Explorer Quarterly Cash Update: September 2017

09 January 2018

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

This edition of the BDO Explorer Quarterly Cash Update reaffirms the growing positive market sentiment towards the resources sector and speculation that the industry is primed for further growth in the coming periods.

Key findings from the September 2017 quarter include:

  • Exploration expenditure increases by 16% - the largest increase for a single Quarter since 2014
  • Financing cash inflows increase for third consecutive quarter
  • Nine exploration company IPOs for the quarter.

This growth was characterised by sustained increases in exploration expenditure and financing cash flows, in addition to nine new exploration companies conducting Initial Public Offerings (IPOs) during the quarter.

Exploration expenditure increased for the second consecutive quarter from $338 million in the June 2017 quarter to $393 million in the September 2017 quarter. This represents an increase of more than 16%, which is the largest increase exhibited during a single quarter since 2014. Financing cash inflows increased by 7% during the quarter to reach $1.39 billion. This suggests that the increased investor appetite for exploration companies exhibited last quarter may be sustained going forward.

The number of ASX listed exploration companies to lodge Appendix 5Bs increased for only the second time since the September quarter of 2013. This supports our theory that the number of exploration companies exiting the market is plateauing and that the resources sector is entering an upward trajectory.

This positive outlook is further supported by the 38% increase in the estimated next quarter cash outflows from the June 2017 quarter to the September 2017 quarter, which demonstrates the optimism that explorers have for their future prospects. A significant contrast from the 9% decline for the same period last year, in which total estimated cash flows for the December 2016 quarter were almost half of the estimate for the December 2017 quarter.

Please view our Explorer Quarterly Cash Update for insights on the cash position of ASX-listed entities as at the September 2017 quarter.