Common Stock: Silver Grail Resources (TSXV:SVG)
Current Market Price: $ 0.14 CAD
Market Capitalization: $ 4.6 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Silver Grail Resources Stock – Summary of the Company
Silver Grail Resources is a mineral exploration company focused on the acquisition, exploration, and development of silver and cobalt properties. They have interests in 7 properties, all of which are located in British Columbia, Canada. The company was founded in 1980 and is headquartered in British Columbia, Canada.
Revenue and Cost Analysis
Silver Grail 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.
For the fiscal year end March 31, 2020 the company had a net loss of $ 53 thousand, an improvement compared to $ 185 thousand the previous year. They had almost no exploration expenditure in either year.
Silver Grail Resources – Royalty and Streaming Agreements
Several of the company’s properties are subject to a 2% net smelter royalty.
Balance Sheet Analysis
Silver grail resources has a weak balance sheet. They have a weak liquidity position and will likely need to raise additional capital to continue as a going concern.
Silver Grail Resources – Debt Analysis
As of the fiscal year end March 2020 the company does not have any debt outstanding.
Silver Grail Resources Stock – Share Dynamics and Capital Structure
As of July 2020 the company has 32.4 million common shares outstanding. In addition they have 2 million warrants and 1.9 million options outstanding. Fully diluted shares outstanding is around 36.3 million shares.
Silver Grail Resources Stock – Dividends
The company does not currently pay a dividend and is unlikely to do so for the foreseeable future.
Management – Skin in the game
Insiders at Silver Grail Resources have not made any relevant transaction in the company’s stock recently, providing no signal to investors.
Silver Grail Resources Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$ 134 thousand / $ 968 thousand = .14
A debt to equity ratio of .14 indicates that Silver Grail uses very little debt in its capital structure and relies mostly on equity financing for funding.
Working Capital Ratio
Current Assets/Current Liabilities
$ 97 thousand / $ 134 thousand = .72
A working capital ratio of .72 indicates a weak liquidity position. Silver Grail may have problems meeting its near term obligations and will likely need to raise additional capital to continue as a going concern.
Price to Book Ratio
Current Share Price/Book Value per Share.
$ 0.14 / $ 0.024 = 5.8
Based on fully diluted shares outstanding Silver Grail has a book value per share of $ 0.024 cents per share. At the current market price this implies a price to book ratio of 5.8, meaning Silver Grail Resources stock currently 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 Grail Resources Stock – Summary and Conclusions
I don’t see any reason to invest in Silver Grail Resources stock. The company is in poor financial health and has almost no exploration expense. The company has had over 30 years to make a discovery and advance a project, yet they haven’t. I don’t see why this would change anytime soon.
I would prefer to allocate to more promising and better funded Canadian exploration companies, such as Orefinders.
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.