Common Stock: Maple Mines (TSXV: MGM)
Current Market Price: $0.28 CAD
Market Capitalization: $ 82 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Maple Mines Stock – Summary of the Company
Maple Mines is a gold exploration company focused on the acquisition, exploration, and development of precious metals properties in Canada. The company is currently focused entirely on its flagship Douay Gold project in Quebec, which consists of over 650 claims covering 355 square kilometers. Maple Mines was founded in 2011 and is headquartered in Montreal Canada.
Revenue and Cost Analysis
Maple Mines 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.
In 2019 Maple Mines had a net loss of $3.6 million, less that their net loss of $5.7 million in 2018. The company’s largest expenses in both years were exploration expenses, which totaled $2.1 million and $4.3 million in 2019 and 2018 respectively.
Maple Mines – Royalty and Streaming Agreements
Certain claims on the Douay property are subject to a 1% net smelter royalty owned by IAMGOLD.
Maple Mines – Mineral Resources
The Douay property has indicated resources totaling 422 thousand ounces of gold and inferred resources totaling 2 million ounces of gold.
Balance Sheet Analysis
Maple Mines has a solid balance sheet. They have sufficient liquidity in the near term and reasonable liability levels.
Maple Mines – Debt Analysis
As of year-end 2019 the company does not have any debt outstanding.
Maple Mines Stock – Share Dynamics and Capital Structure
They company currently has 293 million common shares outstanding. In addition they have 23 million options and 56.8 million warrants outstanding. Fully diluted shares outstanding is around 372.9 million shares.
Maple Mines has a dilutive capital structure. Investors should consider the effects of dilution before investing.
Maple Mines 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 Maple Mines have not made any relevant transactions in the company’s stock recently, providing no signal to investors.
Maple Mines Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$2.5 million / $3.3 million = .75
A debt to equity ratio of .75 indicates that Maple Mines uses a mix of debt and equity in its capital structure, but relies more on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$5.3 million / $2.3 million = 2.3
A working capital ratio of 2.3 indicates a sufficient liquidity position. Maple Mines should not have a problem meeting its near term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
$0.28/$0.01 = 28
Based on fully diluted shares outstanding Maple Mines has a book value per share of $0.01. At the current market price this implies a price to book ratio of 28, meaning the company’s stock currently trades at a significant premium to the book value of the company.
Gold Market – Economic Factors and Competitive Landscape
Gold 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 companies are poised to benefit from a strong economic tailwind.
Maple Mines Stock – Summary and Conclusions
Maple Mines is a pretty standard Canadian gold exploration company. The company is sound financially and actively exploring its flagship property. Most concerning is the company highly dilutive capital structure.
The stock price has double over the past several weeks and certainty isn’t undervalued in my opinion. Although Maple Mines has a promising project, I don’t see a reason to chase the stock higher. I would prefer to allocate to similar Canadian explorers with a better risk/return profile at current prices, for example 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.
