When Will Galena Mining Limited (ASX:G1A) Turn A Profit?

With the business potentially at an important milestone, we thought we'd take a closer look at Galena Mining Limited's (ASX:G1A) future prospects. Galena Mining Limited engages in the acquisition and exploration of mineral projects in Australia. The AU$132m market-cap company announced a latest loss of AU$6.0m on 30 June 2020 for its most recent financial year result. As path to profitability is the topic on Galena Mining's 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 Galena Mining

Expectations from some of the Australian Metals and Mining analysts is that Galena Mining is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$21m in 2023. So, the company is predicted to breakeven approximately 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 79% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Galena Mining's upcoming projects, though, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Galena Mining 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. 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 key fundamentals of Galena Mining 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 Galena Mining, take a look at Galena Mining's company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Historical Track Record: What has Galena 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 Galena 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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This article by Simply Wall St is general in nature. 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.
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