With gold at $1200/oz, I thought I'd throw some more numbers into my spreadsheet cash flow model.

A discounted cash flow model is a simple idea: add up all the money the asset is going to make over its lifetime, subtract all the costs, and discount it to the present using a discount (~interest) rate that reflects the risk in the investment. That's why I provide various discount rates - your risk tolerance may be different than the next guy's.

I get the max production figure from San Gold's press releases.

Assumptions (and there are some BIG ones in there):

Production: 2009 - 47,000 oz, 2010 - 125,000 oz, 2011 - 210,000 oz, 2012+ - 250,000 oz, 35 year mine life (6M+ total oz mined).

$150/t mining cost, 0.43 oz/t average grade (=~US$350/oz prod cost). $1.50/oz smelter rate.

$GOLD: US$1,200, $CD/$US: 0.95

279,785,505 shares out, fully diluted

NPV/Share CD$:

$3.60 15% DR

$5.56 10% DR

$7.59 7% DR

$9.57 5% DR

I'd say the market has us at around a ~15% Discount Rate at the moment, which is fair enough considering we haven't turned a profit for a quarter yet.

Again, looking at what SGR should be worth in 2012 from a simple net earnings multpile point of view (like you might hear the talking heads on CNN wank on about), assuming they reach the planned 250,000 oz/y production by then, and $GOLD stays at ~US$1,200/oz.

250,000 oz/y at a cost of US$350/oz should net CD$279,785,505/year (with a CD$ worth US $0.95). Using traditional earnings multples you get:

10:1 - CD$7.99/share

15:1 - CD$11.99/share