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Market Sentiment Around Loss-Making Lindian Resources Limited (ASX:LIN)

We feel now is a pretty good time to analyse Lindian Resources Limited's (ASX:LIN) business as it appears the company may be on the cusp of a considerable accomplishment. Lindian Resources Limited, together with its subsidiaries, engages in the exploration of mineral properties in Tanzania, Guinea, Malawi, and Australia. With the latest financial year loss of AU$7.7m and a trailing-twelve-month loss of AU$5.3m, the AU$150m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Lindian Resources' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Lindian Resources

According to some industry analysts covering Lindian Resources, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$13m in 2026. The company is therefore projected to breakeven around 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 91%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Lindian Resources' upcoming projects, however, 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.

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One thing we’d like to point out is that Lindian Resources has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

  1. Historical Track Record: What has Lindian Resources' 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 Lindian Resources' 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.