With the business potentially at an important milestone, we thought we'd take a closer look at Jervois Mining Limited's (ASX:JRV) future prospects. Jervois Mining Limited explores for and evaluates mineral properties in the United States, Brazil, Australia, and Uganda. On 31 December 2020, the AU$361m market-cap company posted a loss of AU$48m for its most recent financial year. Many investors are wondering about the rate at which Jervois Mining will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Jervois Mining is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$22m in 2023. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 63% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Jervois Mining's growth isn’t the focus of this broad overview, but, bear in mind 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.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 0.08% 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.
There are key fundamentals of Jervois Mining 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 Jervois Mining, take a look at Jervois Mining's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:
Valuation: What is Jervois Mining 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 Jervois Mining is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Jervois Mining’s board and the CEO’s background.
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.
This article by Simply Wall St is general in nature. 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.
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