Cash flows to Australian explorers in 2021

Australian exploration

Australian-listed explorers raised a record level of funding in the March quarter of 2021, as investors continued uplifting battery minerals and clean energy companies, according to a report from BDO.

Explorers raised $2.37 billion during the March quarter – the fourth consecutive quarter of growth and seven per cent higher than the December 2020 quarter.

This was the highest figure since BDO began its quarterly updates in 2013, with 80 per cent of exploration companies reporting record cash balances over $1 million.

The results for the March quarter’s cash flows were 184 per cent stronger than the same time last year, when the effects of COVID-19 took hold of the market.

The strongest commodity among the top 48 explorers was lithium, as $500 million was poured into the battery metal throughout the quarter.

Trailing it was gold ($329 million) and uranium ($264 million).

These figures were boosted by market leaders Paladin Energy, as the uranium-focused company topped the list with $192 million raised in proceeds from the issue of shares.

Also exceeding $100 million was Piedmont Lithium with $160 million, Geopacific Resources with $123 million for gold exploration and Vulcan Energy Resources with $119 million raised for lithium.

In contrast, the outstanding cashflow leader for 2020 was gold, with $1.86 billion. In fifth position, lithium received just $150 million for 2020, showing the comparative strength in 2021.

Considering gold, oil and gas usually top the charts each year, 2020’s surprise runner-up was sulphate of potash, which raked in $528 million for the year.

Despite the record level of investment, exploration expenditure dropped for the March quarter, down to $549 million from $587 million in the December 2020 quarter.

BDO stated this was due to a higher number of companies spending smaller packets on exploration, as resources were used more sparingly.

“Although we expect that exploration activity will continue to grow in light of strong cash balances and the higher number of listed exploration companies, the extent of exploration spending growth will be limited by the availability of resources, particularly in relation to drilling services and assay testing,” the report stated.

 

 

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