Is Integra Resources (CVE:ITR) A Risky Investment?

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Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies Integra Resources Corp. (CVE:ITR) makes use of debt. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

What Is Integra Resources's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Integra Resources had US$21.1m of debt, an increase on US$11.0m, over one year. But it also has US$63.3m in cash to offset that, meaning it has US$42.2m net cash.

A Look At Integra Resources' Liabilities

Zooming in on the latest balance sheet data, we can see that Integra Resources had liabilities of US$54.2m due within 12 months and liabilities of US$60.1m due beyond that. Offsetting these obligations, it had cash of US$63.3m as well as receivables valued at US$447.0k due within 12 months. So it has liabilities totalling US$50.7m more than its cash and near-term receivables, combined.

Since publicly traded Integra Resources shares are worth a total of US$281.4m, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, Integra Resources also has more cash than debt, so we're pretty confident it can manage its debt safely.

View our latest analysis for Integra Resources

Although Integra Resources made a loss at the EBIT level, last year, it was also good to see that it generated US$23m in EBIT over the last twelve months. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Integra Resources's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Integra Resources may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. During the last year, Integra Resources produced sturdy free cash flow equating to 63% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While Integra Resources does have more liabilities than liquid assets, it also has net cash of US$42.2m. So we don't have any problem with Integra Resources's use of debt. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 2 warning signs with Integra Resources (at least 1 which is significant) , and understanding them should be part of your investment process.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.