Stock Analysis
Founded in 1984, Yorbeau Resources Inc is a Canadian company involved in mineral exploration in Quebec, Canada. The company primarily focuses on gold exploration, but has significant interest in zinc and copper exploration as well. Its exploration activities are concentrated in Quebec’s Abitibi Greenstone Belt, a region renowned for its rich mineral resources. The company’s strategic focus is on projects located in areas with accessible infrastructure.
Business Overview
Yorbeau Resources has 5 employees. The company has invested in 8 properties, with a brief on some of its key projects mentioned below: –
- Rouyn Property: Located in the heart of the Rouyn-Noranda mining camp in Quebec, the Rouyn Property offers exploration potential for Gold. Drilling has identified several mineralized zones, indicating high economic potential of the property for high-quality gold resources.
- Beschefer property: Located in northwestern Quebec, the property overs an area of approximately 4,075 hectares consisting of 128 claims with Yorbeau holding 100% in all claims. Copper appears to be the main mineral that the company aims to explore in the property.
- Selbaie West: The property is located 8 km west of the former Selbaie mine and has historically produced substantial amounts of copper, zinc, silver, and gold.
- Scott Lake: Approximately 20 km southwest of Chibougamau, the Scott Lake Property is a significant asset for Yorbeau. A 2017 Preliminary Economic Assessment reported indicated resources of nearly 18 million tonnes, with a projected pre-tax Net Cash Flow of $515.8 million.
- Other Holdings: The company also holds interests in the Lemoine, Landrienne, and Castagnier properties, among others
The tagline of the company is Creating Value through Exploration and aims to develop its projects into profitable mining operations.
Financial Analysis
| Profit and Loss | 9M 2024 | YoY Change | 2023 | YoY Change | 2022 | YoY Change | 2021 | YoY Change | Average Growth | CAGR |
| Revenue | $ 301,841 | 260% | $ 137,753 | -83% | $828,823 | -8% | $ 897,852 | -21% | 37% | -23% |
| Expenses | $ 838,174 | 6% | $ 2,530,242 | -23% | $3,301,591 | 80% | $ 1,834,447 | -32% | 8% | -21% |
| Operating Loss | $ (536,333) | -24% | $ (2,392,488) | -3% | $(2,472,768) | 164% | $ (936,595) | -40% | 24% | -19% |
| Net Interest Expenses | $ 51,666 | 572% | $ 6,550 | -64% | $18,022 | -44% | $ 32,010 | 113% | 144% | 28% |
| Net Comprehensive Loss | $ (587,999) | -18% | $ (2,436,538) | -3% | $(2,503,810) | 158% | $ (968,605) | -39% | 25% | -18% |
| Net Loss per share | $ (0.01) | 0.0% | $ (0.02) | 100% | $(0.01) | 0% | $ 0.01) | 0% | 25% | 0% |
| Balance Sheet | ||||||||||
| Total assets | $ 26,122,505 | -3% | $ 25,243,876 | -5% | $ 26,597,708 | -6% | $ 28,313,437 | 1% | -3% | -1% |
| Shareholders’ equity | $ 24,478,355 | -6% | $ 24,371,895 | -6% | $ 25,944,600 | -6% | $ 27,454,684 | 1% | -4% | -2% |
| Cash and Cash Equivalents | $ 290,496 | -45% | $ 222,759 | -41% | $ 376,012 | -80% | $ 1,886,476 | 29% | -34% | -28% |
| Loans | $ 800,000 | 1233% | $ 40,000 | -33% | $60,000 | 0% | $ 60,000 | 50% | 313% | 82% |
| Current Assets | $ 394,395 | -42% | $ 335,513 | -50% | $674,069 | -66% | $ 1,975,277 | 21% | -34% | -25% |
| Current Liabilities | $ 1,305,150 | 199% | $ 532,981 | 110% | $253,566 | -43% | $ 441,969 | -26% | 60% | 17% |
| Cash Flow | ||||||||||
| Cash Flow from Operating Activities | $ (863,308) | 27% | $ (967,512) | -11% | $ (1,083,824) | 18% | $ (914,806) | 11% | 11% | 1% |
*All Information is in Canadian Dollars
An analysis of the key financial figures for Yorbeau Resources reveals the following information:
- Revenue for Yorbeau Resources Inc has been on a declining trend with a CAGR of -23%. However, the company is improving in terms of Operating Loss and Net Loss, with both declining at a CAGR of 19% and 18% respectively. The company should continue on this growth trajectory to reduce losses, but focus on increasing revenues as well. The company’s high Net Loss in 2023 and 2022 can be attributed to impairment of mining properties and exploration and evaluation assets.
- Net interest expenses are rising rapidly at a CAGR of 28% from $32,010 in 2020 to $51,666 for the period ending 30-Sep’24. It is a huge concern for a company like Yorbeau Resources that has a negative operating cash and net losses. The company will need to either borrow or raise external debt in order to finance its operations and expenses.
- Cash and Cash Equivalents have declined at a CAGR of 28%, reducing from $1.9 Mn in 2020 to $290k for 9M 2024. The loans for the company have also increased significantly, currently standing at $800,000. And it has to pay an interest rate of 12% per annum payable monthly. Reducing cash and increasing debt increases financial risk on the company.
- In its related party section, Yorbeau Resources Inc mentions that they have unpaid promissory notes amounting to $750,000 to some directors bearing a rate of 12% per annum payable monthly. The transaction should raise a question in mind of investors if the directors are just loaning the money and getting a higher return for their personal benefit.
| Ratio Analysis | 9M 2024 | 2023 | 2022 | 2021 | Average |
| Operating Profit Margin | -177.7% | -1736.8% | -298.3% | -104.3% | -579.3% |
| Net Profit Margin | -194.8% | -1768.8% | -302.1% | -107.9% | -593.4% |
| Return on Equity | -2.4% | -10.0% | -9.7% | -3.5% | -6.4% |
| Cash Ratio | 0.22 | 0.42 | 1.48 | 4.27 | 1.60 |
| Current Ratio | 0.30 | 0.63 | 2.66 | 4.47 | 2.01 |
| Debt to Equity Ratio | 0.03 | 0.00 | 0.00 | 0.00 | 0.01 |
| Asset Turnover Ratio | 0.01 | 0.01 | 0.03 | 0.03 | 0.02 |
The Ratio Analysis for Yorbeau Resources reveals the following information:
- Revenue of the company is extremely low compared to its operating and net profits, with both negative and around 200% of revenue as per 9M 2024 data. It indicates a higher financial risk for investors and significant operational challenges and inefficiencies.
- ROE is negative, indicating the company is generating losses for shareholders. The Cash Ratio has declined from 4.27 in 2021 to 0.22 in 9M 2024, which suggests a deteriorating cash position.
- Debt to Equity is very low, indicating the company finances its activities primarily through the sale of its shares and equity.
- Current Ratio is very low at 0.3 for 9M 2024, indicating the company does not even have enough current assets to cover its short-term obligations. Asset Turnover ratio is very low at 0.01, indicating that the company is not efficiently utilizing its assets to generate revenue.
Share Price Performance
The shares of Yorbeau Resources Inc have rich history, with shares trading as early as 1996. The company’s shares are currently trading at CAD 0.04, with the current market cap of company being CAD 18.46 M CAD.
With a Beta of 0.44, the company’s shares are less volatile than the market. PE Ratio is negative as the company is loss-making. The share price has grown by 33.33% in the past year, but declined by 20% when considering a 5-years’ time frame. On August 7, 2024, Yorbeau closed a non-brokered private placement, by issuing 20,000,000 “flowthrough” Class A common shares at a price of $0.05 per share for aggregate gross proceeds of $1,000,000. Investors should be concerned about the long term growth prospects of the company.
Risks
Yorbeau resources primarily relies on Equity for financing. Ideally, capital should involve a mix of both debt and equity to avoid over-reliance on a single element. If the company is unable to obtain investments from existing investors or gather new investors in the future, it will face serious difficulties in financing its operations. Considering the negative cash flow, declining cash position and high debt, the company may even have to declare bankruptcy if it fails to turn around its fortunes soon. The company’s debt is also being serviced at an interest rate of 12%, which indicates that financial institutions consider the company risky and hence, charging higher interest rates to compensate for the risk involved. Additionally, the high involvement of related party transactions should raise some eyebrows.
Recent Developments
Yorbeau Resources Inc. recently announced the completion of sales of its Rouyn property to Lac Gold Inc. As per the transaction details, Yorbeau will receive a total of CAD 25 Million, with CAD 5 million already receive by the company. The remaining CAD 20 million will be received by the company in 3 equal instalments on December 2025, December 2026, and December 2027. Yorbeau has also retained a 2% net smelter returns royalty on any minerals produced from the Property. The proceeds from the transaction are expected to be used for funding exploration programs and pre-development activities on its other properties, as well as for general corporate purposes. It has already announced plans to invest CAD 2 million on some properties in Beschefer, Selbaie West, and Landrienne. The metals under exploration in this property are Copper, Zinc, Nickel, and Cobalt.
Should you Buy or Sell Yorbeau Resources Stock
Yorbeau Resources appears to be a highly risky company. The company has negative cash flow, revenue is declining, debt is increasing, and cash is also decreasing. It appears to be a huge financial risk.
However, the recent cash infusion of CAD 5 million from the company’s sale of its Rouyn property appears promising. Investors should ideally wait until the financial results for the fiscal year ending December 31, 2024 are reported, and even the following quarter if the results are positive. If Yorbeau is able to efficiently reduce its debt and enhance cash flow from the cash infusion, it may have a financial turnaround, resulting in an increase in the company’s share price.
Aaditya Shah
(Freelance Finance Content Writer)