When Will Resolute Mining Limited (ASX:RSG) Breakeven?
Resolute Mining Limited (ASX:RSG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Resolute Mining Limited engages in mining, exploration, development, operation, and production of gold properties in Africa, the United Kingdom, and Australia. With the latest financial year loss of US$319m and a trailing-twelve-month loss of US$160m, the AU$341m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Resolute Mining's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Resolute Mining
Resolute Mining is bordering on breakeven, according to the 4 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$25m in 2024. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 87%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Resolute Mining given that this is a high-level summary, but, keep in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we would like to bring into light with Resolute Mining is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Resolute Mining's case is 67%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Resolute Mining, so if you are interested in understanding the company at a deeper level, take a look at Resolute Mining's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:
Valuation: What is Resolute Mining 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 Resolute Mining 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 Resolute Mining’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.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
