Common Stock: Mawson Gold (TSX: MAW)
Current Market Price: $0.44 CAD
Market Capitalization: $112.2 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Mawson Gold Stock – Summary of the Company
Mawson Gold is a precious metals exploration company focused on the acquisition, exploration, and development of precious metals properties. They own interests in exploration stage projects in Finland, Australia, and The United States. Currently their main focus is the Rompas-Rajapalot project in Finland, which is about 30,000 hectares in size. Mawson Gold was founded in 2004 and is headquartered in Vancouver, Canada.
Revenue and Cost Analysis
Mawson Gold 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.
In the fiscal year ending May 2019 Mawson had a net loss of $ 3.5 million, an increase from $2.4 million in 2018. The company’s largest expenses are compensation related, including share based compensation.
Mawson Gold – Royalty and Streaming Agreements
The company’s most recent audited financials do not mention any royalty or streaming agreements.
Mawson Gold – Mineral Resources
The Rompas-Rajapalot project has indicated mineral resources totaling 320 thousand ounces of gold and 1.8 million tons of cobalt.
Balance Sheet Analysis
Mawson has a clean and solid balance sheet. They have a base of long term exploration assets. Their liquidity position is sound and their liability levels are very low.
Mawson Gold – Debt Analysis
As of year-end 2019 the company does not have any debt outstanding.
Mawson Gold Stock – Share Dynamics and Capital Structure
As of October 2020 Mawson has 255 million common shares outstanding. In addition they have 12.9 million options and 53.8 million warrants outstanding. Fully diluted shares outstanding is around 321.7 million shares.
Mawson has a dilutive capital structure. Investors should carefully consider the effects of dilution before investing.
Mawson Gold Stock – Dividends
The company does not currently pay a divided and is unlikely to do so for the foreseeable future.
Management – Skin in the game
Insiders at Mawson Gold have been net buyers of the company’s stock in the recent past. This is generally viewed as a bullish signal for the stock.
Mawson Gold Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$829 thousand / $31.9 million = .02
A debt to equity ratio of .02 indicates that Mawson uses almost no debt in its capital structure and relies almost entirely on equity financing to find itself.
Working Capital Ratio
Current Assets/Current Liabilities
$2.3 million / $829 thousand = 2.77
A working capital ratio of 2.77 indicates sufficient liquidity. Mawson should not have problems meeting its near term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
$ .44 / $.10 = 4.4
Based on fully diluted shares outstanding Mawson has a book value per share of $.10 cents. At the current market price this implies a price to book ratio of 4.4 meaning Mawson’s stock currently trades at a 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.
Mawson Gold Stock – Summary and Conclusions
Mawson Gold is an interesting exploration company. They have a compelling project in Finland, where other exploration companies, such as Rupert Resources, have had a lot of success recently. The company is financially healthy with sufficient liquidity and very low liabilities. Most concerning for investors if the potential for dilution, Mawson has excessive options and warrants outstanding.
Overall I view Mawson as a mediocre gold explorer when compared with pure play gold exploration projects such as O3 Mining. However Mawson stock could be interesting as a way to gain Cobalt exposure. Since I am not looking for cobalt exposure currently, I will not be investing in Mawson Gold Stock. But I will add it to my watchlist and if I decide to add cobalt exposure to my portfolio I will reconsider the stock.
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.
