With the business potentially at an important milestone, we thought we'd take a closer look at KGL Resources Limited's (ASX:KGL) future prospects. KGL Resources Limited develops, explores, and evaluates mineral properties in Australia. The AU$143m market-cap company posted a loss in its most recent financial year of AU$3.0m and a latest trailing-twelve-month loss of AU$3.6m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which KGL Resources will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Expectations from some of the Australian Metals and Mining analysts is that KGL Resources is on the verge of breakeven. They expect the company to post a final loss in 2027, before turning a profit of AU$10m in 2028. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2028? Working backwards from analyst estimates, it turns out that they expect the company to grow 112% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving KGL Resources' growth isn’t the focus of this broad overview, but, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
View our latest analysis for KGL Resources
Before we wrap up, there’s one aspect worth mentioning. KGL Resources currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which typically has high 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:
There are too many aspects of KGL Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – KGL Resources' company page on Simply Wall St. We've also put together a list of important factors you should look at:
- Historical Track Record: What has KGL 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on KGL Resources' 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.
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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.