Estimating Arian Silver Fair Market Valuation

By Dennis Boyko
Created on: February 10, 2010
Current version: 0.2 April 8, 2010 -- added a chart symbol key.
Metrics have been updated with closing prices available on 2010-Apr-09.

Fair Market Valuation Summary - 2010-Apr-09

Projected fair market stock price for Arian Silver Corporation is C$0.37. The actual closing stock price was C$0.15.

Based on the close of trading on 2010-Apr-09, the current and projected Market Capitalization per ounce of Silver Equivalent for Arian Silver Corporation, considering only the value of its San José deposit, were:

• current market valuation: US$0.91 per ounce of Ag Eq.

• projected valuation as junior silver producer: US$2.42 per ounce of Ag Eq. based on the Junior Silver Producer Valuation line evaluated at an average ore value of US$87.92 per tonne.

The expected change in valuation, as of February 9, 2010 is shown in the chart below. The projected fair market stock price for Arian Silver Corporation is derived using the estimated valuation at start of production of US$2.42 per ounce of Ag Eq (as derived above) and the following adjustments:

• Capital Expenditure to reach production: US$1M -- see discussion below,

• Risk Premium: 20% -- applied to the estimated capital expenditure,

• Discount Factor: 5% -- discount between present and start of production (less than 1 year is assumed).

  The discounting of the future silver and base metal prices after the start of production are already fully accounted for in the Junior Silver Producer Valuation Line.