Explorer Quarterly Cash Update: March 2015

01 July 2015

Good news remains scarce, as junior explorers report another challenging quarter

This edition of the BDO Explorer Quarterly Cash Update is the seventh edition in our research series. With two years of data underpinning the series, a continual decline in the cash position of many ASX-listed mining, oil and gas explorers characterises an industry sector that is struggling to gain the support it needs from investors.

Given the lag time between drilling, discovering and developing, the reduction of exploration by juniors today has the potential to adversely impact the ability of producers to meet tomorrow’s supply demands.

Based on quarterly Appendix 5B reports lodged with the ASX, our analysis of the March 2015 quarter cash position of Australian-listed explorers shows a decline in the number of companies reporting, a reduction in those that are actually exploring, and a drop in average exploration expenditure.

Key findings from the March 2015 quarter include:

  • The 793 Appendix 5B reports lodged for the March quarter eclipses the previous low of 814 reports lodged in the December 2014 quarter
  • 12 per cent of explorers did not conduct any exploration activity, the highest level since BDO began analysing the sectors quarterly cash expenditure
  • Only 38 per cent of explorers had positive financing cash flows – again the lowest percentage since the analysis began
  • The number of companies with sufficient cash flow to continue net operational expenditures at present levels for more than two quarters has risen slightly to 57 per cent.