Pure Energy Minerals Limited acquires, explores, and develops mineral properties. Its primary project is the Clayton Valley lithium brine project that includes 950 claims covering an area of approximately 23,360 acres located in Clayton Valley, Esmeralda County, Nevada. The company was formerly known as Harmony Gold Corp. and changed its name to Pure Energy Minerals Limited in October 2012. Pure Energy Minerals Limited was incorporated in 1999 and is headquartered in Vancouver, Canada.

Canada

Pure Energy Minerals Limited

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. 

PEMIF reported revenue of CAD 1mn in the last 12 months, up 2% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 2% from FY23 to CAD -0.02.

The stock has been falling steadily in the past six months, losing 28% in total. The stock has lagged its global peers from the same sector and industry (as shown above), underperforming then by 37ppts in total. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is slightly negative.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -76.6% in the last 12 months, a decline from -9.6% in FY23. 

Historically, PEMIF has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -118.3%, down from -114.8% in FY23. 

Pure Energy Minerals Limited reported a return on equity (RoE) of -1.8% in the last 12 months, down from -1.8% in FY24. 

Another important profitability metric, return on assets (RoA), amounted to -1.8% in the last 12 months, an increase from -1.8% in FY24. 

In the last 12 months, the return on capital employed (RoCE) declined to -1.8%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.5 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.

PEMIF 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 may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. 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, slow historical revenue growth, bleak profitability, negligible return on capital, and poor working capital management. We note low margin volatility and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, PEMIF 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, PEMIF 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 critical to immense. 

Considering past and projected metrics, the stock is neither 'expensive' nor 'cheap' compared to its peers. 

Pure Energy Minerals Limited

$ 0.14

3

Pure Energy Minerals Limited

$ 0.14

3

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 0.14

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