New World Resources Limited (ASX:NWC): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at New World Resources Limited's (ASX:NWC) future prospects. New World Resources Limited engages in the exploration and development of mineral properties in North America. On 30 June 2022, the AU$88m market-cap company posted a loss of AU$15m for its most recent financial year. Many investors are wondering about the rate at which New World Resources will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for New World Resources

New World Resources is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$2.9m in 2025. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 91%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for New World Resources given that this is a high-level summary, though, take into account 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.

One thing we’d like to point out is that New World Resources 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. 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:

This article is not intended to be a comprehensive analysis on New World Resources, so if you are interested in understanding the company at a deeper level, take a look at New World Resources' company page on Simply Wall St. We've also put together a list of key aspects you should further research:

1. Historical Track Record: What has New World 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 New World 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.