MONCTON, N.B. – Major Drilling Group International Inc. shares surged in trading Thursday after the mine drilling company boosted its dividend and reported record profits in the first quarter of its fiscal year.
The Moncton, N.B.,-based concern announced after markets closed Wednesday that it was increasing its semi-annual dividend for the second time in a year.
The one-cent increase, to 10 cents per share and equivalent to an 11.1 per cent increase, is payable Nov. 1.
On the Toronto Stock Exchange, Major Drilling (TSX:MDI) shares gained 88 cents, or 9.64 per cent, to $10.01 in morning trading Thursday.
The company reported all-time high profits of $31.9 million or 40 cents per share for the period ended July 31. That compared with $17.9 million or 25 cents per share in the prior year.
Revenues increased for the second consecutive quarter, rising 45 per cent to $237.6 million from $164.2 million a year ago.
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Revenue from Canada-U.S. drilling operations increased by 84 per cent to $112.8 million, with the Quebec-based Bradley Group Ltd. acquired in September 2011 accounting for about half of the increase.
South and Central American revenue was up 35 per cent to $69.4 million for the quarter, driven by stronger activity in Mexico, Chile and Argentina, along with additional contracts in Colombia and Suriname from the Bradley acquisition.
Australian, Asian and African revenues were up eight per cent to $55.3 million. The increase came mainly from African operations in Burkina Faso, the Democratic Republic of Congo and Mozambique, which offset decreases in Mongolia and Australia.
Company president and CEO Francis McGuire said margins improved mainly due to company training and recruitment efforts, which allowed it to increase the number of shifts and productivity in the field.
Revenues from senior and intermediate mining clients increased to about $175 million, from $102 million last year.
McGuire said senior mining clients will represent a greater proportion of its drilling projects going forward as junior miners become more and more cautious in their spending, given the difficulty in accessing capital.
The company expects overall drilling activity to decline somewhat over the next six months, particularly among junior mining clients.
As a result, Major Drilling is reducing its previously announced $100 million of capital expenditures for the year to $70 million used to modernize its fleet.
It spent $23.4 million in the quarter to purchase 24 rigs, while retiring 10 rigs and adding several support vehicles.
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