In our valuation model, we assume Jerritt Canyon produces for 10 years, expanding to 200,000 ounces per year in 2012 at a cash operating cost of about $450 per ounce. Only minimal value is given to the company’s other exploration projects. Under these arguably conservative parameters, we arrive at a price target of about C$0.90 per share, or roughly 70% upside to the current share price.

Management seems to have the right credentials to get the job done, and if the 300,000-400,000 ounce per year target can be achieved internally, we’re probably looking at a $2.00 stock a few years down the road assuming a reasonable mine life and a cooperative gold price.

Second quarter results were a huge improvement over the first quarter. The question is whether or not this trajectory can be maintained. We would have loved to pick this up in the C$0.20-C$0.30 range a few months ago, but we weren’t paying close enough attention. Perhaps a less than stellar Q3 will give us another chance? [David Zurbuchen] [September 8, 2010]