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Ionic Rare Earths Limited (ASX:IXR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ionic Rare Earths Limited engages in the mining, refining, and recycling of magnet and heavy rare earth elements in Australia, Uganda, and United Kingdom. On 30 June 2024, the AU$36m market-cap company posted a loss of AU$21m for its most recent financial year. As path to profitability is the topic on Ionic Rare Earths' investors mind, we've decided to gauge market sentiment. 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 Ionic Rare Earths
According to the 2 industry analysts covering Ionic Rare Earths, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$23m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 123%, which is rather optimistic! 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 Ionic Rare Earths' upcoming projects, though, 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 aspect worth mentioning. Ionic Rare Earths currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Ionic Rare Earths 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 Ionic Rare Earths, take a look at Ionic Rare Earths' company page on Simply Wall St. We've also put together a list of essential factors you should further examine:
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Valuation: What is Ionic Rare Earths 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 Ionic Rare Earths is currently mispriced by the market.
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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 Ionic Rare Earths’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.