Analysts Expect Breakeven For Rio2 Limited (CVE:RIO) Before Long

We feel now is a pretty good time to analyse Rio2 Limited's (CVE:RIO) business as it appears the company may be on the cusp of a considerable accomplishment. Rio2 Limited engages in the exploration, development, and mining of mineral properties in Canada, Peru, Bahamas, and Chile. The CA$241m market-cap company’s loss lessened since it announced a US$12m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$10m, as it approaches breakeven. The most pressing concern for investors is Rio2'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.

See our latest analysis for Rio2

According to the 2 industry analysts covering Rio2, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$28m in 2026. The company is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 78% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Rio2's growth isn’t the focus of this broad overview, though, take into account 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Rio2 has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Rio2 to cover in one brief article, but the key fundamentals for the company can all be found in one place – Rio2's company page on Simply Wall St. We've also put together a list of important factors you should further examine:

1. Valuation: What is Rio2 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 Rio2 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 Rio2’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.