Swick confirms dividend, launches buy-back

Drilling contractor Swick Mining Services will proceed with its first interim dividend payout in five years, while also announcing a $1 million share buy-back program.

The company today said it was in a strong financial position and well-placed for when current economic conditions, as a result of the coronavirus pandemic, stabilised.

Its shares were up 15 per cent on the news at 10:30am AEST to trade at 12 cents.

Swick will proceed with its planned fully-franked interim dividend of 0.3 cents per share, representing a $910,000 payout, due on April 17.

The company also intends to purchase up to $1 million worth of shares under the buy-back program.

Managing director Kent Swick said the program was an appropriate capital management tool given the company’s financial position.

In its interim results released in February, Swick disclosed it had cash of $12 million and total assets comprising $151 million.

“The objectives of the buy-back program are to increase both earnings per share and return on equity to provide further value to its shareholders in what are depressed equity market conditions for the mining services sector,” Mr Swick told the market today.

“At times like this, Swick’s strategic focus on underground core drilling at quality mines comes to the fore in an environment that has the potential to disrupt the broader mineral drilling market.”

Swick reported in February its drilling business had generated $6.9 million in operating cashflow before interest and tax in the first half of the 2020 financial year.

The company said the result, coupled with its strong financial position, would support its first interim dividend since 2015.

In March, however, Swick announced several of its operations had been suspended, including at Newmont’s Tanami gold mine in the Northern Territory.

“Due to COVID-19 implications we have a net reduction of around 6 per cent of the rigs previously in work, and whilst it is very hard to predict the further impact that may arise, we feel confident in the measures both Swick and our clients have taken to minimise those risks," Mr Swick said.

Since announcing reduced work in March, Swick said there had been no further impact on rig utilisation as a result of the virus.

The Perth-based company also said it had no confirmed COVID-19 cases within its workforce.

Swick has moved to even time rosters and is accommodating employees in local towns close to mine sites to lessen the impact of travel restrictions on operations.

Mr Swick said the company was taking all appropriate measures to protect its workforce and limit the impact of COVID-19 on its stakeholders.