- A capital structure includes outstanding shares, warrants, options, and any convertibles.
- Fully diluted share count includes everything that could become a share if exercised or converted.
- Capital structure determines per-share value once a project is monetized.
What is a capital structure?
A junior mining capital structure is the full list of securities the company has issued, including common shares, warrants, options, and any convertibles or other dilutive instruments. The capital structure is disclosed in the MD&A and financial statements every quarter.
Shares outstanding
Shares outstanding is the count of common shares currently issued. This is the denominator for basic earnings per share, basic market capitalization, and basic ownership percentage calculations.
Warrants
A warrant lets the holder buy a new share at a set strike price for a set period. Warrants issued during financings can sit on the books for years. In-the-money warrants are likely to be exercised at expiry; out-of-the-money warrants may expire worthless. Either way, they appear in the fully diluted count.
Stock options
Stock options are issued to directors, officers, and employees as compensation. They function like warrants from a dilution standpoint. The total option count and the weighted-average exercise price are disclosed in the financial statements.
Fully diluted vs basic
Fully diluted share count includes shares, warrants, options, and convertibles assumed to be exercised or converted. For a junior with significant warrant and option pools, fully diluted can be materially higher than basic shares outstanding. Fully diluted is the appropriate denominator for thinking about future per-share value.
| Instrument | Where to find it | Dilutive when |
|---|---|---|
| Common shares outstanding | MD&A and financial statements | Already in basic count |
| Warrants | MD&A and financial statements | Strike below market price |
| Stock options | Financial statement notes | Strike below market price |
| Convertibles | Financial statement notes | Conversion price below market |
Disclosure requirements follow Canadian securities regulation and TSX Venture Exchange or CSE policies depending on listing.
Frequently asked questions
Disclosure requirements follow Canadian securities regulation and TSX Venture Exchange or CSE policies depending on listing.
This article is published by Bellmare Capital, a brand operated by Apollo Shareholder Relations, for information and education only. It is not investment advice, a recommendation, or an offer or solicitation to buy or sell any security. Bellmare Capital is not a registered investment adviser or dealer, and this is not independent research.
Apollo Shareholder Relations provides paid investor relations, marketing and communications services to public companies, including companies in the sectors Bellmare Capital writes about, and may be compensated in cash or securities. Apollo, its principals, employees and contractors may hold securities of companies discussed and may buy or sell them at any time. Where an article covers a company that pays Apollo, it is labelled Sponsored at the top with the compensation and holdings.
Information comes from public filings and other sources believed to be reliable, but its accuracy and completeness are not guaranteed, and it may be out of date. Small cap and junior resource companies are speculative and volatile, and investors can lose their entire investment. Bellmare Capital and Apollo Shareholder Relations accept no liability for any loss arising from use of this content. Read each company's own filings on SEDAR+ and consult a registered adviser before acting.
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