Rye Patch Gold RPMGD

Estimating Rye Patch Gold Fair Market Valuation

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Estimating Rye Patch Gold Fair Market ValuationBy Dennis Boyko Fair Market Valuation Summary - 2011-Sep-13Projected fair market stock price for Rye Patch Gold Corp. at the close of trading on 2011-Sep-13 was C$1.40. The actual closing stock price was C
.445.At the close of trading, the current and projected Market Capitalization per ounce of Gold Equivalent for Rye Patch Gold Corp., were: current market valuation: US$15.83 per ounce of Au Eq. projected fair market valuation as a gold producer: US$161.56 per ounce of Au Eq. Rye Patch Gold Corp. in situ metal value is approximately 77.1% from gold and 22.9% from silver. Therefore, the expected fair market valuation for Rye Patch Gold Corp. should be on the Gold Producer Valuation Line.Rye Patch Gold Valuation ChangeProjected fair market stock price for Rye Patch Gold Corp. is derived using the projected fair market valuation at start of production of US$161.56 per ounce of Au Eq (as derived above) and the following assumptions: Capital Expenditure for mine development: US$300M -- a very rough estimate of the capital costs required to bring the Jessup and Wilco deposits into production. The CapEx value is very much a SWAG at this point. Higher CapEx expenditures could make feasibility questionable at these gold prices, while lower CapEx requirements would increase the fair market valuation. The CapEx figure to be refined once scoping studies or pre feasibility studies are available. Risk Premium: 25% applied to the capital expenditure, Discount Factor: 25% -- set to cover a multi year gap between now and a future start of production on the deposit and to also account for the fact that close to 50% of the contained metals are Inferred Resources. The discounting of the future gold metal prices after the start of production are already fully accounted for in the Gold Producer Valuation Line which is derived from current day market prices and company fundamentals.