Spartan Resources Limited (ASX:SPR): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at Spartan Resources Limited's (ASX:SPR) future prospects. Spartan Resources Limited engages in the exploration, evaluation, and development of gold projects in Australia. On 30 June 2024, the AU$1.6b market-cap company posted a loss of AU$51m for its most recent financial year. As path to profitability is the topic on Spartan 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.

View our latest analysis for Spartan Resources

According to some industry analysts covering Spartan Resources, breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of AU$320m in 2027. The company is therefore projected to breakeven around 3 years from now. 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 108%, 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 Spartan Resources' growth isn’t the focus of this broad overview, however, bear 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Spartan Resources currently 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. 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 Spartan Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Spartan Resources' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is Spartan 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 Spartan 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 Spartan 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.

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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.