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Market Sentiment Around Loss-Making Orla Mining Ltd. (TSE:OLA)

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·3 min read
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We feel now is a pretty good time to analyse Orla Mining Ltd.'s (TSE:OLA) business as it appears the company may be on the cusp of a considerable accomplishment. Orla Mining Ltd. acquires, explores for, and develops mineral properties. With the latest financial year loss of US$28m and a trailing-twelve-month loss of US$27m, the CA$1.2b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Orla Mining will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Orla Mining

Consensus from 3 of the Canadian Metals and Mining analysts is that Orla Mining is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$92m in 2022. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Orla Mining given that this is a high-level summary, but, keep in mind that generally 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Orla Mining currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Orla Mining's case is 73%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Orla Mining which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Orla Mining, take a look at Orla Mining's company page on Simply Wall St. We've also put together a list of important factors you should further research:

  1. Historical Track Record: What has Orla Mining's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Orla Mining's board and the CEO’s background.

  3. 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.