We Think Lifezone Metals (NYSE:LZM) Has A Fair Chunk Of Debt
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We note that Lifezone Metals Limited (NYSE:LZM) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?
Why Does Debt Bring Risk?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.
What Is Lifezone Metals's Debt?
The image below, which you can click on for greater detail, shows that at June 2025 Lifezone Metals had debt of US$30.4m, up from US$24.9m in one year. However, it also had US$13.0m in cash, and so its net debt is US$17.4m.
How Healthy Is Lifezone Metals' Balance Sheet?
The latest balance sheet data shows that Lifezone Metals had liabilities of US$45.2m due within a year, and liabilities of US$808.5k falling due after that. On the other hand, it had cash of US$13.0m and US$769.7k worth of receivables due within a year. So it has liabilities totalling US$32.2m more than its cash and near-term receivables, combined.
Given Lifezone Metals has a market capitalization of US$390.9m, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Lifezone Metals'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.
Check out our latest analysis for Lifezone Metals
Since Lifezone Metals has no significant operating revenue, shareholders probably hope it will develop a valuable new mine before too long.
Caveat Emptor
While Lifezone Metals's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. To be specific the EBIT loss came in at US$37m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through US$47m of cash over the last year. So in short it's a really risky stock. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. To that end, you should learn about the 3 warning signs we've spotted with Lifezone Metals (including 2 which make us uncomfortable) .
If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
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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.