TORONTO (miningweekly.com) – Canadian drilling equipment and services provider Major Drilling this week announced its entry into the underground percussive/long-hole drilling sector with an agreement to buy Taurus Drilling Services for C$27.7-million.

The Moncton, New Brunswick-based driller on Monday said Taurus was operating in Canada, the US and Mexico, providing underground percussive/long-hole drilling to mining company clients.

Under the terms of the agreement, Major Drilling would pay Taurus C$15.9-million in cash, C$7.5-million in stock and would assume C$4.3-million in debt. The transaction was also subject to an additional maximum amount of C$11.5-million tied to performance targets over thee years, starting on August 1.

Payments would be contingent on growing the earnings before interest, taxes, depreciation and amortisation (Ebitda) run rates above current levels.

Through the deal, Major Drilling would acquire 39 drill rigs, together with related equipment, inventory and contracts. The company would also retain the operation's management teams, as well as the other employees, including experienced drillers.

Over the past 12 months, Taurus had produced revenue of about $38-million and Ebitda of about $8-million.

The closing of the transaction was currently scheduled for August 1, subject to normal closing conditions.

"We are very pleased to welcome Taurus and its employees into the Major Drilling group. The Taurus acquisition opens the door to additional diversification in the mining industry as percussive long-hole drilling is more related to the production function of a mine. Offering both underground production drilling and our existing underground core drilling, we can now provide an even wider range of complementary services to our clients," Major Drilling president and CEO Francis McGuire said.

Major Drilling had been dealing with lackluster demand for its services as a consequence of the mining industry downturn, which had resulted in little work and highly competitive pricing among competitors the world over.