We feel now is a pretty good time to analyse Jervois Global Limited's (ASX:JRV) business as it appears the company may be on the cusp of a considerable accomplishment. Jervois Global Limited explores for and evaluates mineral properties in the United States, Brazil, Finland, Australia, and internationally. The AU$760m market-cap company’s loss lessened since it announced a US$21m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$8.1m, as it approaches breakeven. Many investors are wondering about the rate at which Jervois Global 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.
Check out our latest analysis for Jervois Global
Consensus from 3 of the Australian Metals and Mining analysts is that Jervois Global is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$73m in 2023. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Jervois Global's upcoming projects, however, take into account that by and large 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one issue worth mentioning. Jervois Global currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Jervois Global's case is 67%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Jervois Global 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 Global, take a look at Jervois Global's company page on Simply Wall St. We've also put together a list of key aspects you should further examine: