BDO report: Mining explorers raise $2bn to keep searching
The boom is back for Australia’s junior exploration companies, according to accounting firm BDO.
The boom is back for Australia’s junior exploration companies, according to accounting firm BDO, with ASX-listed explorers raising a staggering $2bn in the September quarter, putting them in the best position since the height of the commodities boom.
BDO will release its quarterly cashflow financing report on Australia’s junior explorers on Tuesday, showing the sector is in its strongest financial position since mid-2013 after raising more than $2bn in a rush to the market over the three months.
The September quarter figure is 62 per cent higher than the six-year quarterly average of $1.24bn, according to BDO, and has only been topped twice since the mining boom — in December 2017 and June 2018, when strong oil prices helped junior oil and gas explorers tap the market.
But the oil-price crash brought on by the pandemic meant those companies were absent from the market in the September quarter, and BDO head of global natural resources Sherif Andrawes said the $2bn result was likely to be the most mining juniors had ever raised in a three-month period on the ASX.
“Interestingly, 95 per cent of the funds raised by our explorers were through equity raisings and only 5 per cent through debt. Once again gold stocks dominated this category, but to an even larger extent than seen in previous quarters,” Mr Andrawes said.
“On the other hand, oil and gas companies seem to have fallen out of favour with equity markets, and only comprised 3 per cent of the funds raised, after previously being a consistent top three commodity in this category,” he said.
Mr Andrawes told The Australian Australia’s junior explorers were in the strongest position since 2013, with the BDO analysis, based on the quarterly cashflow reports filed by commodity explorers showing more than 74 per cent of the 642 companies that filed a cashflow report had more than $1m in the bank, with the average balance topping $8.16m at the end of September.
Exploration spending lifted only 10 per cent in the September period, to $431m, Mr Andrawes said, despite the lifting of lockdowns in Australia that limited field work early in the pandemic.
With cash balances repaired and field exploration only now recovering from the pandemic lockdowns, Mr Andrawes said the only thing holding back explorers would be tightening of exploration services — access to drilling rigs, assaying and geological consultants.
“The ability to spend perhaps isn’t there. I think they’re trying to spend, but they’re also taking a longer term view and planning over the next two to three years, rather than immediately,” he said.
Highlighting the strength of market interest in the sector was the number of companies able to tuck away large raisings of more than $10m — 46 in the September quarter, up from 26 in the previous period.
Bellevue Gold raised $135m, Salt Lake Potash $113.5m, emerging market darling De Grey Mining put away $93.15m and Mincor raised $55.1m. The top 46 raisings landed $1.25bn, with the overwhelming majority going to gold hopefuls, who cashed in to the tune of $761.6m.
The gold price hit a record $US2075.47 on August 8 and is now about $US1770 an ounce.
