Equus Mining Limited (ASX:EQE) Is About To Turn The Corner

By
Simply Wall St
Published
March 15, 2022
ASX:EQE
Source: Shutterstock

Equus Mining Limited (ASX:EQE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Equus Mining Limited operates as an exploration and development company in Chile. On 30 June 2021, the AU$29m market-cap company posted a loss of AU$1.7m for its most recent financial year. The most pressing concern for investors is Equus Mining's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Equus Mining

Expectations from some of the Australian Metals and Mining analysts is that Equus Mining is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$462k in 2022. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 134% is expected, 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.

earnings-per-share-growth
ASX:EQE Earnings Per Share Growth March 15th 2022

Underlying developments driving Equus Mining's growth isn’t the focus of this broad overview, but, take into account 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. Equus Mining currently has no debt on its balance sheet, which is rare for a loss-making 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:

There are too many aspects of Equus Mining to cover in one brief article, but the key fundamentals for the company can all be found in one place – Equus Mining's company page on Simply Wall St. We've also put together a list of important aspects you should further research:

  1. Historical Track Record: What has Equus Mining'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 Equus Mining'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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