Mincor Resources NL's (ASX:MCR): Mincor Resources NL engages in the exploration, development, and mining of mineral resources in Australia. On 30 June 2019, the AU$235m market-cap posted a loss of -AU$13.7m for its most recent financial year. The most pressing concern for investors is MCR’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for MCR.
Expectation from Metals and Mining analysts is MCR is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of AU$200k in 2021. Therefore, MCR is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which MCR must grow year-on-year. It turns out an average annual growth rate of 101% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of MCR’s upcoming projects, however, keep 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 I’d like to point out is that MCR has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. This means that MCR 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.
There are key fundamentals of MCR which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at MCR, take a look at MCR’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:
- Valuation: What is MCR 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 MCR is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Mincor Resources’s board and the CEO’s back ground.
- 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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