On a positive note
Lindian Resources Limited (ASX:LIN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lindian Resources Limited, together with its subsidiaries, engages in the exploration of mineral properties in Tanzania, Guinea, Malawi, and Australia. With the latest financial year loss of AU$7.7m and a trailing-twelve-month loss of AU$5.3m, the AU$127m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Lindian Resources 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 Lindian Resources
According to some industry analysts covering Lindian Resources, breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$13m in 2026. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 91% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
earnings-per-share-growth
ASX:LIN Earnings Per Share Growth June 2nd 2024
Given this is a high-level overview, we won’t go into details of Lindian Resources' upcoming projects, but, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. 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. Lindian 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.
