Market Sentiment Around Loss-Making Tesoro Gold Ltd (ASX:TSO)

With the business potentially at an important milestone, we thought we'd take a closer look at Tesoro Gold Ltd's (ASX:TSO) future prospects. Tesoro Gold Ltd engages in the acquisition, exploration, and development of resource projects in Chile. The AU$143m market-cap company posted a loss in its most recent financial year of AU$1.9m and a latest trailing-twelve-month loss of AU$3.0m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Tesoro Gold 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 Tesoro Gold is on the verge of breakeven. They anticipate the company to incur a final loss in 2027, before generating positive profits of AU$2.0m in 2028. The company is therefore projected to breakeven around 3 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 4.4% is expected, which is fair. Should the business grow at a faster rate, it will become profitable at an earlier date than expected.

Underlying developments driving Tesoro Gold's growth isn’t the focus of this broad overview, but, keep 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. So, periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.

Check out our latest analysis for Tesoro Gold

Before we wrap up, there’s one aspect worth mentioning. Tesoro Gold currently has no debt on its balance sheet, which is rare for a loss-making 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 Tesoro Gold, so if you are interested in understanding the company at a deeper level, take a look at Tesoro Gold's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

1. Historical Track Record: What has Tesoro Gold's 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 Tesoro Gold'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.