What are the factors that lead to a high $/oz. acquisition price for a jr. gold co. in 2009? I found one article and chart on 2009 gold prop. acquisitions.

1. The most important factor appears to be how well drilled and proven the prop. is. As the proven (drilled) part of the Au-Ag in the prop. goes down, so does the $ amount paid by buyers.

2. The higher the percentage of reserves proven to resources proven, the higher the $ amount paid by the buyer. Even more widely spaced drilling that proves up resources makes the overall prop. base more valuable to the buyer, but drilled proven reserves are where the money is made.

3. In the last yr., the average $ pd./oz. Au in prop. acquisitions is $ 101./oz for reserves, and $34./oz. for resources.

4. Many of the acquisitions have existing infrastructure (previous mines).

5. The 2009 acquisitions have a reserve average/ prop. of 1.1 mil oz. Au, and a resource average of 2.9 mil oz. Au.

6. Average annual prod. of Au for purchased prop's. is 121,000 oz./y at a cop of $448./oz. Au.

7. Generally, the lower the c.o.p. of the purchased prop., the more the buyer will value the prop. in $/oz.Au.

8 There should be no prod. of Au problems that limit cash flow from the prop., no debt probs., no hedging, no permitting probs., prop must show adequate cash on hand from running the prop., and the prop. should be in a secure country.

If you are interested in the chart details of 2009 gold prop. acquisitions , go to The Global Speculator of 24 July 2009.

http://www.globalspeculator.com.au/documents/GoldSectorMergerandAcquisitionActivity.pdf

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I think there are conclusions to be drawn about SFMI and it's takeover offers coming in 2010-11.

1. If we take any offers seriously before large scale drilling proves the reserves and resources, our $/oz. sale price will be much smaller than if we wait for the drilling. I don't see SFMI getting seriously high offers until late 2010(?) in the $3-5./s buyout range. I would not consider offers below $3./s.

2. Drilling which shows very high AU-Ag oz./t areas will excite retail buyers and up our price.

3. SFMI is positive on the following: we have existing mine infrastructure, a small mill, low cost prod of Au of $250./oz. (?), no debt probs., no hedging, no permitting probs., and prop. is in a secure country. Other factors that I think will be OK in a few months are prod. of AU and Ag, cash flow positive, cash on hand, and general running of the mines.

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If the average price /oz. of Au prop. acquired is $100., then several computations give a general range of where we may be going if we got offers based on $100./oz Au:

1. If SFMI proves by drilling next yr. r + r of 3 mil. Au equiv. oz. = $300. mil. price we sold for. $300 mil div. by 150 mil. shares = $2./share.

2. If SFMI proves by drilling next yr. r+ r of 5 mil. Au equiv. oz. = $500. mil. price we sold for. $500. mil. div by 150 mil . shares = $3.33/ share.

3. If SFMI proves by drilling next yr. r + r 8 mil Au equiv. oz. = $800. mil. price we sold for. $800. mil. div by 150 mil. shares = $5.33/ share.