What amazes me reading this board is that everyone brings their own expertise and background to add to everyone else’s knowledge base making us all the better for it.

I listened to PA’s presentation like others and whereas they focused on his comments about the other half of the deposit or the royalty agreement, etc., me being an old finance guy, I immediately grabbed an old envelope and looked at the numbers he was throwing out.

Now I have made a few assumptions here, so maybe you can bear with me:

1) The mine goes into production in 2011 – PA said 3-5 years with more 3 than 5 if have financing available.

2) They finance the mine with 50% debt and 50% from a new equity issue. CIBC said the mine would cost $750 M. This means $375M in debt and $375M in new equity, financed I am assuming by issuing 25 million new shares AFTER the price rises to $15 per share which I expect the price range to be after their agreement with the gov’t is signed.

3) The price of Gold – where will it be in 2011?? Yes, there are some forecasts at $1500 -$2000, and probably some at $400, but given that they can always hedge their production, today’s value of around $950 seems a reasonable starting point. You can use your own number here.

4) Based only on the 15 million ounces they have currently reported – as yes, Fearless I like you number of 50M+ better – PA said that they will mine approx. 10% of reserves per year, or about 1.5M ounces for the first 3 – 5 years.

5) PA said that their cash cost was $60 per ton operating cost, with 2/3rds of an ounce per tone, yielding an overall cost of approx. $100/oz. And yes, I heard him say that the cash cost would go up after the first 5 years, but …..

So what does that all mean, sell gold at $950/oz. less $100 cost = $850 gross margin.

Times 1.5 Million ounces mined per year = $1,275 million gross profit.

Less: Financing costs of $25 million (on the $375 borrowed to build the mine)

Less: Other costs (exploration and admin.) of $50 million - this is double their current burn rate and assumes they keep exploring the other 30+ targets.

Overall Profit of $1.2 BILLION PER YEAR.

With 175 million shares outstanding (150 million currently plus 25 for the new share offering), this generates a per share profit of $6.86 per year.

Okay, everyone with me so far. Now here comes the tricky and fun part, what will the market assign as the P/E to ARU? Some current P/E’s for reference - ABX = 37; AEM = 59; G = 60 and NMC = 112. Now I don’t think we’ll see this kind of P/E, but would a 10, 15 or 20 seem out of line. Don’t think so.

Now remember these are 2011-2012 earnings, so they have to be discounted back to 2008. So even if you discount them back at 10% per year for 4 years, you get a present value of ARU of $41 - $62. Take that Genuity – why are you not valuing ARU on a cashflow basis and instead on its potential takeover value.

It just makes me wonder if we are not all missing the BIG picture here. Also remember the assumptions of ONLY 15 million ounces of gold and a gold price of only $950. The numbers get really wacky if you make some bolder assumptions.

Just thought I’d throw some thing else into the mix to mull over.