JSE-listed drilling solutions company Master Drilling’s acquisition of Atlantis Group helped to boost its revenue and regional operations in the six months ended June 30.

CEO Danie Pretorius said last week that the company remained committed to diversifying its presence across geographies, commodities and sectors.

“We have worked hard to position our existing businesses across regions, while stabilising new operations and growing our presence in new territories where we believe opportunities will arise, such as Russia and Australia.”

The acquisition of Atlantis Group for $100-million contributed to a 3.8% year-on-year increase in revenue to $70-million, but operating profit decreased by 8.3% year-on-year to $11.8-million.

Profit after tax decreased by 14.7% year-on-year to $8.3-million.

In the reporting period, Master Drilling achieved a 5.6% year-on-year increase in headline earnings per share (HEPS) to 76.7c apiece in rand terms.

However, in dollar terms, HEPS decreased by 8.5% year-on-year to $0.05, as a result of the stronger rand.

The company’s new business pipeline remains solid at $297.1-million and the order book at $198-million.

Pretorius explained that a dividend would be considered at year-end.

“While political and economic factors continue to shape our operating environment, we continue to spearhead technological development, stabilise our global footprint and explore new business opportunities.

“As a result, the business remains stable and well positioned to benefit from an improved global economic climate,” said Pretorius.

Master Drilling is a technology-driven business. Its focus is on developing solutions that enhance clients’ operations and safety performance. Because of this, the bulk of its capital spend is on capacity expansion, some of which has begun to yield positive results, such as through the introduction of remote drilling technology.

Having completed testing of this technology in South Africa, Master Drilling has successfully implemented it in Mexico and Peru.

Further, the commissioning of a mobile tunnel borer is under way, with underground drilling having already started, while the first phase of the shaft boring system – a new shaft sinking system – is also being commissioned.

“This bears testament to Master Drilling’s unwavering commitment to technology development and testing, which will continue to be a key focus during the remainder of 2019,” noted Pretorius.

He added that global trade remained under pressure, impacting negatively on commodity markets and creating uncertainty around the future demand for and consumption of commodities.

Nonetheless, he believes the business is well positioned to withstand these adverse conditions and continue to deliver desirable, efficient and safe drilling solutions when the inevitable upturn materialises.

Although Africa’s significance in terms of revenue has been in decline in recent years, Master Drilling continues to be active on the continent, maintaining a presence in seven countries, including South Africa.

Projects are progressing satisfactorily in Mali and Sierra Leone, with two machines deployed on site in Sierra Leone. There are also projects under way in the Democratic Republic of Congo, among which is the Kibali gold project and the Kamoa copper project, where the company will consider deploying an additional machine.

In Ghana, following some geological issues on the initial project, the company expects to start work on additional projects in the next few months.

Master Drilling has been awarded a new two-phase contract, also in Ghana, that includes deploying a big machine to drill a vent shaft and, in the second phase, working underground. Master Drilling expects this contract to yield more scope going forward.

Meanwhile, operations in Zambia have scaled down significantly. Work at the Lubambe copper mine continues and is nearing completion.

In South Africa, the company says activity in the mining sector remains constrained, amid the uncertain economic climate and recent industrial action in the sectors in which the company operates.

However, Master Drilling was recently awarded a contract for a 1.4 km hoisting shaft, the first of a number of shafts that could be drilled.

In neighbouring Botswana, new opportunities had presented themselves in gas and exploration drilling, confirmed Pretorius.

“Operations in Brazil continued to perform well and in a stable and satisfactory manner, following a restructuring of the business two years ago. The short- to medium-term outlook for our business in this country is positive, with a pleasing build-up in the order book.

“In Chile, we continue to experience growth in the order book and expect to be awarded a substantial amount of contract work for underground vertical shaft development. “In addition, Master Drilling is tendering for the drilling of ventilation shafts which, if successful, will start in mid-2020,” explained Potgieter.

The Peruvian business is undergoing restructuring to ensure that it remains efficient and well positioned to contribute positively to the company. The restructuring is expected to reduce fixed costs as the workforce is resized.

“Restructuring processes are difficult and costly to implement, but we are certain that these measures will ultimately yield positive outcomes,” affirmed Pretorius.

Enquiries continue to be received from across South America, particularly from Colombia.

In Ecuador, work on a project at a large underground mine started recently, with the potential of additional work materialising in future, Master Drilling reported.

Master Drilling’s business in Mexico is stabilising after a challenging first half of the year, owing to operational issues. However, Master Drilling has been awarded new contracts at silver and copper mines that are expected to lead to increased activity during the second half of the year.

“Although it has taken some time to stabilise new clients and contracts, Master

Drilling is likely to record improved activity in the second half of 2019, once the on-boarding process for certain large projects has been completed.”

After getting off to a slow start, Pretorius said, the Bergteamet business, in Scandinavia, had recorded an improvement over the past quarter, with the order book filling up for the remainder of the current financial year and well into 2020.

Projects have been added across a number of locations, including Spain, Turkey, Finland, Norway and Sweden, proving that Bergteamet Raiseboring has become the company’s gateway into the region.

Meanwhile, Pretorius pointed out that the project implemented by the company in India in support of London-listed Vedanta Resources had got off to a “very good start”.

The project is achieving high levels of operational efficiencies and Pretorius expects the contract to meet its targets.

Master Drilling also continues to operate in Australia and China.