Loss-Making Jervois Global Limited (ASX:JRV) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse Jervois Global Limited's (ASX:JRV) business as it appears the company may be on the cusp of a considerable accomplishment. Jervois Global Limited engages in the exploration, development, and production of mineral properties. The AU$250m market-cap company announced a latest loss of US$55m on 31 December 2022 for its most recent financial year result. As path to profitability is the topic on Jervois Global's investors mind, we've decided to gauge market sentiment. 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 Jervois Global

Consensus from 3 of the Australian Metals and Mining analysts is that Jervois Global is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$58m in 2024. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 90% 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.

Underlying developments driving Jervois Global's growth isn’t the focus of this broad overview, but, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. 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 issue worth mentioning. Jervois Global currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Jervois Global's case is 55%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Jervois Global 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 Jervois Global 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 Jervois Global’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.