Toubani Resources Limited's (ASX:TRE) Path To Profitability

Toubani Resources Limited (ASX:TRE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Toubani Resources Limited engages in the exploration and development of gold properties in West Africa. The company’s loss has recently broadened since it announced a AU$8.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$8.4m, moving it further away from breakeven. Many investors are wondering about the rate at which Toubani Resources will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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Expectations from some of the Australian Metals and Mining analysts is that Toubani Resources is on the verge of breakeven. They expect the company to post a final loss in 2026, before turning a profit of AU$88m 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 121% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Toubani Resources' upcoming projects, however, keep in mind that generally 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

See our latest analysis for Toubani Resources

Before we wrap up, there’s one aspect worth mentioning. Toubani Resources 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. 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 Toubani Resources, so if you are interested in understanding the company at a deeper level, take a look at Toubani Resources' company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Historical Track Record: What has Toubani 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 Toubani 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.