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Galena Mining Limited (ASX:G1A): Are Analysts Optimistic?

Galena Mining Limited's (ASX:G1A): Galena Mining Limited engages in the acquisition and exploration of mineral projects in Australia. The AU$102m market-cap company announced a latest loss of -AU$2.4m on 30 June 2019 for its most recent financial year result. The most pressing concern for investors is G1A’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for G1A’s growth and when analysts expect the company to become profitable.

View our latest analysis for Galena Mining

Expectation from Metals and Mining analysts is G1A is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$25m in 2022. G1A is therefore projected to breakeven around 2 years from today. What rate will G1A have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 75%, which is rather optimistic! If this rate turns out to be too aggressive, G1A may become profitable much later than analysts predict.

ASX:G1A Past and Future Earnings, February 21st 2020
ASX:G1A Past and Future Earnings, February 21st 2020

Underlying developments driving G1A’s growth isn’t the focus of this broad overview, though, 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing I’d like to point out is that G1A 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 G1A 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 G1A to cover in one brief article, but the key fundamentals for the company can all be found in one place – G1A’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further examine:

  1. Historical Track Record: What has G1A's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Galena Mining’s board and the CEO’s back ground.

  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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.