Major Drilling Group International Inc. · TSX:MDI
Major Drilling Group International — Investor Presentation (March 2023)
23 slides from Major Drilling Group International's investor presentation, March 2023
Slide 1: Investor Presentation
Investor Presentation March 2023 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: $7.34 - $12.79 Market Cap: ~$886.4M 20 5 • Diversified por
Slide 4: Investment Proposition
Investment Proposition Ideally positioned to capture the mining upturn 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 exploration
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 has historically been driven by a gold customer base, but the 16% emergence of the battery metal demand
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. • 84% 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 include: • Deep hole drilling • Arctic drilling • Helicopter p
Slide 9: 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 10: Copper Heading for a Supply Crunch
Copper Heading for a Supply Crunch • Copper industry supply deficit starting to be recognized. • “…despite a very powerful green demand narrative, it's a • To close gap by 2030 requires 8 mines the size of BHP complete state of inaction from the supply side.” Escondida (world’s largest copper mine),
Slide 11: 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 11
Slide 12: 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 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 $195M. • $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 • Strong liquidity position plus low debt levels ensure balance sheet provides sustainability and flexibility through cycle. • $10M discretionary debt repayment in the quarter. Net Cash (Net Debt) Posi
Slide 17: 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 18: Appendix
Appendix 18 QUALITY - SAFETY - RESULTS
Slide 19: Q3 2023: Financial Review
Q3 2023: Financial Review Q3 2023 Q3 2022 Revenue $149.2 $138.8 Gross Margin 17.7% 16.9% Adjusted Gross Margin1 25.3% 24.2% General & Administrative Costs $16.4 $14.1 EBITDA2 $20.5 $18.4 Net Earnings $6.3 $5.7 Earnings per Share $0.08 $0.07 Note - All values in $CAD unless otherwise indicated. 1 - A
Slide 20: Utilization
Utilization Q3 2023 Q3 2023 # Rigs Utilization Specialized 290 47% Conventional 113 47% Underground 199 53% Total 602 49% QUALITY - SAFETY - RESULTS 20
Slide 21: 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. 9% Specia
Slide 22: Revenue Breakdown
Revenue Breakdown Shift in revenue reflects increase in revenue from battery metals. Drilling Revenue by Customer Drilling Revenue by Commodity Despite a slowdown in junior financing, seniors Copper and Nickel projects continue to grow as and intermediates continued with their expanded need for ba
Slide 23: High Quality Customer Base
High Quality Aligned To Balance Sheet Specialized Experienced Customer Base Market Sustainability Operations Management QUALITY - SAFETY - RESULTS 23
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