Latest news with #SkyMetals
News.com.au
3 days ago
- Business
- News.com.au
Barry FitzGerald: At Sky Metals you buy one tin project, get one free
'Garimpeiro' columnist Barry FitzGerald has covered the resources industry for 35 years. Now he's sharing the benefits of his experience with Stockhead readers. There's been a known massive slug of tin-dominant polymetallic mineralisation sitting out the back of Bourke in north-west NSW crying out for some attention for more than 50 years. That and a metallurgical breakthrough. It's called Doradilla and its owner since 2019, the Norm Seckold-chaired Sky Metals (ASX:SKY), looks to have cracked the code to unlocking the project's big-time potential thanks to current day tin flotation processing technology. Garimpeiro last took a look at Sky in August last year when it was a 3.2c stock for a market cap of $18.8 million. It has since moved up to 7c for a market cap of $49.7 million, a valuation comfortably underpinned by its advanced Tallebung tin project in central NSW. Sky is coming to an end of a four-month drilling program at Tallebung and results to date suggest there will be a big increase in the last inferred and indicated resource estimate of 15.6Mt grading 0.15% tin for 23,000t contained, once all the data is in. It shouldn't take long after that to give the market a feel for its production capability. Given Tallebung is particularly amendable to ore sorting to bump its grade by a factor of five times, the project is likely to be shown to be capable of making Sky's current market many times over in years to come. It's early days at Doradilla in comparison but Sky's metallurgical breakthrough could well see it emerge as a multi-decade tin producer, possibly with rare earths and other metals as part of deal. The lowdown on Doradilla Sitting in semi-arid goat country, Doradilla was first drilled in the 1970s. It's part of a 17km linear skarn which hosts the Doradilla, Midway and 3KEL deposits – the famous (in exploration circles) DMK Line. Big name tin miners past and present (including Renison, Aberfoyle, North Ltd and YTC Resources) had a crack at unlocking the DMK Line but had basically packed up and left by the 1980s when it was realised that simple gravity separation would not work. Sky managing director Ollie Davies takes up the story: 'We've always been aware of the potential for the Doradilla project to host an extensive tin system, however our ability to progress this asset has been hindered by our ability to unlock the tin through a viable metallurgical processing route.' 'Now, through the application of a combination of conventional gravity, magnetic and new flotation process steps, we have achieved economic recoveries of up to 78% tin.' 'This is an exciting and very significant breakthrough which transforms the potential and outlook for this project. While our primary focus remains squarely on the Tallebung tin Project, where we are in the midst of a major resource expansion drilling campaign, Doradilla is clearly shaping up as a sizeable and very attractive pipeline development asset.' Drawing on Doradilla's historical database and its own work, and in light of the metallurgical success, Sky has been able to report a compliant 'Exploration Target' of 10-15 million tonnes grading 0.32-0.42% tin for 32,000-63,000t of contained metal. The target is based on a 2.5km section of Doradilla and there is another 2.5km of strike length on either side. So potentially at least, an already big exploration target could eventually be tripled. The Doradilla breakthrough comes as the tin market remains as strong as you like. The metal was last quoted on LME at $US33,312/t (three month). So it remains more than three times the copper price. The price jumps around depending on production news from operations in, shall we say, fraught locations around the world. Demand is super strong thanks to growing uses in solar panels and all the circuitry that needs to be connected to deliver AI. New mine developments in desirable locations are few and far between and like other critical metals, China has what could be a called an unhealthy grip on the market. Sky's share price did not move on Monday when the metallurgical breakthrough was revealed. Fair enough, the market is being cautious. But given Garimpeiro's suggestion that the company's market cap is more than covered by the Tallebung project, it seems likely it won't be long before the market begins to reward Sky for unlocking Doradilla.
Yahoo
14-03-2025
- Business
- Yahoo
We're Not Very Worried About Sky Metals' (ASX:SKY) Cash Burn Rate
Just because a business does not make any money, does not mean that the stock will go down. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But while the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse. Given this risk, we thought we'd take a look at whether Sky Metals (ASX:SKY) shareholders should be worried about its cash burn. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). Let's start with an examination of the business' cash, relative to its cash burn. View our latest analysis for Sky Metals A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. In December 2024, Sky Metals had AU$13m in cash, and was debt-free. Looking at the last year, the company burnt through AU$4.5m. That means it had a cash runway of about 2.8 years as of December 2024. That's decent, giving the company a couple years to develop its business. You can see how its cash balance has changed over time in the image below. Because Sky Metals isn't currently generating revenue, we consider it an early-stage business. So while we can't look to sales to understand growth, we can look at how the cash burn is changing to understand how expenditure is trending over time. With the cash burn rate up 11% in the last year, it seems that the company is ratcheting up investment in the business over time. That's not necessarily a bad thing, but investors should be mindful of the fact that will shorten the cash runway. Sky Metals makes us a little nervous due to its lack of substantial operating revenue. We prefer most of the stocks on this list of stocks that analysts expect to grow. While Sky Metals does have a solid cash runway, its cash burn trajectory may have some shareholders thinking ahead to when the company may need to raise more cash. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations. Sky Metals' cash burn of AU$4.5m is about 12% of its AU$37m market capitalisation. As a result, we'd venture that the company could raise more cash for growth without much trouble, albeit at the cost of some dilution. As you can probably tell by now, we're not too worried about Sky Metals' cash burn. In particular, we think its cash runway stands out as evidence that the company is well on top of its spending. Although its increasing cash burn does give us reason for pause, the other metrics we discussed in this article form a positive picture overall. Based on the factors mentioned in this article, we think its cash burn situation warrants some attention from shareholders, but we don't think they should be worried. Separately, we looked at different risks affecting the company and spotted 4 warning signs for Sky Metals (of which 3 are concerning!) you should know about. If you would prefer to check out another company with better fundamentals, then do not miss this free list of interesting companies, that have HIGH return on equity and low debt or this list of stocks which are all forecast to grow. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
