Guyana Goldfields Inc. (GUY-T) C$6.65
SPEC. BUY (Unchanged);Target: C$8.50 ↓ (Prior: C$9.00)
Resuming Coverage Following Close of Equity Offering

Guyana Goldfields Inc.
(GUY-T) C$6.655
Resuming Coverage Following Close of Equity Offering

Event
We are resuming coverage of Guyana Goldfields following the completion of
an offering of common shares. The company sold 10 million common shares
at a price of $6.95/share for gross proceeds of $69,500,000.
The funds raised are expected to be used to further the definitive feasibility
study of the company’s Aurora property, continue exploration of the Aurora
and Aranka properties and for general corporate purposes.
We also take this opportunity to incorporate recent changes to our TD
Newcrest metal price and foreign exchange rate forecasts in our valuation.

Impact – SLIGHTLY NEGATIVE
The financing represents a slight positive to our valuation but is more than
offset by the impact of modeling a higher long-term US$/C$ exchange rate
($0.90 vs. $0.85). As a result, our total corporate NAV5% declines slightly to
$8.54/share (from $8.92). Our 12-month target price falls to $8.50/share (from
$9.00), based on a 1.0x target multiple. We maintain our Speculative BUY
recommendation.

Details
• Guyana announced the closing of a share offering that saw the company
issue 10 million common shares at a price of $6.95/share for gross
proceeds of $69,500,000. The company has also granted the underwriters
an option to purchase up to an additional 1.5 million shares within 30
days following closing to cover over-allotments.
• Post-financing, we estimate that Guyana will need to raise an additional
$380 million to fund project construction and development. We model
the company raising an additional $155 million in equity at an issuance
price of $6.50/share, along with $225 million in debt to fund total initial
capital expenditures of US$424 million.

Outlook
We believe that drilling at the company’s prospective Aranka property could result in the discovery of a
significant gold occurrence. With initial drill results from the property forthcoming, we expect this may serve
as a significant near-term catalyst for the stock.
We anticipate the following developments over our 12-month target price horizon:
• Drill results from the Aurora project – Ongoing
• Initial drill results from the Aranka Project, Property ‘C’ – January/February
• Environmental and Social Impact Assessment (Aurora) – Q1/10
• Full Mining Permits to be received – Q1/10
• Hydropower Feasibility Study (Aurora) – Q2/10 (previously Q1/10)
• Definitive Feasibility Study (Aurora) – Q3/10 (previously Q2/10)

Valuation
We calculate that Guyana Goldfields is currently trading at 0.78x our corporate NAV5%. This represents a
slight discount to the small capitalization companies in our gold coverage universe, which trade at an average
of 0.99x NAV5%. We note that this group includes a number of producers and developers with high-grade
projects, which tend to command premium valuations.

Justification of Target Price
We generate our target price by applying a 1.0x multiple to our fully financed corporate NAV5%, calculated
using a gold price of US$900/ounce and an exchange rate of US$0.90 to the Canadian dollar. Our valuation
includes a $150 million exploration credit for the Aranka project, based on the application of $150/oz to a
hypothetical discovery of 1,000,000 ounces.

Key Risks to Target Price
Gold, and fuel price risk; forecast risk relating to deposit size; foreign exchange rate risk; financial and market
risk; technical risk; capital and operating cost risk; timing risk; political risk, including risks related to
indigenous peoples; permitting risk; environmental risk; and staffing and key personnel retention risk.

Investment Conclusion
We are resuming coverage of Guyana Goldfields following the completion of an offering of common shares.
The financing represents a slight positive to our valuation but is more than offset by the impact of modeling a
higher long-term US$/C$ exchange rate. Our 12-month target price falls to $8.50/share, based on a 1.0x target
multiple. We maintain our Speculative BUY recommendation.