I am reworking my valuation model based on more reasonable valuations I have uncovered with some extra research. My thanks to "Barn" for questioning my assumptions.

I will break out the types of resources we have for my analysis based on the 43-101 from earlier this year. So the 4.4 million amount I used previously will now be:

Indicated 1.22 million ounces with silver 4.82 million ounces

Inferred 2.45 million ounces with silver 11.58 million ounces

I added in the silver content at a 50 to 1 ratio. This reflects the current ratio based on current prices.

Lets pick three deposit levels that have been thrown out as the ultimate size of our resource. ( we are adding the resource categories Indicated and inferred to the past number of ounces used in my valuation model and dropping the 4.4 million ounces previously reported at 3.99 (rounded to 4) million ounces reported in the 43-101.

WAS 4.4 million

NOW

1.31 indicated (.3283 of the 3.99 million ounces in 43-101)

2.68 inferred (.6716 of the 3.99 million ounces in 43-101)

WAS 7 million

NOW

2.2981 (.3283 of 7 million ounces once reported in a 43-101)

4.7012 (.6716 of 7 million ounces once reported in a 43-101)

WAS 10 million

NOW

3.283 (.3283 of 7 million ounces once reported in a 43-101)

6.716 (.6716 of 7 million ounces once reported in a 43-101)

Fully diluted number of shares 136.2 million.


As an exploration company

The numbers per ounce that my research found- indicated 40.00 inferred 20.00

Average valuation per ounce in the ground is assumed to be $30.00 per ounce.


4 million ounces

1.31 indicated X 40.00 + 2.68 inferred X 20.00 = 106 million/136.2(# of shares) =0.78

Using average value of 30.00 per ounce 4 million X 30.00 = 120 / 136.2 = 0.88

My price target would be between 0.78 and 0.88

7 million ounces

2.2981 indicated X 40 + 4.7012 inferred X 20 = 185.94 million /136.2 = 1.37

Using average value of 30.00 per ounce 7 million X 30.00 = 210 / 136.2 = 1.54

My price target would be between 1.37 and 1.54.

10 million ounces

3.283 indicated X 40 + 6.716 inferred X 20 = 265.64 / 136.2 = 1.95

Using average value of 30.00 per ounce 10 million X 30.00 = 300 / 136.2 = 2.20

My price target would be between 1.95 and 2.20.

As a development company with a 43-101 ( 1/3 resource, 1/3 indicated, 1/3 inferred) & a pre-feasibility study (PEA)-due the first quarter od 2013.

The valuation of the gold in the ground goes up dramatically by proving the resource is economic by having the PEA.

Gold is valued at 150 - 170 once that is done. I also assume the value of inferred and indicated will increase. So I will use:

resource - 160

indicated - 60

inferred - 40

Average valuation per ounce in the ground is assumed to be about $86.00 per ounce.

4 million ounces (1/3 resource, 1/3 indicated, 1/3 inferred)

1.33 X 160 + 1.33 X 60 + 1.33 X 40 = 345.8 / 136.2 = 2.54 per share

7 million ounces (1/3 resource, 1/3 indicated, 1/3 inferred)

2.31 X 160 + 2.31 X 60 + 2.31 X 40 = 600.6 / 136.2 = 4.41 per share

10 million ounces (1/3 resource, 1/3 indicated, 1/3 inferred)

3.33 X 160 + 3.33 X 60 + 3.33 X 40 = 865.8 / 136.2 = 6.36 per share

As a near term producer with a bankable feasibility study & 43-101 (1/2 resource 1/4 inferred 1/4 potential)
(This may be two years away)

The valuation of the resources for companies in this position are about:

resource 200

indicated 80

inferred 60

Average valuation per ounce in the ground is assumed to be about $135.00 per ounce.


We need to raise cash for drilling and operations and to build a mill.

So lets say we need $200 million and we raise it at 3.76 per share.

200,000,000 / 3.76 = 53191489 new shares( 53,200,000 rounding up)

136,200,000 + 53,200.000 = 189,400,000 shares

4 million ounces (1/2 resource, 1/4 indicated, 1/4 inferred)

2.00 X 200 + 1.00 X 70 + 1.00 X 60 = 530 million / 189.4 = 2.80

7 million ounces (1/2 resource, 1/4 indicated, 1/4 inferred)

3.5 X 200 + 1.75 X 80 + 1.75 X 60 = 945 / 189.4 = 4.99 per share

10 million ounces (1/2 resource, 1/4 indicated, 1/4 inferred)

5.0 X 200 + 2.5 X 80 + 2.5 X 60 = 1350/ 189.4 = 7.12 per share