Mandalay Resources Corporation (TSE:MND) Could Be Less Than A Year Away From Profitability

Mandalay Resources Corporation (TSE:MND) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Mandalay Resources Corporation, a natural resource company, engages in the acquisition, exploration, extraction, processing, and reclamation of mineral properties. The CA$141m market-cap company’s loss lessened since it announced a US$19m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$12m, as it approaches breakeven. As path to profitability is the topic on Mandalay Resources' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Mandalay Resources

Mandalay Resources is bordering on breakeven, according to some Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$4.8m in 2020. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 88% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Mandalay Resources given that this is a high-level summary, however, keep in mind that generally 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 would like to bring into light with Mandalay Resources is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Mandalay Resources' case is 56%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Mandalay Resources which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Mandalay Resources, take a look at Mandalay Resources' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Mandalay 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 Mandalay 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 Mandalay 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. 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.
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