Photo by: Reuters
TORONTO (miningweekly.com) – Canadian drilling equipment and services provider Major Drilling Group International on Tuesday announced that following a review of restructuring options for its Australian operation, it had decided to proceed with a full closure of that branch.
The Moncton, New Brunswick-based company said that the decision was based on the current industry downturn, which had hit Australia particularly hard, and which had resulted in little work and highly competitive pricing in that region.
Australia also is the firm’s highest cost jurisdiction.
The Australian operation contributed only about 2% of global company revenue in the most recent quarter, and only about 4% of global company revenue in the first nine months of this financial year.
Many of the assets used by this operation could be used by the company elsewhere.
TSX-listed Major Drilling said that it would now determine which assets should be moved to other jurisdictions and which should be sold. It was expected that the close-down process would take about six months to complete.
The company said it would incur asset write-downs and cash close-down costs, the amount of which was still to be determined over the next two months, for announcement with the corporation's fourth-quarter financial information. These costs would include employee severance, building lease related costs, the costs of moving assets out of Australia, and other closure costs.