December 2016: Q2 – Explorer Quarterly Cash Update

21 March 2017

Sherif Andrawes , Global Head of Natural Resources
Partner, Corporate Finance

BDO Explorer Quarterly Cash Update: Third successive quarter of increased explorer spending reaffirms improved industry sentiment

This edition of the BDO Explorer Quarterly Cash Update reports on the cash position of Australian-listed explorers for the December 2016 quarter, based on quarterly Appendix 5B reports lodged with the ASX.

For the third consecutive quarter, there has been continued growth in exploration expenditure with an increase of 13% for the December 2016 quarter, with the average estimated cash outflows for the next quarter (March 2017) were almost 40% higher than estimates for the same period last year. This prediction indicates that industry sentiment is improving and that the trend of increasing exploration activity is likely to continue.

Key findings from the December 2016 quarter include:

  • The average exploration expenditure increased for the third successive quarter, from $0.45 million in the September 2016 quarter to $0.51 million in the December 2016 quarter. This indicates that the previous trend of declining exploration expenditure, and cash preservation is well and truly reversing.
  • In the December 2016 quarter, 690 companies lodged Appendix 5B reports, a decline from the 698 companies that lodged reports in the September 2016 quarter.
  • Reasons for the reduction included 11 companies being the subject of backdoor listings, seven of which were technology related companies, and five companies being delisted, suspended or entering administration. These were partially offset by the addition of six exploration companies that conducted an IPO during the quarter.
  • Investor appetite for gold stocks reduced over the quarter as a strong performing US economy alleviated uncertainty stemming from the US Presidential Election and its impact on the global economy.

Please download the Explorer Quarterly Cash Update for insights on the cash position of ASX-listed entities as at the December 2016 quarter.