P/NAV is a great tool to determine how the market is valuing the small cap mining stocks on our list
SmallCapPower | November 7, 2016: Price to Net Asset Value (P/NAV) can be used to determine whether or not a stock is trading at a premium or a discount. As the NAV is the net present value of all future cash flows from a project, and the stock price is what you are willing to pay for the company’s future cash flows, if the P/NAV is greater than 1.0x the stock is said to be selling at a premium, or if it’s below 1.0x it is said to be at a discount. A general rule of thumb when applying a P/NAV multiple is that a multiple of 0.7x tends to be a conservative standard. This is because mining projects never experience the exact conditions set forth in the economic assessments as there can be delays because of equipment, a spill from a tailings pond that halts production or head grades that they had anticipated aren’t realized. That being said, the small cap mining stocks on our list today may all be worth a look as the P/NAVs are all trading at what is considered to be a substantial discount.
Dominion Diamond Corp. (TSE:DDC) – $11.40
Non-Gold Precious Metals & Minerals
Dominion Diamond Corporation is a diamond mining company focused on the mining and marketing of rough diamonds to the global market. The Company’s segments include the Ekati Diamond Mine, the Diavik Diamond Mine and the Corporate segment. It supplies rough diamonds to the global market from its operation of the Ekati Diamond Mine (in which it owns a controlling interest) and its approximately 40% ownership interest in the Diavik Diamond Mine. It controls the Ekati Diamond Mine, as well as the associated diamond sorting and sales facilities in Toronto and Yellowknife, Canada, Mumbai, India, and Antwerp, Belgium.
- Market Cap: $972.83(mm)
- YTD Price PCT Change: -19.4%
- Net Asset Value – Actual (CAD, Millions): $1,785.55P/
- NAV: 0.5x
Sherritt International Corp. (TSE:S) – $0.85
Specialty Mining & Metals
Sherritt International Corp is engaged in mining and refining of nickel from lateritic ores with operations in Canada, Cuba and Madagascar. The Company’s segments include Metals, Oil and Gas, Power, and Corporate and Other. The Metals segment includes mining, processing and refining nickel and cobalt from lateritic ore bodies. It has a partnership with General Nickel Company S.A. (GNC) of Cuba (the Moa Joint Venture) and approximately 40% interest in the Ambatovy Joint Venture that owns a nickel operation in Madagascar.
- Market Cap: $249.81(mm)
- YTD Price PCT Change: 16.4%
- Net Asset Value – Actual (CAD, Millions): $1,557.10P/
- NAV: 0.2x
Capstone Mining Corp. (TSE:CS) – $0.88
Specialty Mining & Metals
Capstone Mining Corp. is a mining company engaged in the production of and exploration for base metals in the United States, Mexico, Canada and Chile. It has five segments: Pinto Valley, Cozamin, Minto, the Santo Domingo development project and Other.
- Market Cap: $340.61(mm)
- YTD Price PCT Change: 100.0%
- Net Asset Value – Actual (CAD, Millions): $1,398.42P/
- NAV: 0.2x
Primero Mining Corp. (TSE:P) – $1.82
Gold
Primero Mining Corp. is a precious metals producer with operations in both Mexico and Canada. The Company is focused on building a portfolio of precious metals assets in the Americas through acquiring, exploring, developing and operating mineral resource properties. Its segments include San Dimas, Cerro del Gallo, Black Fox Complex and Corporate. It owns two producing properties, including the San Dimas gold-silver mine, located in Mexico’s San Dimas district, and the Black Fox mine, located in the Township of Black River-Matheson, Ontario, Canada.
- Market Cap: $299.79(mm)
- YTD Price PCT Change: -41.7%
- Net Asset Value – Actual (FY0, CAD, Millions): $890.52P/
- NAV: 0.3x
Taseko Mines Ltd. (TSE:TKO) – $0.63
Specialty Mining & Metals
Taseko Mines Limited is a mining company engaged in the production and sale of metals, as well as related activities, including exploration and mine development, within the province of British Columbia, Canada and the State of Arizona, the United States. Its operating asset is the Gibraltar Mine, a copper mine located in central British Columbia. It also owns the New Prosperity Gold-Copper, Aley Niobium, Florence Copper and Harmony Gold Projects. The Florence Copper Project is an in-situ copper recovery (ISCR) project in central Arizona.
- Market Cap: $139.76(mm)
- YTD Price PCT Change: 29.9%
- Net Asset Value – Actual (FY0, CAD, Millions): $370.34
- P/NAV: 0.4x
