EXCLUSIVE TO SIGHTLINEU3O8 – One of the first questions asked by investors is “what’s your burn”? That is, how much money is management spending on administration and overhead, relative to the money being spent in the field/on the project?
In order to be consistent, we took a look at the last 24 months of each company’s reported results (as available at March 31, 2018) and recorded the total cash overhead costs, ignoring non-cash items such as share based payments and any “other income or loss” items. What we derived is each company’s average monthly overhead costs.
Second, we compared those figures to the total amount of exploration and development dollars that each company managed during the same 24-month period. That is, how many dollars of fieldwork are managed for every dollar of overhead cost?
The results are very interesting, but one must be reminded not to evaluate any single metric in isolation. For instance, you will note that among development companies, NexGen maintains one of the top burns at nearly $600,000 per month. However, for every $1.00 they spend on overhead, they manage $5.46 in exploration and development, nearly four times the average of the group ($1.46). As a matter of fact, more than half of the development companies spend more on overhead, than they spend on their projects.
On the exploration side, Purepoint Uranium appears to run the most efficient operation managing $9.38 in exploration work for every dollar in overhead (group average $1.84).