Sonoro Gold Corp., an exploration stage company, engages in the acquisition, exploration, and development of mineral properties in Mexico. The company primarily explores for gold and silver deposits. Its flagship project is the Cerro Caliche Group of Concessions that covers an area of approximately 1,400 hectares located in the municipality of Cucurpe, Mexico. The company was formerly known as Sonoro Metals Corp. and changed its name to Sonoro Gold Corp. in August 2020. Sonoro Gold Corp. is headquartered in Vancouver, Canada.

Canada

Sonoro Gold 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. 

SMOFF 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 33% 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 20ppts and its growth decelerated by 18ppts 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 mildly favourable.

In the last 12 months, the return on capital employed (RoCE) grew to 554.1%, above the peers. 

Sonoro Gold Corp. reported a return on equity (RoE) of 551.4% in the last 12 months, up from -236.4% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to -58.7% in the last 12 months, an increase from -118.0% in FY22. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -17.2 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.

SMOFF 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. 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, bleak profitability, negligible return on capital, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure. We note low margin volatility and strong debt servicing capacity, among the positive credit factors. 

In highly turbulent market conditions, SMOFF 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, SMOFF 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 overvalued relative to its peers. 

Sonoro Gold Corp.

$ 0.08

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Sonoro Gold Corp.

$ 0.08

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$ 0.08

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