Engineering, Mining and Heavy Industries

June quarter big for mining exploration, investment

Australian miners more than doubled their exploration spend in the quarter ending June 30, 2017, according to newly-released analysis from advisory firm BDO.

BDO’s Explorer Quarterly Cash Update, released on September 26, found net investing cash flows from Australian-listed explorers rose from $133 million in the March quarter to $269 million in the June quarter, a growth of 103%.

Total exploration expenditure increased by 11% from $305 million to $338 million.

“As expected the revival of increased exploration activity has continued this quarter,” BDO national leader for natural resources Sherif Andrawes said, adding positive energy and attendance at recent industry gatherings further showed this trend.

“We expect to see further capital raised towards the end of the calendar year. Positive talk has now turned into actual deals.”

Net operating cash outflows increased from $514 million to $717 million in the June quarter, the highest point since the March 2015 quarter.

“Companies are spending more cash on investing and exploration,” Andrawes continued. “It’s encouraging to see that they’re doing this whilst controlling their administration costs, which increased by only 11% in the quarter.

“We expect to see further capital raised during the next few months as we head towards the end of the calendar year. M&A activity should continue. Vendors are typically narrowing their focus to a limited number of key projects, providing opportunity to acquirers with interests in advanced niche projects.”

BDO also believes the number of exploration companies leaving the market to be plateauing, which Andrawes said “may indicate we approaching a point of inflection and that the resources sector is entering an upward trajectory”.

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