27/09/2017 - 14:58

Explorers up spending in June qtr

27/09/2017 - 14:58

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Listed exploration companies increased their spending in the three months to June, according to a new report by accounting and corporate advisory firm BDO.

Sherif Andrawes says companies are spending more cash on investing and exploration. Photo: Attila Csaszar

Listed exploration companies increased their spending in the three months to June, according to a new report by accounting and corporate advisory firm BDO.

BDO’s Explorer Quarterly Cash Update examines the cash position of ASX-listed explorers.

In the June quarter, total exploration spending amongst explorers increased by 11 per cent to $338 million, with median exploration spending up 30 per cent to its highest level since the June 2014 quarter according to the report.

Net investing cash flows more than doubled, increasing by 103 per cent to a net outflow of $269 million.

Net operating cash flows gained 39.4 per cent to $717 million in the three months to June, the highest it’s been since the March 2015 quarter.

“We’ve seen optimism build through positive energy and attendance at the recent Diggers and Dealers, Africa Down Under, and RIU Good Oil conferences, and we expect to see further capital raised towards the end of the calendar year. Positive talk has now turned into actual deals,” BDO national leader resources Sherif Andrawes said.

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

Mr Andrawes said he expected to see further capital raised during the next few months.

“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,” he said.

“Furthermore, the number of exploration companies exiting the market appears to be plateauing, which may indicate that we are approaching a point of inflection and that the resources sector is entering an upward trajectory.” 

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