Explorer Quarterly Cash Update: December 2017

30 April 2018

This edition of the BDO Explorer Quarterly Cash Update indicates that Australia's mining industry is on the rebound with growing positive sentiment towards the resources sector, starting with a new cycle of investment across a range of commodities.

Stronger global economic growth and rising commodity prices is underwriting both new investment and mining operations, indicated by increases in both financing and investing cash flows for the December 2017 quarter.

Key findings from the December 2017 quarter include:

  • Total exploration expenditure increased by 7% for the quarter
  • Financing cash inflows increased by $668 million to $2.05 billion
  • Net investing cash flows more than doubled to $524 million compared to the September 2017 quarter.

These positive statistics become even more impressive when considered in light of the December quarter typically being the slowest quarter in terms of capital raisings and investment and exploration expenditure.

The number of companies lodging an Appendix 5B report increased to 703 for the December 2017 quarter, with 12 Initial Public Offerings (‘IPOs’) raising $69.8 million for the quarter. Two coal explorers and one gold explorer transitioned to production during the quarter and one company changed operations to focus on resource recovery.

Despite a projected 22% decrease in cash outflows for the March 2018 quarter, to $2.13 billion, we expect 2018 to be a big year for explorers. With automation and big data becoming a reality for the mining industry, we expect to see substantial productivity gains for the sector as a whole.

Please view our Explorer Quarterly Cash Update for insights on the cash position of ASX-listed entities as at the December 2017 quarter.