The meat of the report points to the $2.84 billion in financing cash that flowed into ASX-listed explorers in the most recent quarter, representing the fourth-highest quarterly inflow since the report was first published a decade ago. Also, the proportion of companies raising more than $1 million grew by 8.3 per cent, while smaller-scale fund raises became less prominent.
The BDO report indicates a gentle loosening of those previously-constricted financial markets, which has been helpfully assisted by easing global macroeconomic conditions.
There were also 53 companies that raised more than $10 million in the past quarter. They included 12 gold explorers, nine lithium, four copper, three graphite, rare earths, oil and gas and copper-gold companies. The number of companies was up noticeably from the 34 in the previous quarter.
Then, even more promisingly, there is the exploration expenditure that increased by 10 per cent to $914 million across all pre-revenue resource companies listed on the ASX in the past quarter. This fillip marks the turning point of a declining trend that has existed since the September quarter one year ago.
While highlighting the decline of finance inflows going back a couple of years, BDO also noted: “The June 2023 quarter showed a marginal reversal of these medium-term trends with the proportion of companies with net financing inflows greater than $1 million increasing from 19 per cent to 25 per cent during the June 2023 quarter.”
BDO Australia also suggested these inflows are likely to lead to an increase in exploration expenditure.
For Dollar Bill, this report sketches the outline of a promising picture for small cap pre-revenue resource stocks going forward with an easing of capital constraints leading to increased exploration spending. Furthermore, there also appears to be a more willing investor public, which may prove to be in the vanguard of a return to more salubrious times ahead, marked by the unlocking of cash destined for the small-capped exploration market.
That makes Dollar Bill feel all warm and fuzzy … just like that Chateau Latour.
Dollar Bill (sometimes known as Bill McConnell) is an Associate Director at Bulls N’ Bears and a former derivatives trader. He is also a former financial journalist and a raconteur of note. This column is for informational and entertainment purposes only and nothing contained within it constitutes financial advice – in fact Dollar Bill specifically recommends that you seek advice from someone other than him….
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