Matador Mining Limited (ASX:MZZ) Is Expected To Breakeven In The Near Future

Matador Mining Limited (ASX:MZZ) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Matador Mining Limited engages in the mining and mineral exploration activities. The AU$58m market-cap company announced a latest loss of AU$2.5m on 30 June 2020 for its most recent financial year result. Many investors are wondering about the rate at which Matador Mining 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 Matador Mining

Consensus from 3 of the Australian Metals and Mining analysts is that Matador Mining is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$36m in 2023. Therefore, the company is expected to breakeven roughly 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which signals high confidence from analysts. 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, we won’t go into details of Matador Mining's upcoming projects, but, keep in mind that by and large 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.

Before we wrap up, there’s one aspect worth mentioning. Matador Mining currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high 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:

There are too many aspects of Matador Mining to cover in one brief article, but the key fundamentals for the company can all be found in one place – Matador Mining's company page on Simply Wall St. We've also put together a list of essential factors you should further research:

1. Valuation: What is Matador Mining 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 Matador Mining 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 Matador Mining’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. 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.
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