Every Appendix 5B ends the same way: Section 8, estimated cash available for future operating activities. It is the most-read section of the form because it reduces the entire quarter to a single figure at item 8.7, the estimated number of quarters the entity can keep operating at its current rate of spend. Investors screen on it. Brokers quote it. ASX Listings compare it to the commentary in your quarterly activities report.
For the June quarter, due by 31 July, the mechanics of Section 8 deserve more attention than they usually get, because two of the most common runway errors come from misunderstanding what the 2020 form amendments changed.
How the runway figure is built
Section 8 is arithmetic over numbers you have already reported elsewhere in the form. Nothing in it is new information; that is precisely why inconsistencies get noticed.
| Item | What it is | Source |
|---|---|---|
| 8.1 | Net cash from / (used in) operating activities | Item 1.9 |
| 8.2 | Payments for exploration and evaluation classified as investing activities | Item 2.1(d) |
| 8.3 | Total relevant outgoings | 8.1 + 8.2 |
| 8.4 | Cash and cash equivalents at quarter end | Item 4.6 |
| 8.5 | Unused finance facilities available | Item 7.5 |
| 8.6 | Total available funding | 8.4 + 8.5 |
| 8.7 | Estimated quarters of funding available | 8.6 divided by 8.3 |
The first thing to notice is item 8.2. Since the July 2020 amendments, capitalised exploration spend is pulled back into the runway denominator. An explorer that capitalises drilling under AASB 6 does not get a longer runway than one that expenses it. The two quarter test is run on total cash burn, operating plus capitalised E&E together. If your board still thinks of runway as cash divided by item 1.9 alone, the form disagrees with them.
The second is item 8.5. Genuinely available undrawn facilities count as funding. A financing facility that is conditional, expired, or subject to milestones you have not met does not belong at 7.5, and ASX has queried entities that padded runway with facilities that were not truly available.
If 8.3 is a net inflow: the form's own note applies. Where an entity's relevant outgoings are positive cash flow, item 8.7 is answered "N/A". You do not report infinite runway; you simply state that the calculation does not apply this quarter.
The two quarter rule
If item 8.7 is less than 2, the form requires answers to three questions at item 8.8:
- 8.8.1: Does the entity expect it will continue to have the current level of net operating cash flows for the time being and, if not, why not?
- 8.8.2: Has the entity taken any steps, or does it propose to take steps, to raise further cash to fund its operations, and if so, what are those steps and how likely does it believe they will be successful?
- 8.8.3: Does the entity expect to be able to continue its operations and to meet its business objectives, and if so, on what basis?
Answering 8.8 is not an admission of distress. A large share of pre-revenue explorers lodge with runway under two quarters at some point in a drilling campaign, and a placement or rights issue shortly after quarter end is a normal part of the funding cycle. What draws an ASX query is not a low 8.7. It is inconsistency: an 8.8.2 that references a capital raising the activities report does not mention, an 8.8.1 that says spend will fall while the exploration commentary promises an expanded drilling program, or a runway figure that does not reconcile to items 1.9, 2.1(d), 4.6 and 7.5 elsewhere on the same form.
Where the errors actually come from
In practice, Section 8 errors are rarely arithmetic. They are upstream classification problems that surface at the bottom of the form. If capitalised exploration payments were miscoded in Xero between operating and investing, both 8.1 and 8.2 are wrong individually while 8.3 happens to be right, and the reviewer who checks only 8.7 never sees it. If a related-party payment was missed at Section 6, the same transaction is usually sitting in the wrong Section 1 line too. The runway number is only as reliable as the ledger classification behind the AASB 6 split and the quarter-end data readiness work.
This is how our ASX 5B Automation approaches Section 8. It connects directly to Xero, maps every cash transaction to its 5B section under the entity's stated AASB 6 policy, computes items 8.1 through 8.7 from the same classified data set, and flags a hard review gate when 8.7 lands below two quarters so the 8.8 answers are drafted deliberately, with the CFO, before anything is lodged. Every figure traces back to source transactions in an audit trail.
Is your June quarter runway figure defensible?
Before you lodge on 31 July, we can show you what your Section 8 looks like when it is computed straight from your Xero ledger, with every input traceable. If 8.7 is near the two quarter line, you want to know that this week, not on deadline day.
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Syed Samir Ahmad
Founder, Genius Accounting Solutions
CA ANZ | MBA | Salesforce Certified (4x) | Xero Partner