London-listed mining services group Capital has completed the acquisition of 100% of the share capital of Metres Down Under (MDU), a specialist underground drilling company headquartered in Kalgoorlie-Boulder, in Western Australia.

Capital says this acquisition establishes its operating presence in the Australian drilling market, one of the world’s premier mining jurisdictions.

The company says it also adds an established business with a strong management and operational team, complementing Capital’s corporate presence in Perth, where several of Capital’s key management are located.

Further, MDU offers exposure to existing drilling contracts at major Australian mining operations, including Sunrise Dam and Tropicana, which are both operated by AngloGold Ashanti.

Capital says it positions the company as a provider of specialist underground reverse circulation (RC) drilling services, with significant scope for deployment across both Capital’s existing international operations and the Australian market.

It also further strengthens Capital’s relationship with AngloGold, with Capital now operating across five of the gold miner’s mine sites across the world.

Capital will use its strong balance sheet to settle the acquisition consideration of up to about $16-million, or about A$22-million, comprising an upfront payment of about $11-million, or about A$15-million, and a milestone-based earn-out of up to about $5-million, or about A$7-million.

Meanwhile, Capital points out that, for the 12-month period to September 30, MDU had generated revenue of about $25-million and adjusted earnings before interest, taxes, depreciation and amortisation of about $6-million.

The London-listed group notes that MDU has nearly 30 years of specialist underground RC experience and is operated by a strong management and operational team with a record spanning more than three-million drilled metres and a total fleet of 11 rigs.

MDU’s capabilities are considered to be highly complementary to Capital’s existing drilling services.

Capital says its versatile fleet can support a range of underground drilling applications, while its remotely operated drilling technology improves equipment use and productivity and reduces personnel exposure to underground hazards.

The combination of MDU’s specialist underground knowledge and established Australian operations with Capital’s balance sheet strength, customer relationships and international footprint creates a strong foundation for future growth.

The two businesses also share an entrepreneurial and safety-led culture, supporting a collaborative approach to integration and long-term growth.

MDU will continue to operate as a distinct business within the Capital group. The initial priorities will be to maintain safe, reliable and uninterrupted service for customers, successfully integrating the experience and strengths of both businesses and developing a targeted growth strategy.

Capital says it will also assess opportunities to expand MDU’s capabilities in Australia and across the group’s international markets in the longer term.

With MDU’s contracted revenues contributing to the group in the fourth quarter of this year, Capital has raised its group revenue guidance for the full-year to between $435-million and $455-million, up from the $430-million to $450-million previously guided at the company’s interim results presentation and up from the $410-million to $440-million initially guided at the start of the year.

“Through MDU, we are entering a new market with a business that has genuine technical leadership, an excellent team and a strong reputation. The acquisition builds on Capital’s existing corporate presence in Perth, where several of our key management team are based.

“MDU’s specialist underground and remotely operated drilling capabilities strongly complement Capital’s existing drilling services and, together, we have an exciting opportunity to grow MDU’s established presence in Australia and introduce its specialised capabilities to Capital’s global customer base,” says Capital executive chairperson Jamie Boyton.

“We look forward to welcoming the MDU team to Capital and building on the strengths of both businesses,” he says.

“MDU has been built on the expertise and commitment of our people, strong customer relationships and a continuous focus on safe and innovative underground drilling.

“Joining Capital gives us the support and international platform to build on these strengths while continuing to deliver the specialist service our customers value. We look forward to working together to grow the business in Australia and internationally,” adds MDU founder and director Brian Eaton.