ASA Gold and Precious Metals Ltd C.ASA

Primary Symbol: ASA

ASA Gold and Precious Metals Limited is a non-diversified, closed-end investment company. The Company's investment objective is long-term capital appreciation primarily through investing in companies engaged in the exploration for, development of projects or mining of precious metals and minerals. The Company invests approximately 80% of its total assets in common shares or securities convertible into common shares of companies engaged, directly or indirectly, in the exploration, mining or processing of gold, silver, platinum, diamonds or other precious minerals; held as bullion or other direct forms of gold, silver, platinum or other precious minerals; in instruments representing interests in gold, silver, platinum or other precious minerals, and/or in securities of investment companies, including exchange traded funds, or other securities. The Company’s investment adviser is Merk Investments LLC.

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ASA Gold and Precious Metals Ltd > Poor top and bottom-line with low and shirking margins.

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Comment by KelownaClownon Jul 15, 2021 11:48am

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Post# 33549728

RE:Poor top and bottom-line with low and shirking margins.

Another mistake: your estimate of 24 million in cash. Valens has more than 40 million.

PUNJABI wrote: The previous business model had failed so the company is out to reinvent itself and is also using an old mostly failed method of buying expensive revenues to compensate for the loss of revenues and show growth. With LYF deal the revenues still fell short of last quarter and the losses increased.

There was so much hype about the purchase of LYF. Now it is getting clear that VLNS overpaid for tiny revenues and money-losing business. When the company hides the financial information of new purchases it is usually to cover the overpayment and poor performance of the company. It is getting clear that they bought a sick company and overpaid. Eventually, the goodwill will be written off one day.

Quote from VLNS balance sheet “During the three and six months ended May 31, 2021, the Company’s consolidated revenue included $540 and $540 from LYF. In addition, for the three and six months ended May 31, 2021, the Company’s consolidated loss and comprehensive loss included a net loss of $805 and $805 from LYF. If LYF had been acquired on December 1, 2020, total revenue would have been $820 and the net loss would have been $2,871”

With a low 22 % gross margin VLNS is not going to be profitable soon. With the current pace of revenue growth, it will take a very long time and if they continue to buy a few more money-losing companies they can run into trouble like the rest of the sector.

They are burning through cash, their account receivables are jumping, with additional companies, their need for cash would increase. At this time they have $24m in cash left which seems to be a decent amount but at their pace of cash utilization, you will see that in a quarter of two they will be raising more money to cover their cash needs and increasing cash burn. Group of money-losing companies with very low margins will drain cash and can ruin a company fast.

VLNS is not much different from other cannibals companies that are buying expensive revenues and burning cash.