Andean Silver Limited's (ASX:ASL) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Andean Silver Limited's (ASX:ASL) future prospects. Andean Silver Limited develops and explores for mineral properties in Australia. On 30 June 2024, the AU$143m market-cap company posted a loss of AU$10m for its most recent financial year. The most pressing concern for investors is Andean Silver's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Andean Silver

Expectations from some of the Australian Metals and Mining analysts is that Andean Silver is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$3.1m in 2026. The company is therefore projected to breakeven around 2 years 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 94% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Andean Silver's upcoming projects, but, bear 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.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 0.7% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Andean Silver to cover in one brief article, but the key fundamentals for the company can all be found in one place – Andean Silver's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Historical Track Record: What has Andean Silver'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 Andean Silver'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.