We feel now is a pretty good time to analyse Liontown Resources Limited's (ASX:LTR) business as it appears the company may be on the cusp of a considerable accomplishment. Liontown Resources Limited engages in the exploration and evaluation of mineral properties in Australia. With the latest financial year loss of AU$13m and a trailing-twelve-month loss of AU$9.7m, the AU$1.8b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Liontown Resources' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Liontown Resources

Consensus from 2 of the Australian Metals and Mining analysts is that Liontown Resources is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$30m in 2024. 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 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 51% 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.

Given this is a high-level overview, we won’t go into details of Liontown Resources' upcoming projects, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. Liontown Resources currently 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 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:

There are key fundamentals of Liontown 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 Liontown Resources, take a look at Liontown Resources' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Historical Track Record: What has Liontown Resources' 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 Liontown Resources' 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.

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.

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