Following a solid 2022 performance, JSE-listed Master Drilling achieved another good performance for the six months ended June 30, with revenue up by 12% year-on-year to $108.2-million, CEO Danie Pretorius says.

Operating profit was up 22.8% to $21.2-million.

The increase in revenue and operating profit follows a record 2022 despite difficult operating conditions experienced globally.

Pretorius notes that this is on the back of higher revenue per rig and investment in new business ventures.

The company saw an increase across most indicators, with profit 8% higher year-on-year at $14.6-million.

Headline earnings a share were up 5.7% in dollar terms from $0.088  to $0.093.

Net cash from operating activities, however, decreased by 5.7% from $13.4-million to $12.6-million.

Master Drilling says it will continue to manage debtors actively to ensure robust conversion to cash. Cash resources continue to be managed prudently to cater for emerging opportunities that require specific design, planning and investment.

Master Drilling has a revenue pipeline of $517.1-million and a committed order book of $276.3-million.

In line with the company’s past practice, it did not declare an interim dividend and will consider an appropriate dividend at year-end.

The interim period included an increased focus on technology development, and Pretorius says Master Drilling has seen some of its new technologies maturing and making an impact on the way mining is conducted.

Apart from its cutting and drilling technologies, the company has also invested in asset-light business ventures in the digital space.

Master Drilling has further invested in businesses that provide proximity detection solutions and integrated data and resource management systems for mining.

These business ventures have contributed to the bottom line and have also opened up new opportunities for the group, Pretorius highlights.

Master Drilling has identified three technology focus areas to develop a growth strategy and diversify the business, namely shaft sinking, tunnelling and non-explosive mining.

To spread risk and reduce funding requirements, Master Sinkers partnered with South Africa’s Industrial Development Corporation with a view to pursuing a promising business case.

During 2022, Master Sinkers continued to design, manufacture and assemble its shaft boring system.

Master Sinkers is engaging with the market to seek the best possible project to implement the technology in a phased approach.

It is envisaged that the shaft boring machine will be commissioned in the first half of 2024 during the test sink of a 50 m deep shaft in South African hard rock.

It is positioning itself as a specialised mining contractor, as opposed to a mainstream one.

A second-generation mobile tunnel borer design is progressing well and will be completed and considered for further development during 2024.

OPERATIONAL
Master Drilling's operations globally enjoyed a profitable year, which it attributes to investments made over the past decade.

Africa remains a key area for the group and it says it is aggressively pursuing further opportunities in this market.

The South African operations have maintained steady growth. With two XXXL machines busy on long-term contracts with a key client, and a third XXXL machine being mobilised at the start of the second half of the year, the medium-term outlook is said to be very positive.

In Ghana, it says it is strategically placed to service existing and potential contracts in the Western African region.

In the Democratic Republic of Congo, it continued its satisfactory performance with a long-term project.

Stable revenue is expected in Mali and the current client is regarded as a strategic partner of Master Drilling.

Tanzania’s operations remained stable with an amendment of its current contracts to add a piling machine during the second half of the year secured.

The company remains optimistic about opportunities in Zambia.

In Botswana, it is progressing well with a long-term contract at one of the copper mines and mobilised a second machine to this project.

South America’s performance was under pressure for the period as a result of several headwinds for miners in the region.

The company is pursuing other opportunities in neighbouring countries such as Ecuador and Colombia.

The market for raise boring and exploration drilling activities in North America continued the strength of 2022.

The Canadian contracts are advancing as expected.

The company continues with efforts to secure contractors’ licences across each relevant state in the US.

Operations in Mexico had a challenging performance in the period. Additional machines have been deployed to projects in other neighbouring countries in this area such as Nicaragua. Work continues on operational efficiencies to reduce overall costs.

The Master Drilling Mexico business, in partnership with A&R Engineering and Mining Services and related companies, a subsidiary of the group, has successfully delivered its first project in this region.

Master Drilling Europe performed well during the first half of 2023 and showed decent returns on the back of a good 2022, the company points out.

In general, it highlights much more movement in the market than a year ago, with several enquiries coming from the infrastructure as well as hydroelectric sectors.

The Indian operations are noted to be performing well, in line with expectations, and the company will continue to seek additional projects within India and the surrounding areas. It has received a further extension on this long-term contract.

Master Drilling is growing its presence in Australia and Central Asia, with a focus on consolidation in the marketplace and organic growth.

Growth in Australia was noted to be promising for the year.

The company started a project in Saudi Arabia and believes this will be the catalyst for future growth in this region. It has progressed with discussions for various stakeholders to be involved in shaft excavation in this region.

The lost time injury frequency rate for the period was 0.49, an improvement from 0.83 in the previous year.

OUTLOOK 

Moving forward, Pretorius emphasises that the focus on capital spend will be critical, as will diversification, and following the commodities that will be important in the medium and long term. Master Drilling will also continue to focus on disruptive technologies and innovation to speed up mining projects.

In the short to medium term, the sales pipeline is expected to stabilise and increase with further tactical acquisitions and joint ventures supporting performance.