We feel now is a pretty good time to analyse Carnaby Resources Limited's (ASX:CNB) business as it appears the company may be on the cusp of a considerable accomplishment. Carnaby Resources Limited, together with its subsidiaries, engages in the exploration and development of mineral properties in Australia. On 30 June 2024, the AU$64m market-cap company posted a loss of AU$12m for its most recent financial year. As path to profitability is the topic on Carnaby 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 Carnaby Resources

Expectations from some of the Australian Metals and Mining analysts is that Carnaby Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$20m in 2027. Therefore, the company is expected to breakeven roughly 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Carnaby Resources' upcoming projects, though, keep in mind 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Carnaby Resources currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of 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 Carnaby Resources 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 Carnaby Resources, take a look at Carnaby Resources' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is Carnaby 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 Carnaby 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 Carnaby 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.