The flagship drilling business delivered EBITDA growth of 93% based on the September 2017 quarter to $6.8 million from revenue of $36.7 million, success in shifting drill rigs onto better performing contracts or new projects.
Based on group revenue of $36.9 million and EBITDA of $6.8 million, total EBIT was $815,000 compared to a $1.1 million loss a year ago
Managing director Kent Swick said the turnaround was a result of improving rates for its rigs, after contract renegotiation, or moving rigs to better performing sites, driving cost efficiencies across the business, and increasing fleet utilisation to an average of 75%.
It has two final contracts requiring rate adjustments temporarily extended for three months at improved rates effective from October 1. The contracts, at Tanami and Mt Charlotte, involve 11 rigs, and Swick intends to tender for ongoing work.
Swick said clients were requesting more deep exploration holes to be drilled from underground, so the company was in the throes of establish a dedicated deep exploration division in order to bolster its position in the underground diamond coring market
It said it ordered specialised deep hole drilling kits that would be the most powerful rigs available in the Australian market.
The company said overall demand for underground mobile rigs continued to remain high, and surface RC drilling has also experienced a small rebound, and new contracts with Kin Mining in the west and Cobalt Blue Holdings in the east commence this quarter.
Despite the recovery, the company drilled 297,904m in the quarter, 10% less than in the September 2017 quarter.
It has 69 underground rigs in its fleet and seven surface rigs, and is open to procuring more with debt funding if the recovery continues and the demand is there, with Swick seeking multiple opportunities globally.
The mineral analysis services arm of the company continues to establish itself following the launch of the ORExplore scanning technology in May. While it still has just five commercial scanning agreements "dozens of resource companies" are planning to send core for trial scans at the ORExplore laboratory in Perth.
Swick, traded at A22c late today, down 6.4%, and valuing the company at almost $51 million.
