The fourth junior mining and exploration (JUMEX) survey by Grant Thornton highlighted the challenges facing small companies.

Unsurprisingly, lack of funding was a major issue, with 41% of respondents holding less than $2 million, up 6% from last year.

Following the September quarterly reporting season, a number of companies have been queried by the Australian Securities Exchange over whether they have the funds to survive.

They include Fox Resources, FairStar Resources, Brighton Mining Group, Stone Resources Australia, Fe, BBX Minerals, GTI Resources and Wavenet International, with all reassuring the market they had adequate funds, or would raise cash.

More than 75% of respondents are planning to raise funds in the next year, while 46% are needing to raise funds in the next six months.

Over two-thirds of companies that conducted capital raisings in the past year experienced moderate or significant challenges in doing so.

To raise funds, just over half of companies expect to have to price their next raising at a significant discount, while 56% expect to conduct overseas roadshows to introduce new investors.

However, interest from overseas directors was only received by 39% of respondents, down from 61% a year earlier.

Most of the companies surveyed indicated they had made business changes to survive, including minimising discretionary spend and reducing overheads, employee numbers and director fees.

But Grant Thornton corporate finance partner Holly Stiles warned that investors were expecting companies to do more than just save cash.

“The time for battening down the hatches has passed – investors are looking for companies that are maximising every dollar, working harder than ever to unlock value in their projects and seizing opportunities to add value through transactions,” she said.

“The past year has seen a continued deterioration of market conditions for JUMEX companies and this means they need to stand out in order to attract investment.”

An overwhelming 81% of respondents are considering a major corporate transaction in the next 12 months.

“JUMEX companies are resilient and most have experienced many downturns in the past,” Stiles said.

“Having taken action on overheads, now is the time to pursue opportunities for growth.”

Almost half of the companies are considering acquisitions in the next 12 months, with Australia remaining the preferred destination for investment, though 67% had their flagship project in Australia.

However, the JUMEX sector is looking to the government to stimulate activity and remove barriers to growth.

More than a third of respondents requested a flow-through shares scheme and welcomed the Coalition government’s pledge to introduce an exploration development incentive next year.

Optimism prevailed when it came to commodity prices, with only 18% of JUMEX companies predicting a decline in the price of the metal of their flagship project over the next 12 months.

Despite that, commodity price volatility remained the second-highest concern after availability of equity funding.