Dec 01, 2020

Explorers ride high on investment wave

Explorers ride high on investment wave

Australia’s junior exploration companies raised a bumper $2 billion in the September quarter, a 51 per cent lift from the previous three months.

Accounting firm BDO Australia said the cash position of ASX-listed explorers now was the strongest since its regular analysis of the field began in June 2013.

But it said exploration companies were yet to pull the trigger on spending, with growth in the sector not translating into expenditure.

Anecdotally, this was due to prevailing economic uncertainty, travel restrictions and limited supply of drilling and other exploration support services in the sector.

The performance of the ‘safe haven’ commodity gold has been a major driver in the investment upsurge.

Access to funding peaked to a two-year high, with total financing inflows reaching $2.02 billion in the September quarter.

These figures signify a 142 per cent surge since the four-year low of $834 million recorded in March this year.

BDO’s Explorer Quarterly Cash Update showed the number of companies raising funds of $10 million or more increased from 28 companies in the June quarter to 46 companies in the latest quarter.

Of these, 25 were gold companies, 3 were sulphate of potash companies, 3 were diversified metals companies and the remaining 15 companies were across 13 different sectors, most notably oil and gas, nickel, mineral sands and copper-gold.

The big bucks went west with Bellevue Gold raising $137 million for work at the Bellevue Gold project in Western Australia, Salt Lake Potash raising $113.5 million towards development at its Lake Way sulphate of potash project in WA, and De Grey Mining raising about $100 million before
costs to fund ongoing development at the Mallina gold project in WA.