Common Stock: Mountain Boy Minerals (TSXV:MTB)
Current Market Price: $.57 CAD
Market Capitalization: $33 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Mountain Boy Minerals Stock – Summary of the Company
Mountain Boy Minerals is a mineral exploration focused on the acquisition, exploration, and development of precious metals properties in Canada’s “Golden Triangle”, located in British Columbia. They have four primary properties. The company was founded in 1999 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
Mountain Boy 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 2019, the company had total operating expenses of $341 thousand.
Mountain Boy Minerals – Royalty and Streaming Agreements
The Barbara, America Creek West, and Red Cliff properties are subject to a 2% net smelter royalty.
Balance Sheet Analysis
Mountain Boy has a descent balance sheet. They have sufficient liquidity and manageable liability levels. They do have a significant deferred tax liability valued at $3.2 million.
Mountain Boy Minerals – Debt Analysis
The company does not have any debt outstanding as of fiscal year end 2019.
Mountain Boy Minerals Stock – Share Dynamics and Capital Structure
As of August 2020, the company has 49 million common shares outstanding. They also have 4.7 million options and 4.7 million warrants outstanding. Fully diluted shares outstanding is around 58.4 million shares.
Mountain Boy has a dilutive capital structure. Investors should carefully consider the effect of potential dilution before investing.
Mountain Boy Minerals 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 Mountain Boy Minerals have been active in the company’s stock, both buying and selling. However, the amounts traded are too small to provide investors with a relevant signal.
Mountain Boy Minerals Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$3.3 million/ $11.8 million = .27
A debt to equity ratio of .27 indicates that Mountain Boy uses some debt in its capital structure but relies mostly on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$750 thousand/ $154 thousand = 4.8
A working capital ratio of 4.8 indicates sufficient liquidity. Mountain Boy should not have a problem meeting its near-term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
$.57/$.20 = 2.8
Based on fully diluted shares outstanding Mountain Boy has a book value per share of $.20. At the current market price this implies a price to book ratio of 2.8, meaning the company’s stock 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.
Mountain Boy Minerals Stock – Summary and Conclusions
Mountain Boy Minerals owns several promising properties in a proven mining region in Canada. They continue to actively explore their properties. The company is in a descent, but not strong financial position. In addition, they own around 1 million share of Ascot Resources, another exploration company focused on Canada’s Golden Triangle.
Despite the potential for dilution, Mountain Boy Minerals stock is an acceptable investment for investors looking for exploration projects in Canada. However, I would prefer to allocate to exploration companies that are exploring their properties much more aggressively, such as O3 Mining. Therefore, I will not invest in Mountain Boy Stock at this time, but I will continue to monitor the project and reconsider my investment decision should the company’s situation change materially.
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.
