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Argentum Silver Stock (TSXV:ASL) – Investment Analysis

Common Stock: Argentum Silver (TSXV:ASL)

Current Market Price: $ 0.21 CAD

Market Capitalization: $ 10.6 million CAD

**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.

Argentum Silver (TSXV:ASL) - Stock Chart
Argentum Silver (TSXV:ASL) – Stock Chart

Argentum Silver Stock – Summary of the Company

Argentum Silver is a precious metals exploration company focused on the acquisition, exploration, and development of silver properties. They own two material properties; one in Peru and the other in British Columbia, which they are actively exploring. Argentum Silver was founded in 2007 and is headquartered in Toronto, Canada.

Revenue and Cost Analysis

Argentum Silver does not have any properties that are currently producing and therefore does not have any revenue. The company consistently runs a net loss and is likely to continue to do so for the foreseeable future.

For the fiscal year end June 2020 Argentum Silver had a net loss of $ 1.7 million, an increase compared to $ 829 thousand the previous year. The company’s largest expenses were exploration related, which totaled $ 1.5 million and $ 461 thousand in 2020 and 2019 respectively. Management compensation is reasonable.

Argentum Silver – Royalty and Streaming Agreements

The company does not have any royalty or streaming agreements associated with either of it properties.

Balance Sheet Analysis

Argentum silver has a simple and solid balance sheet. Liability levels are low and the company has a strong liquidity position.

Argentum Silver – Debt Analysis

As of the fiscal year end June 2020 the company does not have any debt outstanding.

Argentum Silver Stock – Share Dynamics and Capital Structure

As of October 2020 Argentum Silver has 50.7 million common shares outstanding. In addition they have 1.25 million options and 1.65 million warrants outstanding. Fully diluted shares outstanding is around 53.65 million shares.

Argentum Silver Stock – Dividends

The company does not pay a dividend and is unlikely to do so for the foreseeable future.

Management – Skin in the game

Insiders at Argentum Silver have not made any relevant transactions in the company’s stock recently, providing no signal to investors.

Argentum Silver Stock – 3 Metrics to Consider

Debt to Equity Ratio

Total Liabilities/Total Share Holder Equity

$ 212 thousand / $ 886 thousand = .24

A debt to equity ratio of .24 indicates that Argentum Silver uses a mix of debt and equity in its capital structure, but relies mostly on equity financing to fund itself.

Working Capital Ratio

Current Assets/Current Liabilities

$1 million / $ 144 thousand = 7

A working capital ratio of 7 indicates a strong liquidity position. Argentum Silver should not have problems meeting its near term obligations.

Price to Book Ratio

Current Share Price/Book Value per Share.

$ 0.21 / $ 0.017 = 12

Based on fully diluted shares outstanding Argentum Silver has a book value per share of $ 0.017. At the current market price this implies a price to book ratio of 12, meaning Argentum Silver stock currently trades at a significant premium to the book value of the company.

Gold and Silver Market – Economic Factors and Competitive Landscape

Gold and Silver mining is a highly competitive, capital intensive business. The company will need to compete fiercely for both new projects and capital. However, given the current economic environment of global money printing and zero or negative interest rates, it would appear gold and silver companies are poised to benefit from a strong economic tailwind.

Argentum Silver Stock – Summary and Conclusions

Argentum Silver stock is a decent exploration company. The company owns two properties, which they are actively exploring, both is well established mining jurisdictions. Management compensation is reasonable and the capital structure is not dilutive, meaning the company appears shareholder friendly.

However the company’s exploration budget is low and they have not defined any mineral resource yet. Although I can’t find anything wrong with the company, without an understanding of the geology (beyond my competence), I cannot invest in Argentum Silver Stock. I would prefer to invest in better funded and more developed exploration companies, such as O3 Mining.

Disclaimer

This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.

This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.

Patrick Flood, CFA

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