When Will Rock Tech Lithium Inc. (CVE:RCK) Turn A Profit?

We feel now is a pretty good time to analyse Rock Tech Lithium Inc.'s (CVE:RCK) business as it appears the company may be on the cusp of a considerable accomplishment. Rock Tech Lithium Inc. engages in the exploration and development of lithium properties. The CA$144m market-cap company posted a loss in its most recent financial year of CA$29m and a latest trailing-twelve-month loss of CA$22m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Rock Tech Lithium will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Rock Tech Lithium

Consensus from 2 of the Canadian Metals and Mining analysts is that Rock Tech Lithium is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of CA$121m in 2026. So, the company is predicted to breakeven approximately 2 years from today. 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 101%, which is extremely buoyant. 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 Rock Tech Lithium given that this is a high-level summary, but, keep in mind 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. Rock Tech Lithium currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

1. Historical Track Record: What has Rock Tech Lithium's 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 Rock Tech Lithium'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com