Burgundy Reports $86.8M Loss, Secures $83.4M Canadian Tariff Loan

Financial Performance and Operational Challenges

Burgundy Diamond Mines Limited has released its preliminary unaudited financial results for the year ended 31 December 2025, reporting a net loss after tax of $86.8 million. While this marks an improvement from the prior year’s $103.2 million loss, the company’s revenue halved to $186.2 million from $442.1 million in 2024. The decline was primarily driven by the temporary suspension of mining operations at the Point Lake site, triggered by challenging market conditions and the imposition of significant tariffs between the USA and India, which rendered diamond prices sub-economic.

The suspension led to lower carat recoveries and reduced pricing realised during the year, severely impacting sales volumes and margins. Despite these headwinds, Burgundy managed to generate $42.6 million in operating cash flow, supported by income tax refunds and working capital adjustments aimed at conserving cash.

Liquidity Measures and Debt Restructuring

To address liquidity pressures, Burgundy secured up to $83.4 million (CDN$115 million) in loan financing through Canada’s Large Enterprise Tariff Loan Facility (LETL), a government-backed initiative designed to support enterprises affected by tariffs. As at 31 December 2025, $32.8 million had been drawn, with the remaining amount received shortly after year-end.

As part of the LETL Facility conditions, Burgundy restructured its existing 2L Loan, extending its maturity to December 2033 and subordinating it to the LETL Facility. This restructuring included a shift from quarterly cash interest payments to Payment in Kind (PIK) interest, capitalised over the next four years. The company also negotiated subordination agreements with surety bond providers and implemented structured payment plans with creditors to improve its credit position.

Operational and Corporate Changes

Operationally, Burgundy closed its Belgian marketing subsidiary, Arctic Canadian Diamond Marketing N.V., at the end of 2025, transferring sales and marketing functions to its Canadian subsidiary. The Perth polishing operations were also permanently closed mid-year, reflecting a strategic shift in response to market conditions.

The Group continues to hold a 40% interest in the Naujaat Project joint venture with North Arrow Minerals Inc., maintaining its exploration footprint despite the operational challenges.

Going Concern and Market Outlook

The company’s financial statements highlight a material uncertainty regarding its ability to continue as a going concern over the next 12 months. This uncertainty stems from the ongoing impact of tariffs on diamond prices, production delays, and the need for additional financing. Burgundy is actively exploring options to improve liquidity, including potential increases to the LETL Facility, cost rationalisation, and further capital raising.

While the Directors remain confident in the Group’s ability to continue operations, the situation remains contingent on securing additional funding and achieving forecast production and pricing levels in a volatile market environment.