**The following extract was taken from a blog article written on July 1st, 2020. Take this as you wish. Non of what I'm posting below is my opinion, but I am only relaying someone else's views for the stocks education via this forum.
"Given that we have more than half of the Bellevue Gold team with a US$500 million market cap and incredible share price performance as a direct result of their successful delineation of the Bellevue Gold Project, this bodes well for Auteco's drilling success. However, while I have high hopes for the project, the stock looks like it's already pricing in a discovery before it's happened here, with the valuation climbing to US$155 million this week. This is not ideal for a smaller explorer with a sub-1-million ounce resource, and I would argue that valuation would become a headwind at A$0.18. Let's take a closer look below:Based on Auteco's 1.3 billion shares outstanding and a share price of A$0.17, the company is currently valued at A$221 million [US$155 million], a hefty price to pay for an early exploration stage company that's just begun drilling. While Auteco has a robust resource of 823,000 ounces, it's important to note that they've only earned 51% of the project to date, with just 423,000 ounces attributed to them. This means that the company is currently valued at US$366.43/oz, a figure that is well above the US$125.00/oz paid for Tier-1 explorers with high-grade resources and prior infrastructure, and well above the US$150.00/oz paid for gold producers in Tier-1 jurisdictions.
To put this in perspective, Bellevue Gold's enterprise value per ounce is US$200.00/oz with a 2-million ounce resource that's higher-grade and much closer to the development stage. Therefore, the current valuation is getting a little frothy above A$0.17. Even if we give Auteco the benefit of the doubt and assume 80% ownership of the project, which is the maximum under the earn-in agreement, this still values Auteco at US$233.43/oz double where high-grade explorers are currently valued. This valuation headwind is not to point out that the stock will drop 50%, or that the stock can't go higher, it's merely to point out that investors paying up above A$0.175 are buying very expensive ounces. Therefore, while there's a lot to like about Auteco Minerals, it's hard to be bullish at the current valuation."
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