Breakeven On The Horizon For Calidus Resources Limited (ASX:CAI)

·3 min read

We feel now is a pretty good time to analyse Calidus Resources Limited's (ASX:CAI) business as it appears the company may be on the cusp of a considerable accomplishment. Calidus Resources Limited engages in the exploration and exploitation of gold minerals in Australia. The company’s loss has recently broadened since it announced a AU$4.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$6.2m, moving it further away from breakeven. The most pressing concern for investors is Calidus Resources' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Calidus Resources

Calidus Resources is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2022, before turning a profit of AU$63m in 2023. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 91% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Calidus Resources' upcoming projects, but, bear 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. 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. Calidus Resources currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Calidus Resources' case is 79%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Calidus Resources, so if you are interested in understanding the company at a deeper level, take a look at Calidus Resources' company page on Simply Wall St. We've also put together a list of key aspects you should look at:

  1. Valuation: What is Calidus 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 Calidus Resources 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 Calidus Resources’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting