MARKETS

Record quarter for Swick

SWICK Mining Services has reported a record March quarter with unaudited revenue of $A35.5 million, though the company remains cautious about the future as it narrows its full year guidance.

Hannah Vickers
Record quarter for Swick

Managing director Kent Swick cautioned that companies across the board were in cost control mode which could impact business.

“The resource sector is obviously under pressure and there are many reviews of discretionary and non-discretionary expenditure being undertaken by both clients and suppliers,” he said.

“In general, the type of work that Swick specialises in is non-discretionary spending and is, in the main, a required process when mining underground.”

Still, the potential does exist that customers could lower their rig utilisation or defer non-essential drilling and the company has seen start dates of recently awarded work pushed out by up to a month.

“As a result of the later start-ups, management has softened guidance a little to take this into consideration,” Swick said.

The full year guidance was refined to $145-150 million in revenue, narrowed from $145-155 million the company previously announced.

It set a window of $30-32 million for earnings before interest, tax, depreciation and amortisation for the 2013 fiscal year, down slightly from the $30.5-34.5 million originally anticipated.

The company had 59 rigs from a fleet of 76, including three client-owned rigs, operating in the field at March 31, compared with 50 rigs in operation from a fleet of 69 a year ago.

Swick also completed the build of an additional three underground diamond drill rigs and expected them to be commissioned into work in the next quarter.

Swick said the company maintained a high utilisation rate of its drilling equipment in a difficult macro market.

“North American mobilisations are now complete and we look forward to an improved contribution from this region on a go-forward basis,” he said.

The company is confident its underground diamond drilling division is well-placed to see continued growth in both new and established markets as it provides low unit cost solutions.

Swick has begun operations in Portugal at the Neves Corvo copper-zinc mine after an initial single rig six-month trial was expanded to a two-rig trial through the remainder of the calendar year, with an opportunity for long-term work on successful completion.

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