Nature and continuance of operations

6 Months Ended

Jun. 30, 2012

Nature and continuance of operations

Midway Gold Corp. (the “Company” or “Midway”) 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 consolidated financial statements for the three and six months ended June 30, 2012 were prepared on the basis that the Company is a going concern, which contemplates the realization of its assets and the settlement of its liabilities in the normal course of operations. These financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate.

The Company has not generated any revenues from operations. The Company has incurred losses for the three and six months ended June 30, 2012 of $4,227,245 and $7,299,639, respectively, and since inception of May 14, 1996 to June 30, 2012 resulting in an accumulated deficit of $84,921,393; further losses are anticipated in the development of its business. At June 30, 2012, the Company had $3,672,050 in cash and cash equivalents. As discussed in Subsequent event note 16, subsequent to June 30, 2012 the Company filed a preliminary prospectus supplement to its short form base shelf prospectus filed with the securities commissions in each of the provinces of British Columbia, Alberta and Ontario, and a corresponding shelf prospectus as part of an effective registration statement on Form S-3 filed with the U.S. Securities and Exchange Commission, pursuant to which it offered 12,261,562 units at US$1.28 per unit for gross proceeds of US$15,694,799. As of the date of this report, management believes the Company has sufficient funds for ordinary operations through the next twelve months.

The Company’s ability to continue as a going concern is dependent upon its ability to successfully raise additional financing for the substantial capital expenditures required to achieve planned principal operations. While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company.