Here's Why We're Not At All Concerned With Apollo Silver's (CVE:APGO) Cash Burn Situation

Just because a business does not make any money, does not mean that the stock will go down. For example, Apollo Silver (CVE:APGO) shareholders have done very well over the last year, with the share price soaring by 106%. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

In light of its strong share price run, we think now is a good time to investigate how risky Apollo Silver's cash burn is. In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. Let's start with an examination of the business' cash, relative to its cash burn.

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When Might Apollo Silver Run Out Of Money?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at February 2025, Apollo Silver had cash of CA$12m and no debt. Importantly, its cash burn was CA$3.6m over the trailing twelve months. That means it had a cash runway of about 3.5 years as of February 2025. There's no doubt that this is a reassuringly long runway. The image below shows how its cash balance has been changing over the last few years.

View our latest analysis for Apollo Silver

How Is Apollo Silver's Cash Burn Changing Over Time?

Apollo Silver didn't record any revenue over the last year, indicating that it's an early stage company still developing its business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. As it happens, the company's cash burn reduced by 16% over the last year, which suggests that management are maintaining a fairly steady rate of business development, albeit with a slight decrease in spending. Admittedly, we're a bit cautious of Apollo Silver due to its lack of significant operating revenues. So we'd generally prefer stocks from this list of stocks that have analysts forecasting growth.

Can Apollo Silver Raise More Cash Easily?

Even though it has reduced its cash burn recently, shareholders should still consider how easy it would be for Apollo Silver to raise more cash in the future. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Many companies end up issuing new shares to fund future growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).

Apollo Silver's cash burn of CA$3.6m is about 4.5% of its CA$80m market capitalisation. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money.

Is Apollo Silver's Cash Burn A Worry?

As you can probably tell by now, we're not too worried about Apollo Silver's cash burn. In particular, we think its cash runway stands out as evidence that the company is well on top of its spending. Its weak point is its cash burn reduction, but even that wasn't too bad! After taking into account the various metrics mentioned in this report, we're pretty comfortable with how the company is spending its cash, as it seems on track to meet its needs over the medium term. On another note, we conducted an in-depth investigation of the company, and identified 5 warning signs for Apollo Silver (3 are concerning!) that you should be aware of before investing here.

Of course Apollo Silver may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.