Q: My question is on Cerrado Gold, a Canadian company that was a spin-off from a piece of junk I bought a long time ago. Its symbol on the venture exchange is CERT but it is not in your database. I was planning on selling it to clean up my portfolio but after some initial due diligence, it seems like it might be worth keeping. I find its balance sheet confusing in regards to its debt level so I want your thoughts before I do anything. Its a very small position so not a factor in my portfolio.
5i Research Answer:
CERT market cap is $43M, making it very much on the small side and hard for it to attract attention. Shares are down 25% in the past year. It does have revenue and positive cash flow, but shows losses in all years since the spin off. We show cash at $8.5M and total obligations at $21.2M. This is as of September 30. In November it did sell an asset for $30M cash so this can be now included. Thus it is net debt free with a bit of cash now. It produces about 55,000 ounces of gold annually. With operations in Argentina, there is some jurisdiction risk here. Insiders own 11%. All in, we would consider it OK, but not compelling enough to keep.