Common Stock: Kore Mining (TSXV: KORE)
Current Market Price: $1.43 CAD
Market Capitalization: $45 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Kore Mining Stock – Summary of the Company
Kore Mining is a gold mining company focused on the acquisition, exploration, and development of gold properties in North America. They own 100% stakes in four projects in California and British Columbia. Their most advanced project has released a PEA and is currently in the permitting stage. Kore Mining was founded in 1981 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
The company does not have any properties 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.
Total expenses in 2019 were $3.9 million, compared to $2.3 million in 2018. Exploration and evaluation expenses were the company’s largest expenses in both years, which totaled $1.2 million and $875 thousand in 2019 and 2018 respectively.
Kore Mining – Royalty and Streaming Agreements
The company’s Imperial project in California is subject to a total of 2% net smelter royalties. The Gold Creek project in British Columbia is subject to a 1% net smelter royalty.
Kore Mining – Mineral Resources
Kore Mining has measured and indicated resources totaling 2.5 million ounces of gold.
Balance Sheet Analysis
Kore Mining has a sound balance sheet with a strong liquidity position and low liability levels.
Kore Mining – Debt Analysis
As of year-end 2019 the company does not have any debt outstanding.
Kore Mining Stock – Share Dynamics and Capital Structure
As of June 2020, the company had 104.5 million common shares outstanding. The also had 7.7 million option and 5.1 million warrants outstanding. Fully diluted shares outstanding is around 117.3 million shares.
Kore Mining has a dilutive capital structure and investors should consider the effects of potential dilution before investing.
Kore Mining Stock – Dividends
The company does not pay a dividend and is unlikely to do so for the foreseeable future.
Management – Skin in the game
Insiders at Kore Mining have been net buyers of the company’s stock. Eric Sprott owns 26% of the company and management owns 32%. Insider buying and high insider ownership are generally viewed as bullish signals a company’s stock.
Kore Mining Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$707 thousand / $4.1 million = .17
A debt to equity ratio of .17 indicates the Kore Mining uses some debt in their capital structure, but relies mostly on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$3.4 million/$707 thousand = 4.9
A working capital ratio of 4.9 indicates a strong liquidity position. Kore Mining should not have problems meeting their near-term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
$1.43/$.04 = 40
Based on fully diluted shares outstanding Kore Mining has a book value per share of $.04. At the current market price this implies a price to book ratio of 40, meaning the company’s stock trades at a significant premium to the book value of the company.
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.
Kore Mining Stock – Summary and Conclusions
Kore Mining has a solid portfolio of assets with 2.5 million ounces of measured and indicated gold resources. The company is sound financially and backed by well-respected investors. Insider ownership is high, also a positive signal for investors.
Investors should be concerned with potential dilution and with permitting risks in California. Kore Mining stock is an acceptable investment for highly risk tolerant investors looking to add a permitting stage project to a diversified gold stock portfolio.
However, I am not comfortable with the permitting risks associated with California, so I will not invest in Kore Mining Stock yet. If and when the company’s Imperial project is permitted and begins to advance I will reconsider my investment decision. For now I would prefer to allocate to shovel ready projects such as Orezone or projects in the process of developing a mine, such a Minera Alamos.
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.
