Is Nevgold (CVE:NAU) Using Too Much Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. Importantly, Nevgold Corp. (CVE:NAU) does carry debt. But the real question is whether this debt is making the company risky.

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. 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, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Nevgold Carry?

The image below, which you can click on for greater detail, shows that at June 2025 Nevgold had debt of CA$3.43m, up from none in one year. But on the other hand it also has CA$3.84m in cash, leading to a CA$409.8k net cash position.

A Look At Nevgold's Liabilities

We can see from the most recent balance sheet that Nevgold had liabilities of CA$5.32m falling due within a year, and liabilities of CA$34.5k due beyond that. Offsetting this, it had CA$3.84m in cash and CA$73.7k in receivables that were due within 12 months. So it has liabilities totalling CA$1.44m more than its cash and near-term receivables, combined.

Of course, Nevgold has a market capitalization of CA$34.3m, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, Nevgold boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is Nevgold's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for Nevgold

Given its lack of meaningful operating revenue, investors are probably hoping that Nevgold finds some valuable resources, before it runs out of money.

So How Risky Is Nevgold?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months Nevgold lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through CA$5.1m of cash and made a loss of CA$4.9m. Given it only has net cash of CA$409.8k, the company may need to raise more capital if it doesn't reach break-even soon. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 6 warning signs for Nevgold (3 shouldn't be ignored) you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.