Health Check: How Prudently Does Anglesey Mining (LON:AYM) Use 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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We note that Anglesey Mining plc (LON:AYM) does have debt on its balance sheet. But is this debt a concern to shareholders?
Why Does Debt Bring Risk?
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 usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
How Much Debt Does Anglesey Mining Carry?
You can click the graphic below for the historical numbers, but it shows that as of September 2025 Anglesey Mining had UK£4.23m of debt, an increase on UK£3.96m, over one year. Net debt is about the same, since the it doesn't have much cash.
A Look At Anglesey Mining's Liabilities
The latest balance sheet data shows that Anglesey Mining had liabilities of UK£449.2k due within a year, and liabilities of UK£4.28m falling due after that. Offsetting this, it had UK£43.8k in cash and UK£35.4k in receivables that were due within 12 months. So it has liabilities totalling UK£4.65m more than its cash and near-term receivables, combined.
When you consider that this deficiency exceeds the company's UK£3.39m market capitalization, you might well be inclined to review the balance sheet intently. Hypothetically, extremely heavy dilution would be required if the company were forced to pay down its liabilities by raising capital at the current share price. When analysing debt levels, the balance sheet is the obvious place to start. But it is Anglesey Mining'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.
View our latest analysis for Anglesey Mining
Given its lack of meaningful operating revenue, investors are probably hoping that Anglesey Mining finds some valuable resources, before it runs out of money.
Caveat Emptor
Importantly, Anglesey Mining had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping UK£488k. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it had negative free cash flow of UK£349k over the last twelve months. That means it's on the risky side of things. 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. Be aware that Anglesey Mining is showing 5 warning signs in our investment analysis , you should know about...
At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.