WA1 Resources Ltd (ASX:WA1) On The Verge Of Breaking Even

WA1 Resources Ltd (ASX:WA1) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. WA1 Resources Ltd engages in the exploration and development of mineral resources in Western Australia and Northern territory. On 30 June 2024, the AU$957m market-cap company posted a loss of AU$3.5m for its most recent financial year. The most pressing concern for investors is WA1 Resources' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for WA1 Resources

Consensus from 2 of the Australian Metals and Mining analysts is that WA1 Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$800k in 2025. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 67%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of WA1 Resources' upcoming projects, however, keep in mind that typically 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, 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. WA1 Resources 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. 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:

This article is not intended to be a comprehensive analysis on WA1 Resources, so if you are interested in understanding the company at a deeper level, take a look at WA1 Resources' company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Historical Track Record: What has WA1 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 WA1 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.