Dynamic doubles fleet through $21m deal

Wangara business Dynamic Drill and Blast expects to add about $30 million to its full-year revenue, following the acquisition of fellow contractor Orlando Drilling.

Today, Dynamic announced it would spend $21.4 million in cash and scrip to purchase Orlando, a privately owned grade control, exploration and resource definition drilling services provider based in High Wycombe.

The business was founded by directors Joel Skipworth and David Kinnersley in 2007. It has since grown its assets to 17 drill rigs - comprising air core, reverse circulation, and diamond drilling - which will boost Dynamic’s total fleet to 33.

Dynamic, which purchased three drill rigs last month, expects the acquisition will boost its underlying earnings for the current financial year by up to $7 million.

For context, Dynamic earned $2.9 million in the first half of FY21 and generated revenue of $11.6 million.

It announced the deal in the same week counterpart McKay Drilling, a family-run business based in Wangara, was acquired by Canadian company Major Drilling for $80 million.

Dynamic’s acquisition is subject to a number of conditions including shareholder approval, an equity raising to fund the transaction, and regulatory approvals.

“Orlando is an excellent strategic fit for Dynamic and we are very excited to leverage the complementary service offering, asset and customer base, and expertise of the team, to continue to drive growth and shareholder value,” managing director Mark Davis said.

“Importantly, there is a very strong cultural fit between Dynamic and Orlando, which will play a critical role in successfully integrating the two businesses.

“I would like to welcome David and Joel [of Orlando] to the Dynamic board and executive team, and truly believe they will add significant value to our customers and ultimately to all Dynamic shareholders.”

The Orlando co-founders said the deal positioned the company for future growth and provided a stronger platform to better service Dynamic and Orlando’s combined client base, which includes Fortescue Metals Group, Northern Star Resources, and Rio Tinto.

“The combination allows us to provide a full end-to-end service for our customers, whilst maintaining excellence in safety, quality and delivery,” Messrs Skipworth and Kinnersley said.

“Furthermore, the larger fleet base allows us greater capacity to meet customer requirements.

“We are very excited to continue to join the Dynamic team and deliver long-term customer and shareholder value.”

Dynamic will acquire all of Orlando’s issued capital for $4.5 million in cash and 37.5 million in shares, worth about $16.9 million.

Orlando shareholders could also receive potential earn-out payments capped at $9.8 million, subject to performance targets being met, including Orlando achieving underlying earnings of at least $7 million in FY22.

Sternship Advisers is acting as corporate adviser to Dynamic on the deal and HWL Ebsworth Lawyers as legal adviser.

Dynamic, which listed on the ASX in August last year, requested a trading halt on Thursday, expected to lift on May 24.

The company last traded at 47 cents per share.