Triple Flag Precious Metals (TSE:TFPM) Could Easily Take On More Debt

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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Triple Flag Precious Metals Corp. (TSE:TFPM) makes use of debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Triple Flag Precious Metals's Debt?

You can click the graphic below for the historical numbers, but it shows that Triple Flag Precious Metals had US$13.0m of debt in September 2025, down from US$35.0m, one year before. But it also has US$24.4m in cash to offset that, meaning it has US$11.4m net cash.

How Healthy Is Triple Flag Precious Metals' Balance Sheet?

According to the last reported balance sheet, Triple Flag Precious Metals had liabilities of US$37.7m due within 12 months, and liabilities of US$27.3m due beyond 12 months. On the other hand, it had cash of US$24.4m and US$21.5m worth of receivables due within a year. So it has liabilities totalling US$19.1m more than its cash and near-term receivables, combined.

Having regard to Triple Flag Precious Metals' size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the US$6.76b company is struggling for cash, we still think it's worth monitoring its balance sheet. While it does have liabilities worth noting, Triple Flag Precious Metals also has more cash than debt, so we're pretty confident it can manage its debt safely.

Check out our latest analysis for Triple Flag Precious Metals

Better yet, Triple Flag Precious Metals grew its EBIT by 11,091% last year, which is an impressive improvement. That boost will make it even easier to pay down debt going forward. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Triple Flag Precious Metals'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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Triple Flag Precious Metals has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Looking at the most recent three years, Triple Flag Precious Metals recorded free cash flow of 49% of its EBIT, which is weaker than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Summing Up

We could understand if investors are concerned about Triple Flag Precious Metals's liabilities, but we can be reassured by the fact it has has net cash of US$11.4m. And it impressed us with its EBIT growth of 11,091% over the last year. So is Triple Flag Precious Metals's debt a risk? It doesn't seem so to us. Another factor that would give us confidence in Triple Flag Precious Metals would be if insiders have been buying shares: if you're conscious of that signal too, you can find out instantly by clicking this link.

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.