Calidus Resources Limited (ASX:CAI): When Will It Breakeven?

Calidus Resources Limited (ASX:CAI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Calidus Resources Limited engages in the exploration and exploitation of gold minerals in Australia. The company’s loss has recently broadened since it announced a AU$6.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$20m, moving it further away from breakeven. As path to profitability is the topic on Calidus Resources' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Calidus Resources

According to some industry analysts covering Calidus Resources, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of AU$41m in 2025. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 111% year-on-year, on average, which signals high confidence from analysts. 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 Calidus Resources given that this is a high-level summary, but, keep in mind 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.

One thing we would like to bring into light with Calidus Resources is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Calidus Resources' case is 51%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Calidus Resources, so if you are interested in understanding the company at a deeper level, take a look at Calidus Resources' company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Valuation: What is Calidus Resources 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 Calidus Resources 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 Calidus Resources’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.