JOHANNESBURG (miningweekly.com) – Net cash generated from operating activities in the six months to June 30 increased 100% to $11.1-million amid unprecedented Covid-19 disruptions, drilling services company Master Drilling reported on Tuesday

The JSE-listed company, headed by CEO Danie Pretorius, provides drilling services to the mining, civil engineering and building construction sectors across 23 countries.

On entering the year facing a challenging operating environment and deteriorating economic fundamentals, Pretorius said: “Our quick response to the unprecedented disruptions in mining activity ensured our financial stability and profitability.

“I’m proud of the way our teams have responded to the Covid challenges to ensure that we’re able to continue delivering services in a way that is responsible for all staff, their families and the communities in which we operate,”  Pretorius added.

The group managed to limit the revenue decrease to 17.9%, from $70-million for the corresponding previous period to $57.4-million, while first-half operating profit retracted 37.7% to $7.3 million. But net cash from operating activities surged from $5.5-million to $11.1 million.

“We maintained a strong financial footing and improved our cash generation whilst debtor days were kept consistent,” Master Drilling CFO André van Deventer reported.

Although the company reported adequate liquidity headroom, it expressed commitment to maintaining stringent proactive measures focused on cash flows, costs management as well as working capital and capital expenditure optimisation across the business.

Master Drilling reported that it had secured new work in West Africa, Australia, Russia, Europe and North America, with increasing exposure to commodities experiencing significant upswings and driving mining activity.

Opportunities in the civil construction industry were also being pursued and an 18 months’ contract starting in mid-2021 had been secured in France, the company reported in its media release to Mining Weekly.

Its half-year sales pipeline totalled $281.4-million with a committed order book of $144.6-million.

On its stated year-end interest in growing a raise-boring-focused presence in Australia, Russia and central Asia, Pretorius reported that that the company’s Russian business partner agreement was in place and a project had been secured with equipment currently being mobilised. Opportunities in Kazakhstan and neighbouring States were also being worked on and operations in Australia had started under a contract as the company built a pipeline of new projects.

The company reiterated that technological innovation and development remained pillars for its long-term success. Artificial intelligence and big data were driving changes around mining activities to enable cost reductions and improve safety. 

Technology remained a key differentiator: “We continue to support our customers with solutions that address changing conditions and future trends,” said Pretorius.

Cited as an example of its technological advantage during the period was its setting of a world record by drilling a 1 382 m raise-bore pilot hole at Northam’s Zondereinde platinum  group metals (PGMs) mine in Limpopo.

Its mobile tunnel borer continued to receive keen interest and deployment of the machine on a new project is being sought. This follows the Phase 2 capital project at Eland PGMs mine being cancelled owing to Covid’s cutback impact on capital expenditure (capex).

While the company remained committed to developing and delivering solutions to assist clients in meeting their efficiency targets and economic goals, all non-essential capex had been halted to preserve cash during these uncertain times.

The company stated in its release that global economic growth was not expected to correct in the short term and global volatility across capital and commodity markets was poised to further impact overall mining activity and capex spend.

Although some commodities were showing positive trends, only a limited number of new mining projects were expected to be commissioned in the short to medium term.

“Looking ahead, the improvement in commodity prices including gold, PGMs, iron-ore, copper and polymetals, together with the weaker emerging market currencies, should counter some of the headwinds still facing us for the remainder of the year.

“In the longer term, whilst it is still too early to assess the full impact of the pandemic on our business, we believe that our strategy to diversify across regions, commodities, currencies and industries will stand us in good stead to take advantage of opportunities when we emerge from this cycle,” said Pretorius.