Market Sentiment Around Loss-Making Lindian Resources Limited (ASX:LIN)

Lindian Resources Limited (ASX:LIN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lindian Resources Limited, together with its subsidiaries, engages in the exploration of mineral properties in Tanzania, Guinea, Malawi, and Australia. With the latest financial year loss of AU$7.7m and a trailing-twelve-month loss of AU$5.3m, the AU$127m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Lindian Resources 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.

Check out our latest analysis for Lindian Resources

According to some industry analysts covering Lindian Resources, breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$13m in 2026. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 91% 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 Lindian Resources' upcoming projects, but, bear in mind that typically 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.

Before we wrap up, there’s one aspect worth mentioning. Lindian Resources 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:

This article is not intended to be a comprehensive analysis on Lindian Resources, so if you are interested in understanding the company at a deeper level, take a look at Lindian Resources' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Historical Track Record: What has Lindian Resources' 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 Lindian Resources' 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.