Analysts Expect Breakeven For Lunnon Metals Limited (ASX:LM8) Before Long

We feel now is a pretty good time to analyse Lunnon Metals Limited's (ASX:LM8) business as it appears the company may be on the cusp of a considerable accomplishment. Lunnon Metals Limited focuses on the exploration and development of nickel and gold in Australia. The AU$130m market-cap company announced a latest loss of AU$18m on 30 June 2023 for its most recent financial year result. Many investors are wondering about the rate at which Lunnon Metals will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Lunnon Metals

Lunnon Metals is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2024, before turning a profit of AU$44m in 2025. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 85% 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 Lunnon Metals' upcoming projects, though, bear in mind that typically 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. 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 Lunnon Metals has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which typically has high 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 Lunnon Metals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Lunnon Metals' company page on Simply Wall St. We've also compiled a list of important factors you should further research:

1. Historical Track Record: What has Lunnon Metals' 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 Lunnon Metals' 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.