Average exploration expenditure across 690 companies rose from $A450,000 in the September quarter to $510,000.

And in further evidence of a recovery, the estimated average cash outflows for the current quarter were almost 40% higher than the same quarter of last year.

The proportion of companies with two or more quarters of cash reserves increased from just a quarter in September to nearly half for December.

 “The median expenditure has also increased by 23%, indicating there has been a widespread increase, rather than just at the larger end of the market,” BDO national leader, Natural Resources Sherif Andrawes said.

“The increase in funds committed to exploration and estimated future expenditure illustrates the positive market sentiment for junior explorers, which was first identified in the June 2016 quarter.”

Juniors on notice

Despite conditions improving in mining, there are still several explorers that have been asked by the ASX to explain how they are going to survive the current quarter.

Vango Mining, Nex Metals Explorations, Augur Resources, Truscott Mining Corporation, Alt Resources, Castillo Copper, Coalbank, Crater Gold Mining and Mindax all had estimated cash outflows for the March quarter that were higher than their December 31 cash balances.

Vango is out of the woods for now, having secured Dampier Gold as a funding partner for the K2 gold mine, but is negotiating a placement.

Thanks to cobalt potential, Augur raised $1.2 million last week

Castillo has launched a placement and is planning a public offer after announcing plans to acquire copper and cobalt-prospective projects in Queensland and New South Wales.

Nex is currently suspended pending the release of its half-year accounts. It had $150,000 cash at the end of December, but was awaiting an R&D rebate and proceeds from a project sale.

Alt is also relying on an R&D rebate and a New South Wales government grant to top up its cash balance.

As of late last month, Truscott was attempting to raise $200,000, while Mindax was in talks to raise funds.

Crater and Coalbank were surviving on loans from shareholders.

Fresh blood

The number of initial public offerings doubled in the December quarter to six with Panoramic Resources spin-off Horizon Gold being the biggest with a $15 million raise.

“We are aware of a strong pipeline of IPOs and expect to see an increase in the level of M&A activity over the coming months,” Andrawes said.

There are at least nine IPOs currently underway, with TNG spin-off Todd River Resources likely to list next week.

“Another feature we are likely to see more of in 2017, will be spin offs of non-core assets by way of IPO,” Andrawes said.

“It’s even possible that we may see a reversing of the trend of exploration shells being used as vehicles for reverse takeovers by technology companies. Don’t be surprised if in 2017 we start to see exploration projects being reversed into technology shells!”

There are already signs of that occurring with Keras Resources’ Australian gold assets to be vended into biotech shell Pharmanet Group.

Gold companies continued to attract the most capital during the quarter with four gold companies raising in excess of $10 million.