Explorer Quarterly Cash Update: March 2016

31 May 2016

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

Research into the financial health of Australian Listed Explorers: Q3 (Quarter ended 31 March 2016)

BDO’s report on the cash position of Australian-listed explorers for the March 2016 quarter (based on quarterly Appendix 5B reports lodged with the ASX), again shows a decrease in the number of companies reporting and a decrease in the average of exploration expenditure.

There is a declining trend in the number of companies lodging their Appendix 5B reports from 778 for the September 2015 quarter to 753 in the December 2015 quarter and further to 737 in March 2016. We continue to see technology companies back-dooring into exploration companies, which explains a majority of the decline in the number of reporting companies. Partially offsetting this trend during the quarter has been five companies being reinstated from suspension following capital raisings. 

In summary, the key findings of the quarterly update reveal the following:

  • The average exploration expenditure has continued to fall for the eighth straight quarter to $362,000, a significant decrease from $432,000 in the December 2015 quarter.
  • There has been an increase in the percentage of companies that have not undertaken exploration activities, highlighting that companies are in cash preservation mode.
  • Those companies with cash are looking to hold onto it, whilst across the board exploration companies are cutting back on expenditure.
  • The current economic climate may be causing those companies with significant cash reserves to cut administration expenditure.
  • There are companies generating value through developing existing assets through to production. One of these success stories being Blackham Resources.
  • Exploration companies are slowly running down their cash balances, with the average cash balance decreasing from $5.15 million at 31 December 2015 to $4.82 million at 31 March 2016.
  • 14 companies were used as listing vehicles for backdoor listings, 13 of which were technology or biotechnology assets.
  • Two companies were delisted during the period, two exploration companies conducted an IPO and five were readmitted (from suspension) following a capital raising.
  • The number of companies that raised cash flows in excess of $10 million in the March 2016 quarter was seven, down from 17 in both the September 2015 and December 2015 quarters.

Please view our Explorer Quarterly Cash Update for insights on the cash position of ASX-listed entities as at the March 2016 quarter.