We're Not Very Worried About Koryx Copper's (CVE:KRY) Cash Burn Rate

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editorial-team@simplywallst.com (Simply Wall St)

Fri, Mar 28, 2025, 5:04 AM 4 min read

Just because a business does not make any money, does not mean that the stock will go down. By way of example, Koryx Copper (CVE:KRY) has seen its share price rise 190% over the last year, delighting many shareholders. 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 Koryx Copper's cash burn is. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. Let's start with an examination of the business' cash, relative to its cash burn.

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How Long Is Koryx Copper's Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at November 2024, Koryx Copper had cash of CA$18m and no debt. Importantly, its cash burn was CA$4.3m over the trailing twelve months. Therefore, from November 2024 it had 4.3 years of cash runway. A runway of this length affords the company the time and space it needs to develop the business. The image below shows how its cash balance has been changing over the last few years.

debt-equity-history-analysis — TSXV:KRY Debt to Equity History March 28th 2025

Check out our latest analysis for Koryx Copper

How Is Koryx Copper's Cash Burn Changing Over Time?

Because Koryx Copper isn't currently generating revenue, we consider it an early-stage business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. During the last twelve months, its cash burn actually ramped up 99%. While this spending increase is no doubt intended to drive growth, if the trend continues the company's cash runway will shrink very quickly. While the past is always worth studying, it is the future that matters most of all. So you might want to take a peek at how much the company is expected to grow in the next few years.

How Hard Would It Be For Koryx Copper To Raise More Cash For Growth?

Given its cash burn trajectory, Koryx Copper shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive 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).

Koryx Copper's cash burn of CA$4.3m is about 5.2% of its CA$82m 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 Koryx Copper's Cash Burn A Worry?

As you can probably tell by now, we're not too worried about Koryx Copper's cash burn. For example, we think its cash runway suggests that the company is on a good path. Although we do find its increasing cash burn to be a bit of a negative, once we consider the other metrics mentioned in this article together, the overall picture is one we are comfortable with. 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 Koryx Copper (3 are potentially serious!) that you should be aware of before investing here.

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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.