JOHANNESBURG (miningweekly.com) – JSE-listed drilling services provider Master Drilling has been awarded a contract worth in excess of R1-billion to provide Kumba Iron Ore with a ‘one-stop shop’ solution at its Kolomela mine, in the Northern Cape.

The first of its kind for the group, the contract would see Master Drilling provide services that included reverse circulation drilling, pilot drilling and grade control.

Speaking at the group’s results presentation for the 2012 financial year, CEO Danie Pretorius said the contract formed part of one of the company’s strategic initiatives for 2013, which was to grow its revenue base by expanding its drilling service offering.

The company planned to organically grow its operations and form joint ventures (JVs), which would see it grow its revenue base from existing markets and expanding into new geographical areas.

Pretorius noted that Master Drilling anticipated organic growth in Latin America, West Africa and the Middle East; however, an improvement in the group’s Southern Africa business was only expected when the country’s labour, political and energy issues were resolved.

The first company of its kind to be represented on the JSE, Master Drilling recently signed strategic agreements with major and midtier mining companies, which Pretorius indicated was a step in the right direction towards achieving some of its strategic objectives.

The company was awarded a long-term contract in Mali for a gold project with the first raisebore machine currently being prepared for shipment, while the group was also about to sign a contract with a company in Colombia, which would start in the second half of this year.

Meanwhile, Pretorius pointed out that the company was specifically looking at JV opportunities in Europe and Asia, “We are in discussions with a potential partner in Europe…we want to get a better base in Europe and Asia.”

Another strategic initiative planned for the year was to increase the company’s margins, while also focusing on technology optimisation and development.

“Five per cent of group profit will be spent on research and development, as well as innovation programmes,” Pretorius noted.

He said Master Drilling was bullish about copper, zinc, silver and gold, which were identified as anchor commodities for the group.

Meanwhile, the company recorded a 10% increase in profit to R100-million and a 19.6% increase in headline earnings a share to 115.5c for the period under review, while revenue grew by 5% from R687-million to R818-million over the period.

“One of the major contributing factors to the positive results was our strategy to continuously grow our fleet and thus support growth into 2014. On the back of this, we are pleased to have delivered results that are in line with our expectations, even prior to the industry strikes,” Pretorius said.

He noted that only one-third of the company’s current revenue and profit was derived from its African operations, with the majority coming from abroad. Master Drilling’s current rand/dollar income ratio stood at 40:60.

However, Pretorius noted that the company aimed to shift this ratio to 70:30 in favour of revenue from its African operations.

The company’s cash balance was positive for the 2012 financial year at $49.6-million, compared with a negative balance of $1.6-million in the previous year.

With its listing on the JSE, the company raised R352.5-million before expenses, which was allocated to reducing expensive debt on the balance sheets of the group’s Brazilian companies, as well as to the acquisition of R190-million worth of new machinery to grow the company.

Pretorius indicated that Master Drilling had added ten machines to its raiseboring fleet, bringing the number to 88, as well as another ten devices to its exploration drilling division that covers underground production drilling.

“In so doing, we will be able to service demand, grow organically where we currently operate and venture into new areas at a rate of at least two new countries every year,” he noted.