Burgundy Faces Funding Crunch as Tariffs Force Point Lake Shutdown

Operational Challenges at Point Lake

Burgundy Diamond Mines Limited (ASX – BDM) reported a difficult quarter ending September 2025, marked by the suspension of mining activities at its Point Lake open pit operation. The decision was driven by challenging market conditions, notably the imposition of significant tariffs between the USA and India, which have depressed diamond prices to sub-economic levels for the Point Lake diamond population. This suspension has led to a notable decline in tonnes mined, processed, and carats recovered during the quarter.

In response, Burgundy is actively optimising its cost structure to align with the reduced mining footprint, signalling a pragmatic approach to navigating these headwinds.

Resilience at Misery and Life of Mine Extension

Contrasting the setbacks at Point Lake, operations at the Misery Underground mine remain robust, with healthy tonnes mined and brought to surface. Encouragingly, a successful drilling program has allowed Burgundy to update its resource model, extending the underground mine plan at Misery by an additional 2.5 years through to the end of 2027. This extension provides a valuable buffer and continuity for the company’s production profile.

Strong Economics for Fox Underground Project

Burgundy also released an updated pre-feasibility study (PFS) for its Fox Underground Project, which underscores the project’s strong economic potential. The PFS reveals a post-tax net present value (NPV) of US$272 million at a 9% discount rate for the Ore Reserves Case, with an internal rate of return (IRR) of 30%. An Upside Case, incorporating additional inferred resources, boosts the NPV to US$352 million and the IRR to 32%. The Fox Underground development is projected to support a mine life of 14 years, offering a significant long-term growth avenue for Burgundy.

Financial Position and Funding Efforts

Financially, Burgundy’s cash reserves have diminished to US$4.2 million as of 30 September 2025, with net debt (including diamond inventories) increasing to US$47.7 million. In light of these pressures, the company voluntarily suspended trading of its shares on 29 September and is actively pursuing emergency funding through the Canada Enterprise Emergency Funding Corporation’s Large Enterprise Tariff Loan Scheme. Burgundy is currently undergoing due diligence with CEEFC, seeking to secure the necessary capital to sustain operations and advance its projects.

Outlook Amid Market Uncertainty

While the suspension at Point Lake highlights the vulnerability of diamond mining operations to geopolitical trade tensions and market tariffs, Burgundy’s strategic focus on extending mine life at Misery and advancing the Fox Underground Project provides a pathway to stabilise and potentially grow production. The company’s ability to secure emergency funding will be critical in navigating the near-term challenges and capitalising on its promising project pipeline.