Exploration investment rises as dollars flow to gold’s ‘safe-haven appeal’

Gold has usurped uranium in luring the lion’s share of market funds during a big upswing in equity raisings over the June quarter, with former investor favourite lithium still squarely out of vogue.

A mammoth $600 million capital raising by De Grey Mining and $151m drawn down by West African Resources showed the yellow metal had been the dominant commodity in the lead-up to the end of 2024, backing in its “enduring appeal as a ‘safe-haven asset’, according to BDO’s global head of natural resources Sherif Andrawes.

The firm’s latest funds tracker showed investor dollars into exploration companies had bounced 82 per cent from $1.62 billion in the March quarter to $2.95 billion in June.

The flock to gold has come amid global market and geopolitical uncertainty, considered the driver behind the rise to record prices.

BDO also observed it was the first time gold had been the most popular investment commodity over the likes of lithium and oil and gas since June 2023.

Gold dwarfed all other commodities by attracting inflows of more than $1.1b during the three months to June, with uranium trailing behind at $289.9m. Oil and gas was third at $183m.

Mr Andrawes said the resurgence underscored “a renewed investor confidence in the sector amidst macroeconomic uncertainties”.

“The remarkable increase in gold investment demonstrates a strong investor preference for stability.”

In the previous quarter it had been uranium drawing the most investor attention, on the back of strong prices and buzz around nuclear energy.

Uranium slipped back down the ranks, but still managed to stay second on the list via raisings by Deep Yellow and Peninsula Energy.

Financing inflows to lithium bumped up 135 per cent to $118.9m during the June quarter, but that followed what BDO said had been “a very low base” in March “in which lithium capital raises fell off a proverbial cliff”.

Vulcan Energy Resources — developer of a proposed zero-carbon lithium brine project in Germany — raised $64m with the support of Hancock Prospecting.

“The decline in lithium investments highlights the current market sentiment, even as the sector remains crucial for the clean energy transition,” Mr Andrawes said.

Despite sinking prices, BDO noted lithium players such as Galan Lithium, Pilbara Minerals takeover target Latin Resources and Mineral Resources-backed Delta Lithium were still spending on exploration.

Exploration spending of $826m was a 10 per cent uptick on the two-year low in March 2024, but the number of companies reporting nil investment outflows stayed at a two-year high.

“Explorers have been taking a conservative approach by focusing on cash retention and deferring investments amidst uncertainty surrounding capital markets,” BDO said.