Swick posts strong Q3 results

Shares in Swick Mining Services have jumped 10 per cent, after the drilling business revealed its earnings before interest, tax, depreciation and amortisation (EBITDA) rose 58 per cent compared to the prior corresponding period.

Swick’s EBITDA for the third quarter of this financial year was $7.3 million compared to $4.6 million during the same time last year.

Revenue was up 7 per cent from the prior corresponding period to $35.1 million.

In a statement the company said the continuation in its earnings turnaround reflects the ongoing success in its strategy of shifting drill rigs onto better performing contracts or new projects and reducing operating and non-operating costs, ensuring each contract is profitable on a standalone basis.

Swick managing director Kent Swick said the most pleasing aspect was the driller’s ability to secure $210 million in contracts that were being pursued in the March quarter.

This included new work at Northern Star’s Pogo gold mine in Alaska, rig expansion at BHP’s Olympic Dam in South Australia, and contract extensions at Kirkland Lake Gold’s Cosmo gold mine and Newmont Australia’s Tanami gold mine.

“The recent award of $210 million in work has provided a strong base for the business, with many rigs moving from low margin, long-term work to target margin, long-term work,” he said.

“Our ability to secure rate adjustments where necessary as well as locking in fixed shift contract rates at projects where production may be at risk for various reasons has been key in significantly de-risking the business on a commercial basis.

“We have had good feedback from many clients on this approach, although we appreciate that it is not necessarily applicable to all drilling situations.”

Swick provided full year guidance for this financial year, with revenue of $138 million to $143 million and EBITDA of $27.5 to $29.5 million expected.

Shares in Swick were trading at 22 cents each at 2.30pmAEDT.