BDO Australia just released its regular quarterly summary of the Australian junior exploration sector.
For the three months to 30 June, exploration spending surpassed $1 billion.
That’s the first time this has happened since December 2023 and is 26% higher than the two-year average. BDO’s analysis goes back to 2013. All this is happening as the number of exploration companies is falling, too.
Gold is the leading commodity, followed by rare earths, then oil and gas:
BDO summarises the appeal of gold companies currently like this:
“Elevated gold prices, safe-haven demand, and geopolitical uncertainty continue to underpin the investment case for gold explorers and developers, particularly those capable of shortening development timelines, expanding resources, or leveraging existing infrastructure.”
BDO notes that investment funding is also rising across broader commodities despite macroeconomic uncertainty from conflicts in the Middle East and Ukraine.
There’s also heightened investor uncertainty about the path of interest rates and inflation.
Market support was strongest for companies close to production or mine restarts, rather than greenfield opportunities.
That may change.
BDO says: “The June quarter may mark the early stages of a broader uplift in exploration activity, with explorers increasingly expanding budgets and deploying their high cash holdings capital into the ground.”
That’s consistent with the elevated level of cash across the sector.
Cash balances are at a record high of $13 billion.
50% of this money sits with the top 50 explorers by market capitalisation. This gives the sector a strong position and outlook for the foreseeable future. Activity levels are accelerating.
BDO writes: “The June 2026 quarter may ultimately be remembered as the point at which the sector began transitioning from accumulating capital to deploying it, with explorers increasingly committing balance sheet strength towards long-term project advancement and strategic growth initiatives.”
Recent federal government changes to capital gains tax could weigh on sentiment and confidence in the junior sector.
Explorer IPOs (initial public offerings) on the ASX typically raise $5–10 million from a broad shareholder base, including retail investors who could be deterred by the recent tax change from investing in the high-risk junior sector.
Whether that’s the case remains to be seen.
Write to Callum Newman at Mining.com.au
Images: Unsplash & BDO
