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Exploration raisings top $3b with rare earths in rare air

Brad ThompsonReporter

IMO if you want to truly help rare earth supply chain. Give funding to Lynas domestically and help advance the US operations instead of speaking a big game, but having radio silence.

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ASX-listed exploration companies raised more than $3 billion in the December quarter with a flood of money directed to rare earths, in another sign of how anxious the US and its western allies are to shore up non-China supply.

The raising bounced back from just $1.82 billion in July-September when a tightening in capital markets was blamed on global economic uncertainty.

Aspiring gold producers attracted the most finance ($379.68 million) for the second consecutive quarter, says a study by advisory firm BDO covering companies purely in the exploration phase, not yet making revenue.

Rare earths zoomed into second spot with $369.76 million raised in the three months, followed by lithium ($343.5 million) and old king coal with $282.9 million.

In the rare earths space, Hastings Technology Metals received $191.4 million in finance and acquired a 19.9 per cent stake in Toronto Stock Exchange-listed Neo Performance Materials thanks to the backing of Andrew Forrest’s privately owned Wyloo Metals.

and Rinehart emerged with a 10% stake in Arafura rare earths after pumping $60 million into a $121 million capital raising

The backing from the two iron ore billionaires came with the Albanese government taking a keen interest in financing of rare earths projects.

Treasurer Jim Chalmers confirmed on Wednesday that he had blocked Chinese businessman Wu Tao increasing his stake in Northern Minerals from 10 per cent to 19.9 per cent based on advice from the Foreign Investment Review Board.

BDO’s global head of natural resources, Sherif Andrawes, said Russia’s war on Ukraine and the subsequent supply chain disruptions in gas and other commodities appeared to have brought into sharper focus the Western world’s reliance on China for rare earths essential in electric vehicles, wind turbines, electronics and in defence applications from night vision goggles to guided missiles.

“Rare earths are important in everything from defence systems to iPhones and there is a realisation that we can’t be dependent on China forever, so there’s a search for alternative suppliers,” he said.

Mr Andrawes said aspiring rare earths producers with assets in Africa were reporting intense interest from the US in addition to the activity in Australia

The BDO analysis shows investment and exploration spending in the December quarter reached some of the highest levels since it started tracking the money flows almost a decade ago.

Across all of 2022, lithium explorers attracted the most finance ($1.2 billion) headed by fund raisings by the likes of Sayona Mining, Leo Lithium, Global Lithium and Core Lithium.

Gold came in second place with $1.15 billion followed by rare earths with almost $700 million.

Total exploration dipped to $993 million in the December quarter, down from a record spend of $1.07 billion on the hunt for new mining and oil and gas assets in the previous three months.

Mr Andrawes said the December quarter marked the second-highest tally of funds raised in any three-month period since 2013.

“Our explorers have more than bounced back from a very temporary dip, with record-high raisings seen this quarter,” he said.“

Gold explorers raised the most funds for the second consecutive quarter as growing inflation, geopolitical uncertainty and market volatility continued to drive demand,” he said.

“Gold is a well-recognised place for investors to turn to in times of geopolitical or economic uncertainty, and we are certainly facing these times at the moment.

“With the depth of expertise that ASX-listed explorers have in the gold sector - both for local and overseas projects - we can expect gold to attract increased funding, at least in the short term.”

In the fallout from global gold giant Newmont’s pursuit of biggest ASX-listed producer Newcrest and other deals in the making, BDO expects a round of consolidation in the sector.

BDO also sees no end in sight to the money flooding into the search for lithium and other energy transition metals with graphite, cobalt, uranium and nickel all prominent in capital raisings in 2022.

“We see gold, lithium and rare earth metals as the commodities of the moment, and we expect this trend to continue into 2023 and beyond,” Mr Andrawes said.