Tis rigor and not law

Nathan Richardson of Mining Journal, Inigo Montoya, Excellon Resources and an Anorak

If it were a normal punter or somebody who isn’t trying to fake it as a financial journalist, it would be different and I wouldn’t care. Well that’s not true either, I would care because I’m a total Anorak and can’t help myself but if you, Nathan Richardson of Mining Journal, want to report and publish in a trade paper about all that money stuff you also need to know what the special words mean, instead of just assuming or guessing.

In the Mining Journal report on Excellon Resources (EXN) yesterday entitled “Platosa concerns overshadow Excellon’s record year” the note rounded off with (quote), “Shares in Excellon are currently trading at C95c, capitalising the company at $32m” and in the immortal words of Inigo Montoya…

…so Nathan Richardson, as well as Nathan’s sub-ed and probably even the editor at MJ need to write out 100 times “Capitalization Is Not Market Cap” (and use the Limey S if you insist).

Capitalization at Excellon Resources is much lower and that throwaway line at the end of a business wire report used by somebody pretending expertise bugged me so much it even got me checking EXN’s numbers tonight (Yes, I’m that nerdy). It depends on the system, but the standard formula for capitalization is “equity + retained earnings – debt” but let’s not go there, because if we used that EXN’s number would look very smelly indeed (for one thing the company has no earnings to retain, yok yok). However, there is an acceptable alternative formula of “current assets + equity – liabilities” and that gives the company a chance. So, we go to the 3q21 financials and learn that currents come to U$14.2m (which includes recoverable VAT and inventories, I’m being generous) while total liabilities are U$44.5m (with less than $4m of that non-cash). Meanwhile, this evening EXN in its US listing closed at U$0.72 and with 33.055m shares out, the market cap (i.e. what you thought you were talking about, Nathan) is U$23.8m.

Therefore: U$14.2m plus U$23.8m minus U$44.5m = Oh dear, EXN capitalization is below zero.

Any questions, Nathan?


    I’m not an accountant but I knew there is a difference between those 2 terms.
    Thanks for the EXN numbers.


    Kudos to these people for making it so easy to avoid their companies.


    “equity + retained earnings – debt”

    Do u mean [assets – debt = equity]?

    Equity, retained earnings and debt are claims of assets, so equity + r.e. – debt might be understating the capitalisation of a co.


    Anorak spelled backwards is Karona. You’re phonetically timely, eh?


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