Orezone Gold Corporation (TSE:ORE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Orezone Gold Corporation engages in the exploration and development of gold properties. With the latest financial year loss of US$19m and a trailing-twelve-month loss of US$15m, the CA$317m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Orezone Gold’s path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
According to the 3 industry analysts covering Orezone Gold, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$71m in 2023. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 40% year-on-year, on average, 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.
Underlying developments driving Orezone Gold’s growth isn’t the focus of this broad overview, however, keep 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. Orezone Gold currently has a debt-to-equity ratio of 159%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Orezone Gold 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 Orezone Gold, take a look at Orezone Gold’s company page on Simply Wall St. We’ve also put together a list of relevant factors you should further examine:
Valuation: What is Orezone Gold 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 Orezone Gold is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Orezone Gold’s board and the CEO’s background.
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.
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