Explorer Quarterly Cash Update: March 2023

BDO’s latest research into the health of Australian-listed explorers for the March quarter of 2023 suggests that volatile financial markets have constrained the ability of the sector to raise funds, which in turn, has resulted in subdued operations and investment.

The March 2023 quarter witnessed a notable industry-wide slowdown due to deteriorating global macroeconomic conditions, including inflation and wavering commodity prices. However, gold remained popular as a safe haven investment and advanced-stage explorers were favourably positioned.

Government incentives supported critical minerals explorers, and battery metals continued to attract sustained investor interest.

Despite ongoing pressure and declining financing cash inflows, the sector has shown resilience and adaptability in challenging economic circumstances.

Exploration expenditure in the March 2023 quarter declined, with all signs indicating explorers are exercising caution with their spending as access to funds begins to ease amidst the economic uncertainty. However, explorers remain resilient by maintaining strong cash balances despite upward inflationary pressure. Most exploration companies still report sufficient funds for at least two quarters of operations, and those with less are optimistic in their ability to streamline costs or raise future funds.