Investors flock to uranium as nuclear debate heats up

Investors flock to uranium as nuclear debate heats up

Exploration expenditure fell to a two-year low during the March 2024 quarter, BDO’s latest Explorers Quarterly Cash Update has revealed.

Although the previous quarter marked near-record exploration spending and abundant fundraisings, The March quarter saw financing cash inflows fall to $1.62 billion, representing a 39 per cent decrease on the $2.68 billion raised during the previous quarter.

In addition, financing inflows averaged $2.08 million per company, which marked a 29 per cent decrease on the two-year average of $2.92 million.

BDO Global Head of Natural Resources Sherif Andrawes said several factors contributed to the rocky quarter, which culminated in an overall 49 per cent decrease in net financing cash flows.

“The recent volatility in financing cash flows stems from the adverse reaction of capital markets to interest rate rises, which have been in play since May 2022,” Sherif said.

“This is likely to have been compounded by elevated inflation and uncertainty stemming from other macroeconomic and geopolitical events.

“However, despite wider macroeconomic factors, we also highlight a seasonal trend that has been apparent since the March 2015 quarter, in that capital raises tend to be lower in the March quarters.”

Significantly, fewer companies raised over $1 million during the March quarter, and the proportion of explorers raising no funds at all increased, nearing the two-year high seen this time last year.

Sherif said smaller explorers in particular were finding the current economic landscape challenging.

“Looming market uncertainty has contributed to a softening in capital markets, resulting in reduced funding availability, particularly for smaller explorers,” he said. 

“However, in contrast to this, advanced explorers and early-stage producers continued to gather investor support, with 38 companies raising capital in excess of $10 million.”

The quarter also marked the end of lithium and gold’s two year-long battle at the top of the most sought-after mineral resource, with Uranium emerging as the new leader as global conversation around nuclear energy intensifies.

“Contrary to gold, the uranium price growth is a story of a short-term supply gap on the back of a global mindset shift towards nuclear energy.

“While Australia wrestles with a domestic debate over the adoption of nuclear energy, 22 nations, committed to tripling their nuclear generation capacity by 2050.

“As Australia navigates its stance on nuclear energy, the international demand for uranium paints a dynamic outlook for the industry’s future with nuclear seeming to have an important role as a portfolio energy source in the energy transition.”

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