Manag­ing the head­winds in the min­ing sec­tor

Finweek English Edition - - MARKETPLACE -

Mas­ter Drilling re­sults saw rev­enue down while prof­its were up as the com­pany mostly charges in dol­lars, but pays costs in lo­cal cur­ren­cies, and in dol­lar terms prof­its rose by 16%. It of­fers drilling ser­vices to min­ing com­pa­nies and it is not sur­pris­ing that util­i­sa­tion of small rigs dropped from 54% to 35%. This is cer­tainly a risk for the busi­ness but also an op­por­tu­nity if it can get util­i­sa­tion back up.

The is­sue is that min­ing re­mains un­der pres­sure glob­ally but, on the flip side, a lot of min­ing is be­ing out­sourced and the in­dus­try has also be­come very cost aware. Mas­ter Drilling fits in per­fectly as it of­fers cheaper, more ef­fec­tive out­sourced min­ing and en­joys a great niche po­si­tion as a ma­jor global player.

It re­ports in dol­lars, with just over half of rev­enue earned in this cur­rency. This adds some fur­ther risk if the rand were to strengthen.

Over­all the com­pany is ex­pe­ri­enc­ing head­winds, but it’s manag­ing them and it re­mains a leader in the space with its own tech­nol­ogy. (Also see page 22.)

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