Yahoo Finance Loss-Making Geopacific Resources Limited (ASX:GPR) Expected To Breakeven In The Medium-Term
With the business potentially at an important milestone, we thought we'd take a closer look at Geopacific Resources Limited's (ASX:GPR) future prospects. Geopacific Resources Limited engages in the exploration and development of gold and copper deposits in Papua New Guinea and Cambodia. The AU$149m market-cap company announced a latest loss of AU$4.6m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Geopacific Resources' 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.
Check out our latest analysis for Geopacific Resources
According to some industry analysts covering Geopacific Resources, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$36m in 2022. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Geopacific Resources given that this is a high-level summary, though, bear in mind 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that Geopacific Resources 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. 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:
This article is not intended to be a comprehensive analysis on Geopacific Resources, so if you are interested in understanding the company at a deeper level, take a look at Geopacific Resources' company page on Simply Wall St. We've also compiled a list of important aspects you should further research:
Valuation: What is Geopacific 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 Geopacific Resources is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Geopacific Resources’s board and the CEO’s background.
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.
This article by Simply Wall St is general in nature. 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.
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