When Will Nevada Copper Corp. (TSE:NCU) Turn A Profit?

With the business potentially at an important milestone, we thought we'd take a closer look at Nevada Copper Corp.'s (TSE:NCU) future prospects. Nevada Copper Corp. engages in the exploration, development, and operation of mineral properties in Nevada. The CA$122m market-cap company posted a loss in its most recent financial year of US$358m and a latest trailing-twelve-month loss of US$79m shrinking the gap between loss and breakeven. As path to profitability is the topic on Nevada Copper's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Nevada Copper

According to the 2 industry analysts covering Nevada Copper, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$19m in 2025. So, the company is predicted 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 71%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Nevada Copper given that this is a high-level summary, but, bear 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Nevada Copper currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Nevada Copper's case is 77%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Nevada Copper, so if you are interested in understanding the company at a deeper level, take a look at Nevada Copper's company page on Simply Wall St. We've also compiled a list of relevant 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.