In This Article:
Spartan Resources Limited (ASX:SPR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Spartan Resources Limited engages in the exploration, evaluation, and development of gold projects in Australia. The AU$1.5b market-cap company announced a latest loss of AU$51m on 30 June 2024 for its most recent financial year result. As path to profitability is the topic on Spartan Resources' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for Spartan Resources
Expectations from some of the Australian Metals and Mining analysts is that Spartan Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$245m in 2027. Therefore, the company is expected to breakeven roughly 3 years from today. 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 105%, 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 Spartan Resources' upcoming projects, though, keep in mind that typically 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.
One thing we’d like to point out is that Spartan Resources 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. 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 too many aspects of Spartan Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Spartan Resources' company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:
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Valuation: What is Spartan Resources 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 Spartan Resources 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 Spartan Resources’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.