Is Premier African Minerals’ (PREM.L) Cash Burn a Cause For Concern?

2021 is being a favorable year for Premier African Minerals as the company increased its shares by more than 70%o n average. The values rose sharply to 0.3970 GBP in March 2021, particularly. That was the last four years’ maximum. However, just in one week, the shares declined to 0.2 points. Since that, the slope has been oscillating around 0.18 GBP. For the last month, the prices soared 0.24 GBP, but at the beginning of July, they dropped to 0.1950 GBP. With the company’s dropping values now, let’s have a look at its cash runway.

The cash runway of a company is calculated by dividing its cash hoard by its cash burn. Premier African Minerals has $727k in cash as of December 2020, according to its reports. Notably, its cash burn over the previous twelve months was US$802k. As of December 2020, it had a cash runway of about 11 months. That is a relatively short cash runway, implying that the company must either reduce its annual cash burn or replenish its cash.

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Premier African Minerals did not generate any revenue in the previous year, indicating that it is still in the early stages of development. Nonetheless, as part of the assessment of its cash burn situation, we can look at its cash burn trajectory. It is possible that the 11% decrease in cash burn over the last year is due to management tightening their belts as cash reserves deplete. We admit that we are wary of Premier African Minerals due to its lack of significant operating revenues.

Richard McEntire

Finance and Entertainment Reporter Richard is a bottle of wine - the older the sweeter. He has already found the sweetest hobby in writing entertainment and finance news for Own Snap. Readers get the updated posts regularly from him searching for real-time news.

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