The March of the Zombie Miners Continues

Mining & Minerals - Evaluations

Date posted: 06/27/16

Jeff Desjardins reports that Canada has a reputation worldwide as the epicenter for mining exploration, and over the years the country junior-listed companies have created billions of dollars in wealth through new mineral discoveries. However, these days, Canada is home to a horror story that seems to haunt investors more each year .. 52% of all Canadian mining stocks are now zombies, and together the walking dead combine for a total of -$2.8 billion in negative working capital. It was just over a year ago that Tony Simon, President of Seguro Consulting, brought to our attention the initial problem of the zombie miners. In this case, his zombie definition referred to mining exploration companies that had negative working capital and therefore did not meet the Continuous Listing Requirements (CLR) for the TSX and TSX-V stock exchanges. The chart from last year called A Miner Problem detailed these requirements, while also showing the ugly state of the 589 listed companies balance sheets. Many of these companies have negative working capital because they have no real assets that can be monetized, while being saddled with mounting costs or unsustainable debt. Because there appears to be another year worth of information, as based on Mr. Simon, who is a CPA by designation. Here are the stats that caught his eye, most of which are also included in the chart ... The number of zombie miners increased from 589 to 669. Zombies now make up 52% (up from 40%) of all mining companies in Canada listed on TSX and TSX-V exchanges. The average zombie has had negative working capital for 44 months. Negative working capital of all zombie companies increased by 31.6% from -$2.15 billion (2015) to -$2.83 billion (2016). Of the original 589 zombies, 398 (68%) stayed as zombies the following year, and were counted towards 2016 total. Mr. Simon provided us with some additional stats on the companies carried forward: