Ann: Significant regional discovery with hit of 5.5m @ 18g/t gold, page-38

I've been buying AUT lately. For me, it's been a simple matter of understanding the value of the resource.

The resource today stands at 2.23Moz at 7.8gpt - which is a tremendous, high grade resource by anyone's standards. There's still a lot of work to do and a lot of variables but the higher grade will generally result in fewer tonnes being mined to extract the gold. That means the grade contributes strongly to costs and profitability. This is obvious I know but what it also does is make each ounce more valuable to investors and possible suitors as each ounce is arguably more economical than lower grade resources (generally speaking).

If a miner was looking to acquire a project, would they want higher grade or lower grades resources? Would they want a resource that's expensive to extract or cheaper to extract?

Based on the cash of $17M at end June, the value of each ounce (based on EV / resource ounces) is AU$29/oz or US$18. Thanks insanely cheap relative to other comparable high-grade resource.

Gold is working against us and in all likelihood, AUT will need to raise again in the new year. I believe they'll raise after releasing the resource update in Jan. This is important as some may argue that this will hold the SP back but I don't think it will. Depending on the raise dimensions and the increase in resource size, it's more likely than not that the EV/oz valuations will DECREASE. That means that if they add ounces and see a lift in SP and then raise, the result will be a superior valuation relative to today.

In the future, I look forward to commanding a valuation similar to that of BGL. They are significantly ahead in their journey but the resource of ~3.1Moz @ 9.5gpt is comparable. They're currently commanding AU$203 per resource ounce (US$128). They have higher grades and have declared a reserve of 1.3Moz @ 6gpt but I fully expect AUT to follow this path.

If AUT succeed in growing the resource and moving closer to production like BGL have, that would round us up to over $400M MC. That's a huge upside.

The USD wrecking ball and gold sentiment is working against us for now but the tides will turn and developers like AUT can offer good exposure to that change in sentiment and prices.

IMO it's an easy buy at these levels.