Common Stock: Warrior Gold (TSXV: WAR)
Current Market Price: $.095 CAD
Market Capitalization: $7.6 million CAD
**Note: All values in this article are expressed in Canadian Dollars (CAD) unless otherwise noted.
Warrior Gold Stock – Summary of the Company
Warrior Gold is a precious metals exploration company focused on the acquisition, exploration, and development of precious metals properties in Canada. Their main focus is the Goodfish-Kirana project located in the Red Lake district of Ontario. The company was founded in 1984 and is headquartered in Toronto Canada.
Revenue and Cost Analysis
Warrior Gold does not have any properties that currently produce and therefore does not have any revenue. The company consistently runs a net loss and is likely to continues to do so for the foreseeable future.
In 2019, the company had a net loss of $1.5 million, an increase from 2018’s net loss of $1.2 million. The company’s largest expenses in both years were exploration related expenses.
Warrior Gold – Royalty and Streaming Agreements
The Goodfish-Kirana project is subject to a 1.5% net smelter royalty.
Balance Sheet Analysis
Warrior Gold has an OK balance sheet. Liquidity is sufficient in the short term and liability levels are low.
Warrior Gold – Debt Analysis
As of the company’s fiscal year end 2019 (March 31, 2020), the company does not have any debt outstanding.
Warrior Gold Stock – Share Dynamics and Capital Structure
As of July 2020, the company has 80.5 million common shares outstanding. They also have 6.6 million options and 12.1 million warrants outstanding. Fully diluted shares outstanding is around 99.2 million shares.
Warrior Gold has a dilutive capital structure and investors should consider the effects of dilution before investing.
Warrior 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 Warrior gold have been net buyers of the company’s stock in the recent past, however the amounts have been too small to provide investors with a signal.
Warrior Gold Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$217 thousand/ $5 million = .04
A debt to equity ratio of .04 indicates that Warrior Gold uses almost no debt in its capital structure and relies almost entirely on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$260 thousand/$194 thousand = 1.3
A working capital ratio of 1.3 indicates a sufficient, but not strong liquidity position.
Price to Book Ratio
Current Share Price/Book Value per Share.
$.095/$.05 = 1.9
Based on fully diluted shares outstanding Warrior Gold has a book value per share of $.05. At the current market price this implies a price to book ratio of 1.9, meaning the company’s stock trades at a slight 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.
Warrior Gold Stock – Summary and Conclusions
Warrior Gold owns a promising asset in the Goodfish-Kirana project. The property is located in a premier mining region and has 18 historical shafts and pits. According to the company the property’s fragmented historical ownership means it has never been properly explored. Warrior Gold is actively exploring the property and intersected gold in nine of ten drill holes during their 2019 drill program.
The company is stable financially, although potential dilution is concerning. Given that Warrior Gold is a single asset exploration play, I don’t find it compelling enough to invest in on its own. But it provides great optionality as a portfolio asset of Radius Gold stock, so if I wanted exposure to Warrior Gold, I would prefer to gain that exposure via Radius Gold 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.
