Common Stock: International Tower Hill Mines (NYSE: THM)
Current Market Price: $1.13
Market Capitalization: $212 million
International Tower Hill Mines Stock – Summary of the Company
International Tower Hill Mines is a precious metal exploration company focused on the acquisition and exploration of precious metals properties. Their major project is the Livengood Gold project in Alaska, which the own 100%. They also own several other exploration stage projects in Alaska and Nevada. International Tower Hill Mines was founded in 1978 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
International Tower Hill Mining does not have any producing properties, therefore they do not have any revenue and consistently run a net loss. They are likely to continue to run a loss for the foreseeable future.
In 2019, the company had a net loss of $3.8 million, compared to a net loss of $4.2 million in 2018. The company’s largest expense is mineral property expenditures which were $1.6 million for the year ended 2019 compared to $1.5 million for the year ended 2018.
Their second largest expenses are compensation related including wages and consulting fees.
International Tower Hill Mines – Reserves
The Livengood project has 11.5 million ounces of “measured and indicated” gold, making it the largest independent gold only resource in North America, according to the company’s corporate presentation.
Royalty and Streaming Agreements
Several of the leases on the Livengood property have net smelter royalty’s ranging from 1% to 3%. All claims on Alaska state land are subject to a 3% royalty based on net income.
Balance Sheet Analysis
The company has a very strong balance sheet with sufficient liquidity and very low liability levels. At year end 2019, they had $7.1 million in current assets including $6.9 million in cash, compared to $335 thousand in current liabilities.
The company had long term assets totaling $55 million at the end of 2019, and no long-term liabilities.
Although the company has a very strong short term liquidity position, the nature of the business means they will need to raise additional capital in the future.
Debt Analysis
The company does not have any debt as of year-end 2019
International Tower Hill Mines Stock – Share Dynamics and Capital Structure
As of March 2020, the company had 187.5 million shares outstanding. They also have 2.4 million options outstanding and 1.4 million deferred share units. Fully diluted shares outstanding is around 191.4 million.
International Tower Hill Mines has no senior debt and very few dilutive instruments outstanding. I believe the capital structure is acceptable for commons shareholders.
International Tower Hill Mines Stock – Dividends
The company has never paid a dividend and plans to retain future earnings to finance growth.
Management – Skin in the game
There has not been any relevant insider activity related to International Tower Hill Mining stock recently.
3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$335 thousand/$62.2 million = .005
A debt to equity ratio of .005 indicates the company has nearly no debt in its capital structure and has relied entirely on equity to finance itself.
Price to Book Ratio
Current Share Price/Book Value per Share.
$1.13/$.33 = 3.5
Based on fully diluted shares outstanding the company has a book value per share of $.33. At the current market price this implies a price to book ratio of 3.5. A price to book ratio of 3.5 means the company trades at a premium to the book value of its assts.
Working Capital Ratio
Current Assets/Current Liabilities
$7.1 million/ $335 thousand = 21
A working capital ratio of 21 indicates an extremely strong liquidity position. The company should not have problems meeting its short-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.
International Tower Hill Mines Stock- Summary and Conclusions
The company has one of the highest potential gold deposits in North America. Its financial situation is strong, with sufficient liquidity and very low liabilities. Although there are still significant questions around permitting and additional financing, the project appears to be in a good position. The capital structure is favorable for common shareholders.
Although the price has increased nearly 400% in the past week form around $.30 to $1.13, the project may still present significant upside given its size and scope. THM stock may merit an allocation for highly risk tolerant investors within a well-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.
