Explorer Quarterly Cash Update: December 2020

11 March 2021

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

BDO’s latest research into the financial health of Australian-listed explorers for the December quarter of 2020 shows the strongest cash position since June 2013 (when BDO first commenced this analysis), with 78% of exploration companies reporting a cash balance of $1 million or more.

Financing cash inflows continued to grow and cash balances strengthened, increasing by 9% from $2.02 billion in the September 2020 quarter, to $2.21 billion in the December 2020 quarter. Additionally, net investing cash outflows increased by 325% to a two-year high of $536 million, with exploration spending following suit, increasing by 36% to $587 million.

The analysis shows that 43 companies (termed ‘Fund Finders’ in the report) raised funds of $10 million or more, and made up 61% of the $2.21 billion total funds raised. This $2.21 billion is the highest cash inflow that BDO has observed since commencing its analysis in 2013 and represents a 37% increase compared to the corresponding quarter of 2019. Equity markets continued to be the preferred source of funds, with ‘Fund Finders’ sourcing 80% of their funds through equity raisings.

The December quarter saw 20 recently floated exploration companies contribute to the inflow of funds for the quarter with many junior exploration companies capitalising on favourable equity markets and resource-friendly investor appetites. 

656 companies lodged an Appendix 5B in the last quarter, increasing from 642 in the previous September 2020 quarter. This was mainly driven by the 20 exploration companies that recently completed IPOs.

The quarterly analysis reported a declining trend in the number of companies lodging an Appendix 5B since June 2013. In June 2013, there were 860 companies that lodged quarterly cash flow reports, with a peak of 865 companies in September 2013. A sharp decline took place from the March 2014 quarter to the December 2016 quarter, when BDO observed that many exploration companies were either being delisted or being used as listing vehicles for backdoor listings, primarily by technology and biotechnology companies.

BDO expects the cash position of Australian explorers to continue to go from strength to strength this financial year. Explorers are confident that the ability to raise capital will continue throughout the year and are comfortable spending the cash on exploration activities.

Download the full Explorer Quarterly Cash Update for December 2020 below.