Companies Like Southern Silver Exploration (CVE:SSV) Can Afford To Invest In Growth
Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the...
Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly. So should Southern Silver Exploration (CVE:SSV) shareholders be worried about its cash burn? In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth.
First, we'll determine its cash runway by comparing its cash burn with its cash reserves. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Does Southern Silver Exploration Have A Long Cash Runway? 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. As at July 2025, Southern Silver Exploration had cash of CA$16m and no debt. Looking at the last year, the company burnt through CA$4.5m. That means it had a cash runway of about 3.6 years as of July 2025. A runway of this length affords the company the time and space it needs to develop the business.
The image below shows how its cash balance has been changing over the last few years. TSXV:SSV Debt to Equity History September 27th 2025 See our latest analysis for Southern Silver Exploration How Is Southern Silver Exploration's Cash Burn Changing Over Time? Southern Silver Exploration didn't record any revenue over the last year, indicating that it's an early stage company still developing its business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. Over the last year its cash burn actually increased by 17%, which suggests that management are increasing investment in future growth, but not too quickly.
However, the company's true cash runway will therefore be shorter than suggested above, if spending continues to increase. Southern Silver Exploration 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. How Easily Can Southern Silver Exploration Raise Cash? Given its cash burn trajectory, Southern Silver Exploration shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt.
Many companies end up issuing new shares to fund future 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. Story Continues Since it has a market capitalisation of CA$156m, Southern Silver Exploration's CA$4.5m in cash burn equates to about 2.9% of its market value. That means it could easily issue a few shares to fund more growth, and might well be in a position to borrow cheaply. So, Should We Worry About Southern Silver Exploration's Cash Burn? As you can probably tell by now, we're not too worried about Southern Silver Exploration's cash burn.
For example, we think its cash runway suggests that the company is on a good path. While its increasing cash burn wasn't great, the other factors mentioned in this article more than make up for weakness on that measure. After taking into account the various metrics mentioned in this report, we're pretty comfortable with how the company is spending its cash, as it seems on track to meet its needs over the medium term. On another note, we conducted an in-depth investigation of the company, and identified 4 warning signs for Southern Silver Exploration (2 don't sit too well with us!) that you should be aware of before investing here.
Of course Southern Silver Exploration may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.