When Will Nevada Copper Corp. (TSE:NCU) Breakeven?

We feel now is a pretty good time to analyse Nevada Copper Corp.'s (TSE:NCU) business as it appears the company may be on the cusp of a considerable accomplishment. Nevada Copper Corp. engages in the exploration, development, and operation of mineral properties in Nevada. The company’s loss has recently broadened since it announced a US$20m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$24m, moving it further away from breakeven. The most pressing concern for investors is Nevada Copper's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Nevada Copper

Consensus from 4 of the Canadian Metals and Mining analysts is that Nevada Copper is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$11m in 2022. Therefore, the company is expected to breakeven just over a year 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 77%, 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 Nevada Copper's upcoming projects, but, take into account that by and large 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.

One thing we would like to bring into light with Nevada Copper is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Nevada Copper's case is 50%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Nevada Copper 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 Nevada Copper, take a look at Nevada Copper's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Nevada Copper 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 Nevada Copper 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 Nevada Copper’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.
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