Investors have pounced on drilling services company Swick Mining Services Ltd today after the group revealed it had achieved record revenue of $4.85 million during the month of June, up 142 per cent on the previous corresponding period.
Investors have pounced on drilling services company Swick Mining Services Ltd today after the group revealed it had achieved record revenue of $4.85 million during the month of June, up 142 per cent on the previous corresponding period.
Shares in SMS surged from $1.22 to $1.40, or 14.8 per cent.
At 2pm its shares had dipped slightly to $1.39.
SMS also updated the market on its operational activities including a series of new drilling contracts and contract extensions with Mincor Resources NL, Consolidated Minerals Ltd and Sally Malay Mining Ltd.
SMS has also established its own in-house engineering department in South Guildford after acquiring Eaton Engineers, which SMS said was a small but long established engineering business that serviced the WA drilling industry.
A copy of the company's announcement is pasted below:
SWICK MINING SERVICES - COMPANY UPDATE
Swick Mining Services Ltd (ASX Code: SWK) is pleased to provide an update on its operational activities. Highlights include:
Record revenue figure for June 2007 of $4.85 million (142% increase on June 2006). One year underground diamond drilling contract with Barrick Gold Corporation for up to three rigs at the Lawlers and Darlot Gold Mines. Two year underground diamond drilling contract with Mincor Resources NL for up to four rigs at Mincor's Kambalda nickel mines. Two year underground diamond drilling contract extension with Consolidated Minerals Ltd for two rigs at the Beta Hunt Nickel Mine. Two year underground diamond drilling contract extension with Sally Malay Mining Ltd for one rig at the Lanfranchi Nickel Mine. Continued 100% conversion of trials to formal contracts. Underground diamond drilling trial to commence with Jubilee Mines NL. Roll-out of six underground diamond drill rigs to Newmont's Jundee Gold Mine completed. 30 underground diamond drill rig build program on schedule. Three rigs commissioned for the new surface diamond drilling division. New RC drilling contract with Territory Resources Ltd for one rig at the Frances Creek Iron Ore Mine. Two new rig builds commenced for the RC drilling division, with plans for a third new rig build confirmed following discussions with Consolidated Minerals Ltd. Establishment of an in-house engineering department.
Record Revenue Result for June 2007
In June 2007, Swick Mining Services produced record monthly revenue of approximately $4.85 million resulting from new rig rollouts in both the underground diamond drilling division and surface diamond drilling division. This represents an increase of 142% compared to June 2006 revenue, highlighting the continued strong growth of the Company over the past 12 months. As at 1 July 2007, the Company operated a fleet of 31 drill rigs and employed more than 270 personnel. Award of Underground Diamond Drilling Contract with Barrick Gold Swick Mining Services has been awarded an underground diamond drilling contract with Barrick Gold Corporation, the world's largest gold producer with a portfolio of 27 operating mines around the globe. The Company will provide up to three underground diamond drill rigs between Barrick's Lawlers and Darlot Gold Mines in Western Australia for an initial 12 month period commencing 1 July 2007. Prior to being awarded the contract, Swick Mining Services provided an extended trial of underground diamond drilling at the Lawlers Mine, which demonstrated the significant productivity and safety benefits of the Company's rigs. The contract award continues the Company's 100% success rate from trial drilling programs and confirms the Company's ability to offer the premium quality drilling services now sought by major mining houses. Swick Mining Services considers further opportunities will arise with Barrick and with each of the new contract awards and extensions set out below. Award of Underground Diamond Drilling Contract with Mincor Resources Swick Mining Services has been awarded an underground diamond drilling contract with Mincor Resources NL following an extended trial at the Mittel Nickel Mine in the Kambalda Nickel District of Western Australia. The Company will provide up to four underground diamond drill rigs across Mincor's nickel mines in Kambalda for an initial 24 month period commencing 1 July 2007. Award of Underground Diamond Drilling Contract Extension with Consolidated Minerals Swick Mining Services has been awarded an underground diamond drilling contract with Consolidated Minerals Ltd, which replaces a 24 month drilling contract which expired on 30 June 2007. The Company will provide two underground diamond drill rigs to Consolidated Minerals' Beta Hunt Nickel Mine in the Kambalda Nickel District of Western Australia for an initial 24 month period commencing 1 July 2007. Award of Underground Diamond Drilling Contract Extension with Sally Malay Mining Swick Mining Services has been awarded an underground diamond drilling contract with Sally Malay Mining Ltd, which replaces a 24 month drilling contract which expired on 30 June 2007. The Company will provide one underground diamond drill rig to Sally Malay's Lanfranchi Nickel Mine in the Kambalda Nickel District of Western Australia for an initial 24 month period commencing 1 July 2007. Swick Mining Services also provides surface diamond drilling services to Sally Malay's Lanfranchi Nickel Mine. Trial of Underground Diamond Drilling Services with Jubilee Mines Swick Mining Services will undertake an underground diamond drilling trial with Jubilee Mines NL. The Company will provide one underground diamond drill rig to Jubilee's Cosmos Nickel Mine in the North Eastern Goldfields of Western Australia for an anticipated trial period of between three and six months commencing from mid July 2007. Successful Rollout of Rigs under the Underground Diamond Drilling Contract with Newmont As previously announced, Swick Mining Services was awarded a major underground diamond drilling contract with global gold giant Newmont Mining Corporation to provide up to nine underground diamond drill rigs between Newmont's Jundee and Tanami Gold Mines for a period of 36 months commencing May 2007. The Company has successfully completed the rollout and commissioning of six underground diamond drill rigs to the Jundee Mine. A further three rigs are scheduled for rollout to the Tanami Mine in August and September 2007.
Underground Diamond Drill Rig Build Program on Schedule
As previously announced, Swick Mining Services plans to build up to 30 new underground diamond drill rigs by the end of calendar year 2008, owing to the award of the Newmont drilling contract and further growth opportunities. To date, the Company has completed building four of the 30 rigs, with an additional three rigs currently in various stages of build in the Company's workshop. It is expected that the first ten of the 30 rigs will be completed by the end of August 2007. The second stage of the build program for the remaining 20 rigs will commence in November 2007, with the Company now focused on completing all of the scheduled rig builds by June 2008. The build program will grow the underground diamond drilling fleet to a total of 45 rigs and position the Company as one of the largest providers of underground diamond drilling services in Australia. Commissioning of the Surface Diamond Drilling Division Swick Mining Services has completed the rollout and commissioning of three new surface diamond drill rigs following the establishment of the division earlier this year. The Company has one rig under contract to each of the following clients: Consolidated Minerals at the Widgiemooltha Nickel Project in Western Australia. Sally Malay Mining at the Lanfranchi Nickel Mine in Western Australia. Goldstar Resources at the Walhalla Gold Project in Victoria. The rigs operating in Western Australia are the Swick designed surface diamond drill rigs which were built in conjunction with Boart Longyear in Adelaide. The innovative Swick rigs utilise highly advanced drilling control and rod handling systems which provide significant improvements in safety compared to standard configurations. The Company is assessing the performance of the rigs, with a focus on the effectiveness of the rod handling system and overall productivity. Following a refinement of the design of the Swick rigs over the coming months, the Company will focus on a second build program and further expansion of the division. Award of RC Drilling Contract with Territory Resources Swick Mining Services has been awarded a surface RC drilling contract with Territory Resources Ltd. The Company will provide one RC drill rig to Territory Resources' Frances Creek Iron Ore Mine in the Northern Territory for a program of 20,000m of RC drilling commencing mid July 2007. Expansion of the RC Drilling Division Swick Mining Services currently operates two surface RC drill rigs in its RC drilling division, which includes the innovative and award winning Swick designed RC drill rig. As a result of the success of this rig, the Company has commenced building two new Swick designed rigs. The current design has been further improved and future builds will be standardised to a new specification that the Company believes is unmatched in the industry for both safety and productivity. The builds for the new rigs are scheduled for completion in January and March 2008. In addition, Consolidated Minerals Ltd has requested the provision of a second Swick designed RC drill rig at the Woodie Woodie Manganese Mine in Western Australia. The Company will therefore undertake an expanded three rig build program for the RC division, which will take the total RC drill rig fleet from two to five rigs. Swick Mining Services believes there is a significant market for the innovative RC drill rig, particularly in the iron ore sector. The Company has commenced discussions with iron ore producers to test the appetite for the Swick designed RC drill rigs. Swick Mining Services is confident that the RC division has the potential to grow into a significant revenue source in the coming years.
Establishment of In-House Engineering Department
Swick Mining Services has established an in-house engineering department in a new facility at its workshop premises in South Guildford, Western Australia. To facilitate this move, Swick Mining Services has acquired Eaton Engineers, a small but long established engineering business that services the Western Australian drilling industry, which has been incorporated into the new workshop facility. The principal of Eaton Engineers, Ron Eaton, has extensive experience in the fabrication of drill rods, drill consumables, drill tooling and other ancillary equipment used in the industry. The engineering department will produce various lines of drilling consumables utilised by the Company which are currently provided by third party suppliers. This will result in significant cost savings and ensure a timely and certain supply of key consumables. In addition, the engineering department will be involved in on-going research and development programs aimed at improving the engineering of the Company's existing drill rigs and tooling systems, as well as the development of new rig designs and drilling systems. This ability will assist the Company in maintaining its strong technical competitive advantage and position as a drilling industry innovator. To oversee the development and operation of the engineering department, the Company has appointed a highly experienced Engineering Manager with an extensive background in the drilling and manufacturing industries. The Engineering Manager will also be responsible for the Company's rig build, rig refurbishment and field maintenance programs.
