Common Stock: Gold Standard Ventures (GSV)
Current Market Price: $1.01 CAD
Market Capitalization: $284.3 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise stated.
Gold Standard Ventures – Summary of the Company
Gold Standard Ventures is a gold mining company focused on the acquisition and exploration of gold properties exclusively in Nevada. The have one material projects, the Railroad-Pinion project, which is in the licensing and exploration stage. They also have several other properties at earlier stages of development. Gold Standard Ventures was founded in 2004 and is headquartered in Vancouver, Canada.
Revenue and Cost Analysis
The company does not have any producing properties and therefore does not have any revenue. They consistently run a net loss and will likely continue to do so for the foreseeable future.
In 2019 Gold Standard Ventures had a net loss of $9.7 million, a slight improvement from a loss of $10.2 million in 2018. Most the company’s expenses are related to professional fees, management compensation (including share based), and consulting fees.
Balance Sheet Analysis
The company has a very simple balance sheet. Liquidity is OK and liabilities are low. Current assets were $7.7 million at the end of 2019, compared to $2.8 million in current liabilities.
Total assets were $232.2 million, almost all of which is a long-term exploration and evaluation asset. Total liabilities were only $4.3 million
Although the company has very low liabilities, they are burning a significant amount of cash to fund exploration. They will require additional financing in the near future to maintain operations.
Gold Standard Ventures – Debt Analysis
The company does not have any debt but does have several small contractual obligations totaling
Gold Standard Ventures Stock – Share Dynamics and Capital Structure
As of March 2020, the company had 278.3 million common shares outstanding. They also have 1.7 million restricted share units and 11.3 million options outstanding. Fully diluted shares outstanding is 291.3 million.
Gold Standard Ventures has a dilutive capital structure and has stated that they will need to raise additional capital in the near future. Investors should carefully consider their place in the capital structure and the effects of dilution before investing.
Gold Standard Ventures Stock – Dividends
The company has never paid a dividend and is unlikely to do so for the foreseeable future.
Management – Skin in the game
Over the past 12-18 months’ insiders at Gold Standard Ventures have been net buyers of GSV stock.
Gold Standard Ventures – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$4.3 million/$227 million=.02
A debt to equity ratio of .02 means the company is funded almost entirely with equity capital and does not rely on debt for financing.
Price to Book Ratio
Current Share Price/Book Value per Share.
$1.01/$.78=1.3
Based on my estimate of fully diluted shares outstanding, GSV stock has a book value per share of $.78. At the current market price this implies a price to book ratio of 1.3. A price to book ratio of 1.3 means GSV stock currently trades at a slight premium to the book value of its assets.
Working Capital Ratio
Current Assets/Current Liabilities
$7.7 million/$2.8 million=2.7
A working capital ratio of 2.7 means the company has sufficient liquidity to meet its obligations in the near term.
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.
Gold Standard Ventures – Summary and Conclusions
Gold Standard Ventures has several promising exploration stage properties in Nevada. They have a solid balance sheet with very low liability levels. However, they are burning a lot of cash to fund exploration and will need to raise additional funds soon. Their capital structure is already dilutive, and shareholders are likely to be diluted further when they raise more capital.
GSV stock is currently valued at roughly the book value of its assets. It is highly uncertain if any of their properties will ever produce, but if they do, there is significant upside. For highly risk tolerant investors GSV stock may be an acceptable investment within a highly-diversified portfolio of gold stocks.
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.
