Drill specialist makes strong debut on JSE
Publication: Business Day
Journalist: Allan Seccombe
Master Drilling Group made its debut on the JSE on Thursday, closing at R9, which was about 15% higher than its placement price of R7.85 with 24,733 shares trading in 31 deals.
Headquartered in Fochville, Master Drilling operates 154 drills, 84 of which are raise bore machines, an area of speciality for the company. It has offices in seven countries and has a smaller exploration drilling branch to its business.
The group has 1,800 employees, 650 of whom are employed in South Africa where it builds its drills. It uses components made domestically and in China, but says it will build its machines in Fochville.
Raise bore hole drilling is usually done at existing mines and entails sinking a small vertical hole between two tunnels, attaching a drill bit and pulling it up. Mines use these holes for ventilation.
Master Drilling finance director Andre van Deventer said on Thursday the company, being the only dedicated specialist drilling company listed on the JSE, offered investors exposure to not only its operations in SA, but to the dollar earnings it generated around the world.
Danie Pretorius, who founded the business in 1986 and is its MD, and management own more than 60% of the business and there is a free float of about 36%. It means that a hostile takeover of the company would be difficult.
Mr van Deventer said Master Drilling had raised R439.6m before expenses to put towards its growth plans. It wanted six more raise bore drills that could sink larger diameter holes.
Master Drilling has nine machines that could drill holes wider than 3m.
Mr van Deventer said Master Drilling held the record with a 7.3m diameter on a raise bore hole. It sank the hole at an Exxaro Resource mine.
It is busy with a second such hole at a Sasol mine. It plans buying more drill pipes.
“As mines are becoming deeper, the holes are becoming deeper, so we need additional drill pipes,” Mr van Deventer said.
Master Drilling is looking to buy out rivals in Mexico and Europe as part of its expansion plans and might need to issue more shares to raise funds.
The company is developing a horizontal form of raise drilling and it is on track to enter a test phase next year to prove the technology. It is also working on a drill that can work on-reef, which would suit gold or platinum mines.
The company wants to expand its business into production drilling, which means sinking holes for explosives, as well as growth in exploration drilling.
It had, when still privately owned, invested 80% of profits in the business.
Companies offering a similar service of raise boring include mining services group Murray & Roberts.