Common Stock: FireFox Gold (TSXV:FFOX)
Current Market Price: $.095 CAD
Market Capitalization: $3.2 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
FireFox Gold Stock – Summary of the Company
FireFox Gold is a mineral exploration company focused on the acquisition and exploration of gold related properties in Finland. The company owns options on several exploration stage properties, some of which it actively explored in 2019. The company was founded on 2017 and is headquartered in Vancouver, Canada.
Revenue and Cost Analysis
FireFox Gold does not own 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 2018 and 2019, the company had a net loss of $2.2 million in each year. Their largest expenses are exploration related expenses, which were around $1.4 million annually in both 2018 and 2019. Their next largest expenses are compensation related, including share based compensation.
FireFox Gold – Royalty and Streaming Agreements
Several of the company’s properties have a 1.5% net smelter royalty, which can be reduced to 1% by making payment of 1,000 troy ounces of gold within 90 days of publishing a positive feasibility study.
Balance Sheet Analysis
The company has an OK balance sheet with sufficient liquidity and no long-term liabilities.
FireFox Gold – Debt Analysis
As of year-end 2019 FireFox does not have any debt outstanding.
FireFox Gold Stock – Share Dynamics and Capital Structure
As of April 2020, FireFox had 48.8 million common shares outstanding. In addition, they had 3.5 million options and 21.3 million warrants outstanding. Fully diluted shares outstanding is around 70.1 million.
FireFox has a dilutive capital structure, investors should carefully consider their place in the capital structure before investing.
FireFox Gold Stock – Dividends
The company does not pay a dividend and is unlikely to do so for the foreseeable future.
FireFox Gold Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$193 thousand/$975 thousand = .2
A debt to equity ratio of .2 indicates that the company uses mostly equity financing to fund itself and is not reliant on debt.
Price to Book Ratio
Current Share Price/Book Value per Share.
$.095/$.014 = 6.8
Based of fully diluted shares outstanding FireFox has a book value per share of $.014. At the current market price this implies a price to book ratio of 6.8, meaning FireFox stock trades at a significant premium to the book values of its assets.
Working Capital Ratio
Current Assets/Current Liabilities
$286 thousand/$193 thousand = 1.5
A working capital ratio of 1.5 indicates sufficient short term liquidity, meaning FireFox should not have problems 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.
FireFox Gold Stock – Summary and Conclusions
FireFox is exploring very early stage properties in Finland, some of which are in areas with little history of exploration. The company appears to be well run, with an acceptable balance sheet and an active exploration program.
The company has a highly dilutive capital structure, and will likely dilute shareholders further in the future. Royalties have already been sold on some of the company’s properties. Both of these factors limit the potential upside for investors.
Although FireFox appears to have a promising portfolio of exploration properties, these projects are simply too early stage for me to invest in given my level of knowledge. I will continue to monitor the company and reconsider based on new information.
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.
