Common Stock: Rockhaven Resources (TSXV: RK)
Current Market Price: $.15 CAD
Market Capitalization: $28.1 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Rockhaven Resources Stock – Summary of the Company
Rockhaven Resources is a precious metals exploration company focused on a single asset, the Klaza property, located in the Yukon region of Canada. The company was founded in 2005 and is headquartered in Vancouver, Canada.
Revenue and Cost Analysis
Rockhaven does not have any properties that are currently producing and therefore does not have any revenue. The company consistently runs a net loss and will likely continue to do so for the foreseeable future.
In 2019, the company had a net loss of $237 thousand, a slight improvement from 2018’s net loss of $336 thousand.
Rockhaven Resources – Royalty and Streaming Agreements
213 out of the company’s 1,478 claims on the Klaza Property are subject to net smelter royalty’s ranging from 1% to 1.5%.
Rockhaven Resources – Mineral Resources
The Klaza property has Indicated Mineral Resources of 4.5 Mt containing 686,000 oz gold and 14,071,000 oz silver. Inferred Mineral Resources of 5.7 Mt containing 507,000 oz gold and 13,901,000 oz silver.
Balance Sheet Analysis
Rockhaven has a descent balance sheet. Liquidity is adequate and long term liability levels are low.
Rockhaven Resources – Debt Analysis
As of year-end 2019, the company does not have any debt outstanding.
Rockhaven Resources Stock – Share Dynamics and Capital Structure
As of March 2020, the company has 187.6 million common shares outstanding. In addition, they have 12.3 million options and 32.4 million warrants outstanding. Fully diluted shares outstanding is 232.4 million.
Rockhaven has a dilutive capital structure, investors should carefully consider their place in the capital structure before investing.
Rockhaven 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
Insiders at Rockhaven Resources have not made any relevant transactions related to the company’s stock recently, providing no signal for investors.
Rockhaven Resources Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$2.6 million/$36.3 million = .07
A debt to equity ratio of .07 indicates that Rockhaven uses very little debt in its capital structure and relies almost entirely of equity financing to fund itself.
Price to Book Ratio
Current Share Price/Book Value per Share.
$.15/$.16 = .96
Based on fully diluted shares outstanding, Rockhaven has a book value per share of $.16. At the current market price this implies a price to book ratio of .96, meaning the company’s stock currently trades at a slight discount to the book value of the company.
Working Capital Ratio
Current Assets/Current Liabilities
$2.9 million/$583 thousand = 5
A working capital ratio of 5 indicates sufficient short term liquidity. Rockhaven should not have a problem meeting its near-term obligations.
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.
Rockhaven Resources Stock – Summary and Conclusions
Rockhaven has a dilutive capital structure and is not adequately exploring its only property. For these reasons, I am not willing to invest in Rockhaven Resources stock.
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.
