Hi Siva I can read that you are trying to explain the hype or...

Hi Siva I can read that you are trying to explain the hype or blue sky factor as the reason for the extremely high valuation. There is no denying the FOMO and HYPE factor that hits stocks from time to time. I'm not talking about that factor per se as my point is related to comparative analysis for trying to value a gold explorer/developer. There are many ways to value a gold mining stock with reasonable confidence, less so gold explorers and developers, with no one way being a silver bullet.

The analyst reports at the opening posts have used the DCF method. That requires many assumptions as there are plenty of missing facts until a company starts mining and processing. The DCF method, aka NPV, needs economic studies conducted before one can be relatively confident to rely on any valuation using the DCF method. The more deep and extensive the study, eg DFS v PFS, the more relatively confident one can be about the valuation.

My earlier post suggesting that this stock is over valued is based on the Global Resource in situ value method known as the Enterprise Value/Resource Oz ratio. This factor is called the EVO. The current average EVO for Explorers/Developers in Australia is circa $30 and for those companies with projects in W.A. it is slightly higher reflecting the lower risk jurisdiction. BGL has a present EVO at circa $318. If we are generous and say the average EVO for projects in W.A is $50 then BGL is more than 6 times over the value of the average for a W.A. explorer/developer and 10 times over the value of the average Australian explorer/developer.

For instance, if you use the Australian average EVO for BGL to do the Global Resource in situ value method then the fair value for a stock with 2.2m oz is $110m. I'm not even talking about the disgusting prevalence for companies to over estimate, or misrepresent, or fudge, or spin, or just plain lie about their resource estimates either (recent examples being ESG, GCY and DCN). That is a whole different story for another day.

Here are a copy of links that might help to understand how gold mining companies can be valued:

https://corporatefinanceinstitute.com/resources/knowledge/valuation/mining-asset-valuation-techniques/

https://www.edisongroup.com/wp-content/uploads/2019/02/GoldStarsandBlackHoles_220119.pdf

http://cdn-au.mailsnd.com/27632/IeP8CFZDuQ4VIXjArGThPPT6-OU7GP6JEZTLkovX4VQ/2223301.pdf

Regardless, good luck with your investments Siva and hopefully this post provides food for thought and you really have found the toot toot back up the truck let's line wipe the manipulators stock and so on. That is all and DYOR IMHO etc etc blah blah blah.

Cheers