We're Not Very Worried About Tanami Gold's (ASX:TAM) Cash Burn Rate

Alright, let's dive into the cash burn rate of Tanami Gold (ASX:TAM) and why we're not too concerned about it. First things first, what's cash burn? In simple terms, it's the rate at which a company is spending its cash reserves. Now, let's address the elephant in the room: Tanami Gold's cash burn rate.

Tanami Gold has been burning through cash at a rate of AU$6.0m per year. Now, that might sound like a lot, but let's put it into perspective. This is a relatively low cash burn rate compared to other gold mining companies. For instance, Newmont Corporation, one of the largest gold mining companies, had a cash burn of US$1.2 billion in 2021 (Source: Newmont's Annual Report 2021). So, Tanami Gold's cash burn rate is a mere drop in the bucket compared to its peers.



But why is Tanami Gold burning through cash? The primary driver of Tanami Gold's cash burn is its investment in exploration and development activities. The company is expanding its exploration and development activities in promising gold mining regions to increase reserves and production capacity. This is evident in the company's recent developments, such as the expansion of drilling activities at the Central Tanami Project and the announcement of a mineral resource update.

Now, you might be thinking, "That sounds like a lot of money to spend without any guarantee of a return." And you'd be right. Exploration and development activities are risky, but they're also necessary for the long-term growth and success of the company. Think of it like planting a seed. You might not see any immediate results, but with time, water, and sunlight, that seed can grow into a mighty tree.

Moreover, Tanami Gold's cash runway is 5.6 years, which is calculated by dividing its cash balance of AU$33m by its annual cash burn of AU$6.0m. This indicates that the company has a substantial amount of cash to fund its operations and growth for the foreseeable future. So, even if Tanami Gold continues to burn through cash at its current rate, it still has a healthy cash runway.

In conclusion, we're not very worried about Tanami Gold's cash burn rate. The company's cash burn rate is relatively low compared to its peers, and its cash runway is healthy. While the primary driver of Tanami Gold's cash burn is its investment in exploration and development activities, which is risky, it's also necessary for the long-term growth and success of the company. So, let's not sweat the small stuff and keep an eye on Tanami Gold's progress as it continues to explore and develop its gold mining projects.