Explorer Quarterly Cash Update: December 2015

17 March 2016

Investors are looking to gold and lithium explorers to lead the revival

BDO’s report of the cash position of Australian-listed explorers for the December 2015 quarter (based on quarterly Appendix 5B reports lodged with the ASX), shows a significant decrease in the number of companies reporting and a stable median level of exploration expenditure.

There is a declining trend in the number of companies lodging their Appendix 5B reports from 780 for the June 2015 quarter to 778 for the September 2015 quarter and further to 753 in the December 2015 quarter. This trend can be mainly attributable to technology companies using exploration companies as a means to list on the ASX via the reverse takeover route and companies being delisted/suspended from the ASX as they explore other growth opportunities.

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

  • There have been 14 unlisted companies which back doored into listed exploration companies, with 8 of these unlisted companies holding technology assets.
  • 7 exploration companies have delisted, 3 entered into voluntary administration and three exploration companies completed an Initial Public Offering on the ASX. 
  • There has been an increase in the percentage of companies that have not undertaken exploration activities over the review period, which indicates that an increasing number of exploration companies are going into cash preservation mode.  
  • There has been an increase in the number of companies that have spent more than $1m on exploration activities, which reflects the willingness of the larger explorers to continue to spend on exploration.
  • The average exploration expenditure has continued to fall for the seventh straight quarter, though the median expenditure has remained relatively stable over the past four quarters, again supporting the notion that the larger exploration companies are continuing to explore, with the drop off being at the smaller end of the market.
  • The number of companies with nil investing cash flows has decreased from 393 to 351 which indicates greater investment activity, in the form of both purchasing and selling of assets.
  • The number of explorers with a net investment in capital expenditure has remained flat at approximately 33% between September 2015 and December 2015.
  • The number of companies that raised cash flows in excess of $10 million in the December 2015 quarter was 17, unchanged from the September 2015 quarter.

Please view our Explorer Quarterly Cash Update for insights on the cash position of ASX-listed entities as at the December 2015 quarter.