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With the business potentially at an important milestone, we thought we'd take a closer look at Delta Lithium Limited's (ASX:DLI) future prospects. Delta Lithium Limited explores for and develops lithium and gold properties in Western Australia. The AU$122m market-cap company announced a latest loss of AU$12m on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Delta Lithium will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Delta Lithium
According to the 3 industry analysts covering Delta Lithium, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$25m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 1.5% year-on-year, on average, which is a somewhat cautious outlook. Should the business grow at a faster rate, it will become profitable at an earlier date than expected.
We're not going to go through company-specific developments for Delta Lithium given that this is a high-level summary, though, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that Delta Lithium has no debt on its balance sheet, which is rare for a loss-making 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 Delta Lithium, so if you are interested in understanding the company at a deeper level, take a look at Delta Lithium's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:
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Historical Track Record: What has Delta Lithium's 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.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Delta Lithium's board and the CEO’s background.
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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.