Strategic Metals Ltd. acquires, explores for, and evaluates mineral properties in Canada. The company explores for gold, silver, lead, zinc, copper, tin, tungsten, vanadium, and lithium metals; and deposit types, such as porphyry, skarn, epithermal vein, orogenic gold, sedex, carbonate replacement, etc. As of April 28, 2022, it had a portfolio of approximately 100 projects. Strategic Metals Ltd. is headquartered in Vancouver, Canada.

Canada

Strategic Metals Ltd.

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. 

SMDZF reported revenue of CAD 0mn in the last 12 months, down 0% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 7% from FY23 to CAD -0.02.

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). Over the past six months the stock has exceeded the performance of this peer group by 15ppts and its growth accelerated by 2ppts 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.

In the last 12 months, the return on capital employed (RoCE) grew to -2.1%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to -2.1% in the last 12 months, an increase from -3.3% in FY22. 

Strategic Metals Ltd. reported a return on equity (RoE) of -4.2% in the last 12 months, up from -6.1% in FY22. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.7 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.

SMDZF 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 relatively stable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. 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 very high. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, weak debt servicing capacity, inadequate interest coverage, and poor cash flow generation.

In highly turbulent market conditions, SMDZF 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, SMDZF 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. 

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

Strategic Metals Ltd.

$ 0.12

3

Strategic Metals Ltd.

$ 0.12

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 0.12

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