Common Stock: Granada Gold Mine (TSXV:GGM)
Current Market Price: $ 0.22 CAD
Market Capitalization: $ 23.7 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Granada Gold Mine Stock – Summary of the Company
Granada Gold Mine is a precious metals exploration company focused on the acquisition, exploration, and development of gold properties in Canada. Their main focus is the Granada property located in Quebec ,Canada. The company was founded in 1985 and is headquartered in British Columbia, Canada.
Revenue and Cost Analysis
The company does not have any assets that are currently producing and therefore does not have any revenue. They consistently run a net loss and are likely to continue to do so for the foreseeable future.
In 2020 Granada Gold had a net loss of $ 3.7 million, a slight decrease from $ 4.5 million in 2019. Their largest expenses were exploration related, which totaled $ 1.3 million in both 2020 and 2019.
Granada Gold Mine – Royalty and Streaming Agreements
The Granada property is subject to a 2% gross metals royalty as well as a net smelters royalty of 1% on certain claims.
Granada Gold Mine – Mineral Resources
The Granada property has measured and indicated resources totaling 762,000 ounces of gold.
Balance Sheet Analysis
Granada Gold has a very weak balance sheet. Their liquidity position is poor and the true value of their assets is uncertain. Additionally they have debt outstanding, and generate no revenue to repay the debt
Working Capital Ratio
Current Assets/Current Liabilities
$ 682 thousand / $7.9 million = .08
A working capital ratio of .08 indicates an extremely weak liquidity position. Granada Gold will need to raise additional capital in order to continue as a going concern. This will be to the detriment of existing shareholders.
Granada Gold Mine – Debt Analysis
As of the fiscal year end June 2020 the company had $1.6 million in total debt outstanding.
Granada Gold Mine Stock – Share Dynamics and Capital Structure
As of January 2021 the company has 105.6 million commons shares outstanding. In addition they have 7.7 million options and 34 million warrants outstanding. Fully diluted shares outstanding is around 147.3 million shares.
Granada Gold has a dilutive capital structure and investors should consider the effects of dilution before investing.
Granada Gold Mine 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 Granada Gold Mine have not made any relevant transactions in the company’s stock in the recent past, providing no signal to investors.
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.
Granada Gold Mine Stock – Summary and Conclusions
I don’t see a reason to allocate to Granada Gold stock. The company is a single asset company in a very weak financial position,. They have debt and no revenue to repay, as well as low exploration expense compared to other exploration companies in the region. Additionally their capital structure is dilutive with significant options and warrants outstanding.
There are much more promising exploration projects focused on Quebec, that present larger upside potential with lower risk compared to Granada Gold stock. O3 Mining and Orefinders are two examples.
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.
