When Will Arizona Lithium Limited (ASX:AZL) Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Arizona Lithium Limited's (ASX:AZL) future prospects. Arizona Lithium Limited operates as a mineral exploration company in the United States. On 30 June 2023, the AU$111m market-cap company posted a loss of AU$14m for its most recent financial year. The most pressing concern for investors is Arizona Lithium's 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 Arizona Lithium

Arizona Lithium is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$14m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. 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 86%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Arizona Lithium given that this is a high-level summary, however, take into account 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Arizona Lithium has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which typically has high 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:

There are key fundamentals of Arizona Lithium 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 Arizona Lithium, take a look at Arizona Lithium's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is Arizona Lithium 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 Arizona Lithium 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 Arizona Lithium’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.