Swick Mining’s strategies of shifting drill rigs on to better performing contracts or new projects and reducing costs has continued to pay off with the underground and surface mineral drilling business posting a more than 100% year-on-year increase in EBITDA in the December quarter.
The company delivered “strong unaudited results” for the three-month period, it said, with the drilling business’ earnings before interest, tax, depreciation and amortisation (EBITDA) up 109% to A$9.5 million ($6.8 million). This coincided with the company completing 263,690 m of drilling and the average fleet use coming in at 75% across the quarter.
Drilling business revenue of A$37.7 million was up 8% compared with the same quarter of 2017. Overall group revenue and EBITDA was marginally up on the drilling business numbers as the company’s mineral technology business, Orexplore, registered several commercial scans during the period.
In addition to shifting drill rigs and cutting costs, Swick benefitted from improved short-term rates at two existing underground drilling services contracts in the quarter – for Newmont and its Tanami and Mt Charlotte assets, where 11 rigs are deployed. Swick said: “These rates will run through to March 2019, to allow for a competitive tender process for the long-term contracts to be completed (in which Swick is participating).”
Swick Managing Director, Kent Swick (pictured), said: “The earnings rebound of our drilling business has continued and shows how we can unlock Swick’s potential when we target the right projects for the right clients and ensure we deliver value for money for our clients.
“The improved margins are a mixture of adjusted rates where needed and also from a 6% year-on-year reduction in our operating costs per shift in the underground division by focusing on manning levels, consumables usage, procurement processes and inventory management.”
The Swick MD added that its recently established deep exploration division, DeepEx, continued to move forward during the quarter with preparations underway to deploy two high-torque mobile drills this month at Kirkland Lake Gold’s Fosterville mine. This will further assist the deep underground exploration drilling it is already carrying out at the mine.
This came on top of an update on Orexplore, which in the eight months since launch has secured seven customers and numerous trial programmes with a range of miners, explorers and consultants, Kent Swick said.
He also said the gold spectrometer was undergoing testing at Orexplore’s R&D headquarters in Stockholm, Sweden, and that the company expects to have initial feedback on the in-machine prototypes performance during this quarter.