Hillgrove Resources Limited (ASX:HGO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Hillgrove Resources Limited operates as a mining company in Australia. The company’s loss has recently broadened since it announced a AU$6.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$7.2m, moving it further away from breakeven. As path to profitability is the topic on Hillgrove Resources' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Expectations from some of the Australian Metals and Mining analysts is that Hillgrove Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$15m in 2024. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 52% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Hillgrove Resources' upcoming projects, but, keep in mind that typically a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. Hillgrove Resources currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Hillgrove Resources, so if you are interested in understanding the company at a deeper level, take a look at Hillgrove Resources' company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:
Valuation: What is Hillgrove Resources worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Hillgrove Resources is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Hillgrove Resources’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks 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.