Common Stock: Silver Elephant Mining (TSX:ELEF)
Current Market Price: $.47 CAD
Market Capitalization: $67.4 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Silver Elephant Mining Stock – Summary of the Company
Silver Elephant Mining is a precious metals exploration company focused on the acquisition, exploration, and development of precious metals properties. They own interests in properties located in Bolivia, Nevada, and Ontario. The company was founded in 1978 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
Silver Elephant does not have any properties that currently produce. The company consistently runs a net loss and is likely to continue to do so for the foreseeable future.
In 2019, the company had total expenses of $3.5 million. Their largest expenses were compensation and promotion related.
Silver Elephant Mining – Royalty and Streaming Agreements
The Gibellini project in Nevada is subject to a 2.5% net smelter royalty.
Silver Elephant Mining – Mineral Resources
The company’s Bolivia project has indicated and inferred mineral resources totaling 36.7 million ounces of silver.
Balance Sheet Analysis
Silver Elephant has a decent balance sheet. Liquidity is sufficient in the near term and long term liability levels are low.
Silver Elephant Mining – Debt Analysis
As of year-end 2019, Silver Elephant does not have any debt outstanding.
Silver Elephant Mining Stock – Share Dynamics and Capital Structure
As of August 2020, Silver Elephant has 143.4 million common shares outstanding. In addition, they have 11 million options and 35.2 million warrants outstanding. Fully diluted shares outstanding is around 189.7 million shares.
Silver Elephant has a dilutive capital structure. Investors should carefully consider the effects of dilution before investing.
Silver Elephant Mining Stock – Dividends
The company does not pay a dividend and is unlikely to do so for the foreseeable future.
Silver Elephant Mining Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$2.7/$24.7 = .11
A debt to equity ratio of .11 indicates that Silver Elephant uses very little debt in its capital structure and relies almost entirely on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$3.4 million/$2.4 million = 1.4
A working capital ratio of 1.4 indicates a sufficient, but not strong liquidity position.
Price to Book Ratio
Current Share Price/Book Value per Share.
$.47/$.13 = 3.6
Based on fully diluted shares outstanding Silver Elephant has a book value per share of $.13. At the current market price this implies a price to book ratio of 3.6, meaning Silver Elephant stock trades at a premium to the book value of the company.
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 Elephant Mining Stock – Summary and Conclusions
Silver Elephant seems to have a decent property in Bolivia with some potential. However, the company is by no means in a strong financial position and their capital structure is dilutive. I don’t see anything exceptional about Silver Elephant, especially when compared with other Bolivian exploration projects such as New Pacific Metals. As I mentioned in my analysis of New Pacific, I would prefer to invest in silver producers like Fortuna Silver rather than Bolivian silver explorers.
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.
