Raiseboring and drilling solutions provider Master Drilling continues to extend its service provision capacity and technology reach, with the company focusing on diversifying into new markets and industries and advancing technologically.
“Diversification across geographies, commodities, currencies and industries remains a key part of Master Drilling’s long-term strategy,” CEO Danie Pretorius said during the group’s interim results presentation in Johannesburg last week, noting that the group was experiencing strong demand, with increased enquiries across various regions and commodities.
While the group is investigating several opportunities in Australia, Canada and the US and envisaging additional growth from these countries, as well as from Africa and Scandinavia, it is also considering market potential in South America.
As the group aims to grow business not only in underground mining, but also in openpit mining, which accounts for the bulk of mining, Master Drilling aims to acquire a Chilean drilling business. Pretorius believes that, given the group’s exposure and raiseboring experience, it could add value to such a company.
Further, the group would ideally like to extend its revenue growth through expanding into the civils and construction sector. “We would ultimately like to see this sector comprising 30% of our total portfolio,” he said.
While Pretorius noted that Master Drilling would target specific niches in this sector, with sewage work and water tunnelling as potential options, he cautioned that, as the group had limited knowledge in this space, it would take “baby steps”.
In strengthening its internally developed technology service offering, Master Drilling further met several development milestones regarding its world-first technologies. The company is confident that these technologies will gain traction in its markets.
In terms of mobile mining, the concept phase of Master Drilling’s mobile tunnel borer is expected to start this month. The tunnel borer will allow for continuous mining, with no need for blasting, thereby significantly enhancing mining efficiencies.
“We believe this is where substantial future growth will originate from,” said Pretorius.
He added that the group aimed to order the tunnel borer this month and take delivery of the machine and undertake commissioning next year.
Meanwhile, the Industrial Development Corporation (IDC) has confirmed partial funding for the first phase of Master Drilling’s blind shaft boring system (BSBS) development.
Allowing for cost-effective and safe access to orebodies located at great depths and in hard substrate, the BSBS has minimal environmental impact, as the entire operation can be conducted without the need for blasting. Roll-out of the project is expected in 2019.
With the IDC, Master Drilling is also exploring opportunities to develop locally initiated technologies that support cost-effective, simpler and improved drilling systems.
In addition, Pretorius highlights the company’s recent developments in tunnel boring machinery, which have resulted in the design of equipment able to bore out suitably sized excavations at a rate that far exceeds conventional methods.
Master Drilling’s gripper machine, which weighs 16 t, has been designed with a steering system to follow the seam as required. The machine relies on friction and thrust to advance during drilling and to maintain its ‘grip’ inside the hole, while preventing the machine itself from falling down the hole.
Pretorius adds that Master Drilling will also commit to additional horizontal raiseboring production, which, he believes, can become a game changer for industry.
Despite a volatile economic environment and currency fluctuations from a strengthening rand, Master Drilling posted resilient results for the six months ended June 30.
Two additional machines and the impact of favourable foreign-exchange movements contributed to a 12.5% increase in revenue to $60.5-million.
The group added two raisebore machines during this period, which contributed 4.7% towards the company’s revenue growth. Master Drilling’s fleet now comprises 106 raisebore machines and 33 slim-drilling rigs.
The group’s operating profit, however, decreased by 9.6% to $12.1-million.
“Despite a volatile macroeconomic and political environment globally, we reported good interim results today, underpinned by a solid US dollar revenue increase . . . The stronger emerging market currencies during the current reporting period, however, had an adverse impact on earnings,” Pretorius said.
Despite the extended commodities downcycle that put pressure on the business, as well as the occurrence of shorter-term contracts as opposed to longer-term contracts, Master Drilling CFO Andre van Deventer highlighted that the company had maintained a healthy pipeline of $226.1-million and a committed order book of $115.3-million.
Master Drilling’s conservative provisions for taxation in some jurisdictions in previous years led to a decrease in taxation, which supported a flat profit after taxation of $10-million in the period under review.
US dollar earnings per share (EPS) increased by 4.8% to 6.6c, while South African rand EPS decreased by 10.7% to 87c, owing to the stronger rand, compared with the same period last year.
Similarly, US dollar headline earnings per share (HEPS) increased by 4.8% to 6.6c, while South African rand HEPS decreased by 10.7% to 87c, compared with the same period last year.
Net cash generation improved to $11.7-million, following investments in 2016 that catered for higher volumes of work coming on stream, owing to new projects across the group.
The first half of 2017 saw steady market activities, lower-than-targeted use rates and the initiation of two new projects, which supported the group’s financial performance, compared with the same period last year.