TORONTO (miningweekly.com) – The first-quarter earnings of Canadian drilling equipment and services provider Major Drilling were all but wiped out, mainly as a result of explorers and miners delaying or cancelling their exploration and drilling projects.

The Moncton, New Brunswick-based company, which had operations across the globe, said the uncertainty around economic matters impacted the mining market during the three months ended July 31, while in certain jurisdictions uncertainty as to the policies of host governments, or issues of land tenure, also had a negative impact on activity levels.

“Despite lower pricing levels, we maintained good margin performance thanks to the improved productivity of our crews and to the cost-cutting measures we have implemented. However, going forward, further reductions in pricing will be more difficult to offset by gains in productivity," president and CEO Francis McGuire said on Monday.

Over the last year, the company had reduced staff levels by 45% or 2 300 positions and, during the quarter, the company incurred additional restructuring costs related to further staff reductions. Senior management salaries and directors' fees were also reduced during the quarter.

The company would also focus on cash management by limiting capital expenditure and reducing its inventory and by closely monitoring costs.

Major Drilling said the current economic environment would continue to significantly impact drilling in the short to medium term, particularly on gold projects, where the company has a significant presence.

Also, lower levels of demand had increased competitive pressures, which would impact pricing going forward.

“With the number of projects being either delayed or cancelled, around the world, we believe that in the medium-term, most commodities could face an imbalance between supply and demand and that the need to develop resources in areas that are increasingly difficult to access, will increase, which should increase demand for specialised drilling," McGuire said.

Total revenue for the quarter was $108.2-million, down 54% from the record revenue of $237.6-million recorded in the same quarter last year.

Net earnings dropped 95% year-on-year to C$1.5-million, or C$0.02 a share, compared with C$31.9-million, or C$0.40 a share.

The gross margin percentage for the quarter was 32.5%, compared with 34.2% for the same period last year.