Is Bellevue Gold (ASX:BGL) Using Debt In A Risky Way?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that Bellevue Gold Limited (ASX:BGL) does use debt in its business. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Bellevue Gold Carry?

You can click the graphic below for the historical numbers, but it shows that Bellevue Gold had AU$98.5m of debt in June 2025, down from AU$216.9m, one year before. However, its balance sheet shows it holds AU$151.6m in cash, so it actually has AU$53.1m net cash.

How Strong Is Bellevue Gold's Balance Sheet?

The latest balance sheet data shows that Bellevue Gold had liabilities of AU$66.2m due within a year, and liabilities of AU$358.7m falling due after that. Offsetting this, it had AU$151.6m in cash and AU$4.24m in receivables that were due within 12 months. So its liabilities total AU$269.1m more than the combination of its cash and short-term receivables.

Since publicly traded Bellevue Gold shares are worth a total of AU$1.73b, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, Bellevue Gold also has more cash than debt, so we're pretty confident it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Bellevue Gold can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for Bellevue Gold

Over 12 months, Bellevue Gold reported revenue of AU$395m, which is a gain of 32%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is Bellevue Gold?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months Bellevue Gold lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through AU$53m of cash and made a loss of AU$46m. With only AU$53.1m on the balance sheet, it would appear that its going to need to raise capital again soon. Bellevue Gold's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. We've identified 1 warning sign with Bellevue Gold , and understanding them should be part of your investment process.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.