09/06/2022 - 15:43

Explorer spending slows

09/06/2022 - 15:43

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Fundraising activity among explorers has fallen from the lofty highs of 2021, but BDO’s global head of natural resources Sherif Andrawes says it’s too early to call time on the sector’s streak.

Explorer spending slows
BDO's Sherif Andrawes said the firm had observed mixed signals from the sector. Photo: Attila Csaszar

Fundraising activity among explorers has fallen from the lofty highs of 2021, but BDO’s global head of natural resources Sherif Andrawes says it’s too early to call time on the sector’s streak.  

Cash inflows for the March 2022 quarter dropped 45 per cent to $2.07 billion from a record $3.75 billion raised in the December 2021 quarters, according to BDO’s latest explorer quarterly cash update.

Exploration spending decreased by 14 per cent to $832 million, albeit from from an eight year high. 

New data from the firm revealed that there was evidence of a slowdown, but BDO global head of natural resources Sherif Andrawes told Business News that it was too early to tell whether it pointed to an overall downward trend.

According to BDO, exploration spending fell by 14 per cent to $832 million for March, while the number of explorers raising more than $10 million reduced from 71 in the December quarter to 44.

Mr Andrawes said there were mixed signals emerging from the sector, but remained optimistic for the coming quarters.

“Anecdotally, we're seeing the money still being raised this quarter, we're seeing IPOs still going up,” Mr Andrawes said.

“Which shows that the indicators at least for the next quarter or next couple of quarters are quite strong.”

“Is this now going to plateau out and [will] this next quarter be the same…or was December the peak and we’re going in a downward trend? That we don't know.”

He said indicators of a potential downturn would be if fundraising or initial public offering activity dropped off significantly in the next quarter.

“I don’t see that,” Mr Andrawes said.

The number of companies that lodged Appendix 5Bs - a measure for IPO activity - increased to 750 for the March quarter from 740 last quarter, the highest number since 2015.

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