Breakeven Is Near for West Red Lake Gold Mines Ltd. (CVE:WRLG)

We feel now is a pretty good time to analyse West Red Lake Gold Mines Ltd.'s (CVE:WRLG) business as it appears the company may be on the cusp of a considerable accomplishment. West Red Lake Gold Mines Ltd. acquires, explores, evaluates, and develops gold properties in Canada. The CA$301m market-cap company announced a latest loss of CA$107m on 31 December 2024 for its most recent financial year result. The most pressing concern for investors is West Red Lake Gold Mines' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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Consensus from 3 of the Canadian Metals and Mining analysts is that West Red Lake Gold Mines is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$72m in 2025. Therefore, the company is expected to breakeven roughly 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 70% year-on-year, on average, 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.

Underlying developments driving West Red Lake Gold Mines' growth isn’t the focus of this broad overview, but, bear 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

See our latest analysis for West Red Lake Gold Mines

Before we wrap up, there’s one issue worth mentioning. West Red Lake Gold Mines currently has a debt-to-equity ratio of 192%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of West Red Lake Gold Mines 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 West Red Lake Gold Mines, take a look at West Red Lake Gold Mines' company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

1. Valuation: What is West Red Lake Gold Mines 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 West Red Lake Gold Mines 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 West Red Lake Gold Mines’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.