Common Stock: Triumph Gold (TSXV: TIG)
Current Market Price: $0.25 CAD
Market Capitalization: $34.2 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Triumph Gold Stock – Summary of the Company
Triumph gold is a precious metals exploration company focused on the acquisition, exploration, and development of precious metals properties. Their main focus is their flagship Freegold Mountain property located in the Yukon Territory in Western Canada. Triumph Gold was founded in 2006 and is headquartered in Vancouver Canada.
Revenue and Cost Analysis
Triumph 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 2019 Triumph had a net loss of $5.2 million, significantly less than their $8.8 million loss in 2018. This decrease is due mostly to a decrease in exploration expenses. Despite this year over year decrease in exploration expenditure, exploration expenses were the company’s largest expense in both year. Exploration relate expenses were $2.5 million and $5.8 million in 2019 and 2018 respectively.
Triumph Gold – Royalty and Streaming Agreements
The Freegold Mountain project is subject to net smelter royalties ranging from 2% to 3%. The Tad/Toro property is subject to a 3% net smelter royalty.
Triumph Gold – Mineral Resources
The Freegold Mountain project has indicated and inferred resources totaling 2 million ounces of gold.
Balance Sheet Analysis
Triumph Gold has a sound balance sheet. Liquidity is sufficient and liability levels are reasonable.
Triumph Gold – Debt Analysis
As of year-end 2019 the company does not have any debt outstanding.
Triumph Gold Stock – Share Dynamics and Capital Structure
As of September 2020 triumph has 136.9 million common shares outstanding. In addition they have 8 million options and 19.1 million warrants outstanding. Fully diluted shares outstanding is around 164.1 million shares.
Triumph Gold has a dilutive capital structures. Investors should consider the effects of dilution before investing.
Triumph Gold 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 Triumph Gold have been net sellers of the company’s stock recently. This is generally viewed as a bearish signal by investors.
Triumph Gold Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$514 thousand / $4.1 million = .12
A debt to equity ratio of .12 indicates that Triumph uses a small amount of debt in its capital structure, but relies heavily on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$1.4 million / $464 thousand = 3
A working capital ratio of 3 indicates a sound liquidity position. Triumph should not have problems meeting its near term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
$0.25 / $0.025 = 10
Based on fully diluted shares outstanding Triumph Gold has a book value per share of $0.025 cents. At the current market price this implies a price to book ratio of 10, 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.
Triumph Gold Stock – Summary and Conclusions
Triumph Gold is an intriguing exploration play. It’s hard to ignore a potential 2 million ounce resource located in a well-established Canadian jurisdiction. The company is in a solid position financially with a sound liquidity position and reasonable liability levels.
My two largest concerns are dilution and valuation. Triumph stock currently trades at a price to book of 10, even after the stock has declined nearly 50% from its local high in July 2020. Additionally they have significant dilutive instruments outstanding in addition to relevant royalty obligations.
Given the stock’s recent performance and the current valuation, I am not comfortable allocating to Triumph gold stock yet. I will continue to monitor the company’s progress and reconsider based on how the project progresses. For now I will continue to allocate to what I believe to be higher potential Canadian explorers, such as O3 Mining.
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.
