Explorer Quarterly Cash Update: June 2023 quarter

Each quarter, BDO’s Natural Resources team compile a quarterly report that delivers insights into the financial health and cash position of ASX-listed exploration companies.

Our latest edition explores the June 2023 quarter which showcases a shifting landscape for explorers where M&A and consolidation are paving the path ahead.  

The current quarter shows a reset of investor sentiment, marked by the increase in financing, investment and exploration spending as cash balances generally remained healthy.

Explorers secured $2.84 billion in funding in the quarter, reflecting an increase of 111 per cent compared to the preceding March 2023 quarter, and 82 per cent of explorers reported cash balances of $1 million or higher.

Unsurprisingly, the largest exploration spends were among gold and lithium explorers, but there was also a revival in copper exploration.

An anticipated return in consolidation activity was confirmed, particularly in the gold sector. IPOs focussed on critical minerals, with lithium and rare-earth minerals taking centre stage with this trend expected to continue.  Furthermore, four newly listed companies entered our data set this quarter, all of which stepped into the critical minerals space, showing a healthy appetite in capital markets for explorers in this space.

Overall, data for the June quarter suggests the sector is still thriving, and favourable government incentives – such as the Critical Minerals Strategy – are poised to assist explorers in unlocking the potential beneath the surface and continue Australia on its path to becoming a well-diversified leader in energy transition minerals.

Looking ahead, we predict an increase in IPOs during the second half of 2023, with a focus on energy transition minerals, and the consolidation trend of explorers disappearing through acquisition to continue in the short-term.