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    Here's Why We're Not Too Worried About Tesoro Gold's (ASX:TSO) Cash Burn Situation

    Simply Wall St·08/12/2026 00:45:41
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    There's no doubt that money can be made by owning shares of unprofitable businesses. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But while the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse.

    So should Tesoro Gold (ASX:TSO) 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'. Let's start with an examination of the business' cash, relative to its cash burn.

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    When Might Tesoro Gold Run Out Of Money?

    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 December 2025, Tesoro Gold had cash of AU$30m and no debt. In the last year, its cash burn was AU$17m. Therefore, from December 2025 it had roughly 22 months of cash runway. That's not too bad, but it's fair to say the end of the cash runway is in sight, unless cash burn reduces drastically. The image below shows how its cash balance has been changing over the last few years.

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    ASX:TSO Debt to Equity History August 12th 2026

    View our latest analysis for Tesoro Gold

    How Is Tesoro Gold's Cash Burn Changing Over Time?

    While Tesoro Gold did record statutory revenue of AU$320k over the last year, it didn't have any revenue from operations. That means we consider it a pre-revenue business, and we will focus our growth analysis on cash burn, for now. In fact, it ramped its spending strongly over the last year, increasing cash burn by 113%. It's fair to say that sort of rate of increase cannot be maintained for very long, without putting pressure on the balance sheet. 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 Hard Would It Be For Tesoro Gold To Raise More Cash For Growth?

    Given its cash burn trajectory, Tesoro Gold shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Companies can raise capital through either debt or equity. Many companies end up issuing new shares to fund future 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.

    Tesoro Gold's cash burn of AU$17m is about 9.2% of its AU$179m 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.

    Is Tesoro Gold's Cash Burn A Worry?

    Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Tesoro Gold's cash burn relative to its market cap was relatively promising. Cash burning companies are always on the riskier side of things, but after considering all of the factors discussed in this short piece, we're not too worried about its rate of cash burn. Taking a deeper dive, we've spotted 3 warning signs for Tesoro Gold you should be aware of, and 2 of them don't sit too well with us.

    Of course Tesoro Gold 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.