Cash runway

How it works

Working capital is current assets minus current liabilities. Both are on the balance sheet in the latest quarterly financial statements.

Monthly spending is general and administrative costs plus exploration. The MD&A breaks both out, usually by quarter, so divide the quarter by three. Many Canadian juniors capitalize exploration rather than expensing it, so it may not appear on the income statement; look in the cash flow statement or the exploration and evaluation note. The second figure shows the runway if exploration stopped and only overhead continued.

The runway counts from the balance sheet date, not from today. Statements are often two to five months old by the time they are read, so check for financings announced since.

Money raised through flow-through shares can only be spent on eligible exploration, and a flow-through premium liability is not cash the company owes, so leave it out of current liabilities.

The MD&A discusses liquidity and whether funds are sufficient for planned work. If there is a material uncertainty about the company continuing as a going concern, the notes to the statements and the auditor's report say so.

For education only. Not investment advice. The results are only as good as the numbers entered; check every figure against the company's own filings. See the Disclaimer.