Rio2 Limited (CVE:RIO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rio2 Limited engages in the exploration, development, and mining of mineral properties in Canada, Peru, Bahamas, and Chile. The CA$214m market-cap company’s loss lessened since it announced a US$12m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$10m, as it approaches breakeven. As path to profitability is the topic on Rio2's 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.

Check out our latest analysis for Rio2

According to the 2 industry analysts covering Rio2, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$28m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. 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 78%, 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 Rio2 given that this is a high-level summary, though, take into account that by and large 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.

One thing we’d like to point out is that Rio2 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:

This article is not intended to be a comprehensive analysis on Rio2, so if you are interested in understanding the company at a deeper level, take a look at Rio2's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

1. Valuation: What is Rio2 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 Rio2 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 Rio2’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.