Major Drilling Group International Inc. · TSX:MDI
Major Drilling Group International — Investor Presentation (September 2022)
24 slides from Major Drilling Group International's investor presentation, September 2022
Slide 1: Investor Presentation
Investor Presentation September 2022 TSX: MDI QUALITY - SAFETY - RESULTS majordrilling.com QUALITY - SAFETY - RESULTS
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes certain information that may constitute “forward-looking information” under applicable Canadian securities legislation. All statements, other than statements of historical facts, included in this presentation that address future events, developme
Slide 3: Major Drilling: Company Overview
Major Drilling: Company Overview • Leading provider of specialized drilling FUNDAMENTALS1 services to the mining industry, registered in TSX: MDI REGISTERED IN OVER ACROSS over 20 countries, with a fleet of approx. 600 drills. 52 Week Range: $7.65 - $12.79 Market Cap: ~$736.9M 20 5 • Diversified por
Slide 4: Investment Proposition
Investment Proposition Ideally positioned to capture the precious metal upswing Specialized • Significant barriers to entry met with right experience & modern fleet Operations • Operating in challenging environments where largest new discoveries likely found Aligned To • Leverage to multi-year exp
Slide 5: Diversified, Sustainable Revenue Sources
Diversified, Sustainable Revenue Sources Broad range of services, customers and leverage to Drilling Revenue by Customer premium commodities ensures sustainable revenue sources • Major Drilling currently has a focus on projects linked to gold revenue but 25% recognizes the importance of exposure t
Slide 6: Contractor of Choice
Contractor of Choice Providing repeat services to the highest quality, investment grade customers • Diversified repeat customer base with low turnover. • Many larger customers consist of multiple ‘independent’ regional subsidiaries/projects. • 75% of Major Drilling revenue is sourced from operatio
Slide 7: Operational Diversification
Operational Diversification Diversified operations spread globally in highest-return regions • Registered in over 20 countries Key Projects across 5 continents. • MDI’s operations and customers provide protection against market volatility through diversification. Oyu Tolgoi Op: Rio Tinto • ~60% of
Slide 8: Specialized Drilling
Specialized Drilling Surpassing customer expectations, industry leader in operational excellence and on-site safety • Specialized drilling services have significant barriers to entry, focus on areas more difficult to access. • Examples of those include: • Deep hole drilling • Arctic drilling • Hel
Slide 9: History Repeats on the Edge of the Upcycle…
History Repeats on the Edge of the Upcycle… Industry backdrop mirrors early 2000’s upcycle • MDI revenue closely follows exploration budget cycle. • Cycle driven by reserve depletion and commodity pricing. • Same events are visible today mirroring early 2000s. QUALITY - SAFETY - RESULTS 9
Slide 10: History Repeats on the Edge of the Upcycle…
History Repeats on the Edge of the Upcycle… Last cycle escalation 1998-2004 2004 2005 2006 2007-2012 6-year lack of Senior gold companies Junior gold financing Increased copper and Extensive definition exploration increase exploration to available; increased base metal budgets to drilling campaigns
Slide 11: Gold Reserves Need to be Replenished
Gold Reserves Need to be Replenished • Senior gold companies generating strong cash flows, however, gold reserves declining due to lack of material “While we look closely at all exploration. new business opportunities, • Prioritizing value-adding grassroots exploration and we believe finding our dev
Slide 12: Copper Heading for a Supply Crunch
Copper Heading for a Supply Crunch • “…despite a very powerful green demand narrative, it's a complete state of inaction from the supply side.” • “…that really means this supply crunch is becoming very real.” • “…because it takes four to five years for a copper mine to be developed, if it's just an
Slide 13: …and MDI is Optimally Positioned
…and MDI is Optimally Positioned What’s different for Major Drilling this time? Today - 2002 Entered downturn net cash on hand. Current liquidity of $136M. • $28M net debt, $2M EBITDA and $0 to invest. Invested in fleet during downturn, kept • Minimal capex spent through downturn and fleet inf
Slide 14: Responding to Labour Challenges
Responding to Labour Challenges • Increased activity bringing shortage of skilled labour, particularly in North America. • We are addressing this challenge by: • Increased training efforts at our training centres. • Reinstating retention programs successful in previous upcycle. • Additional trainees
Slide 15: Investing in Training & Innovation
Investing in Training & Innovation Allocating capital to data-led initiatives to boost productivity, operational efficiency, and enhance customer information • Rapid changes in technology leading drilling contractors to find new solutions to old problems. • Data-led innovation initiatives boost pr
Slide 16: Balance Sheet Strength
Balance Sheet Strength Clean balance sheet and no near-term maturities Robust Liquidity Position CASH & TOTAL LIQUIDITY • Strong liquidity position plus low debt levels ensure balance sheet provides sustainability and flexibility through cycle. • $20M discretionary repayment of LTD in the quarter.
Slide 17: Outlook Provides Unique Opportunity
Outlook Provides Unique Opportunity Major Drilling is ideally positioned to capture the imminent increase in demand CYCLE UPSWING SHIFTS DEMAND… …CAPTURED BY THE MAJOR DRILLING STRATEGY • Precious metal reserves in sharp decline due to World leader in specialized drilling declining exploration act
Slide 18: ESG: Culture of Sustainability
ESG: Culture of Sustainability Environmental Social Governance “Minimize, mitigate and remediate our “Act in a socially responsible manner that benefits “Conduct our work with the highest standards of environmental impact.” the communities where we operate.” ethics and transparency.” • Exercising re
Slide 19: Appendix
Appendix 19 QUALITY - SAFETY - RESULTS
Slide 20: Q1 2023: Financial Review
Q1 2023: Financial Review Q1 2023 Q1 2022 Revenue $199.8 $151.0 Gross Margin 25.6% 20.1% Adjusted Gross Margin1 30.8% 26.3% General & Administrative Costs $16.2 $13.6 EBITDA2 $43.5 $24.2 Net Earnings $24.2 $11.1 Earnings per Share $0.29 $0.14 Note - All values in $CAD unless otherwise indicated. 1 -
Slide 21: Utilization
Utilization Utilization rate increased during the quarter but still room to grow Q1 2023 Q1 2023 # Rigs Utilization Specialized 296 50% Conventional 116 52% Underground 188 59% Total 600 53% QUALITY - SAFETY - RESULTS 21
Slide 22: Majority of Activity Focused on Specialized
Majority of Activity Focused on Specialized Fleet activity reflects both market dynamics and Major Drilling strategy • With future deposits coming from areas more Drilling Revenue by Project Type difficult to access, there will be an increased need for specialized services in the future. 13% Speci
Slide 23: Revenue Breakdown
Revenue Breakdown Shift in revenue reflects increase in revenue from battery metals. Drilling Revenue by Customer Drilling Revenue by Commodity Elevated activity from junior mining companies Copper projects continue to grow as need for as capital raised in last couple of years gets battery metals
Slide 24: High Quality Customer Base Aligned To Market
High Quality Aligned To Balance Sheet Specialized Experienced Customer Base Market Sustainability Operations Management QUALITY - SAFETY - RESULTS 24
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