JOHANNESBURG (miningweekly.com) – Innovative drilling technologies company Master Drilling, which will next month launch a new blast-free mobile tunnel boring machine that is expected to have a far-reaching beneficial impact on mining, on Tuesday reported satisfactory results for the six months ended June 30.
The Johannesburg Securities Exchange-listed company, which reported 11.3% higher revenue to $67.4-million and 6% higher operating profit to $12.9-million, is considering a year-end dividend.
First-half rand earnings per share of 77.5c in the period were 10.6% lower and the company is looking forward to a better second half on a committed order book worth $114.4-million and a pipeline of $358.2-million.
“There’s certainly an uptick worldwide, apart from South Africa at the moment, and I like to think that commodities in the last 18 months were certainly on the up, which probably confirms the sentiment in the market,” Master Drilling CEO Danie Pretorius commented to Mining Weekly Online in a telephone interview.
Next month, executives and mining officials will attend the launch of Master Drillings’ new mobile tunnel borer, which allows for continuous mining without blasting.
“I really hope that this will help some of these miners to develop some sort of a system where it’s going to be eventually a non-blasting mining environment,” he said.
The machine will subsequently be rolled out worldwide, while progress continues on the blind shaft boring technology, which is expected to be marketed in the next two years to address many projects not eventuating because of the length of time taken to bore.
“Many don’t want to wait for seven, eight years for a shaft to be sunk and for the total infrastructure. The investment environment has just changed. If we can cut off 50% of the development phase of a mine, that’s a huge difference. Even if it comes at a bit of a price, we still believe there are a number of these projects that can be dusted off again and maybe become feasible again, for all we know,” Pretorius added to Mining Weekly Online.
“The uptick in the global economy and commodity cycle is bearing fruit in our business as we receive new contracts and a steady flow of new enquiries that feed into the pipeline. Our presence is growing in Central and North America as well as in Europe, following the acquisition of Bergteamet, where we have been engaged in customer projects across various countries and commodities.
“We also continue to maintain our presence in the local mining sector where viable opportunities arise, while the value we can add across other exploration activities, such as water exploration, is becoming increasingly evident,” Pretorius said.
The acquisition of Bergteamet, which resulted in a moderate increase in debt from $44.1-million to $45.9-million, has led to the expansion of the company’s footprint in Europe, in countries such as France and Spain,
“Given the recent weakening of emerging market currencies, we anticipate that the adverse effect of the stronger rand on our business will reverse in the second half, which should bode well for Master Drilling, given the strength of the pipeline and new enquiries,” Master Drilling CFO André van Deventer said.
A key pillar of Master Drilling’s strategy being its ability to provide clients with advanced and effective drilling solutions and services across geographies and sectors sets the business apart from its competitors.
“Our innovation journey is on-going and will remain a critical element of the growth and sustainability of our business, alongside people capacity and development, and increased profitability. We believe this strategy positions us well as we continue to look for expansion opportunities,” Pretorius added.
Established in 1986, Master Drilling provides drilling solutions through tailor-made designs coupled with a flexible support and logistics chain.
Net cash generation remained unchanged at $11.7-million, following the initial investments in working capital to cater for higher volumes of work coming on stream involving new projects across the group.
In the six months, 95.7% of the Master Drilling capital spend was on capacity expansion with the remaining 4.3% was allocated towards maintenance capital.
Master Drilling has secured several nickel- and diamond-mining-related contracts in Canada and has deployed additional equipment to sites in Mexico, where it has also been awarded new contracts.
In South Africa, slim-drilling work at Kumba Iron Ore’s Kolomela project has continued successfully for six years, a project at Sishen mine has been secured and more enquiries are being received for the drilling of bigger and deeper holes.
Enquiries are also being received from other sectors of the economy, particularly with regards to projects related to water exploration, where Master Drilling has secured a R19-million contract with the City of Cape Town.
The company expects to receive more enquiries involving complex water exploration work that requires its innovative engineering capabilities and projects remain under way in Zambia, and a new project is due to start in Ghana at the end of the year.
In India, a project for Vedanta that got off to a very good start in 2018, has already required the deployment of a second machine to the site, with further expansion opportunities being explored.