Swick reinstates interim dividends, commences strategic review

26-Feb-2020 Intellasia | FTI Consulting, Strategic Communications Perth | 6:02 AM Print This Post

Highlights:

* Group TRIFR at end of 1H FY20 at 6.4 which is the lowest in Swick history a reduction of 65 percent from 18.4 at the end of the prior corresponding period

* A record 63 underground diamond drill rigs deployed globally at end of half

* DeepEX division created and commenced operations with deepest hole drilled in the half of 1,374 metres

* Established a significant 8 rig contract in Alaska at Pogo Mine, with the eighth rig mobilised in October 2019

* Revenue and other income of $81.5m, up 8.2 percent on 1H FY19, driven by an increase in rig deployments

* Cash generating Drilling Business and robust financial position supports first interim dividend since 2015, with fully franked interim dividend of 0.3cps declared

* 2Q FY20 EBITDA of $6.8m, up 15 percent on 1Q FY20, benefiting from cost reductions and productivity improvements at Pogo

* FY20 Drilling Business EBITDA expected to be in line with FY19

* Orexplore achieved a key milestone with two site based trials currently underway

* Board of directors has commenced a strategic review to consider optimal corporate structure for both Drilling Business and Mineral Technology Business that will deliver greatest value for shareholders

Western Australia Swick Mining Services Limited (‘Swick’, ASX: SWK), a leading provider of high-quality underground and surface mineral drilling and mineral analysis services, announces its results for the six-month period ended 31 December 2019 (1H FY20).

Swick Managing director Kent Swick said significant progress had been achieved in the second quarter which provided confidence going into the second half of FY20.

“Swick has ramped up the total drill rigs in work during the half from around 54 at the start of the financial year to 66 at the end of the half yet we still managed to achieve a record safety performance which is a great effort by our team. I am really proud of our employees’ attitudes to doing things the right way backed by a comprehensive safety and training system and our safety culture is well recognised and appreciated by our clients. With around 650 personnel in the global business it has been a great performance over the last twelve months.

“Swick delivered solid earnings in the first half despite navigating some challenges ramping up at our significant new contract at Pogo in Alaska, with the Drilling Business generating positive operating cash flow. This enabled the Board to declare its first interim dividend in five years as we look to enhance returns to shareholders,” Swick said.

“In the first half we went from 52 underground diamond rigs deployed to 63 globally, a record number for the business and we also had three surface RC drills in work. During the six-month period our focus has been on enhancing productivity and cost efficiency from these rigs as we ramp up at new projects. In particular, initiatives at the Pogo project have gained real traction, with Swick achieving material cost reductions and productivity improvements after successfully deploying all eight rigs at the site. This has resulted in second quarter earnings from our Drilling Business up 15 per cent over the first quarter and is providing us with confidence that we will reach target performance at Pogo by the end of FY20.

“Meanwhile, we continue to support investment in our Mineral Technology Business, Orexplore and it is pleasing to see this business approaching the final step in its commercialisation runway, with two site-based trials currently underway. Orexplore is a very exciting technology that has the potential to provide a significant amount of useful data for geotechnical engineers, mining engineers, geologists, and metallurgists from a single scan.”

 


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