We're Keeping An Eye On Black Mammoth Metals' (CVE:BMM) Cash Burn Rate
Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the...
Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price. 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? So should Black Mammoth Metals (CVE:BMM) shareholders be worried about its cash burn? In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'.
The first step is to compare its cash burn with its cash reserves, to give us its 'cash runway'. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. How Long Is Black Mammoth Metals' Cash Runway? You can calculate a company's cash runway by dividing the amount of cash it has by the rate at which it is spending that cash. As at March 2025, Black Mammoth Metals had cash of CA$2.4m and no debt. Importantly, its cash burn was CA$4.4m over the trailing twelve months. So it had a cash runway of approximately 7 months from March 2025. That's quite a short cash runway, indicating the company must either reduce its annual cash burn or replenish its cash.
The image below shows how its cash balance has been changing over the last few years. TSXV:BMM Debt to Equity History July 31st 2025 View our latest analysis for Black Mammoth Metals How Is Black Mammoth Metals' Cash Burn Changing Over Time? Black Mammoth Metals didn't record any revenue over the last year, indicating that it's an early stage company still developing its business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. Remarkably, it actually increased its cash burn by 940% in the last year. With that kind of spending growth its cash runway will shorten quickly, as it simultaneously uses its cash while increasing the burn rate.
Black Mammoth Metals makes us a little nervous due to its lack of substantial operating revenue. We prefer most of the stocks on this list of stocks that analysts expect to grow. How Hard Would It Be For Black Mammoth Metals To Raise More Cash For Growth? Given its cash burn trajectory, Black Mammoth Metals shareholders should already be thinking about how easy it might be for it to raise further cash in the future. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth.
By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn. Story Continues Black Mammoth Metals' cash burn of CA$4.4m is about 5.9% of its CA$75m market capitalisation. Given that is a rather small percentage, it would probably be really easy for the company to fund another year's growth by issuing some new shares to investors, or even by taking out a loan. How Risky Is Black Mammoth Metals' Cash Burn Situation? Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Black Mammoth Metals' cash burn relative to its market cap was relatively promising.
After looking at that range of measures, we think shareholders should be extremely attentive to how the company is using its cash, as the cash burn makes us uncomfortable. Separately, we looked at different risks affecting the company and spotted 5 warning signs for Black Mammoth Metals (of which 4 are significant!) you should know about. If you would prefer to check out another company with better fundamentals, then do not miss this free list of interesting companies, that have HIGH return on equity and low debt or this list of stocks which are all forecast to grow. Have feedback on this article?
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