Market Sentiment Around Loss-Making Phoenix Copper Limited (LON:PXC)

Phoenix Copper Limited (LON:PXC) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Phoenix Copper Limited, together with its subsidiaries, engages in the exploration and mining activities for precious and base metals primarily in North America. With the latest financial year loss of US$1.5m and a trailing-twelve-month loss of US$1.1m, the UK£15m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Phoenix Copper's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Phoenix Copper

Phoenix Copper is bordering on breakeven, according to some British Metals and Mining analysts. They expect the company to post a final loss in 2024, before turning a profit of US$19m in 2025. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 97% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Phoenix Copper's upcoming projects, though, 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.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 5.3% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Phoenix Copper, so if you are interested in understanding the company at a deeper level, take a look at Phoenix Copper's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Historical Track Record: What has Phoenix Copper'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 Phoenix Copper'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.