Major Drilling’s acquisition of Explomin Perforaciones is a strategic move that enhances its position as the world’s largest mineral driller. This new addition increases the total rig count to 707 and provides significant exposure to the copper market.
The purchase is expected to add immediately to profits, making it an attractive opportunity for investors. Additionally, the firm boasts a strong balance sheet.
MAJOR DRILLING GROUP INTERNATIONAL INC. (symbol MDI on Toronto) is a large contract driller mainly serving the mining industry.
In November 2024, Major Drilling acquired Explomin Perforaciones, a specialty drilling contractor based in Lima, Peru. The purchase price was $63 million U.S., with an additional $22 million U.S. available over the next three years based on future performance.
Explomin offers a wide array of specialized services including deep hole, directional, and high-altitude drilling, supplemented by a stable base of underground drilling operations. Major Drilling acquired a fleet of 92 drills. Its total rig count is now 707 and the Explomin assets solidify its position as the world’s largest mineral driller.
Explomin has a strong brand and reputation in South America, with over 90% of revenue derived from senior mining firms. The company has annual revenue of about $95 million U.S.
The acquisition seems like a good fit for Major Drilling. It will add immediately to profits and provide the company with increased exposure to the copper market.
Note—Explomin is one of the largest South American drilling contractors, with the majority of its operations in Peru, while it also serves markets in Colombia, Dominican Republic and Spain.
Major Drilling: Recent acquisition provides a big revenue boost
In the quarter ended January 31, 2025, Major Drilling’s revenue rose 21.0%, to $160.7 million from $132.8 million a year earlier. Excluding the acquisition of Explomin, which was completed at the beginning of the quarter, revenue totalled $127.9 million, representing a decrease of 3.7%.
More specifically, revenue in the Canada-U.S. region fell 31.0% to $43.0 million. The decrease was mainly due to a seasonal shutdown of certain drill programs earlier than in previous years, with fewer program extensions, along with a more competitive environment due to a lack of junior financings.
South and Central American revenue increased 121.5% to $75.3 million for the quarter. The increase reflects elevated copper activity in Chile.
Asian and African operations reported revenue of $42.4 million, which was up 15.8% from the same period last year. Demand for specialized services in Australia and Mongolia drove the growth in the quarter.
Major Drilling lost $9.1 million, or $0.11 a share, in the quarter, compared to a loss of $2.3 million, or $0.03. The larger loss came from added costs for the Explomin acquisition, as well as higher operating expenses.
The company’s balance sheet remains strong, with cash of $63.0 million, or $0.77 a share. It also has long-term debt of just $29.0 million.
Recommendation in Power Growth Investor: Major Drilling Group Int’l Inc. is a buy for aggressive investors.
