Tag Archives: DDH1 Limited

Swick Mining and DDH1 Ltd to combine surface and underground drilling offering

Swick Mining Services and DDH1 Ltd have agreed in-principle terms to combine their businesses to create, they say, a global scale mineral drilling business with a balance of surface and underground services.

The conditional, non-binding indicative proposal is part of a planned all-scrip transaction where Swick shareholders would receive 0.2970 DDH1 shares for each Swick share held.

The proposed transaction values Swick’s Drilling Business at an enterprise value of A$115 million ($84.1 million). After deducting Swick’s planned A$12 million Orexplore investment and the net debt within the Drilling Business, the remaining equity value of A$99.3 million equates to the offer value of approximately $0.35 per Swick share.

Swick and DDH1 offer complementary drilling services and expertise, with long established successful track records working with a wide range of exploration and mining companies, they say.

“There is merit in a merger of the two companies, both in terms of cost synergies and scale benefits,” they added. “The combination is expected to realise meaningful synergies over time, with both sets of shareholders able to benefit due to the all-scrip consideration.”

The combination of the two Western Australia-based businesses will have a balance of surface (circa-60%) and underground (circa-40%) drilling from a combined fleet of 170-plus rigs, which generated approximately A$445 million in revenue and A$103 million in EBITDA in the 2021 financial year to June 30, 2021.

The proposed transaction is conditional on, among other things, negotiation of a binding Scheme Implementation Agreement between the parties, which is expected to occur shortly. The transaction is then expected to complete following the completion of the Orexplore demerger – anticipated to occur after a shareholder vote expected in December.

Swick’s Chairman, Andrew Simpson, said: “A combination of two market leading Australian drilling business – Swick and DDH1 – makes strategic sense and combines high quality, experienced expertise in underground and surface drilling. For Swick shareholders, the proposed transaction will enable them to benefit from their ownership in the enlarged group, while also realising value of the Orexplore business in the form of a new ASX listing.”

Swick’s Managing Director, Kent Swick, added: “We have grown Swick to become the largest underground drilling contractor in Australia with a market leading position, defined by solid margins and established top-tier clients throughout the years both in Australia and internationally.

“There is a strong commercial logic in combining the DDH1 and Swick businesses and being able to offer our customers a complete range of high quality and innovative mineral drilling services from the discovery phase, through to mining and completion. I am very proud that the team at Swick have built a business that has been recognised and valued by another high-quality peer.

“While the transaction is conditional, and there are still additional steps to undertake, the board will continue to act in the best interests of Swick shareholders.”