Q4 2021 resource exploration hits eight-year high of A$973 million

Q4 2021 resource exploration hits eight-year high of A$973 million

Latest research from business advisory firm BDO shows total resource exploration hit an eight-year high of A$973 million for the Q4 2021. This figure is up from the previous figure of A$877 million in Q3 2021.

BDO’s research into the financial health of Australian-listed resource explorers listed on the ASX for the quarter ended 31 December 2021 shows record IPO activity, capital raisings, and investment spending.

The flurry of activity over the last quarter of 2021 saw 740 companies lodge Appendix 5Bs, which is 36 more than the 704 companies in the September 2021 quarter.

“Exploration has yet again seen record-breaking level of funds flowing, with inflows totalling a record $3.75 billion in Q4 2021. This was up from the previous record of $2.55 billion pocketed in Q3 2021,” said Sherif Andrawes, BDO’s Global Head of Natural Resources.

The growth in financing cash inflows to $3.75 billion in funds represents a 47% increase from the September 2021 quarter, which translates to an average financing inflow of $5.06 million per company.

“The exploration sector is not slowing, despite the record levels of activity we saw throughout 2021,” said Sherif. “The sector is continuing to send out very positive signals, with growing investment and exploration spending still well-supported by a steady access to funding. In fact, net investing outflows finally showed the uptick we anticipated, increasing by 263% from the September 2021 quarter, reaching $1 billion.”

As in the September 2021 quarter battery mineral companies were prominent, spurred along by trends such as rising electric vehicle adoption and lower carbon emission targets. Larger investment spends were undertaken by lithium exploration and development companies primarily in relation to the acquisition of new exploration assets, infrastructure and plant and equipment.

“By acquiring strategic assets that form part of the wider supply chain of electric vehicle batteries, companies focused on lithium have positioned themselves to become more than just a lithium miner, but also a provider of battery products and components that feed into the broader EV and renewables industries.”

BDO expects that the growth in exploration activity will continue in light of strong cash positions and the higher number of listed exploration companies, but note that this growth may continue to be constrained by the availability of resources, travel restrictions and a shortage of skilled labour.

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