We Might See A Profit From Hillgrove Resources Limited (ASX:HGO) Soon

Hillgrove Resources Limited (ASX:HGO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Hillgrove Resources Limited engages in the operation, exploration, and development of mineral properties in Australia. The AU$164m market-cap company posted a loss in its most recent financial year of AU$24m and a latest trailing-twelve-month loss of AU$18m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Hillgrove Resources will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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Hillgrove Resources is bordering on breakeven, according to the 3 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$48m in 2026. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 44%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Hillgrove Resources' upcoming projects, though, take into account that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Check out our latest analysis for Hillgrove Resources

Before we wrap up, there’s one aspect worth mentioning. Hillgrove Resources currently has no debt on its balance sheet, which is rare for a loss-making 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:

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

1. Valuation: What is Hillgrove 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 Hillgrove 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 Hillgrove 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.

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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.