Rook 1 hosts the Arrow deposit, as well as the South Arrow, Harpoon, Bow and Cannon discoveries. NexGen holds just under 200,000 hectares of land, and includes the largest development-stage uranium deposit in Canada, its 100%-owned Rook 1 project. The company is focussed on developing uranium projects in the southwestern part of the Athabasca Basin of Saskatchewan and Alberta, one of the world’s leading sources of high-grade uranium oxide used in nuclear power reactors. The exploration and development company’s valuation has been boosted as the spot price for uranium edged higher in May to pass $32 per lb., and comes after several years in which uranium was trading in the $25-30 per lb. NexGen Energy’s (TSX: NXE NYSE: NXE) market cap has increased fivefold from last year, pushing it from third to first place in this year’s top ten ranking. Thank you for reading.Aerial view of NexGen Energy’s Rook 1 project in Saskatchewan, Canada. Simply Wall St has no position in the stocks mentioned. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. If you spot an error that warrants correction, please contact the editor at This article by Simply Wall St is general in nature. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. We aim to bring you long-term focused research analysis driven by fundamental data. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying. Of course Fission Uranium may not be the best stock to buy. You can click here to see what Fission Uranium's CEO gets paid each year. We think it's very important to consider the cash burn for loss making companies, but other considerations such as the amount the CEO is paid can also enhance your understanding of the business. After looking at that range of measures, we think shareholders should be extremely attentive to how the company is using its cash, as the cash burn makes us uncomfortable. On this analysis of Fission Uranium's cash burn, we think its cash burn relative to its market cap was reassuring, while its cash runway has us a bit worried. So, Should We Worry About Fission Uranium's Cash Burn? As a result, we'd venture that the company could raise more cash for growth without much trouble, albeit at the cost of some dilution. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).įission Uranium has a market capitalisation of CA$160m and burnt through CA$20m last year, which is 13% of the company's market value. Many companies end up issuing new shares to fund future growth. Companies can raise capital through either debt or equity. While its cash burn is only increasing slightly, Fission Uranium shareholders should still consider the potential need for further cash, down the track. Story continues How Hard Would It Be For Fission Uranium To Raise More Cash For Growth? Depicted below, you can see how its cash holdings have changed over time. Importantly, if we extrapolate recent cash burn trends, the cash runway would be a lot longer. That's a very short cash runway which indicates an imminent need to douse the cash burn or find more funding. So it had a cash runway of approximately 5 months from June 2019. Looking at the last year, the company burnt through CA$20m. When Fission Uranium last reported its balance sheet in June 2019, it had zero debt and cash worth CA$8.7m. See our latest analysis for Fission Uranium When Might Fission Uranium Run Out Of Money?Ī cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. First, we'll determine its cash runway by comparing its cash burn with its cash reserves. So should Fission Uranium ( TSE:FCU) shareholders be worried about its cash burn? In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly. For example, although software-as-a-service business lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |