Delta Lithium Limited (ASX:DLI): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Delta Lithium Limited's (ASX:DLI) future prospects. Delta Lithium Limited explores for and develops lithium properties in Western Australia. The AU$164m market-cap company posted a loss in its most recent financial year of AU$8.5m and a latest trailing-twelve-month loss of AU$7.4m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Delta Lithium will turn a profit, with the big question being “when will the company breakeven?” 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 Delta Lithium

According to the 3 industry analysts covering Delta Lithium, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$25m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. 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 14%, which seems realistic. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Delta Lithium's growth isn’t the focus of this broad overview, but, bear in mind 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 a double-digit growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. Delta Lithium 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:

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

1. Valuation: What is Delta 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 Delta 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 Delta 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.