Luca Mining Corp. (CVE:LUCA) Has Found A Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Luca Mining Corp.'s (CVE:LUCA) future prospects. Luca Mining Corp. engages in the acquisition, exploration, and development of mineral resource properties in North America. With the latest financial year loss of US$10m and a trailing-twelve-month loss of US$19m, the CA$427m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Luca Mining's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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Luca Mining is bordering on breakeven, according to the 2 Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$39m in 2025. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 128% year-on-year, on average, which signals high confidence from analysts. 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 Luca Mining's upcoming projects, however, bear in mind that typically 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.

View our latest analysis for Luca Mining

One thing we would like to bring into light with Luca Mining is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Luca Mining's case is 48%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Luca Mining to cover in one brief article, but the key fundamentals for the company can all be found in one place – Luca Mining's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Valuation: What is Luca Mining 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 Luca Mining 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 Luca Mining’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.