IMPACT Silver Corp. engages in the exploration, development, and mineral processing activities in Mexico. The company produces silver, lead, zinc, gold, and copper deposits. It primarily owns interests in the Royal Mines of Zacualpan Silver-Gold District and the Capire Mineral District covering an area of approximately 211 square kilometers located in central Mexico. The company also operates Cuchara, San Ramon, Guadalupe, Veta Negra, and Capire open pit mines. IMPACT Silver Corp. was founded in 2006 and is headquartered in Vancouver, Canada.

Canada

IMPACT Silver Corp.

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

IPT.V reported revenue of CAD 27mn in the last 12 months, up 31% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 46% from FY23 to CAD -0.05.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 23ppts and its growth decelerated by 10ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -23.3% in the last 12 months, a decline from -6.8% in FY22. 

Historically, IPT.V has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -43.9%, down from -19.4% in FY22. 

IMPACT Silver Corp. reported a return on equity (RoE) of -18.2% in the last 12 months, down from -5.2% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to -15.7% in the last 12 months, a decrease from -4.7% in FY22. 

In the last 12 months, the return on capital employed (RoCE) declined to -16.6%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.4 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

IPT.V has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is usually stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, and inadequate interest coverage. We note resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, IPT.V is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, IPT.V is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. 

IMPACT Silver Corp.

CA$ 0.2

2

IMPACT Silver Corp.

CA$ 0.2

2

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Profitability factor

Risk / Profitability

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Profitability factor

CA$ 0.2

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