ASX explorers put record cash reserves to work as spending surges
ASX explorers put record cash reserves to work as spending surges
Australian-listed explorers are putting their record cash reserves to work, with exploration expenditure topping $1 billion as investment activity surged.
BDO’s latest Explorer Quarterly Cash Update found exploration expenditure reached $1.05 billion in the June quarter, the highest level since December 2023 and 26 per cent above the two-year average.
At the same time, net investing cash outflows jumped 61 per cent to $1.61 billion, their highest level since June 2023, as explorers deployed capital into project development, infrastructure and strategic growth initiatives.
Despite the sharp increase in spending, the sector ended the quarter with $13.04 billion in cash, maintaining record levels reached in March.
BDO Global Leader of Natural Resources and Energy, Sherif Andrawes, said the figures showed the substantial capital accumulated by explorers over the past year was increasingly moving off balance sheets and into projects.
“The story over the past few quarters has been the extraordinary amount of capital explorers have been able to accumulate. What we are now seeing is that capital being put to work,” Sherif said.
“Exploration spending is back above $1 billion, investment activity has accelerated significantly and, importantly, explorers have been able to do that while maintaining record levels of liquidity. “That points to a sector with both the confidence and financial capacity to advance projects despite continued geopolitical and macroeconomic uncertainty.”
BDO’s analysis of the sector’s 50 largest explorers by market capitalisation also showed capital remained concentrated among the bigger players.
The group held $6.84 billion, or 52 per cent of the sector’s total cash reserves, and accounted for 27 per cent of exploration expenditure during the quarter.
Gold remained the dominant commodity for investors; however it was rare earths that recorded one of the quarter’s most significant shifts.
Financing inflows into rare earths increased more than twelvefold from March, with three companies raising a combined $316.54 million.
Arafura Rare Earths topped the Fund Finder list after raising $175.53 million.
“The scale of the shift towards rare earths is significant and reflects the growing strategic importance investors are placing on secure critical mineral supply chains,” Sherif said.
Oil and gas also recorded its strongest funding result in at least five years, with nine companies raising more than $300 million as energy security and supply concerns continued to influence investment decisions.
Sherif said the allocation of capital reflected an increasingly strategic investment environment.
“Gold continues to attract capital as investors look for exposure to safe-haven assets, but the resurgence in rare earths and oil and gas shows geopolitical considerations are also increasingly shaping where money is going,” he said.
“Critical mineral supply chains and energy security are no longer peripheral issues for investors. They are becoming important considerations in capital allocation.”
Looking ahead, Sherif said changes to capital gains tax could emerge as a headwind for new exploration listings.
“The removal of the 50 per cent CGT discount could have an outsized impact on exploration IPOs because of the inherently higher-risk nature of the sector,” Sherif said.
“Exploration IPOs commonly seek to raise between $5 million and $10 million, and raising that capital may not necessarily be the problem.
The bigger challenge could be achieving the required spread of shareholders if the changes make retail investors less willing to participate.”
Sherif said the combination of record liquidity and accelerating expenditure left explorers well positioned heading into the second half of 2026.
“The sector has spent the past year building its financial firepower. We are now beginning to see what it intends to do with it.”
For media enquiries:
Tate Papworth
Manager, Media
E: Tate.Papworth@bdo.com.au
Ph: 0433411189