Common Stock: Goliath Resources (TSXV:GOT)
Current Market Price: $ 0.44 CAD
Market Capitalization: $ 16.7 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Goliath Resources Stock – Summary of the Company
Goliath Resources is a mineral exploration company focused on the acquisition, exploration, and development of precious metals properties. The company owns an interest in several exploration stage properties, located in Quebec and British Columbia, Canada. Goliath Resources was founded in 2017 and is headquartered in British Columbia, Canada.
Revenue and Cost Analysis
Goliath Resources 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 end June 2020 Goliath had a net loss of $ 2.5 million, a decrease compared to $ 3 million the previous year. The company’s largest expenses in both years were exploration related. These expenses totaled $ 1.6 million and $ 2.2 million in 2020 and 2019 respectively.
Goliath Resources – Royalty and Streaming Agreements
Several of the company’s properties are subject to a 3% net smelter royalty, which can be reduced to 2%.
Balance Sheet Analysis
Goliath Resources has a simple and sound balance sheet. They have no long term assets or liabilities, and sufficient liquidity in the near term.
Goliath Resources – Debt Analysis
As of the fiscal year end June 30, 2020 Goliath Resources does not have any debt outstanding.
Goliath Resources Stock – Share Dynamics and Capital Structure
As of January 2021 the company has 38 million common shares outstanding. In addition they have 3.8 million options and 30.4 million warrants outstanding. Fully diluted shares outstanding is around 72.8 million shares.
Goliath has a highly dilutive capital structure. Investors should carefully consider the effects of dilution before investing.
Goliath 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
Management owns around 15% of the company’s outstanding shares. Insiders have been net buyer of the company’s shares in the recent past, which is generally viewed as a bullish signal by investors.
Goliath Resources Stock – 2 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$ 301 thousand / $ 311 thousand = .97
A debt to equity ratio of .97 indicates that Goliath Resources uses nearly equal parts debt and equity in its capital structure and is not overly reliant on either form of financing.
Working Capital Ratio
Current Assets/Current Liabilities
$ 612 thousand / $ 301 thousand = 2
A working capital ratio of 2 indicates a sufficient liquidity position. Goliath Resources 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.
Goliath Resources Stock – Summary and Conclusions
Goliath Resources is a solid early stage exploration play. They own several exploration stage properties in proven gold regions. They are financially healthy and actively exploring their properties. Given the number of properties the company has an interest in, the stock has a lot of optionality at its current market cap.
However their capital structure is highly dilutive. Although there may be significant upside potential if Goliath makes a new economic discovery, I would prefer to allocate to more advanced exploration stage Canadian projects, such as 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.
