JOHANNESBURG (miningweekly.com) – The average spend of Australia-listed exploration companies has fallen for the eighth consecutive quarter in the first three months of the year as companies preserve their cash, a quarterly report by BDO Australia has shown.
The advisory group stated this week that the exploration expenditure had decreased by 16% between the December and March quarters to A$362 000.
The percentage of companies that did not undertake any exploration activities also increased from 47% in the December quarter to 52% in the March quarter, as an increasing number of explorers entered cash preservation mode.
BDO stated that exploration companies were slowly running down their cash balances with the average cash balance decreasing from A$5.15-million at December 31, to A$4.82-million at the end of March.
“Those companies with cash are looking to hold onto it, while across the board, exploration companies are cutting back on expenditure.”
Despite the decline in the level of exploration expenditure, the latest BDO ‘Explorer Quarterly Cash Update’ highlighted that there were “pockets of activity” in the exploration sector, with gold and lithium outperforming other commodities.
In terms of financing cash flows, the market continued to favour gold in times of economic uncertainty, with three of the seven major fund raisings of the quarter coming from gold exploration companies, including Blackham Resources, Doray Minerals and Eastern Goldfields. There was also a significant capital raising in the lithium sector by Orocobre and some smaller scale raisings by lithium explorers.