A new year has dawned, and it looks set to be a big one for Core Lithium Ltd (ASX: CXO) and its share price.
2023 is expected to be the year in which the company kicks off spodumene concentrate production at its flagship Finniss Lithium Project. But could it also be the year the company turns its first profit?
Right now, the Core Lithium share price is $1.185 – 16% higher than it was at the final close of 2022.
For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted nearly 2% so far this year.
Let's take a look at what the rest of 2023 might hold for the ASX 200 lithium favourite and whether the company's bottom line could end the year in the green.
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What might 2023 hold for Core Lithium shares?
The Core Lithium share price had a ripper in 2022 as the market's anticipation for the company's first revenue event grew. The stock surged 73% over the 12-month period.
And the big news came shortly after the new year began. Core Lithium announced the first shipment of lithium from the project had sailed, marking the company's first revenue event.
And the market likely won't be waiting long until the next big announcement. The company is expecting to kick off spodumene concentrate production in the current half.
Additionally, around 80% of the project's lithium is already secured under binding offtake agreements.
However, there's more to reaching profitability than bringing in revenue.
Let's dive into Core Lithium's balance sheet
Core Lithium posted a $7.46 million loss for financial year 2022.
Of course, the company's revenue would need to surpass its upcoming losses before it reaches profitability. It's hard to say whether that will occur in 2023.
It's also worth noting that around $27,000 of finanical year 2022's loss was attributed to exploration and evaluation expenses. At the company's recent annual general meeting, chair Greg English highlighted that its exploration budget for calendar year 2022 was its largest to date and was expected to double in 2023.
Thus, it's reasonable to assume the company's expenses might increase in the near future.
Though, it's worth noting it's managed to keep debt off of its balance sheet. That's no mean feat for a mineral exploration and development company!
It boasted $95.5 million of cash at the end of September and has since completed a $100 million capital raise, leaving it well funded for the time being.
Fellow ASX 200 lithium share's journey to profitability
To provide an example of how long lithium fans have previously waited for market favourites to break even, let's take a look back on Pilbara Minerals Ltd (ASX: PLS)'s journey to profitability.
Of course, the lithium industry was a different beast when the now-S&P/ASX 50 Index (ASX: XFL) giant was up-and-coming. It's also worth noting Pilbara Minerals is a starkly different company than Core Lithium. Thus, their respective paths to profitability will probably exhibit major differences.
Still, it wasn't that long ago that Pilbara Minerals was announcing its Pilgangoora Project's first shipment of lithium concentrate. The maiden shipment set sail in October 2018.
The following years, however, brought ups and downs for the lithium market. Pilbara Minerals' first profit ultimately wasn't reached until financial year 2022, when it came in at $560 million.
When might Core Lithium post a profit?
With that in mind, fans of Core Lithium shares may want to hedge their excitement for a 2023 profit.
Though, one broker is hopeful the company could start raking it in in the not-so-distance future.
Macquarie is tipping the company to post strong free cash flows by financial year 2024 and 2025, my Fool colleague Mitch reports.
