LZM — financial distress indicators
Financial-health summary
LZM's reported numbers place it in the 'Very weak' financial-health band (distress score 87/100). The main indicators are operating profit does not cover interest, cash runway under 12 months and severe working-capital shortfall. Independently, the Ohlson accounting model puts its 1-year failure probability at 85% and the market-implied (Merton) default probability is 2.6%. In its favour: revenue still growing (+652% yoy).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Interest coverage (EBIT / interest) is -1.79×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
At the current free-cash-flow burn, cash covers ~6 months.
Going-concern standard: management must assess ability to continue for 12 months (ASC 205-40). Runway below that horizon forces dilution, asset sales or default.
Current ratio is 0.46 (current assets cover 46% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Debt is 30% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 1.72 → model probability 85%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Short-term debt is 1.8× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Revenue still growing (+652% YoY).
- High insider/promoter ownership (58%) aligns management with survival.
📰 Recent news scan
- Lifezone Metals Announces US$8 Million Reduction in Cap on Consideration Payable to BHP Following Continued IFC Performance Standard 5 AlignmentYahoo Finance · 2026-10-07
- Lifezone Metals H1 Earnings Call HighlightsYahoo Finance · 2026-07-30
- Lifezone Metals Limited Q2 2026 Earnings Call SummaryYahoo Finance · 2026-07-30
- Lifezone Announces Release Date of H1 2026 Interim Financial Results and Notice of Investor WebcastYahoo Finance · 2026-07-27
- Alaska Energy Metals Announces Positive Metallurgical Testing Results, Nikolai Nickel Project, AlaskaYahoo Finance · 2026-07-16
- Lifezone Metals Publishes 2025 Sustainability ReportYahoo Finance · 2026-07-09
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do LZM's financial-health indicators show?
As of 2026-10-08, LZM's public financial data places it in the 'Very weak' band with a distress score of 87/100, driven by operating profit does not cover interest, cash runway under 12 months and severe working-capital shortfall. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is LZM's financial distress score?
87/100 ('Very weak'). Ohlson O-score 1.72 (model 1-year failure probability 85%). Merton distance-to-default 1.95 σ (model default probability 2.6%).
What works in LZM's favour?
Revenue still growing (+652% YoY). High insider/promoter ownership (58%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Unclassified companies with distress indicators
- CNEY (CNEY)Very weak 100/100
- EPOW (EPOW)Very weak 100/100
- GIBO (GIBO)Very weak 100/100
- GNS (GNS)Very weak 100/100
- HKPD (HKPD)Very weak 100/100
- HUBC (HUBC)Very weak 100/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.