Ausdrill Limited (ASX: ASL), established in 1987 and based in Canning Vale, is a global mining services company with operations across Africa, Australia, India and the United Kingdom. Its services include exploration, manufacturing of drill rigs, mine development, surface mining as well as underground mining, mineral analysis, procurement and logistics.
On April 23rd, 2019, Ausdrill informed that it had successfully refinanced its revolving credit facilities with an aggregate limit of AUD 300 million and a term extension by ~ four years (maturing on July 1st, 2023). The company received strong support for the same and the new facilities have been provided by Standard Chartered Bank, Nedbank, Caterpillar Finance, HSBC, Deutsche Bank and Goldman Sachs on a bilateral basis. A notable reduction has also been agreed for the interest rate, which is lower than that under the existing facilities, reflecting the continued support from financers as well as Ausdrill’s well-developed credit profile.
These facilities would provide Ausdrill the flexibility to capitalise on growth opportunities in new potential markets where the company has a competitive edge, or even expand into related services that compliment Ausdrill’s existing product portfolio.
Recently, the company entered into a binding agreement with Pentium Hydro Pty Ltd and Vysarn Limited to sell its hydrogeological drilling assets, which historically operated as ‘Connector Drilling’ for a cash consideration of around $16 million. It is a part of the considered portfolio review that is ongoing to assess the businesses that align with the company’s new strategic direction.
The Asset Sale Agreement covers many waterwell drilling assets and related inventory currently used by Ausdrill’s waterwell business. However, the completion of the agreement is subject to the satisfaction of various conditions precedent such as ASX and purchaser shareholder approval. Besides, the purchaser should also hold or seek sufficient finance to satisfy the purchase price as the offer demands.
The company delivered strong results for the first half of the financial year 2019 (H1 FY2019) ended December 31st, 2018, following the transformational acquisition of Barminco. Accordingly, the revenue from operations amounted to $ 640.2 million, up 45.6% on the prior corresponding period (pcp) ended December 31st, 2017. Besides, Ausdrill reported an underlying EBIT from continuing operations of $ 67.1 million, up 27.6% and an underlying net profit after tax of $ 39.8 million (statutory net profit after tax of $217.0 million), also up 32.7% on the pcp.
During the period, Ausdrill acquired leading underground mining services provider, Barminco, thus becoming the second largest mining services company in Australia. The company also announced an interim fully franked dividend of 3.5 cents per share and closed the period with a cash and cash equivalents of $ 198.86 million.
Recently, Dimensional Entities and Norges Bank became substantial holders in the company on purchase of 34,356,811 and 36,155,256 ordinary fully paid shares representing a voting power of 5.013% and 5.285, respectively.
Ausdrills’s current market valuation stands at ~ AUD 1.17 billion with ~ 685.64 million outstanding shares. On April 24th, 2019, at 03:05 PM AEST, the ASL stock is trending at AUD 1.697 with ~ 703,483 shares traded. ASL has also generated a positive YTD return of 50.44% so far.
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