We feel now is a pretty good time to analyse American West Metals Limited's (ASX:AW1) business as it appears the company may be on the cusp of a considerable accomplishment. American West Metals Limited, together with its subsidiaries, engages in the acquisition, exploration, and development of mineral projects in the United States and Canada. On 30 June 2024, the AU$38m market-cap company posted a loss of AU$17m for its most recent financial year. As path to profitability is the topic on American West Metals' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for American West Metals

American West Metals is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2026, before turning a profit of AU$51m in 2027. The company is therefore projected to breakeven around 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 89%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for American West Metals given that this is a high-level summary, but, 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. American West Metals currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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 American West Metals 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 American West Metals, take a look at American West Metals' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Historical Track Record: What has American West Metals' 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 American West Metals' 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.