Perth-based Swick Mining Services says it made a number of redundancies to minimise costs during the March quarter and plans to make an impairment adjustment at year’s end, despite an increase in demand for underground drilling from its existing clients.
Swick increased its revenue by 16 per cent on the previous corresponding period to $32.7 million, as usage of its fleet of underground diamond drills went up by 10 per cent to 83 per cent.
The company is operating at 24 mine sites for 19 individual clients.
“As foreshadowed in our FY15 half-year update, Swick has experienced an increase in activity during the third quarter,” the company said in a statement.
“A total of 61 rigs from a fleet of 83 were operating in the field as of March 31, compared to 55 rigs from a fleet of 81 a year ago.”
However despite the increase in activity, managing director Kent Swick said the company was rationalising its overhead and restructuring its internal processes within the business to minimise costs.
“Unfortunately, as a result, quite a number of employees have been made redundant,” he said.
“I think that the response that Swick has made in the mineral drilling downturn to-date to maintain a high level of service quality whilst working with its clients to lower the direct and indirect costs of drilling has been greatly appreciated.”
Swick will also be making an impairment adjustment to its reverse circulation division due to recent low utilisation.
“It appears now that some of our clients are showing signs of an appetite to increase their drilling, at least in the underground business,” Mr Swick said.
He said the company’s challenge now was to maintain its value to its clients and satisfy shareholders by improving efficiencies through operational initiatives designed to increase production and lower the number of drill crew required per shift.
“Swick has recently established single man operation for some rigs on multi-rig sites on a trial basis with excellent results,” Mr Swick said.
“Over the next three years, Swick is planning to upgrade its underground diamond drill fleet to enable unattended and semi-autonomous drilling.”
The company’s full-year revenue outlook remained in its target range of $125 million to $135 million.
Swick shares were 11.1 per cent higher to 15 cents a share at 1:30pm.
