** |   |   | 77,077 |   |   | 794,446 |   |
|                                                                                  |  |
|                                                                                  |   |   | **$** | **3,984,331** |   | $ | 3,420,538 |   | **$** | **6,321,363** |   | $ | 4,407,548 |   | $ | 40,096,169 |   |
|                                                                                  |  |

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

8

----

 

 

MIDWAY GOLD        CORP.

(an exploration stage company)

Notes to        Consolidated Interim Financial Statements

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (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, 2007 which may be found on the Company’s profile on SEDAR and        EDGAR.

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, 2007 and have been        consistently followed in the preparation of these consolidated interim financial        statements, except as follows:

 

**Recently adopted accounting policies**

 

**Statement of Financial Accounting Standards        No.** **157, Fair Value        Measurements**

 

Statement of Financial Accounting Standards No. 157,*Fair Value Measurements*(“SFAS        157”), clarifies the definition of fair value, establishes a framework for measuring        fair value, and expands the disclosures on fair value measurements. We have adopted SFAS        157 and FASB Staff Position FAS 157-2:*Effective Date of FASB        Statement No.* *157*effective January 1, 2008. The adoption of SFAS 157 for financial        instruments as required at January 1, 2008 did not have a material effect on our        consolidated financial statements; however, we are required to provide additional        disclosure as part of our consolidated financial statements. We will adopt SFAS 157 for        non-financial assets and non-financial liabilities on January 1, 2009 as required and        do not expect the provisions to have a material effect on our consolidated financial        statements.

 

SFAS 157        establishes a three-tier fair value hierarchy, which prioritizes the inputs used in        measuring fair value. These tiers include: Level 1, defined as observable inputs such as        quoted prices in active markets; Level 2, defined as inputs other than quoted prices in        active markets that are either directly or indirectly observable; and Level 3, defined as        unobservable inputs in which little or no market data exists, therefore requiring an entity        to develop its own assumptions.

 

The        valuation of investments in marketable securities include available for sale securities.        The Company’s Level 1 assets include the valuation of the common shares available for        sale with no trading restrictions as determined using a market approach based upon        unadjusted quoted prices for identical assets in an active market. Level 1 assets also        include the valuation of warrants that are considered derivatives and are marked to market        each reporting period based upon unadjusted quoted prices for identical assets in active        markets. The Company’s Level 2 assets include the valuation of common shares with        trading restrictions that will be removed within one year of the financial period reporting        date as determined using a market approach and based upon quoted prices for identical        assets in an active market adjusted by a discount to market comparable to the discount        allowed by the TSX Venture Stock Exchange for private placements.

 

9

----

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

 

The        determination of fair value for financial reporting purposes as at June 30, 2008 and        utilizing the applicable framework is as follows:

 

| Financial Instrument          | Quoted prices in active markets for identical assets | Significant other observable inputs

                      | Significant unobservable inputs | Total    |
|-------------------------------|------------------------------------------------------|-----------------------------------------------------------------|---------------------------------|----------|
|                          | Level 1                                              | Level 2                                                         | Level 3                         |     |
| Available-for-sale securities | $196,000                                             | $147,000                                                        | $-                              | $343,000 |
| Derivatives                   | 70,000                                               | -                                                               | -                               | 70,000   |
| Total                         | $266,000                                             | $147,000                                                        | $-                              | $413,000 |

 

In        February 2007, the FASB issued FAS No. 159 “The Fair Value Option for Financial        Assets and Financial Liabilities” including an amendment of FASB Statement No. 115.        This Statement permits entities to choose to measure many financial instruments and certain        other items at fair value. This Statement applies to all entities, including not-for-profit        organizations. Most of the provisions of this Statement apply only to entities that elect        the fair value option. FAS No. 159 is effective for fiscal years beginning after November        15, 2007, and interim periods within those fiscal years, and is applicable beginning in the        Company’s first quarter beginning January 1, 2008 and it had no material impact on        the consolidated financial statements.

 

Recent        United States Accounting Pronouncements:

 

In        December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business        Combinations” (“FAS 141R”), which replaces FAS 141 and SFAS No. 160,        “Non-controlling Interest in Consolidated Financial Statements”, an amendment        of ARB No. 51 (“FAS 160”). FAS 141R establishes principles and requirements for        how an acquirer in a business combination recognizes and measures in its financial        statements the identifiable assets acquired, the liabilities assumed, and any controlling        interest; recognizes and measures the goodwill acquired in the business combination or a        gain from a bargain purchase; and determines what information to disclose to enable users        of the financial statements to evaluate the nature and financial effects of the business        combination. FAS 160 requires retroactive adoption of the presentation and disclosure        requirements for existing minority interests. FAS 141R and FAS 160 shall be applied        prospectively on or after an entity’s fiscal year that begins on or after December        15, 2008. The Company is currently assessing the impact that FAS 141R and FAS 160 will have        on its consolidated financial statements but does not expect that it will have a material        impact on the consolidated financial statements.

 

| **3.** | **Investments** |
|--------|-----------------|

         

As        consideration for the Company’s sale of the Jessup project to Rye Patch Gold Corp.        (“Rye Patch”) the Company was issued 2,000,000 common shares of Rye Patch and        1,000,000 common share purchase warrants (the “Warrants’) on September 28,        2007. The Warrants entitle the Company to purchase one common share of Rye Patch at an        exercise price of $1.00 until September 28, 2009. The 2,000,000 common shares become        available to sell beginning with 400,000 on September 28, 2007 and then 400,000 each six        months after until they are all available to sell by September 28, 2009.

 

 

10

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

|                                                   |
|---------------------------------------------------|
||
|                                                   |
||
|                                                   |
||
| Restricted                common shares (a)       |   |   |   | 400 |   |   | 180,000 |   |   | — |   |   | 180,000 |   |
| Available for sale - common                shares |   |   |   | 1,600 |   |   | 720,000 |   |   | (377,000 | ) |   | 343,000 |   |
| Warrants (b)                                      |   |   |   | 1,000 |   |   | 100,000 |   |   | (30,000 | ) |   | 70,000 |   |
|                                                   |
| Total                investments                  |   |   |   |  |   |   | 1,000,000 |   |   | (407,000 | ) |   | 593,000 |   |
|                                                   |

 

|                                                   |
|---------------------------------------------------|
||
|                                                   |
||
|                                                   |
||
|                                                   |
| Restricted                common shares (a)       |   |   |   | 800 |   |   | 360,000 |   |   | — |   |   | 360,000 |   |
| Available for sale - common                shares |   |   |   | 1,200 |   |   | 540,000 |   |   | (120,000 | ) |   | 420,000 |   |
| Warrants (b)                                      |   |   |   | 1,000 |   |   | 100,000 |   |   | (30,000 | ) |   | 70,000 |   |
|                                                   |
| Total                investments                  |   |   |   |  |   |   | 1,000,000 |   |   | (150,000 | ) |   | 850,000 |   |
|                                                   |

 

| (a) | As at June 30, 2008, 400,000 of the Rye Patch common shares are                    considered restricted, thus they have no active quoted market and are reported                    at cost until they no longer are considered restricted. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

| (b) | Warrants are considered derivatives thus are marked to market                    each reporting period with gains or losses recorded in the Statement of                    Operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

During        the period ended June 30, 2008, the Company recognized $257,000 unrealized loss on the        common shares of Rye Patch as the fair value at June 30, 2008 was less than the fair value        at December 31, 2007.

 

| **4.** | **Equipment:** |
|--------|----------------|

         

|                                   |
|-----------------------------------|
||
|                                   |
||
|                                   |
| Computer                equipment |   |   | $ | 232,035 |   | $ | 91,537 |   | $ | 140,498 |   | $ | 185,177 |   | $ | 55,696 |   | $ | 129,481 |   |
| Office equipment                  |   |   |   | 60,693 |   |   | 21,478 |   |   | 39,215 |   |   | 47,219 |   |   | 17,155 |   |   | 30,064 |   |
| Field equipment                   |   |   |   | 66,569 |   |   | 15,417 |   |   | 51,152 |   |   | 46,506 |   |   | 9,458 |   |   | 37,048 |   |
| Trucks                            |   |   |   | 89,389 |   |   | 40,311 |   |   | 49,078 |   |   | 67,629 |   |   | 26,896 |   |   | 40,733 |   |
|                                   |
|                              |   |   | $ | 448,686 |   | $ | 168,743 |   | $ | 279,943 |   | $ | 346,531 |   | $ | 109,205 |   | $ | 237,326 |   |
|                                   |

 

 

11

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

 

| **5.** | **Mineral properties:** |
|--------|-------------------------|

 

The        continuity of expenditures on mineral properties is as follows:

 

|                                  |
|----------------------------------|
||
|                                  |
| Midway                (a)        |   |   | $ | 6,394,704 |   | $ | 4,543 |   | $ | — |   | $ | 6,399,247 |   |
| Spring Valley                (b) |   |   |   | 4,879,825 |   |   | 653,614 |   |   | — |   |   | 5,533,439 |   |
| Pan (c)                          |   |   |   | 31,961,798 |   |   | 127,645 |   |   | — |   |   | 32,089,443 |   |
| Afgan (d)                        |   |   |   | 4,168,784 |   |   | 79,218 |   |   | — |   |   | 4,248,002 |   |
| Gold Rock (e)                    |   |   |   | 23,248 |   |   | 240,497 |   |   | — |   |   | 263,745 |   |
| Maggie Creek (f)                 |   |   |   | — |   |   | 9,902 |   |   | (9,902 | ) |   | — |   |
| Burnt Canyon (g)                 |   |   |   | 24,546 |   |   | 15,623 |   |   | — |   |   | 40,169 |   |
| Maiden Gold (h)                  |   |   |   | — |   |   | 55,552 |   |   | (55,552 | ) |   | — |   |
|                                  |
|                             |   |   | $ | 47,452,905 |   | $ | 1,186,594 |   | $ | (65,454 | ) | $ | 48,574,045 |   |
|                                  |

 

| (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.

         

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 (paid)                  |
| 300,000            |   | On or before August 15, 2008 and annually thereafter |
|               |   |                                                 |

         

In the six-month period ended June 30, 2008 the Company staked additional        claims within and adjacent to the Midway property.

 

 

12

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

 

| (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 had an option to acquire 100% of 44 unpatented        mining claims (the “Spring Valley Claims”). During the term of the Spring        Valley Option Agreement, the Company incurred minimum annual expenditures of US$150,000 and        paid the Owner US$475,000 from 2003 until making the final payment of US$3,000,000 on        August 31, 2007 to complete the purchase of the Spring Valley Claims. The Owner retained a        NSR royalty 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% NSR 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 (paid)                                                                                                                                                                                     |
| 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% NSR royalty.

         

In 2004 the Company purchased one claim for US$75,000.

         

On September 7, 2005, the Company entered into a purchase and sale 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, which 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 royalty payable:

 

13

----

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

         

|  

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 (paid)             |
| 36,000                     |   | On or before each April 25 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 purchased land and mineral rights of 920 gross        acres, 320 acres net surface, 770 acres net mineral, (the “Seymork Parcel”)        from Seymork Investments Ltd. (“Seymork”) for US$200,000, subject to a 3% NSR        royalty on any production and sale of metals from the claims. On June 11, 2008 the Court        settled a long standing title dispute to this ground validating the Company’s claim        to the Seymork Parcel. The settlement allowed the Company to purchase two promissory notes        secured against the property for approximately US$598,000. This amount has been included in        accounts payable and accrued liabilities at June 30, 2008 and was paid in early July 2008.        In the future, the Company may elect to sell up to 27.6 square miles of interests in lands        included in the purchase (9.1 square miles of net surface, 19 square miles net minerals)        but not needed for development of the Spring Valley project to recover a portion of the        cost.

         

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 royalty payable:

         

| Option payment US$ |   | Dates                                          |
|--------------------|--------|------------------------------------------------|
| 10,000             |   | Upon execution of agreement (paid)             |
| 15,000             |   | On or before July 18, 2007 (paid)              |
| 20,000             |   | On or before July 18, 2008 (paid subsequently) |
| 20,000             |   | On or before each July 18 annual 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 US$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 royalty payable.

 

 

14

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

         

| Option payment US$ |   | Dates                                                 |
|--------------------|--------|-------------------------------------------------------|
|               |   |                                                  |
| 6,000              |   | Upon execution of agreement, October 25, 2006 (paid)  |
| 12,000             |   | On or before October 25, 2007 (paid)                  |
| 20,000             |   | On or before October 25, 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 royalty payable.

         

| Option payment US$ |   | Dates                                                 |
|--------------------|--------|-------------------------------------------------------|
| 2,000              |   | Upon execution of agreement, October 30, 2006 (paid)  |
| 4,000              |   | On or before October 30, 2007 (paid)                  |
| 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.

         

On June 1, 2007 the Company entered into a mineral lease agreement and        option to purchase 2 unpatented lode mining claims for US$500,000. To maintain the option        the Company must make monthly payments of US$1,000 (paid through to December 2008) and        one-time payments of US$25,000 by June 1, 2009, US$150,000 by June 1, 2012, US$150,000 by        June 1, 2014 and US$55,000 by June 1, 2017. All payments shall be credited towards the        purchase price.

         

Over the years the Company has staked additional claims within and adjacent        to the Spring Valley property.

         

| (c) | Pan Property, Nevada |
|-----|----------------------|

 

Pursuant to the acquisition of Pan-Nevada Gold Corporation        (“Pan-Nevada”) effective April 16, 2007, the Company assumed the January 7,        2003 mineral lease agreement with Gold Standard Royalty Corporation (“GSRC”)        (formerly the Lyle Campbell Trust) for a 100% interest in the Pan property. On or before        January 5 of each year the Company must pay an advance minimum royalty of the greater of        US$60,000 or the US dollar equivalent of 174 ounces of gold valued by the average of the        London afternoon fixing for the third calendar quarter preceding January 1 of the year in        which the payment is due. On January 1, 2008 the Company paid GSRC an advance minimum        royalty of US$118,343. The minimum advance royalties will be creditable against a sliding        scale NSR production royalty of between 2.5% and 4%. The Company must incur a minimum of        US$65,000 per year work expenditures, including claim maintenance fees, during the term of        the mining lease.

 

Subsequent to acquiring Pan-Nevada the Company staked additional claims        adjacent to the Pan property some of which fall within the one mile area of interest of        GSRC mining lease and will be subject to the NSR royalty to GSRC.

         

 

15

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

         

| (d) | Afgan Property, Nevada |
|-----|------------------------|

         

Pursuant to the acquisition of Pan-Nevada effective April 16, 2007, the        Company assumed the January 7, 2003 mineral lease agreement with GSRC for a 100% interest        in the Afgan property. On or before January 5 of each year the Company must pay an advance        minimum royalty of the greater of US$40,000 or the US dollar equivalent of 116 ounces of        gold valued by the average of the London afternoon fixing for the third calendar quarter        preceding January 1 of the year in which the payment is due. On January 1, 2008 the Company        paid GSRC an advance minimum royalty of US$78,896. The minimum advance royalties will be        creditable against a sliding scale NSR production royalty of between 2.5% and 4%. The        Company must incur a minimum of US$60,000 per year work expenditures, including claim        maintenance fees, during the term of the mining lease.

         

In August 2007, Midway acquired 104 unpatented claims from WFW Resources,        LLC of Elko, Nevada, for a US$52,000 property payment and annual advance royalty payments        of US$25,000 for years 2 to 5 and US$50,000 for years 6 to 10 with a NSR royalty of 4%. The        royalty can be bought down to 1% NSR depending upon the price of gold.

         

| (e) | Gold Rock (formerly the Monte) Property, Nevada |
|-----|-------------------------------------------------|

         

Pursuant to the acquisition of Pan-Nevada effective April 16, 2007, the        Company assumed the March 20, 2006 mineral lease agreement with GSRC for a 100% interest in        the Gold Rock property. On or before January 5 of each year the Company must pay an advance        minimum royalty of the greater of US$30,000 in 2008 (paid) and US$45,000 by January 5,        2009. By January 5, 2010 and annually thereafter US$60,000 thereafter or the US dollar        equivalent of 108.05 ounces of gold valued by the average of the London afternoon fixing        for the third calendar quarter preceding January 1 of the year in which the payment is due.        The minimum advance royalties will be creditable against a sliding scale NSR production        royalty of between 2.5% and 4%. The Company must incur a minimum of US$75,000 year work        expenditures, including claim maintenance fees, during the term of the mining        lease.

         

On January 15, 2007 the Company entered into a mineral lease agreement with        Anchor Mineral, Inc. of Kansas, for unpatented mining claims adjoining the Gold Rock        project. Advance minimum royalty payments will be due each year of the lease creditable        against a 3.5% NSR production royalty.

| Option payment US$ |   | Dates                                               |
|--------------------|--------|-----------------------------------------------------|
| 6,000              |   | On or before June 1, 2008 (paid)                    |
| 10,000             |   | On or before January 15, 2009                       |
| 20,000             |   | On or before January 15, 2010                       |
| 30,000             |   | On or before January 15, 2011                       |
| 30,000             |   | The greater of $30,000 or the gold equivalent price |

         

The gold equivalent price shall be $30,000 multiplied by a factor of the        closing price of gold on the last business day in December 2010 over the closing price of        gold on January 15, 2007.

 

On January 24, 2008 the Company entered into a mineral lease agreement with        Messrs. Pert and Moyle of Nevada for 13 unpatented mining claims over the Easy Junior        deposit area. The Company paid a first annual minimum royalty of US$50,000 and will be        required to make annual minimum royalty payments of US$50,000 for years 2 to 6; US$60,000        for years 7 to 11 and US$75,000 for year 12 and thereafter for the remainder of the fifteen        year lease. The minimum advance royalty payments may be creditable against a

 

 

16

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

production NSR sliding scale royalty ranging from 2% to 6% based on the gold        price. The Company has an option to outright purchase the claims for US$5,000,000 with any        minimum advance royalty payments creditable against the purchase price.

         

On February 13, 2008 the Company entered into a mineral lease agreement with        Mr. Pankow of Nevada for two unpatented mining claims adjacent to the Gold Rock        project. The Company paid a first annual minimum royalty of US$7,750 and will be required        make annual minimum royalty payments of US$7,750 for years 2 to 6; US$9,250 for years 7 to        11 and US$11,500 for year 12 and thereafter for the remainder of the fifteen year lease.        The minimum advance royalty payments may be creditable against a production NSR sliding        scale royalty ranging from 2% to 5% based on the gold price. The Company has an option to        outright purchase the claims for US$775,000 with any minimum advance royalty payments        creditable against the purchase price.

         

On February 13, 2008 the Company was assigned an existing lease on 10        unpatented claims adjoining the Gold Rock property by William Sheriff, a director of the        Company in consideration of 30,000 common shares at a value of $88,500 issued on March 31,        2008. The Company assumes the obligations of the February 15, 2004 underlying lease with        Ronny Jordan and paid Mr. Jordan the first annual lease payment of US$10,000. During        the term of the lease annual minimum royalty payments of US$15,000 will be required each        February 15 thereafter. The Company may elect at any time during the life of the agreement        to purchase half of the property for US$1,000,000 and the remaining half may be purchased        for another US$1,500,000 with all royalty payments paid prior to the purchase creditable        against the purchase price. A 2.5% NSR royalty was retained by Ronny Jordan and a 0.5% NSR        royalty was retained by William Sheriff.

         

The Company staked additional claims adjacent to the Gold Rock property some        of which fall within the one mile area of interest of the GSRC mining lease or the Anchor        Minerals Lease and will be subject to the NSR royalty to either GSRC or Anchor        Minerals.

         

| (f) | Maggie Creek Property, Nevada |
|-----|-------------------------------|

         

Pursuant to the acquisition of Pan-Nevada effective April 16, 2007, the        Company assumed the January 7, 2003 mineral lease agreement with GSRC for a 100% interest        in the Maggie Creek property. On or before January 5 of each year the Company must pay an        advance minimum royalty of the greater of US$5,000 or the US dollar equivalent of 14.5        ounces of gold valued by the average of the London afternoon fixing for the third calendar        quarter preceding January 1 of the year in which the payment is due. On January 1, 2008 the        Company paid GSRC an advance minimum royalty of US$9,862. The minimum advance royalties        will be creditable against a sliding scale NSR production royalty of between 2.5% and 4%.        The Company must incur a minimum of US$15,000 year work expenditures, including claim        maintenance fees, during the term of the mining lease. The Company terminated the mineral        lease with GSRC in the second quarter and wrote off a total of $9,902 in mineral property        costs.

         

| (g) | Burnt Canyon Property, Nevada |
|-----|-------------------------------|

         

On November 19, 2007, the Company entered into a mineral lease agreement and        option to purchase unpatented lode mining claims for a series of annual payments as        advances upon a 3% NSR royalty payable.

 

 

17

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

         

| Option payment US$ |   | Dates                                                                      |
|--------------------|--------|----------------------------------------------------------------------------|
| 25,000             |   | Upon execution of agreement (paid)                                         |
| 25,000             |   | On or before November 19, 2008                                             |
| 30,000             |   | On or before November 19, 2009                                             |
| 40,000             |   | On or before November 19, 2010                                             |
| 50,000             |   | On or before November 19, 2011 and each year                    thereafter |

         

The Company has the option to purchase the claims for a price of        US$1,000,000. Any advance royalties paid will be credited against the purchase        price.

         

On May 1, 2008, the Company entered into a mineral lease agreement and        option to purchase 20 unpatented lode mining claims for a series of annual payments as        advances upon the 2% NSR royalty payable:

         

|  

Option payment US$ |   | Dates                                             |
|----------------------------|--------|---------------------------------------------------|
| 10,000                     |   | Upon execution of agreement (paid)                |
| 10,000                     |   | On or before May 1, 2009                          |
| 10,000                     |   | On or before May 1, 2010                          |
| 15,000                     |   | On or before May 1, 2011                          |
| 20,000                     |   | On or before May 1, 2012

and annually thereafter |

         

The Company has the option to purchase these claims for a total purchase of        US$2,500,000. Any advance royalties paid will be credited against the purchase        price.

         

The Company staked additional claims that comprise the Burnt Canyon        property.

         

| (h) | Maiden Gold, Montana |
|-----|----------------------|

         

On April 4, 2008 the Company entered into a mineral lease agreement with        Patrick D. Henry and Daniel Bauer for patented mining claims and unpatented mining claims        located in Fergus County, Montana. The Company paid a first annual minimum royalty of        US$45,000 and a US$10,000 signing bonus and will be required to make annual minimum royalty        payments of US$45,000 thereafter for the remainder of the ten year lease. The minimum        advance royalty payments may be creditable against a production NSR sliding scale royalty        ranging from 1% to 4%. The Company has an option to outright purchase the claims for        US$1,000,000 with any minimum advance royalty payments creditable against the purchase        price. The Company was not able to secure the rest of the necessary property package and        abandoned this effort and wrote off the $55,552 in total acquisition costs.

         

| 6. | 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. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

18

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

|   | (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. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

19

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

|   | (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 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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

20

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

|   | (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 entitled the holder to purchase one additional                    common share at $2.70 per share until May 16, 2007. 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. The Company incurred                    $65,216 in issue costs. By May 16, 2007 1,725,000 of the warrants were                    exercised and 137,500 expired unexercised. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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. The Company paid                    $88,750 in finders’ fees and incurred $94,546 in issue costs for this                    private placement. By November 10, 2007 908,782 of the warrants were exercised                    and 91,218 expired unexercised. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xxv) | On April 16, 2007, the Company issued 7,764,109 common shares at                    a value of $25,000,431, 308,000 stock options at a value of $608,020 and                    870,323 share purchase warrants at a value of $1,420,054 in connection with the                    acquisition of Pan-Nevada Gold Corporation. By December 31, 2007, 154,000 of                    the stock options had been exercised and 761,823 share purchase warrants had                    been exercised. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xxvi) | On August 24, 2007, the Company issued 2,000,000 common shares                    at $2.70 per common share for proceeds of $5,400,000 by way of a private                    placement. The Company incurred $28,000 in share issue costs. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xxvii) | On March 31, 2008, the Company issued 30,000 common shares at a                    value of $88,500 pursuant to a lease assignment of mining claims for the Gold                    Rock project. The Company incurred $1,489 in share issue costs. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xxviii) | On June 12, 2008, the Company issued 1,421,500 common shares at                    $2.00 per common share for proceeds of $2,843,000 by way of a private                    placement. The Company incurred $75,371 in share issue costs. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

| (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 was amended on May 12, 2008 to add an appendix called the 2008 Stock        Incentive Plan for United States Resident Employees (the “U.S. Plan”) to        supplement and be a part of the Plan. The purpose of the U.S. Plan is to enable the Company        to grant Incentive Stock Options, as that term is used in Section 422 of the Internal        Revenue Code of 1986, as amended from time to time, and any regulations promulgated        thereunder to qualifying employees who are citizens or residents of the United States of        America. This does not change the aggregate number of options that can be granted pursuant        to the Plan. The purpose of 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.

 

 

21

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

         

|                                                |
|------------------------------------------------|
||
||
|                                                |
| February 11,                2008               |   |   | $ | 1.43 |   |   | 84,000 |   |   | — |   |   | (84,000 | ) |   | — |   |   | — |   | $ | — |   |
| September 5,                2008               |   |   | $ | 1.24 |   |   | 100,000 |   |   | — |   |   | — |   |   | — |   |   | 100,000 |   |   | 76,000 |   |
| October 11, 2008                               |   |   | $ | 1.07 |   |   | 70,000 |   |   | — |   |   | — |   |   | — |   |   | 70,000 |   |   | 65,100 |   |
| September 14,                2009              |   |   | $ | 0.80 |   |   | 242,500 |   |   | — |   |   | (20,000 | ) |   | — |   |   | 222,500 |   |   | 267,000 |   |
| February 4, 2010                               |   |   | $ | 0.85 |   |   | 80,000 |   |   | — |   |   | — |   |   | — |   |   | 80,000 |   |   | 92,000 |   |
| June 24, 2010                                  |   |   | $ | 1.30 |   |   | 500,000 |   |   | — |   |   | — |   |   | — |   |   | 500,000 |   |   | 350,000 |   |
| March 9, 2011                                  |   |   | $ | 2.00 |   |   | 100,000 |   |   | — |   |   | (25,000 | ) |   | — |   |   | 75,000 |   |   | — |   |
| March 22, 2011                                 |   |   | $ | 2.00 |   |   | 100,000 |   |   | — |   |   | — |   |   | — |   |   | 100,000 |   |   | — |   |
| May 4, 2011                                    |   |   | $ | 2.00 |   |   | 30,000 |   |   | — |   |   | — |   |   | — |   |   | 30,000 |   |   | — |   |
| June 11, 2011                                  |   |   | $ | 2.53 |   |   | 385,000 |   |   | — |   |   | (75,000 | ) |   | — |   |   | 310,000 |   |   | — |   |
| 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 26, 2012                                 |   |   | $ | 3.20 |   |   | 200,000 |   |   | — |   |   | — |   |   | — |   |   | 200,000 |   |   | — |   |
| July 31, 2012                                  |   |   | $ | 2.71 |   |   | 975,000 |   |   | — |   |   | — |   |   | (50,000 | ) |   | 925,000 |   |   | — |   |
| October 30, 2012                               |   |   | $ | 3.36 |   |   | 100,000 |   |   | — |   |   | — |   |   | — |   |   | 100,000 |   |   | — |   |
| November 16,                2012               |   |   | $ | 3.25 |   |   | 40,000 |   |   | — |   |   | — |   |   | — |   |   | 40,000 |   |   | — |   |
| December 6, 2012                               |   |   | $ | 3.32 |   |   | 15,000 |   |   | — |   |   | — |   |   | — |   |   | 15,000 |   |   | — |   |
| April 13, 2014                                 |   |   | $ | 2.04 |   |   | 400,000 |   |   | — |   |   | — |   |   | — |   |   | 400,000 |   |   | — |   |
| May 12, 2013                                   |   |   | $ | 2.00 |   |   | — |   |   | 50,000 |   |   | — |   |   | — |   |   | 50,000 |   |   | — |   |
| May 23, 2013                                   |   |   | $ | 2.00 |   |   | — |   |   | 75,000 |   |   | — |   |   | — |   |   | 75,000 |   |   | — |   |
|                                                |
|                                                |   |   |   | 0.00 |   |   | 3,726,500 |   |   | 125,000 |   |   | (204,000 | ) |   | (50,000 | ) |   | 3,597,500 |   | $ | 850,100 |   |
|                                                |
| Weighted average exercise                price |   |   | $ | 2.18 |   |   |  | $ |   | 2.00 |   | $ | 1.84 |   | $ | 2.71 |   | $ | 2.19 |   |   |  |   |
|                                                |

At June 30, 2008, all but 553,333 of        the 3,597,500 stock options were exercisable.

 

The        intrinsic value of stock options outstanding at June 30, 2008 relates to vested options.        Intrinsic value for vested stock options is calculated on the difference between the        exercise prices of the underlying options and the quoted price of $2.00 for our common        stock as of June 30, 2008.

 

The        Company recorded stock-based compensation expense of $334,476 in the six months ended June        30, 2008 for options vesting in that period of which $172,267 was included in salaries and        benefits in the statement of operations and $162,209 was included in salaries and labour in        the schedule of mineral exploration expenditures.

 

 

22

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

 

| (d) | Share purchase warrants: |
|-----|--------------------------|

         

The        continuity of share purchase warrants is as follows:

 

|                             |
|-----------------------------|
||
||
|                             |
| May 23,                2008 |   |   | $ | 1.43 |   |   | 108,500 |   |   | — |   |   | (108,500 | ) |   | — |   |   | — |   |
|                             |
|                             |   |   |   |  |   |   | 108,500 |   |   | — |   |   | (108,500 | ) |   | — |   |   | — |   |
|                             |

 

| **7.** | **Related party transactions:** |
|--------|---------------------------------|

 

|   | (a) | During the six-months ended June 30, 2008 $45,000 (2007 -                    $45,000) was paid for office facilities and administrative services to a                    company with an officer in common. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Recovery of office costs from a company managed by common                    directors and officers $2,513 (2007 - $8,875). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------|

|   | (c) | During the six-months ended June 30, 2008 the Company issued a                    director 30,000 common shares pursuant to a mineral property agreement                    described in note 5(e). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Included        in accounts payable and accrued liabilities at June 30, 2008 is $41,788 (June 30, 2007        $631) payable to the companies referred to in this note and other directors and        officers.

 

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.** | **Contingency:** |
|--------|------------------|

         

In May        2006, the Company’s wholly-owned Nevada subsidiary MGC Resources Inc.        (“MGC”) purchased additional property (the “Seymork Parcel”)        from Seymork Investments Ltd. (“Seymork”) for US$200,000 to expand the        Spring Valley project in Nevada. The Seymork Parcel represents about 4% of the surface        area of the Spring Valley project. In 1998, the transfer of Emma        Wagner’s (“Wagner”) interest in the Seymork Parcel to Seymork, as        well as a transfer of the interest held by Wagner’s deceased husband’s estate        to Seymork, was formally approved by a Nevada court. As part of the consideration for the        court-approved transaction, Seymork executed two promissory notes, one in favor of Wagner        and one in favor of the estate of Wagner’s deceased husband. Two deeds of trust        relating to the Seymork Parcel were also executed and recorded to secure payment of the        promissory notes. Both notes were later assigned to a group represented by Wallace D.        Stephens (collectively ”Stephens”). The promissory notes were        not repaid and, in March 2006, 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 Property, and claiming that the conveyance to Seymork was not a sale but that        Seymork had agreed to hold the Seymork Parcel in trust for Wagner. MGC joined the lawsuit        in order to protect its interests in the Seymork Parcel. On June 11, 2008 a Nevada court        settled the long standing title dispute to this ground validating the Company’s claim        to the Seymork Parcel. The settlement allowed the Company to purchase the two promissory        notes secured against the property for approximately US$598,000. This amount has been        included in accounts payable and accrued liabilities at June 30, 2008 and was paid in early        July 2008 (note 5(b)).

 

| **9.** | **Subsequent events** |
|--------|-----------------------|

 

Subsequent to June 30, 2008, the Company:

 

 

23

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

| a) | On July 16, 2008, the Company’s board of directors granted                    215,000 stock options to certain US resident employees at an exercise price of                    $2.00 and a five-year term with normal vesting provisions. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

| b) | On July 21, 2008, the Company issued 275,000 shares pursuant to                    the exercise of stock options for proceeds of $357,500. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------|

         

| c) | On July 17, 2008, the Company and Golden Predator Mines Inc.                    (“Golden Predator”) jointly announced that the two companies have                    entered into a term sheet (the “Term Sheet”) describing the                    principal terms of a business combination between the two companies. Pursuant                    to the Term Sheet, Golden Predator shareholders would receive one common share                    of the Company for each common share of Golden Predator held by them.                    Outstanding options, warrants and convertible securities of Golden Predator                    would, subject to the final transaction terms, be converted into or exchanged                    for corresponding securities of the Company. Upon closing, the Company will                    change its name to “Golden Predator Mines Inc.” |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The Term Sheet contemplates, subject to regulatory approval and        requirements, a dividend being declared and paid to the Company’s shareholders        immediately prior to closing of the business combination. The dividend would consist of one        transferable warrant (the “Dividend Warrant”) for each outstanding share the        Company on the record date of the dividend. Each Dividend Warrant would entitle the holder        thereof on exercise to acquire an additional share of the Company at a price of $2.05 for a        period of 18 months from issuance.

         

Additionally, the Term Sheet contemplates that, prior to completion of the        business combination between the Company and Golden Predator, 80.1% of the shares of the        Company’s wholly-owned subsidiary that holds the Golden Eagle property interests        (“Spin-co.”) will be spun-off to the Company’s current shareholders. The        combined company from the business combination will hold the remaining 19.9% of the shares        of Spin-co.

         

The spin-off is subject to approval of the final terms by the board of        directors of each of Golden Predator and the Company, as well as regulatory, stock        exchange, shareholder and court approvals and compliance with applicable securities        laws.

 

The Term Sheet contemplates that the business combination would be completed        by way of a statutory plan of arrangement under the*Business        Corporations Act*(British Columbia). The final structure of the        business combination, however, will be based upon a review of the tax and securities        implications of the transaction. Upon completion of the transaction shareholders of Golden        Predator will hold approximately 53% of the issued and outstanding shares of the resulting        company, prior to the exercise of outstanding warrants and options.

 

Golden Predator will have the right to appoint four members to the board of        directors of the resulting company, and Midway will have the right to retain three        directors of one of whom will be William M. Sheriff, a current director of both Midway and        Golden Predator. In addition, the employees of both Midway and Golden Predator will be        offered continuing positions with the resulting company, subject to review. William M.        Sheriff will be the CEO and Chairman of the Board; Steve Vanry is expected to become the        company’s President following a successful completion of the previously announced        business combination of Golden Predator and Fury Explorations Ltd. Alan Branham will serve        as the President of the Company’s US subsidiary as well as a Vice President of Golden        Predator Mines (US). Christine Thomson will continue as the resulting company’s        Corporate Secretary and Larry Yau will be the resulting company’s CFO.

 

Pursuant the Term Sheet, Golden Predator has agreed to provide a loan        facility of $5 million to the Company, which the Company may draw upon in installments of        $1 million. The loan proceeds will be applied by the Company towards the development of its        Pan and Midway projects and other permitted uses. The loan will be for a term of 12 months        and will bear interest at prime plus 2%.

         

24

----

 

 

MIDWAY GOLD CORP.

(an exploration stage company)

| Notes to Consolidated Interim Financial Statements |
|----------------------------------------------------|

For the        three and six month periods ended June 30, 2008 and 2007

*(expressed in Canadian dollars) (Unaudited)*

 

The Term Sheet contemplates that the parties will agree to a break-fee of        $2.5 million, payable by either party in specified circumstances. In addition, the        directors and officers of each of Golden Predator and the Company will be asked to enter        into agreements to vote their shares in favour of the transaction at any meeting of        shareholders of either party held for that purpose.

 

Completion of the transaction will be subject to receipt of a favourable        fairness opinion, completion of due diligence investigations, the parties entering into a        definitive agreement, securities law compliance and obtaining all necessary court,        regulatory, stock exchange, board and shareholder approvals.

 

| d) | On August 1, 2008 the Company issued 600,000 common shares at                    US$2.50 per common share for proceeds of US$1,500,000 by way of a private                    placement to Kinross Gold USA Inc.; purchased a 75% interest in the Golden                    Eagle, Washington, project from Kinross Gold USA Inc. at a cost of US$1,500,000                    and purchased a 25% interest in the Golden Eagle project from Hecla Limited at                    a cost of US$483,333. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

An exploration agreement has been executed between the Company’s        wholly owned subsidiary, MGC Resources Inc. and Kinross Gold U.S.A. Inc. with an effective        date of August 1, 2008 on the Company’s Thunder Mountain project. To maintain its        option to joint venture Kinross must expend $500,000 before the 2nd anniversary,        $500,000 before the 3rd anniversary, $1,000,000 before the 4th        anniversary and a total of $3,000,000 before the 5th anniversary at which time        the parties can enter into a standard form joint venture agreement whereby Kinross will        hold a 75% interest and Midway a 25% interest.

         

Midway completed the acquisition of the Golden Eagle property through a        wholly-owned subsidiary created to hold the property (“Spin-co”).

 

Pursuant to the Term Sheet between the Company and Golden Predator it is        contemplated that prior to completion of the business combination between the Company and        Golden Predator Spin-co. will be spun-off by the distribution of 80.1% of the shares of        Spin-co to the Company’s current shareholders. The combined company from the business        combination will hold the remaining 19.9% of the shares of Spin-co.

         

The spin-off is subject to approval of the final terms by the board of        directors of each of Golden Predator and the Company, as well as regulatory, stock        exchange, shareholder and court approvals and compliance with applicable securities        laws.

         

 

 

 

 

25

----

 

**Item        2.    Management’s Discussion and Analysis of Financial Condition and        Results of Operations.**

 

*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 Quarterly Report filed on Form 10-Q. 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 report.*

 

This        discussion and analysis should be read in conjunction with the accompanying unaudited        interim consolidated financial statements and related notes. The discussion and analysis of        the financial condition and results of operations are based upon the unaudited interim        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 reasonable under the        circumstances. Actual results are likely to differ from 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, certain statements made in this report may constitute “forward-looking        statements”. These forward-looking statements involve known or unknown risks,        uncertainties and other factors that may cause the actual results, performance, or        achievements of Midway to be materially different from any future results, performance or        achievements expressed or implied by the forward-looking statements. Except for historical        information, the matters set forth herein, which are forward-looking statements, involve        certain risks and uncertainties that could cause actual results to differ. Potential risks        and uncertainties include, but are not limited to, unexpected changes in business and        economic conditions; significant increases or decreases in gold prices; changes in interest        and currency exchange rates; unanticipated grade changes; metallurgy, processing, access,        availability of materials, equipment, supplies and water; determination of reserves;        results of current and future exploration activities; results of pending and future        feasibility studies; joint venture relationships; political or economic instability, either        globally or in the countries in which we operate; local and community impacts and issues;        timing of receipt of government approvals; accidents and labor disputes; environmental        costs and risks; competitive factors, including competition for property acquisitions; and        availability of external financing at reasonable rates or at all. Forward- looking        statements can be identified by terminology such as “may,” “will,”        “should,” “expects,” “intends,” “plans,”        “anticipates,” “believes,” “estimates,”        “predicts,” “potential,” “continues” or the negative of        these terms or other comparable terminology. Although Midway believes that the expectations        reflected in the forward-looking statements are reasonable, it cannot guarantee future        results, levels of activity, performance or achievements.

 

**Overview**

 

**Company        Overview**

 

Midway is a        precious metals exploration company focused on the creation of value for shareholders by        exploring and developing quality precious metal resources in stable mining        areas.

 

Midway’s Canadian corporate office is in White Rock, B.C.

Midway        operates from an office in Helena, Montana. In addition, the Company has three field        offices in Lovelock, Tonopah, and Eureka, Nevada. These offices support the Spring Valley,        Midway and Pan Projects, respectively. These offices also support work on four other        exploration projects, located on three of the major Nevada gold trends.

 

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Midway        currently controls over 69 square miles (157 sq. km) of mineral rights on the Battle        Mountain-Eureka, Humboldt and Round Mountain Trends.

 

Midway        have three advanced exploration projects: the Spring Valley, the Pan and the Midway        projects, and five earlier stage exploration targets. These early stage exploration        projects include Gold Rock, Afgan, Burnt Canyon, Golden Eagle, and Thunder        Mountain.

 

The map        below shows the location of Midway’s properties located in Nevada, USA. Activities on        these properties in the second quarter ended June 30, 2008 and up to August 1, 2008, the        date of this Quarterly Report filed on Form 10Q are described in further detail        below.