Boab Metals Limited (ASX:BML): When Will It Breakeven?

We feel now is a pretty good time to analyse Boab Metals Limited's (ASX:BML) business as it appears the company may be on the cusp of a considerable accomplishment. Boab Metals Limited engages in the exploration of mineral tenements in Australia. With the latest financial year loss of AU$5.9m and a trailing-twelve-month loss of AU$5.1m, the AU$19m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Boab Metals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Boab Metals

Boab Metals 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$21m in 2026. The company is therefore projected to breakeven around 2 years from today. 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 120% year-on-year, on average, 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.

Given this is a high-level overview, we won’t go into details of Boab Metals' upcoming projects, though, keep in mind that generally 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 Boab Metals 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 Boab Metals, so if you are interested in understanding the company at a deeper level, take a look at Boab Metals' company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

1. Valuation: What is Boab Metals 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 Boab Metals 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 Boab Metals’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com