Explorer Quarterly Cash Update: September 2022

BDO’s latest research into the financial health of Australian-listed explorers for the September quarter of 2022 continues to provide positive signals, as exploration expenditure hits a record high and growing investment continues to be well-supported by high cash balances. 

The September 2022 quarter mirrored the June 2022 quarter in its expenditure, which was above the 1 billion dollar mark, setting another record. In the past, the sector has been dominated by gold and oil and gas companies in terms of sector spend, however, our expectation for the growing prominence in battery mineral exploration actualised this quarter, with four battery mineral companies making the top 10 list for exploration spends.

Investment spending by the sector showed a return to recorded levels in the December 2021 and March 2022 quarters, after the one-off net investment inflow recorded in the prior June 2022 quarter. These levels of investment spending are notably higher than historical levels, underpinned by strong cash balances and a continuation of funding following the COVID-19 recovery.

47 companies (which we have termed ‘Fund Finders’) raised funds of $10 million or more and made up 71% of the total raised. Gold companies led the way for most funds raised following the dominance of battery mineral fundraisings since June 2021.

Despite various challenges in the September 2022 quarter, explorers maintained their respective projects and exploration programmes. We also observe that battery mineral explorers demonstrated noteworthy resilience against a broadly based economic slowdown.

Based on our analysis of the September quarter, the sector is well placed to weather any forthcoming economic turbulence.

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