Is Atlas Lithium (NASDAQ:ATLX) Using Debt Sensibly?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Atlas Lithium Corporation (NASDAQ:ATLX) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Atlas Lithium Carry?

The chart below, which you can click on for greater detail, shows that Atlas Lithium had US$10.1m in debt in September 2025; about the same as the year before. However, it does have US$21.0m in cash offsetting this, leading to net cash of US$10.8m.

How Healthy Is Atlas Lithium's Balance Sheet?

According to the last reported balance sheet, Atlas Lithium had liabilities of US$6.38m due within 12 months, and liabilities of US$30.2m due beyond 12 months. On the other hand, it had cash of US$21.0m and US$1.46m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$14.2m.

Since publicly traded Atlas Lithium shares are worth a total of US$104.7m, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, Atlas Lithium boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Atlas Lithium's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

View our latest analysis for Atlas Lithium

Given its lack of meaningful operating revenue, investors are probably hoping that Atlas Lithium finds some valuable resources, before it runs out of money.

So How Risky Is Atlas Lithium?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that Atlas Lithium had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through US$32m of cash and made a loss of US$33m. With only US$10.8m on the balance sheet, it would appear that its going to need to raise capital again soon. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Be aware that Atlas Lithium is showing 5 warning signs in our investment analysis , and 2 of those are concerning...

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.