March 2022 quarter: activity slows after record high December 2021 quarter but explorers remain cash

March 2022 quarter: activity slows after record high December 2021 quarter but explorers remain cash

Latest research from business advisory firm BDO into the cash position of ASX-listed explorers shows activity in the sector has slowed following a record high finish to the 2021 calendar year, but explorers remain cashed-up for the future.

The largest decline was observed in the level of financing cash inflows, which decreased by 45 per cent from $3.75 billion in the December 2021 quarter to $2.07 billion in the March 2022 quarter. Sherif Andrawes, BDO’s Global Head of Natural Resources, said this was mainly driven by the reduced number of large capital raisings undertaken over the March quarter, which is consistent with historical data as fundraising activity tends to reduce at the start of a calendar year. Sherif said it was worth noting that cash positions remain healthy in comparison to historical averages.

Exploration spending across the sector also decreased by 14 per cent to $832 million but this remains higher than historical levels. The number of companies that raised funds of $10 million or more reduced from 71 in the December quarter to 44 this quarter, which is the same as for the September 2021 quarter. Sherif said that despite this decrease, the average financing inflow per explorer still exceeds historical averages – and is up 11.4 per cent compared to the average since the March 2017 quarter.

“We saw the sector hit record highs at the end of the last calendar year, which was very positive news for our explorers. And while our latest findings do show a decrease from that peak, all measures are still well ahead of long term average levels, and we know that funding activity tends to slow at the start of a calendar year,” Sherif said.

“We also observed the continued strength of the sector’s cash position, with 87 per cent of companies reporting cash balances of $1 million or more. This is a significant increase from the 69 per cent average we have seen since the March 2017 quarter. What this suggests to us is that the decrease in financing cash flows may not necessarily be a sign of capital markets turning, but could represent the strong cash position of explorers, who may be clicking over into spending mode,” he said.

Sherif said it was also interesting to note that while it is not immediately reflected in the level of total exploration spend - with total exploration expenditure decreasing by 14 per cent to $832 million this quarter – the proportion of companies that have spent $1 million or more was 29 per cent, which is up from a 3 year historical average of 21 per cent. He said despite the decline in exploration spend (on an aggregate basis) for the quarter, this still represents the third highest exploration spend recorded by the sector as a whole since the June quarter of 2014.

The number of companies that lodged Appendix 5Bs this quarter increased to 750, up from the 740 last quarter, the highest number since 2015. A key observation was the reduced number of newly-listed exploration companies in the March quarter, indicative of a slowdown in IPO activity. Sixteen companies that recently completed an IPO lodged an Appendix 5B for the first time in the March 2022 quarter, which is significantly lower than the 40 new companies in the December 2021 quarter and 32 new companies in the September 2021 quarter.

“These results provide some evidence that activity in the sector has slowed, but we think it is far too early to conclude that the period of strong performance we have seen has now ended. Our explorers are well-funded for future operations and the outlook on financing remains extremely positive. However, against a backdrop of geopolitical risk, high inflationary pressures and rising interest rates, it’s possible that capital markets will gradually become more selective in terms of where funds are allocated,” said Sherif.

“It is our view that the global push towards environmental, social and governance (ESG) is a key differentiating factor for exploration companies, and that those with strong ESG value propositions will remain ahead of those unable to adapt. We strongly believe this will be a key distinction for explorers into the future.”

Download March 2022 Explorer Quarterly Cash Update

Read the story in the AFR: Drop in exploration shows mining boom is peaking (

Read the story in The Australian: Cash not tossed around like confetti, but don't call end of mining's bull market just yet. (

Read the story in The West Australian: BDO report shows exploration softer in March quarter but still strong | The West Australian