Publication:

Explorer Quarterly Cash Update: June 2021

16 September 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 June quarter of 2021 shows spending hit a seven-year high of $666 million, representing a 34% increase over the two-year average.

The results are positive for the exploration sector with the uptick in expenditure reflecting recent quarters of successful fund raising, strong commodity prices and increased confidence in the resources sector since the COVID-19 outbreak. Exploration companies again raised record-breaking funds in the June 2021 quarter with explorers pocketing a total of $2.54 billion. If this trend continues the sector may see average exploration expenditure hit record highs by the end of the 2021 calendar year.

Based on the report, current cash balances indicate that exploration companies still have the capacity to spend more on exploration, but the extent to which an increase in expenditure is observed will likely continue to be limited by availability of resources, travel restrictions and skilled labour shortages.

Demand for particular commodities, most notably energy metals, is more likely to increase than decrease over the coming years, with data from the June 2021 quarter giving promising indicators that this activity is still sustainable at least to the end of the year and into the early parts of 2022.

Read the full report