Burgundy Diamond Mines’ Revenue Drops 44% as Net Loss Hits $29.5 Million
Burgundy Diamond Mines posted a $29.5 million net loss for H1 2025, driven by operational disruptions and weaker diamond prices, leading to a temporary halt of mining at Point Lake. The company is navigating liquidity challenges with new financing arrangements while restructuring its operations.
- Net loss of $29.5 million for half-year ended June 2025
- 44% revenue decline to $125.2 million amid lower diamond sales
- Temporary suspension of Point Lake open pit mining due to depressed prices
- Secured fuel offtake financing and related party loans to manage working capital
- Executive turnover with CEO and CFO retirements; diamond cutting operations closed
Financial Performance and Operational Challenges
Burgundy Diamond Mines Limited (ASX – BDM) revealed a challenging first half of 2025, reporting a net loss of US$29.5 million, a sharp reversal from a restated profit of US$9.4 million in the same period last year. Revenue fell 44% to US$125.2 million, reflecting a combination of lower diamond carat recovery, a shift in ore blend from the higher-value Sable to Point Lake, and the impact of new tariffs. The company processed 34% less ore and recovered 33% fewer carats compared to H1 2024, underscoring operational headwinds.
The transition from Sable to Point Lake open pit mining was marred by wet and muddy conditions early in the year, disrupting ore supply. Meanwhile, underground operations at the Misery mine faced winter-related challenges that temporarily froze ore flow, though production improved in Q2 with enhanced mining techniques. Despite these efforts, the operational difficulties contributed to higher open pit mining costs and inventory write-downs totaling US$7.8 million.
Liquidity Management and Financing Initiatives
Facing a working capital deficit and a cash balance reduced to US$7.2 million by June 30, Burgundy has taken steps to shore up liquidity. The company secured a US$39.2 million fuel offtake financing agreement with a Macquarie Bank subsidiary, designed to smooth seasonal cash flow volatility. Additionally, it obtained short-term loans totaling US$43.4 million from a related party lender linked to a company managed by a director, with repayment structured through diamond inventory sales.
Despite these measures, Burgundy disclosed a material uncertainty regarding its ability to continue as a going concern. The company is actively negotiating further financing options, including potential deferral or refinancing of its US$73.8 million 2nd Lien Loan due in mid-2026, and is implementing cost-saving initiatives such as suspending non-critical capital projects and temporarily halting open pit mining at Point Lake.
Strategic and Corporate Developments
In a significant operational shift, Burgundy permanently closed its diamond cutting and polishing facility in Perth, pivoting towards strategic partnerships with international manufacturers, traders, and luxury brands to capture greater value along the diamond supply chain. This move aligns with the company’s focus on maximizing margins amid a challenging market environment.
Leadership changes marked the period, with CEO Kim Truter retiring at the end of May and Jeremy King stepping in as Interim CEO. The CFO and Company Secretary also transitioned, with Brad Baylis retiring and Brent Mierau appointed as the new Corporate Secretary. The company issued unlisted options to executives as part of remuneration, though some did not vest due to retirements.
Market Conditions and Future Outlook
The temporary suspension of Point Lake mining announced in July 2025 reflects the depressed diamond price environment, which rendered operations there sub-economic. This decision led to workforce reductions and a redundancy provision of approximately US$3.1 million. Burgundy’s ability to navigate these headwinds will depend heavily on diamond market recovery and successful capital raising efforts.
The company’s financial statements were restated due to a prior accounting error related to a royalty agreement, but this did not materially affect earnings per share. Burgundy continues to face significant operational and financial challenges, with management emphasizing ongoing efforts to stabilize production, improve cash flow, and secure additional funding.
Bottom Line?
Burgundy’s next chapter hinges on diamond market recovery and its success in securing fresh capital to sustain operations.
Questions in the middle?
- Will Burgundy secure the additional financing needed to avoid further operational disruptions?
- How will the suspension of Point Lake mining impact overall production and cash flow in the coming quarters?
- What strategic partnerships will Burgundy pursue to enhance margins after closing its polishing operations?