Burgundy’s Q2 Revenue Falls to $471M as Carats Recovered Rise

Operational Highlights and Financial Performance

Burgundy Diamond Mines Limited (ASX, BDM) released its Q2-2025 results showing a nuanced operational picture. The company mined more ore and recovered more carats compared to the previous quarter, largely driven by ore release from the Point Lake open pit and increased recovery from the Misery mine. However, the overall grade of ore processed declined by 26%, reflecting a higher proportion of lower-grade open pit ore in the blend.

This shift in ore quality weighed on revenue, which fell 6% quarter-on-quarter to US$471 million, while revenue per carat sold also declined. The adjusted EBITDA plunged 281% to just US$6.4 million, highlighting the earnings pressure from the lower-value ore mix and softer diamond prices.

Strategic Pivot, Point Lake on Care and Maintenance

In response to the uneconomic conditions at Point Lake, Burgundy has placed the mine on care and maintenance as of July 2025. Bulk sampling indicated that continuing operations at current diamond prices would not be viable. The company retains the option to restart Point Lake should market conditions improve, maintaining operational flexibility.

Cost control initiatives are underway, including vendor contract negotiations and a 'buy better, spend better' campaign. Processing plant operations have shifted to a batch schedule to reduce fixed costs, while efforts to enhance production capacity at the Misery Underground Group (MUG) are underway.

Extending Mine Life and Advancing Projects

On a more positive note, the Misery mine life has been extended by 2.5 years to the end of 2027 following a geological model update incorporating new drilling data. This update revealed a more gradual tapering of the ore pipe than previously thought, allowing for additional mining levels with relatively low capital expenditure.

Meanwhile, the Fox underground project is progressing with a pre-feasibility study that extends mine life by 14 years and demonstrates robust economics, including a post-tax net present value of US$272 million and an internal rate of return of 30% at US$250 per carat. Key development milestones are planned for 2026 and early 2027, supported by a $36 million critical path capital expenditure.

Balance Sheet and Cash Flow Considerations

Burgundy’s cash position weakened significantly during the quarter, ending June 2025 with just US$7.2 million in cash and cash equivalents, down from US$38.8 million at the end of March. Major cash outflows included a US$13.3 million fuel offtake repayment, US$10 million in capital expenditures, and US$29.5 million spent on Point Lake waste pre-stripping. Net debt increased to US$84 million, reflecting the challenging operating environment.

The company has also reduced diamond inventories, reflecting improved sales cycles and lower market values. Despite these pressures, Burgundy is maintaining a cautious but forward-looking stance, focusing on operational efficiencies, cost controls, and potential mergers and acquisitions to strengthen its position.