When Will Core Lithium Ltd (ASX:CXO) Become Profitable?

We feel now is a pretty good time to analyse Core Lithium Ltd’s (ASX:CXO) business as it appears the company may be on the cusp of a considerable accomplishment. Core Lithium Ltd engages in the development of lithium and various metal deposits in Northern Territory and South Australia. The AU$1.9b market-cap company announced a latest loss of AU$7.5m on 30 June 2022 for its most recent financial year result. The most pressing concern for investors is Core Lithium’s path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Core Lithium

Core Lithium is bordering on breakeven, according to the 4 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$257m in 2024. So, the company is predicted to breakeven approximately 2 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 32%, 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.

Underlying developments driving Core Lithium’s growth isn’t the focus of this broad overview, however, 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Core Lithium 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 key fundamentals of Core Lithium 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 Core Lithium, take a look at Core Lithium’s company page on Simply Wall St. We’ve also put together a list of essential aspects you should further examine:

1. Valuation: What is Core Lithium 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 Core Lithium is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Core Lithium’s board and the CEO’s background.
3. 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.