Here's Why We're Watching ATEX Resources' (CVE:ATX) Cash Burn Situation
There's no doubt that money can be made by owning shares of unprofitable businesses. For example, although Amazon.com...
There's no doubt that money can be made by owning shares of unprofitable businesses. For example, although Amazon.com made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com? Given this risk, we thought we'd take a look at whether ATEX Resources (CVE:ATX) shareholders should be worried about its cash burn. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow).
The first step is to compare its cash burn with its cash reserves, to give us its 'cash runway'. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. When Might ATEX Resources Run Out Of Money? A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. In June 2025, ATEX Resources had CA$26m in cash, and was debt-free. Importantly, its cash burn was CA$41m over the trailing twelve months. Therefore, from June 2025 it had roughly 8 months of cash runway.
Notably, analysts forecast that ATEX Resources will break even (at a free cash flow level) in about 3 years. Essentially, that means the company will either reduce its cash burn, or else require more cash. The image below shows how its cash balance has been changing over the last few years. TSXV:ATX Debt to Equity History October 1st 2025 Check out our latest analysis for ATEX Resources How Is ATEX Resources' Cash Burn Changing Over Time? Because ATEX Resources isn't currently generating revenue, we consider it an early-stage business. So while we can't look to sales to understand growth, we can look at how the cash burn is changing to understand how expenditure is trending over time.
Over the last year its cash burn actually increased by a very significant 57%. While this spending increase is no doubt intended to drive growth, if the trend continues the company's cash runway will shrink very quickly. While the past is always worth studying, it is the future that matters most of all. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company. How Easily Can ATEX Resources Raise Cash? Given its cash burn trajectory, ATEX Resources shareholders should already be thinking about how easy it might be for it to raise further cash in the future.
Companies can raise capital through either debt or equity. Commonly, a business will sell new shares in itself to raise cash and drive growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations. Story Continues ATEX Resources' cash burn of CA$41m is about 5.4% of its CA$763m market capitalisation. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money. Is ATEX Resources' Cash Burn A Worry?
Even though its cash runway makes us a little nervous, we are compelled to mention that we thought ATEX Resources' cash burn relative to its market cap was relatively promising. Shareholders can take heart from the fact that analysts are forecasting it will reach breakeven. Looking at the factors mentioned in this short report, we do think that its cash burn is a bit risky, and it does make us slightly nervous about the stock. On another note, ATEX Resources has 4 warning signs (and 3 which are a bit concerning) we think you should know about. Of course ATEX Resources may not be the best stock to buy.
So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.