Latin Resources Limited's (ASX:LRS) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Latin Resources Limited's (ASX:LRS) future prospects. Latin Resources Limited explores and develops mining projects in Australia, Peru, Argentina, and Brazil. The AU$560m market-cap company announced a latest loss of AU$19m on 31 December 2023 for its most recent financial year result. As path to profitability is the topic on Latin Resources' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Latin Resources

According to the 3 industry analysts covering Latin Resources, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$110m in 2026. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 86% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Latin Resources' growth isn’t the focus of this broad overview, though, keep in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

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

1. Valuation: What is Latin Resources 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 Latin Resources 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 Latin Resources’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.