Santana Minerals Limited (ASX:SMI): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at Santana Minerals Limited's (ASX:SMI) future prospects. Santana Minerals Limited engages in the exploration and evaluation of gold and silver properties in New Zealand, Cambodia, and Mexico. The AU$343m market-cap company announced a latest loss of AU$2.6m on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Santana Minerals 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 Santana Minerals

According to the 3 industry analysts covering Santana Minerals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$129m in 2027. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 84% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Santana Minerals' growth isn’t the focus of this broad overview, however, bear 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. 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 Santana Minerals 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 Santana Minerals, so if you are interested in understanding the company at a deeper level, take a look at Santana Minerals' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

1. Historical Track Record: What has Santana Minerals' 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 Santana Minerals' 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.