West Red Lake Gold Mines Ltd. (CVE:WRLG) Is About To Turn The Corner

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. engages in the acquisition, exploration and evaluation, and development of gold properties in Canada. The CA$204m market-cap company posted a loss in its most recent financial year of CA$33m and a latest trailing-twelve-month loss of CA$83m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which West Red Lake Gold Mines will turn a profit, with the big question being “when will the company breakeven?” 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 West Red Lake Gold Mines

Consensus from 4 of the Canadian Metals and Mining analysts is that West Red Lake Gold Mines is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of CA$39m in 2025. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 78% is expected, which is rather optimistic! 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 West Red Lake Gold Mines' upcoming projects, however, keep in mind that typically 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.

Before we wrap up, there’s one issue worth mentioning. West Red Lake Gold Mines currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in West Red Lake Gold Mines' case is 71%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

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.