Explorer Quarterly Cash Update: June 2015

29 September 2015

Phillip Murdoch , Partner, Audit & Assurance |

Significant increase in funds raised by junior explorers

This edition of the BDO Explorer Quarterly Cash Update is the eighth edition in our research series.

Based on quarterly Appendix 5B reports lodged with the ASX, our analysis of the June 2015 quarter cash position of Australian-listed explorers shows significant improvement from the previous quarter, with an increase in the number of companies with positive financing cash flows. This indicates there is still investor appetite for good businesses at reasonable valuation levels.

Despite the positive financing cash flows, there was a marginal reduction in companies that are actually exploring, and a stable median level of exploration expenditure from the ones that are.

With more than two years of data underpinning the series, the trends show us that when times are tough, explorers are very adept at preserving their cash and surviving until better times emerge, however without being able to undertake an alternative strategy in the longer term, administration can be the ultimate outcome.

Key findings from the June 2015 quarter include:

  • 780 companies lodged Appendix 5B reports, a marginal decline from 793 in the previous quarter
  • There was a significant increase in the number of explorers with positive financing cash flows, with 47% of the companies being able to raise funds either via the capital raising route or through borrowings
  • The number of explorers who did not conduct any exploration activity has remained muted between the March 2015 and June 2015 quarter.