Value Analysis https://www.capitalcube.com/blog/index.php/premier-gold-mines-ltd-value-analysis-torontopg-april-21-2017/
Premier Gold Mines Ltd. – Value Analysis (TORONTO:PG) : April 21, 2017
Capitalcube gives Premier Gold Mines Ltd. a score of 58.
Our analysis is based on comparing Premier Gold Mines Ltd. with the following peers – Goldcorp Inc., Sage Gold Inc., Constantine Metal Resources Ltd., Ashburton Ventures Inc., North American Palladium Ltd., Eastmain Resources Inc. and Marathon Gold Corporation (G-CA, SGX-CA, CEM-CA, ABR-CA, PDL-CA, ER-CA and MOZ-CA).
Investment Outlook
Premier Gold Mines Ltd. has a fundamental score of 58 and has a relative valuation of NEUTRAL.
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Company Overview
- From a peer analysis angle, relative underperformance over the last year has improved more recently.
- It currently trades at a Price/Book ratio of (1.60).
- PG-CA‘s EBITDA-based operating performance is better than its peers. The price to EBITDA multiple does not imply high future growth but seems to predict the company will maintain its relatively high operating returns on the existing level of capital.
- PG-CA‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
- Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
- PG-CA‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
- The company’s level of capital investment seems appropriate to support the company’s growth.
- PG-CA‘s operating performance may not allow it to raise additional debt.
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Leverage & Liquidity
PG-CA would seem to have a hard time raising additional debt.
- With debt at a relatively low 12.50% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 7.31%), and relatively tight interest coverage level of -1.83x, PG-CA would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
- Of the 7 chosen peers for the company, only 4 of the stocks have an outstanding debt balance. Companies with no debt include CEM-CA, ER-CA and MOZ-CA.
PG-CA has maintained its Constrained profile from the prior year-end.
- PG-CA‘s interest coverage is its highest over the last four years and compares to a low of -66.53x in 2015.
- While its interest coverage increased to -1.83x from -66.53x (in 2015), its peer median decreased during this period to 1.38x from 499.56x.
- Interest coverage rose 562.87 points relative to peers.
- PG-CA‘s debt-EV is its highest over the last four years and compares to a low of 2.14% in 2015.
- The increase in its debt-EV to 12.50% from 2.14% (in 2015) was also accompanied by an increase in its peer median during this period to 7.31% from 1.07%.
- Relative to peers, debt-EV rose 4.12 percentage points.
Access the detailed analysis for Premier Gold Mines Ltd.
Key Liquidity Items
| Company | Debt/Enterprise Value (%) | Current Ratio | Interest Coverage (x) | Cash Flow To Total Debt (%) |
| Goldcorp Inc. | 19.45 | 2.02 | 1.38 | 30.54 |
| Sage Gold Inc. | 41.87 | 1.2 | -1.27 | -59.65 |
| Constantine Metal Resources Ltd. | 0 | 2.7 | No interest exp | 999 |
| Ashburton Ventures Inc. | 2.12 | 0.16 | 0 | -1121.25 |
| North American Palladium Ltd. | 26.84 | 1.11 | -4.38 | -3.98 |
| Eastmain Resources Inc. | 0 | 2.7 | No interest exp | 999 |
| Marathon Gold Corporation | 0 | 3.73 | No interest exp | 999 |
| Premier Gold Mines Limited | 12.5 | 3.79 | -1.83 | 209.2 |
| Peer Median | 7.31 | 2.36 | 1.38 | 119.87 |
| Best In Class | 2.12 | 3.79 | No interest exp | 999 |
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Company Profile
Premier Gold Mines Ltd. is a Canadian-based mineral exploration company, which focuses on exploring for and developing gold deposits within Canada and the United States of America. Its projects include Rahill-Bonanza, McCoy-Cove, Hasaga and Goldbanks. Premier Gold Mines was founded on May 29, 2006 and is headquartered in Thunder Bay, Canada.
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