Major Drilling Group International Inc is one of the world’s largest drilling services companies, primarily serving the mining industry. In its results for its second quarter of fiscal year 2018, ended October 31, 2017, it reported quarterly revenue was $88 million, up 10.1% from the $79.9 million recorded for the same quarter last year; but actual exploration activity was up by a greater degree.
“Exploration activity levels continue to increase in all regions. While revenue is up 10% as compared to the same quarter last year, the volume of activity increased by more than 10%, given the negative impact of foreign exchange translation on revenue as the US dollar weakened compared to the previous year,” said Denis Larocque, President and CEO of Major Drilling Group International Inc. “We are pleased to see a return of demand for our services in South America and Asia, regions that were most affected by the cyclical downturn. Although drilling prices have not yet recovered, margins improved during the quarter, mainly driven by improved productivity.”
“Both gold and base metal prices are holding at healthy levels, which are positive signs going into calendar 2018. As mining companies are looking to replenish their depleting reserves, we are starting to receive more inquiries for projects, which points to an increase in exploration budgets for calendar 2018. Most senior and intermediate mining companies are still working through their mining plans for 2018, however, we have already secured two new multi-year contracts with key customers for grade control and underground services, solidifying our diversification strategy.”
“As we are seeing demand for our services increase, combined with an already tight labour pool, we continue to make investments in technology and equipment, providing tools to our crews in order to improve safety and productivity. This falls in line with the enhancement of our recruiting and training systems as we attract a new generation of employees.”
Major Drilling has added five rigs that fit both its specialised and diversification strategies. Two of the additional rigs are suited for surface drill and blast/grade control work and two others are mobile underground rigs, adding to its mobile computerised fleet of rigs.
“We believe that most commodities will face an imbalance between supply and demand as mining reserves continue to decrease due to the lack of exploration. Typically, gold and copper projects represent over 70% of the company’s activity. Due to the lack of exploration, mineral reserves of the top gold mining companies have decreased by almost 15% over the last two years. As well, many industry experts expect the copper market will face a deficit position in the next few years, due to the continued production and high grading of mines, combined with the lack of exploration work conducted to replace reserves. Therefore, it is expected that at some point in the near future, the need to develop resources in areas that are increasingly difficult to access will significantly increase, at which time we expect to see a resurgence in demand for specializsd drilling,” said Larocque.
