Fellas, grab a drink, turn on some music, get comfortable… this is going to take some time. I think it’ll be worth it though, especially all those who keep wanting to know how Tyhee compares to other gold miners’ valuations. I have scoured the internet and spent hours compiling this data, for myself mostly, so I don't get my expectations too high.

I have chosen-- somewhat randomly-- these companies that have released either a Pre-Feasibility or full Feasibility Study at some point in the last several years. They are all new or potential gold producers, in the small to mid-size categories (under 200K/year production). Some of them have moved toward production, others have not. I think this should give us a better idea of what to expect with the pending release of our Pre-Feasibility Study.

I think the best way to measure the valuations is in a way similar to Doody’s metrics, namely: Market cap ($/oz) Proven & Probable, market cap ($/oz) Total (Proven & Probable & Measured & Indicated), and Market cap ($/oz) Production. All numbers are rounded. I am ignoring exploration property potential for all companies. I am ignoring grades of the ore, because for the most part that data is included in the calculations that arrive at production cash costs. I am ignoring debt. Data is mostly from the end of last week, so some of the share price data may have changed slightly.

I am going to make the following assumptions very conservative. These are unknowns but I would rather be conservative so we have a baseline level of expectations:

-Only including Nicholas, Ormsby, and Bruce Zones (1.6 million oz M&I)

-50% of the M&I ounces reclassified as Proven or Probable in the PFS = 800K ounces.

-Cash costs slightly higher than the PEA estimate at $400/oz.

-Production of 80K ounces in 2013-2014, moving toward 100K. Production can only be calculated based on P&P numbers, and the zones mentioned above would provide 80-100K for 8-10 years, similar to the mine life estimate from the PEA.

-Ignoring all inferred ounces.

Using the above assumptions, Tyhee’s valuations come out as follows:

Market cap: $50M

Market cap per oz P&P: $63

Market cap per oz Total Resource: $31

Market cap per oz Production: $625

With these figures established as our baselines, we can look at the following companies. I have included the same metrics for all companies, as well as what stage the company is at currently, and roughly the timeline for how they got there. I have also included the multiple to which the company’s ounces are valued compared to Tyhee (using the above baselines), so we can have a quick estimate with which to multiply our current share price to match the valuation.

Keep in mind that this would not include dilution, so one must account for that as we progress. If we could get from here to production with 1/3 further dilution (say another 100 million shares estimate), then we would need to cut the multiplier by a similar factor.

Without further ado...

Victoria Gold

PFS March 2010.Production scheduled for 2013 – 2014.

Market Cap: $215M

P&P oz: 1.75M

Total oz: 3.7M

Production Target: 175K

Costs: $500/oz

MCap/oz P&P: $121 (1.9X Tyhee)

MCap/oz Tot: $57 (1.8X Tyhee)

Mcap/oz Production: $1217 (1.9X Tyhee)

Notes: High cash costs seem to keep valuation down compared to others with similar resource profiles.

Century Mining

FS Jan 2008.Ramping up to production now.

Market Cap: $320M

P&P oz: 1.1M

Total oz: 2.4M

Production Target: 100K

Costs: $500/oz

MCap/oz P&P: $283 (4.5X Tyhee)

MCap/oz Tot: $117 (3.8X Tyhee)

Mcap/oz Production: $3230 (5.2X Tyhee)

Notes: Again, high cash costs.Ramping up to production currently means they have roughly average values for P&P reserves compared to industry averages.

Oromin

PFS Sept 2009 - essentially showed mine not economic.Redoing with full FS due July 2010.

Market Cap: $90 M

P&P oz: 0.5M estimate

Total oz: 2.2M

Production Target: 50K estimate

Costs: $580/oz

MCap/oz P&P: $180 (2.9X Tyhee)

MCap/oz Tot: $40 (1.3X Tyhee)

Mcap/oz Production: $1800 (2.8X Tyhee)

Notes: P&P are my estimates, as none were determined in PFS. Full FS should be interesting. Very high cash costs in PFS.Similar resource profile to Tyhee. Even with all the negatives, still higher valuation than Tyhee due to PFS. A great example to see what happens when the market determines the economics of a mine are not feasible.

Romarco

Released FS Feb 2009.Production 3+ years away.

Market Cap: $937M

P&P oz: 1.3M

Total oz: 3.4M

Production Target: 130K

Costs: $266/oz

MCap/oz P&P: $720 (11.4X Tyhee)

MCap/oz Tot: $270 (8.7X Tyhee)

Mcap/oz Production: $7200 (11.5X Tyhee)

Notes: This one has been discussed to death. Market for their only 1.3M P&P seems frothy to me, to say the least. Yet, this is what is possible for valuations, even 3 years + out to production. From what I hear, having a good looking spokeswoman doesn’t hurt.

Timmins Gold

Released PFS March 2008. No full FS. Production started December 2009.

Market Cap: $204M

P&P oz: 0.6M

Total oz: 0.9M

Production Target: 100K

Costs: $412/oz

MCap/oz P&P: $334 (5.3X Tyhee)

MCap/oz Tot: $226 (7.3X Tyhee)

Mcap/oz Production: $2040 (3.3X Tyhee)

Notes: Perhaps similar production and cash costs as Tyhee. Production level valuations for those ounces.

Apollo Gold

August 2007 PFS. April 2008 FS. June 2009 production.

Market Cap: $127M

P&P oz: 1.6M

Total oz: 2.8M

Production Target: 100K

Costs: $550/oz

MCap/oz P&P: $79 (1.3X Tyhee)

MCap/oz Tot: $45 (1.5X Tyhee)

Mcap/oz Production: $1270 (2.0X Tyhee)

Notes: One of the lowest valuations on P&P I have seen, probably due to very high cash costs. Even though in production now, has closer to development-level valuations.

Minefinders

April 2006 FS.May 2009 production.

Market Cap: $824M

P&P oz: 4.55M

Total oz: 6.9M

Production Target: 195K

Costs: $323/oz

MCap/oz P&P: $181 (2.9X Tyhee)

MCap/oz Tot: $118 (3.8X Tyhee)

Mcap/oz Production: $4270 (6.8X Tyhee)

Lake Shore Gold

August 2007 PFS. Straight to production March 2009

Market Cap: $1.1B

P&P oz: 0.8M

Total oz: 1.7M

Production Target: 125K

Costs: $322/oz

MCap/oz P&P: $1,332 (21X Tyhee)

MCap/oz Tot: $650 (20X Tyhee)

Mcap/oz Production: $8,850 (14X Tyhee)

Notes: Perhaps the most highly valued P&P reserves I have seen. Very similar profile to Tyhee. Their grade used in PFS was very high (near 7g/t) but this should be incorporated into cash costs. Super-high valuation may be due to high grades, ample upside exploration potential, or success in going straight from PFS to production in less than 2 years.

Discussion

In my analysis, we can see here that even the lowest valuations for companies with PFS (Victoria and Oromin) is near 2X that of Tyhee’s current valuation using a P&P reserve of 0.8M ounces. Both of these companies have cash costs at $500 or higher. In Oromin’s case, their PFS was essentially a failure.

In the middle range, we can see companies that are progressing toward production or are newly in production, such as Century, Timmins, and Minefinders. Most of these small and mid-sized emerging producers have a valuation roughly 3 – 7X Tyhee.

At the high end are companies who have similar profiles to Tyhee but who have ounces that seem to have taken on lives of their own. Romarco and Lake Shore Gold have resources valued between 8 – 21X Tyhee’s. Lake Shore has a very similar profile to Tyhee, yet is in production, and has their 0.8M P&P valued at 21X higher.

Final Analysis

Even the companies with poor/failed economics and a PFS have a valuation 2X that of Tyhee. Thus, I expect at least a double from here in the period of time after Tyhee’s PFS release. That would bring us in the range of 40 cents, also nearing the LOM report target.

If we have somewhat better economics than these lowly examples, I expect a higher multiple. Perhaps with cash costs in the $400 range there may be a 2-3X multiple of the current valuation for 800K of P&P. That would see us approach 60 cents this year.

A valuation similar to Romarco would see a share price in the $1.50 - $2.00 range. Is like that possible? Yes, but I am not planning on it. Romarco has a full FS. Companies who are valued as high as Romarco with only a PFS seem to achieve that level only when they succeed in reaching production. So, those are ranges we can begin to fathom over the next 2-3 years.

Of course, keep in mind that it is gold in the ground we all own. If gold does head toward $1,500 or $2,000 in that timeframe, and we prove up more ounces during that time, and the gold market gets frothy or even enters the much-talked-about “mania phase”, much higher valuations than even Lake Shore Gold are certainly possible.

In sum, I see no point to sell right now. Perhaps some with short time horizons (why are you even here then?) might lighten up in the 40 cent range later this year. Yet, the risk-to-reward ratio here for the next 6-12 months is the best I can find. We may not rocket launch this year, but the future seems extremely bright as we progress toward those valuations that we can all see are realistic here based on real-world examples.

I am open to all discussions.

Hysteria