Cash mountain coming to Diggers ‘n’ Dealers summit

afr.com:

High cash levels in the exploration sector will underwrite an upbeat mood at this week’s Diggers & Dealers conference, countering concerns about a tougher environment for fundraising early-stage metals and critical minerals prospects.

The annual Kalgoorlie event underscores the ASX’s status as the dominant home of listed mining juniors, as global lithium hopefuls eye the more favourable multiples on offer relative to Toronto and London.

BDO global head of resources Sherif Andrawes. 

“I think the world has turned. Higher interest rates, high costs and geopolitical uncertainty, it feels like there is a bit of a pause in terms of raising money,” said Sherif Andrawes from advisory firm BDO.

Diggers ‘n’ Dealers made its name promoting the smaller companies that collectively make up the most populous group on the ASX, and this year’s event will return to those roots given big miners like Rio Tinto, BHP, Fortescue and Newcrest will not be presenting in 2023.

Mr Andrawes’ team have kept close tabs on cash flows marked for exploration over the past decade, and BDO’s data shows the sector is still swimming in the cash that poured in during the pandemic years, when low interest rates and a focus on decarbonisation convinced investors to chase the thrill of the drill.

While average cash holdings in ASX-listed explorers remain higher than at any time between 2013 and 2020, and 80 per cent still have more than $1 million on hand, BDO’s data shows sequential declines in average holdings in the past three quarters.

Mr Andrawes said explorers were better placed to hoard cash than their peers with operating mines.

“The upside is most companies that are on the ASX in the junior exploration space are well funded,” he said.

“Those in the