Spe­cialised min­ing out­fit plans R4bn mar­ket cap­i­tal­i­sa­tion by next year

The Star Early Edition - - BUSINESS REPORT - Ka­belo Khu­malo

SPE­CIALISED min­ing drilling ser­vice group Master Drilling plans to have a mar­ket cap­i­tal­i­sa­tion of R4 bil­lion next year and a foot­print in North Amer­ica.

The com­pany has been buoyed by the maiden div­i­dend it de­clared for the year to March af­ter first listing on the JSE in 2012.

Hen­nie van der Merwe, chair­per­son of Master Drilling, said in the com­pany’s an­nual re­port that ge­o­graphic and cur­rency di­ver­si­fi­ca­tion would en­able it to progress to­wards achiev­ing its goals of creat­ing fur­ther value.

“Master Drilling is well po­si­tioned to take ad­van­tage not only of a cycli­cal up­swing in the min­ing sec­tor but also of our com­mit­ted strate­gic move to ex­pand our ser­vice/prod­uct of­fer­ing into other in­dus­tries as well as into ad­di­tional ge­o­graph­i­cal ar­eas,” Van der Merwe said.

The com­pany, which was estab­lished in 1986, pro­vides drilling ser­vices to blue-chip, ma­jor and mid-tier com­pa­nies in the min­ing, civil en­gi­neer­ing and hy­dro­elec­tric en­ergy sec­tors, across a num­ber of com­modi­ties.

Two sub groups

The Gaut­eng-head­quar­tered group com­prises two main op­er­a­tional sub groups – South African op­er­a­tions and in­ter­na­tional.

In the year to March, the com­pany re­ceived 18 per­cent of its rev­enue from its rest of Africa op­er­a­tions, while it got 24 per­cent in its home mar­ket and a whop­ping 57 per­cent in its Latin Amer­ica op­er­a­tions.

The com­pany re­ported that its rev­enue for the year to March de­creased 1.5 per­cent to $118 mil­lion, while its dol­lar earn­ings a share in­creased by 5.9 per­cent to 14.3 cents, while its rand-de­nom­i­nated earn­ings a share went up 22 per­cent to 210c.

The group re­ported a 5.7 per­cent in­crease in prof­its to $22.3m in the pe­riod and de­clared a maiden div­i­dend of 30c a share. It has a mar­ket cap­i­tal­i­sa­tion of about R2.5bn. Ear­lier this year it said that its hor­i­zon­tal raise bor­ing (HRB) tech­nol­ogy was ready for in­ter­na­tional roll-out af­ter the suc­cess­ful pi­lot test at the Cul­li­nan Mine.

HRB can re­place con­ven­tional drill-and-blast min­ing and prom­ises to in­crease min­ing pro­duc­tiv­ity thanks to its con­tin­u­ous process of rock bor­ing, and in ad­di­tion, of­fers sig­nif­i­cant safety ben­e­fits. It was of­fi­cially un­veiled at the In­vest­ing in Africa Min­ing Ind­aba 2017, held in Cape Town.

Danie Pre­to­rius, chief ex­ec­u­tive of Master Drilling, said that view­ing the com­pany’s rev­enue in terms of di­ver­si­fi­ca­tion en­abled it to fo­cus on the op­por­tu­ni­ties it sees glob­ally for its tech­nol­ogy. “In ad­di­tion, our di­ver­sity in ge­ogra­phies gives us the flex­i­bil­ity of cur­rency di­ver­si­fi­ca­tion, which pro­vides a nat­u­ral hedge against cur­rency volatil­ity, while at the same time, with 50 per­cent of our earn­ings US dol­lar-based, we can take ad­van­tage of the rel­a­tive value of other cur­ren­cies,” he said.

Fol­low­ing ini­tial de­lays in com­mis­sion­ing the blind shaft bor­ing sys­tem con­tract in the US, the com­pany had noted sig­nif­i­cant progress and en­quiries from other North Amer­i­can op­er­a­tors were en­cour­ag­ing. The com­pany said at the end of De­cem­ber its com­mit­ted or­der book amounted to $196m (R2.55bn), while its pipe­line amounted to $300m.

Pre­to­rius said a key fo­cus for the group would be to change its de­pen­dency on min­ing ac­tiv­i­ties in pro­vid­ing a bulk of its in­come. “Dur­ing the year 94 per­cent of our work was in the min­ing sec­tor. While we will con­tinue to mar­ket our­selves in this sec­tor – mainly to the cop­per, poly­metal­lic and gold/zinc mines – we have long been aware that our de­pen­dence on a dom­i­nant sin­gle sec­tor is a risk for our busi­ness.”


Master Drilling at Cul­li­nan Di­a­mond Mine. De­pen­dence on a dom­i­nant sin­gle sec­tor is a risk for the com­pany’s busi­ness.

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