Common Stock: Aftermath Silver (TSXV: AAG)
Current Market Price: $0.84 CAD
Market Capitalization: $105 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Aftermath Silver Stock – Summary of the Company
Aftermath Silver is a precious metals exploration company focused on the acquisition, exploration, and development of mineral properties. The company owns several exploration stage properties, two in Chile and one in Peru. Aftermath Silver was founded in 2011 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
Aftermath Silver 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 ending May 2020 Aftermath had a net loss of $3 million, a significant increase compared to $570 thousand in the previous year. The company’s largest expenses were compensation related, including share based compensation. Exploration expenses was $329 thousand.
Aftermath Silver – Royalty and Streaming Agreements
The Berenguela project in Peru is subject to a 1.25% net smelter royalty.
Aftermath Silver –Mineral Resources
The Cachinal property in Chile has indicated and inferred resources totaling 18.8 million ounces of silver.
Balance Sheet Analysis
Aftermath Silver has a decent, but not strong balance sheet. Liquidity is sufficient and liability levels are manageable. However debt for a company with no revenue is always concerning.
Aftermath Silver – Debt Analysis
As of the fiscal year end May 2020 , the company has $498 thousand in debt outstanding related the acquisition of the Minera Cachinal property.
Aftermath Silver Stock – Share Dynamics and Capital Structure
As of September 2020 Aftermath has 125 million common shares outstanding. In addition they have 6 million options and 18.9 million warrants outstanding. Fully diluted shares outstanding is around 149.9 million.
Aftermath has a dilutive capital structure. Investors should consider the effects of dilution before investing.
Aftermath Silver 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 Aftermath Silver have both bought and sold relevant amounts of the company’s stock recently. Eric Sprott purchased over 18 million shares in September and sold 4 million of those shares in October. Insider activity in Aftermath Silver stock does not provide a clear signal to investors.
Aftermath Silver Stock – 2 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$965 thousand / $ 5.8 million = .17
A debt to equity ratio of .17 indicates that Aftermath uses some debt in its capital structure, but relies mostly on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$3.1 million / $511 thousand = 6.1
A working capital ratio of 6.1 indicates a sound liquidity position. Aftermath should not have problems meeting its near term obligations.
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.
Aftermath Silver Stock – Summary and Conclusions
Aftermath Silver has several exploration stage projects in Chile and Peru, one of which has indicated and inferred resources of over 18 million ounces of silver. The company is financially healthy, with a sound liquidity position and manageable liability levels. However dilution and debt should be concerning for investors.
Although aftermath appears to be a decent silver explorer with properties in good mining districts, I don’t see anything exceptional about the opportunities presented that would compel me to invest. I would prefer to allocate to other silver exploration plays such as Chesapeake Gold or Aya Gold & Silver.
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.
