Exploration sector faces unprecedented challenges amidst declining investment and activity
The Australian exploration sector is experiencing a significant downturn, with key indicators such as capital raising, exploration expenditure, and company cash reserves all showing marked declines in the March 2025 quarter.
Capital raising efforts have dwindled, with only 26 companies raising over $10 million, a stark contrast to previous periods.
Additionally, exploration expenditure has fallen to $643.52 million, the lowest total since June 2021, reflecting a 19 per cent decrease from the previous quarter.
The average cash balance held by explorers has also decreased to $9.8 million, indicating a trend of capital discipline and cautious expenditure.
BDO Global Leader of Natural Resources & Energy, Sherif Andrawes said the data paints a concerning picture for the exploration industry.
“The sharp decline in capital raising and exploration expenditure signals a broader trend of investor caution and market uncertainty,” he said.
“Our analysis for the quarter indicates a gloomy start for exploration companies in calendar year 2025. In previous quarters, explorers have been resilient in the face of softening commodity prices, particularly for those in uranium and lithium.
“However, falling cash balances, reduced spending, and a declining number of companies reporting Appendix 5Bs are potential markers for further pain that may be felt by certain areas of the exploration sector.”
While most indicators were trending down, the gold sector remains a relative bright spot, attracting $621.2 million in financing, more than double the amount from the same period last year.
“This surge is attributed to gold's status as a safe-haven asset amidst ongoing macroeconomic volatility,” Sherif said.
“M&A activity in the gold sector has also increased, with notable transactions such as Gold Fields' acquisition of Gold Road Resources and Ramelius' offer for Spartan Resources.”
However, other commodities are not faring as well. Lithium financing has plummeted by 90 per cent, and uranium financing has ceased entirely.
The removal of the Junior Minerals Exploration Incentive from the Australian Federal Budget further exacerbated challenges for junior explorers.
"While gold remains resilient, other sectors are struggling. The elimination of supportive policies like the Junior Minerals Exploration Incentive adds to the difficulties faced by explorers.
“The outlook for the exploration sector remains uncertain, with ongoing challenges in capital raising and investment activity.”
For media enquiries:
Tate Papworth
Manager, Media
E: Tate.Papworth@bdo.com.au
Ph: 0433411189