quick thoughts on the quarterly, page-3

My key question for PRU at present is where the equity debt construction finance mix will end up. Below are my thoughts and counter arguments/criticism is very welcome - most particularly with reasons why debt may make up more (or less) than what I've tentatively come up with. I've used this to hint where I think the SP will be in 2 years time:

Conservatively, $175m all up (allowing for some USD movement) should be sufficient for 2011 Ayanfuri construction . I'd expect at least the 30m of this consisting of long lead items will be met via the $58m TSX listing cash. Based on the companies high quarterly cash burn (above 20m per quarter at present) I've allowed the rest of current cash reserves (88m odd) to fund drilling (around 6m a quarter - hopefully continuing right through the next 6 quarters) and some miscellaneous development/Tengrela costs throughout 2010.

The question then remains how will they fund the balance - perhaps as low as $100m up to $145m. Given the prominent role of Noahs Rule - and its encouraging that the company spend 10m on put options to assuage potential debt financiers - I'm leaning toward at least 50% of the balance being debt funded. So I'd expect PRU would not need to raise more than $70m equity, perhaps none? I'd also expect this wouldn't be required until Q2-Q3 2010 at the earliest and, with more reserve upgrades in the meantime, would expect the raising would be at no less than $2. So lets say a max of 35m shares to add to the 39m in the TSX listed and the current diluted figure of 315m.

So what would you pay in 2011 for a company with 390m shares all up and 75m debt (or less) with a gold mine producing 220k oz expected to ramp up to 300k within 3 years, and perhaps 500k and/or a second mine after that? Well, with an average C1 under 500/oz and initial potential earnings around 100m at current gold prices, I'd reckon EPS of 25c per share with large ramp up/reserve upside potential could easily see a PE well north of 20. The nice round $5 target I came up with earlier makes another appearance! This is what I see buyers paying - minimum - in 2 years time if everything goes to plan.