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Master Drilling posts record revenue, focuses on new technology development

28th March 2023

By: Marleny Arnoldi

Deputy Editor Online

     

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Drilling solutions company Master Drilling has posted record revenue of $226-million for the year ended December 31, 2022 – a 31.7% year-on-year increase.

CEO Danie Pretorius attributed the strong revenue generation, as well as strong cash generation of $25-million, to higher utilisation rates and investments in new business ventures.

The company’s continued focus on capital discipline has also resulted in increased returns, he adds, referring to the group’s operating profit growing by 26% year-on-year to $35-million.

Earnings per share (EPS) increased by 7.6% year-on-year to $0.14, while headline earnings per share (HEPS) increased by 10% to $0.14.

In rand terms, EPS increased by 19% to 232.5c, while HEPS increased by just under 22% to 232.5c.

Master Drilling declared a dividend of 47c apiece in 2022, compared with a 32c dividend in 2021.

The company increased its debt from $32-million in 2021 to $46-million in 2022, with its gearing ratio having increased from 5.8% to 8.2%.

Notably, the company recorded a significant improvement in its lost-time injury frequency rate, from 1.65 in 2021 to 0.83 in 2022, despite employing more than 200 new people in the year under review, which potentially increases the risk of injury.

Master Drilling, during its results presentation on March 28, announced that it had a renewed focus on technology development, with new technologies maturing and making an impact on the way mining was conducted.

The company is aiming to make the industry safer, more productive and more cost-effective, including through investments in proximity detection solutions and integrated data and resource management systems for mining.

Moreover, Pretorius explained that Master Drilling had been able to leverage its relationships with clients and partners to grow the business, not only to expand its international footprint but also to offer more turnkey solutions and become a holistic contractor.

In the year under review, Master Drilling spent $24-million, the majority of which was spent on expansion initiatives, while 37% was spent on sustaining the existing fleet.

The existing fleet comprises 140 raisebore and 38 slim drilling machines, as well as one mobile tunnel boring rig. In the year under review, the total raiseboring fleet utilisation rate was 77%, while the slim drilling fleet utilisation was about 67%.

The rate of new rigs coming on board would settle with a focus on larger units, which typically generated higher income, Pretorius stated.

In terms of markets, Africa remains the key area for the group, where the company is pursuing many opportunities.

For example, Master Drilling mobilised two additional machines to Sierra Leone towards the end of 2022 and will start a new project soon.

The company is also growing its presence in Australia and Central Asia and hopes to further its geographical growth in emerging mining countries this year.

Commenting on where Master Drilling sees the most potential for market expansion in 2023, Pretorius says it is keen on growing its disruptive technologies, including mobile tunnel boring, shaft boring system and cut and break technologies globally, since it allows quicker and safer access to ore bodies, as well as reduced dilution of ore, compared with traditional technologies.

TECHNOLOGY DRIVE

Master Drilling has identified three technology focus areas to grow and diversify the business – shaft sinking, tunnelling and nonexplosive mining.

The Master Sinkers business, in 2022, continued to design, manufacture and assemble a shaft boring system and is now seeking the best possible project to implement the technology in a phased approach.

Pretorius said a shaft boring machine would likely be commissioned during the second half of this year, during a test sink of a 50-m-deep shaft in an area with hard rock.Pretorius tells Mining Weekly that the company received a letter of intent from a local miner and that Master Drilling is keen to use this machine as a proof of concept of the technology.

The company is positioning itself as a specialised mining contractor as opposed to a mainstream one.

Moreover, Master Drilling in 2022 applied a mobile tunnel borer for the construction of the Sandsloot Exploration Decline at Anglo American Platinum’s Mogalakwena mine, during which key performance indicators were met.

Pretorius said the technology looked promising, although the company had experienced a steep learning curve with associated mining-specific interactions. Therefore, Master Drilling was progressing with a second-generation mobile tunnel borer design, which would be further developed this year.

“From our experience gained, it has become evident that alternative nonexplosive tunnelling technologies will be required for specific tunnelling application needs that are not addressed by the mobile tunnel borer, and that will be considered in future for further development,” Pretorius highlighted.

Nonexplosives mining is still an uncharted area for Master Drilling, as the company is looking to provide solutions for clients that are not bound by the requirements of explosives approvals, as well as the shielding of personnel against hazards and offering the flexibility to operate remotely. Pretorius says quality excavations can be done without explosives, which helps to preserve the integrity of the surrounding rock and reduce the support materials needed owing to little to no overbreak.

The company has engaged four different clients where it is able to develop these technologies and provide bespoke solutions.

“By doing so, we hope to build relationships with these clients in a phased approach, thereby ensuring gradual progress and minimising large exposure or risk. All these projects are progressing well,” stated Pretorius.

He added that the future of the mining industry lay in mechanisation and remote operations and, therefore, the company would continue to pursue diversification opportunities outside of the traditional drilling business into areas such as artificial intelligence.

Looking ahead, Pretorius is confident that Master Drilling will perform well in the new financial year, owing to its long-term contracts, diversified footprint, proactive capital management and service orientation.

Its project pipeline, as of December, totalled $567-million, while the committed order book stood at $265-million.

Pretorius said the sales pipeline was expected to stabilise in the short to medium term, with further tactical acquisitions and joint ventures supporting performance.

“Our focus in 2023 will be on building a sustainable, diversified and scalable business through organic and acquisitive growth as well as formal partnerships and alliances.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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