Breakeven Is Near for Burgundy Diamond Mines Limited (ASX:BDM)

Burgundy Diamond Mines Limited (ASX:BDM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Burgundy Diamond Mines Limited, a resources company, focuses on the mining, production, cutting, polishing, grading, and sale of diamonds. On 31 December 2023, the AU$284m market-cap company posted a loss of US$1.4m for its most recent financial year. Many investors are wondering about the rate at which Burgundy Diamond Mines will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Burgundy Diamond Mines

Burgundy Diamond Mines is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$115m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 7.6%, which is a somewhat cautious outlook. Should the business grow at a faster rate, it will become profitable at an earlier date than expected.

Underlying developments driving Burgundy Diamond Mines' growth isn’t the focus of this broad overview, but, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Burgundy Diamond Mines is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Burgundy Diamond Mines' case is 61%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Burgundy Diamond Mines 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 Burgundy Diamond Mines, take a look at Burgundy Diamond Mines' company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Valuation: What is Burgundy Diamond Mines 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 Burgundy Diamond Mines 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 Burgundy Diamond Mines’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com