Profitability PressureSubstantially lower gross margins and persistent negative operating and net margins indicate poor cost control or lower realized prices. If margins remain compressed, the business will struggle to generate sustainable earnings and fund growth without structural cost improvements.
Rising LeverageA higher debt-to-equity ratio increases financial rigidity and interest obligations. For a cyclical mining business, elevated leverage reduces flexibility to weather price dips, limits capital allocation to exploration and development, and raises refinancing and covenant risks.
Negative Free Cash FlowSustained negative free cash flow implies operations and investments are not self-funding. Over months this necessitates external financing or asset sales, increasing dilution or leverage risk and constraining reinvestment in projects critical for long-term production growth.