Rookie,

I'm not going to do the math here, but the approach that Trey Wasser outlines in this article from 2007 makes sense to me. I'm in SGR because I trust those involved, and because they are a growth story in a sector that will benefit from the macro economic environment. I'm also not a miner, or have any history in the business - 90% of everything I've learned about mining is from the likes of Lunch Meat, Hotmuck, Elementwise, retiredminer, etc. On to Trey:

On my list, I focus only on companies with existing production for 2007 or companies with “fully funded, fully permitted mines” that are on schedule for 2007 production. Then, I put together a very simple model to compare valuations. I calculate enterprise value using fully diluted shares outstanding, plus debt. I subtract “in the money” warrant/option value and cash/liquid investments. I use the company’s projections for 2007 production and NI 43-101 reserves. I only use the reserves from producing (or soon to be producing) mines. I use measured and indicated plus 50% of inferred resources. From this, I calculate the dollar value for an ounce of annual production and an ounce of mineral reserves.

This spreadsheet acts as my first screen. I then look at the individual companies and consider some other important criteria. Production history and cost is a prime consideration. I also evaluate political risk, hedging, by-product credits and management’s development track record. All things being equal, I then consider the “blue sky” of a company’s project pipeline, stock ownership or joint venture partners. I use $3000 per ounce of annual production and $200 per ounce of reserves as fair value ($3000/$200). I try to buy companies below these levels.

http://seekingalpha.com/article/24948-gold-stock-earnings-to-shine-in-2007