Support for lithium explorers remains strong despite price slump

Support for lithium explorers remains strong despite price slump

Exploration spending topped $1 billion in the December 2023 quarter, making it the highest quarterly spend in 2023, BDO’s Explorers Quarterly Cash Update has revealed. 

BDO Head of Global Natural Resources Sherif Andrawes said that although there was significant volatility in commodity prices, explorers continued to thrive as the 2023 calendar year came to a close. 

“Total exploration expenditure was $1.01 billion, reaching levels among the highest recorded since 2013 and marking the highest of the 2023 calendar year,” Sherif said.

“An encouraging sign for the sector more broadly was the fact that the increase in exploration expenditure was not just coming from the larger end of the market, there was also a 23 per cent increase in those companies spending between $100k and $300k.” 

Explorers also maintained their momentum by securing $2.68 billion in funds in the December quarter, a 32 per cent increase from the September quarter. 

Significantly, despite the dramatic slump in battery metal prices, lithium players continued to see gains as the prime recipients of investor funding throughout the quarter. 

“Although we observed a slump in lithium and nickel prices and valuations in the second half of 2023, our data demonstrates that support for lithium explorers remains resilient, further evidenced by the recent ASX listing of Kali Metals Limited for which BDO acted as investigating accountant,” Sherif said. 

“Additionally, despite the big drop in lithium prices, for the second consecutive quarter, lithium was the leading commodity in our Fund Finders analysis - those explorers raising over $10 million the quarter.”

Lithium explorers accounted for 37.7% of the $2.01 billion raised by the 43 explorers featuring as Fund Finders in the quarter. 

While renewable energy sources continued to grow, a reliance on traditional energy sources also remained. 

“The December 2023 quarter saw an uptick in consolidation activity, most notably in the critical minerals, gold, and oil and gas sectors, as larger players sought to pursue strategic partnerships to advance their projects. 

“Notably, three of the top five spends related to oil and gas explorers, showcasing the reliance on traditional energy sources in our path to net zero. 

“This comes as no surprise, given the long-term nature of the energy transition and the need for investment in new oil and gas sources over the medium-term to meet long-term demand."

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