Assessing ATEX Resources (TSXV:ATX) Valuation After Warrant Proceeds And Expanded Phase VI Drilling Program

ATEX Resources (TSXV:ATX) is back in focus after warrant exercises brought in about CA$52.5 million, lifting cash to roughly CA$140 million and supporting a 5,000 metre expansion of its Phase VI drill program.

See our latest analysis for ATEX Resources.

Those fresh warrant proceeds and the Phase VI drill expansion come after a mixed short term price patch, including a 1 day share price return of 1.69% and a 30 day share price return decline of 3.23%. However, the 90 day share price return of 77.22% and one year total shareholder return of 97.18% suggest momentum has been strong over both the recent and multi year period.

If ATEX’s run has you thinking about other copper focused ideas, it could be worth scanning our list of 8 top copper producer stocks as a starting point for further research.

With ATEX trading at CA$4.20 against an average analyst price target of CA$4.73 and fresh cash supporting an expanded drill plan, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth?

Price to Book of 37x: Is it justified?

ATEX is trading on a P/B of 37x, while the last close sits at CA$4.20 and the shares trade richer than both sector and peer averages.

P/B compares the share price to the company’s net assets per share. It is often used for asset heavy businesses like miners and explorers. For a pre revenue, loss making explorer such as ATEX, a high P/B usually reflects how much investors are paying for the underlying copper gold project and future drilling results rather than current earnings.

Here, that 37x P/B stands out. It is much higher than the Canadian Metals and Mining industry average of 3.6x and also above the peer average of 20.7x, which indicates the market is assigning a richer tag to ATEX’s assets than to many comparable names. If those peers trade at materially lower multiples, the current P/B level implies a premium price for the same dollar of book value.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price to book ratio of 37x (OVERVALUED)

However, a rich 37x P/B and ongoing net loss of CA$69.54 million mean any drilling disappointment or funding setback could quickly challenge the current optimism.

Find out about the key risks to this ATEX Resources narrative.

Next Steps

If the mix of premium valuation and funding risk leaves you unsure, act quickly to review the underlying data and form your own view using our 3 important warning signs.

Looking for more investment ideas?

If ATEX feels fully priced or too concentrated, consider broadening your watchlist. The watchlist choices you make today can influence the opportunities you notice in the future.

• Target potential mispricings by scanning our list of 6 high quality undervalued stocks that combine solid fundamentals with prices that may not fully reflect their underlying strength.
• Focus on income-oriented ideas by reviewing 6 dividend fortresses that offer higher yields with an emphasis on stability and consistency.
• Seek to limit downside risk by checking 7 resilient stocks with low risk scores designed for investors who want exposure to equities without taking on higher risk scores.

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.

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