Burgundy Diamond Mines Limited (ASX:BDM) Could Be Less Than A Year Away From Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Burgundy Diamond Mines Limited's (ASX:BDM) future prospects. Burgundy Diamond Mines Limited, a diamond exploration company, focuses on developing diamond projects. On 30 June 2023, the AU$270m market-cap company posted a loss of AU$28m 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

Expectations from some of the Australian Metals and Mining analysts is that Burgundy Diamond Mines is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$155m 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 31%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Burgundy Diamond Mines' upcoming projects, but, keep in mind 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 19% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Burgundy Diamond Mines, so if you are interested in understanding the company at a deeper level, take a look at Burgundy Diamond Mines' company page on Simply Wall St. We've also put together a list of important factors 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.