Master Drilling’s earnings grow as capex starts to find the sweet spot

The group delivers innovative drilling technologies and mining solutions and services.

The group delivers innovative drilling technologies and mining solutions and services.

Published Mar 27, 2024


Master Drilling Group lifted headline earnings a share by 15.1% to 267.7 cents after it’s global operations experienced a profitable year and benefited from the past 10 years of capital expenditure.

A 52.8 cents a share dividend was declared, an increase from 47.5 cents in 2022. Cash from operating activities increased by 42% to $35.5 million (R659bn). The order book ended the year stable at $288.3m, with a healthy project pipeline of $535.3m.

The group delivers innovative drilling technologies and mining solutions and services.

CEO Danie Pretorius said the company performed resiliently in 2023, increasing revenue 7.2% to a record of $242.8m, despite global market and economic uncertainty.

“While profitability faced some pressure, we are grateful for the support of our valued clients and business partners,” Pretorius said in the published results.

He said Master Drilling would continue to work on technological advancements. “Beyond our traditional core technologies, we have strategically invested in asset-light digital ventures.”

These initiatives encompassed proximity detection solutions and integrated data and resource management systems designed for mining operations.

“These ventures have not only contributed to our financial performance, but have also opened doors to exciting new opportunities, ensuring continued relevance and solidifying our position as a leading innovator,” said Pretorius.

He said they remained optimistic about the future. The focus on cost control, capital allocation, and operational excellence would continue.

Cash was being managed carefully to cater for opportunities that required specific design, planning and investment.

Capital spend of $34.7m was applied 76% on expansion and 24% on sustaining the existing fleet.

Debt decreased to $44.1m from $46.1m and the gearing ratio, including cash, remained flat and low at 7.8%.

In South America, despite one specific loss-making project having a negative impact on financial performance, machine utilisation rose across the board.

Key projects with important clients continued to move forward, with negotiations underway for extensions and new contracts were being negotiated. In one of the countries, production saw a significant rebound, reaching its highest level in several years.

In Central and North America it had been a “productive and successful” year.

“Despite not yet performing satisfactorily financially, we've obtained key permits allowing us to expand our service offerings not only in this region but potentially to neighbouring regions.”

Investment in marketing had paid off as a couple of new contracts had been secured across multiple mines.

Africa continued to be a stronghold for the group and new business opportunities were being actively sought. The group has a strong presence in several African countries.

The Rest of the World operations exceeded expectations on profitability through efficient use of staff, cost-control measures, and successful project execution. Business was expanding into other areas.

In the platinum mining sector, dewatering operations had been paused due to cost-cutting measures. The freed-up equipment was available for deployment on new projects.

Drilling operations had also begun at a new client with two newer technological machines, and satisfactory penetration rates have been achieved. These operations were expected to ramp up in the first half of 2024.

Development of a robotic surface drilling machine was completed late in 2023 with operational testing started and operational work at a client expected to begin in April 2024. The group started production with a newly developed robotic underground machine in late 2023.

The other mining service companies were out-performing expectations.

The service offerings have been expanded outside the South African borders, with this expansion being pursued globally during 2024.

Pretorius said Master Brilling was confident in its ability to perform well, in spite of uncertainty in global markets.

This confidence stemmed from long-term contracts and from a deliberately diversified footprint across various regions, commodities, currencies, and industries.


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