Loss-Making Caravel Minerals Limited (ASX:CVV) Expected To Breakeven In The Medium-Term

Caravel Minerals Limited (ASX:CVV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Caravel Minerals Limited, together with its subsidiaries, explores for mineral tenements. With the latest financial year loss of AU$11m and a trailing-twelve-month loss of AU$12m, the AU$81m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Caravel Minerals' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Caravel Minerals

Expectations from some of the Australian Metals and Mining analysts is that Caravel Minerals is on the verge of breakeven. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$263m in 2027. Therefore, the company is expected to breakeven roughly 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 89% 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.

Underlying developments driving Caravel Minerals' growth isn’t the focus of this broad overview, though, bear in mind that by and large 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Caravel Minerals currently has no debt on its balance sheet, which is rare for a loss-making 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:

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

1. Historical Track Record: What has Caravel Minerals' 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 Caravel Minerals' 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.

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

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.