Breakeven On The Horizon For Ionic Rare Earths Limited (ASX:IXR)

We feel now is a pretty good time to analyse Ionic Rare Earths Limited's (ASX:IXR) business as it appears the company may be on the cusp of a considerable accomplishment. Ionic Rare Earths Limited operates as a mineral exploration company. With the latest financial year loss of AU$8.5m and a trailing-twelve-month loss of AU$19m, the AU$84m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Ionic Rare Earths' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Ionic Rare Earths

Consensus from 3 of the Australian Metals and Mining analysts is that Ionic Rare Earths is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of AU$21m in 2026. Therefore, the company is expected to breakeven roughly 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 64%, 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 Ionic Rare Earths given that this is a high-level summary, however, take into account that generally 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. Ionic Rare Earths currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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.

Next Steps:

This article is not intended to be a comprehensive analysis on Ionic Rare Earths, so if you are interested in understanding the company at a deeper level, take a look at Ionic Rare Earths' company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is Ionic Rare Earths 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 Ionic Rare Earths is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Ionic Rare Earths’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.

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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.