JSE-listed drilling technology company Master Drilling achieved a 40% year-on-year increase in revenue to a record $171.8-million for the year ended December 31, 2021.

It generated $32.5-million in cash from operating activities, reduced its debt to $32.1-million and grew its operating profit by 126% year-on-year to $27.8-million.

Earnings a share increased by 500% year-on-year to $0.13, while headline earnings a share were up by 396.2% to $0.129.

"In the drilling technology space, any supplier and service provider that is able to fast-track access to orebodies is well-positioned. This constitutes Master Drilling's technology focus, which places an emphasis on accelerating access to orebodies to capitalise on the commodities supercycle," CEO Danie Pretorius noted in a presentation of the group's results on March 22.

"Gone are the days when investors would take a 10- to 15-year view of a mine and provide support with this in mind. Now, we need to figure out ways to access orebodies more quickly and, in this process, deal with automation and mechanisation and explosive-less mining.

"[Providing effective solutions for the mining industry currently] is about timing. Miners will often pay a premium, if a company can demonstrate that it can make a difference in this space [of improving safety and speed of access to ore bodies]," he noted.

Master Drilling director Koos Jordaan stressed the importance of technology advances, noting that it contributed to improved sustainability.

He said the company was developing relevant solutions that the industry and its clients would need in the future.

Among others, for the company's raise boring services, its LP 100 development provides mobile and high-capacity articulated wheeled carriers for up and down slots and raise boring holes.

Further, its electrical vehicle development track aims to provide future mines with a lower-carbon footprint and meet current clients' requests for the highest environmental standards.

The development of monitoring systems for downhole equipment provides better control and planning, leading to greater overall efficiency. On the exploration side, slim-hole drilling and exploration drilling are focused on the development of high-capacity, reliable openpit rigs, as well as associated equipment developments such that it is able to deliver deep-mine dewatering wells. It has three new such slim-hole rigs, said Jordaan.

The company is also increasingly offering wireline logging and scanned geotechnical logs to provide higher-quality information to clients more quickly in order for them to respond, he added.

Further, digitalising control is informing parts of two core drill rigs being developed separately; one for underground and the other to provide services for drilling applications.

MOBILE TUNNEL BORER
The company is progressing on its tunnelling services developments, said Jordaan, referring to the company's mobile tunnel borer (MTB).

"Rock cutting improves safety, owing to the absence of explosives and no personnel being exposed to unsupported rock faces. It is also a continuous process, without needing any stop-start. The MTB and tunnelling services also serve as a platform for decarbonisation, by reducing or removing explosives and fossil fuels use," said Jordaan.

The MTB is in the commissioning phase and Master Drilling expects it to contribute to revenue by the second half of the year, although expectations are that it will start to contribute strongly during the first half of the 2023 financial year, said Pretorius.

"We have also made it clear that, once we hit the [key performance indicators] on this machine and are comfortable with the performance, we will probably go on-risk to build another [MTB] without a commitment from a client. This is likely to be during the second half of the year," Pretorius said.

Additionally, the company is also working on its shaft boring developments to accelerate access to underground orebodies. This system should be ready during the fourth quarter of this year or the first quarter of 2023, he added.

"We are focusing on carefully managing working capital. The raise boring division, which is the historic backbone of the company, will see minimal investment. However, in our drilling division, slim drilling will probably see greater investment, given the uptick in the market.

"The special projects division will likely see the bulk of [capital expenditure] spend, typically [projects are focused on] underground tunnelling and shaft sinking, and creating the infrastructure for mines," said Pretorius.

Meanwhile, in terms of digitalisation, the company in July 2021 acquired a 25% stake in underground rail-bound, trackless equipment hardware management systems and safety solutions company A&R Engineering & Mining Supplies.

"We have signalled our intent to acquire a controlling interest in this business over the short- to medium-term," Pretorius highlighted.

However, in terms of the MTB and raise boring, there remain significant opportunities, including the specific business opportunities it saw in Sweden during the past year, he added.

Most of the larger raise boring machines in the world have been allocated to projects and the next two to three years will see high utilisation rates, especially of the larger machines in the raise boring fleet. The company was pleased with the performance of the raise boring fleet in 2021 and expects a similar or better performance in 2022, said Master Drilling COO Roelof Swanepoel.

Jordaan added that the company is working on a turnkey MTB project to establish an exploration decline on mining major Anglo American Platinum's Mogalakwena platinum-group metals mine.

"We are looking to start tunnelling in the first quarter of 2022. We have also initiated a study on additional applications and projects. The study is associated with technologies and various value propositions which are substantially diversified including underground mining access and non-explosive mining methods to address the needs of clients.

"We are so confident that the [MTB] concept has value that we are already working on the second-generation MTB. Future projects may use two MTB simultaneously to establish twin declines to underground access or to get from A to B quickly, and achieve a quick turnaround to steady-state mining for our clients," he said.

Meanwhile, Pretorius, Jordaan and Swanepoel praised the company's 2 300 employees and management teams for contributing to a stellar year. The company added around 700 new employees to its roster over the past year, mainly associated with new projects.

Master Drilling will continue with its internship and skills development programmes, which are already delivering specialist technicians and, potentially, new leaders for the company, Swanepoel said.

"A greater focus on talent is required in the future. It is something that we are busy with that remains a work in progress, and this will be something to watch going forward," said Pretorius.