Delta Lithium Limited's (ASX:DLI) Path To Profitability

We feel now is a pretty good time to analyse Delta Lithium Limited's (ASX:DLI) business as it appears the company may be on the cusp of a considerable accomplishment. Delta Lithium Limited explores for and develops lithium properties in Western Australia. The AU$214m market-cap company’s loss lessened since it announced a AU$8.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$7.4m, as it approaches breakeven. The most pressing concern for investors is Delta Lithium's 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 Delta Lithium

According to the 3 industry analysts covering Delta Lithium, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$15m in 2026. The company is therefore projected to breakeven around 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 -11%,

We're not going to go through company-specific developments for Delta Lithium given that this is a high-level summary, but, keep 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 that a low or volatile growth rate in the near future 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 quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of Delta Lithium to cover in one brief article, but the key fundamentals for the company can all be found in one place – Delta Lithium's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Historical Track Record: What has Delta Lithium's 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 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.