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We Think Deep Sea Minerals (CSE:SEAS) Needs To Drive Business Growth Carefully

Simply Wall St · 2d ago

We can readily understand why investors are attracted to unprofitable companies. For example, Deep Sea Minerals (CSE:SEAS) shareholders have done very well over the last year, with the share price soaring by 500%. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.

So notwithstanding the buoyant share price, we think it's well worth asking whether Deep Sea Minerals' cash burn is too risky. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.

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When Might Deep Sea Minerals Run Out Of Money?

A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. As at June 2026, Deep Sea Minerals had cash of CA$1.6m and no debt. Importantly, its cash burn was CA$2.8m over the trailing twelve months. That means it had a cash runway of around 7 months as of June 2026. To be frank, this kind of short runway puts us on edge, as it indicates the company must reduce its cash burn significantly, or else raise cash imminently. The image below shows how its cash balance has been changing over the last few years.

debt-equity-history-analysis
CNSX:SEAS Debt to Equity History October 9th 2026

See our latest analysis for Deep Sea Minerals

How Is Deep Sea Minerals' Cash Burn Changing Over Time?

Deep Sea Minerals didn't record any revenue over the last year, indicating that it's an early stage company still developing its 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. Its cash burn positively exploded in the last year, up 11,282%. Given that sharp increase in spending, the company's cash runway will shrink rapidly as it depletes its cash reserves. Deep Sea Minerals 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 Easily Can Deep Sea Minerals Raise Cash?

Since its cash burn is moving in the wrong direction, Deep Sea Minerals shareholders may wish to think ahead to when the company may need to raise more cash. Companies can raise capital through either debt or equity. Many companies end up issuing new shares to fund future 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.

Deep Sea Minerals' cash burn of CA$2.8m is about 8.9% of its CA$31m 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 Deep Sea Minerals' Cash Burn A Worry?

On this analysis of Deep Sea Minerals' cash burn, we think its cash burn relative to its market cap was reassuring, while its increasing cash burn has us a bit worried. 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. Taking a deeper dive, we've spotted 6 warning signs for Deep Sea Minerals you should be aware of, and 4 of them are potentially serious.

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.