Common Stock: Silver Bull Resources (TSX:SVB)
Current Market Price: $.56 USD
Market Capitalization: $16.2 million USD
**Note: All values in this article are expressed in United States Dollars (USD) unless otherwise noted.
Silver Bull Resources Stock – Summary of the Company
Silver Bull Resources is a mineral exploration company focused on the acquisition, exploration, and development of mineral properties in Mexico. Their flagship property is the 100% owned Sierra Mojada silver, lead and zinc property in the state of Coahuila Mexico. The company was founded in 1993 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
Silver Bull Resources 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. The company had a net loss of $4 million in 2019, an increase from $3.5 million in 2018.
Silver Bull Resources – Royalty and Streaming Agreements
Certain concession on the Sierra Mojada property are subject to a 2% net smelter royalty.
Silver Bull Resources – Mineral Resources
The Sierra Mojada property has Measured and Indicated resources totaling 90.8 million ounces of silver.
Balance Sheet Analysis
Silver Bull has a decent balance sheet. Liability levels are low. However, given their current burn rate, the company will need to raise additional capital in the medium term.
Silver Bull Resources – Debt Analysis
As of year-end 2019 the company does not have any debt outstanding.
Silver Bull Resources Stock – Share Dynamics and Capital Structure
As of April 30, 2020, the company has 236.3 million common shares outstanding. In addition, they have 16.3 million options and 15.8 million warrants outstanding. Fully diluted shares outstanding is around 268.5 million shares.
Silver Bull has a dilutive capital structure. Investors should carefully consider the effects of dilution before investing.
Silver Bull Resources Stock – Dividends
The company does not pay a dividend and is unlikely to do so for the foreseeable future.
Management – Skin in the game
There has not been any insider trading in Silver Bull Resources stock recently, providing no signal for investors. Insider ownership is around 8%.
Silver Bull Resources Stock – 2 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$ 641 thousand / $ 8.5 million = .07
A debt to equity ratio of .07 indicates that Silver Bull uses almost no debt in its capital structure and relies almost entirely on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$1.9 million/ $641 thousand = 3
A working capital ratio of 3 indicates sufficient short term liquidity.
Silver Market – Economic Factors and Competitive Landscape
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 silver companies are poised to benefit from a strong economic tailwind.
Silver Bull Resources Stock – Summary and Conclusions
The Sierra Mojada property is an intriguing property with high potential, evidenced by its over 90 million measured and indicated silver ounces. However, when compared with other Mexican exploration companies, Silver Bull Resources stock is not very compelling. They have a dilutive capital structure, low exploration expenses, and have had issues with local residents including a blockade.
I will not invest in Silver Bull Resources stock, if I were to allocate additional capital to Mexican exploration companies, I would prefer to allocate to a company like Chesapeake Gold.
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.