MONCTON, NB, Dec. 1 /CNW Telbec/ - Major Drilling Group International Inc. (TSX: MDI) is pleased to announce that, through its wholly owned subsidiaries, it has signed agreements to purchase the drilling operations of the Longstaff group in southern Africa. These include the operations of Raldril (Pty) Limited in South Africa, RA Longstaff (Botswana) (Pty) Ltd in Botswana, and R.A. Longstaff Namibia (Pty) Limited in Namibia.
These businesses operate in regions where Major Drilling does not currently have a presence. Through this purchase Major Drilling will acquire 55 conventional drill rigs, together with related support equipment, inventory, and contracts. It is anticipated that these assets will give Major Drilling the immediate physical capacity to expand further throughout other parts of southern Africa, considered to be an area of continuing growth in the industry.
In addition to purchasing the drilling assets, Major Drilling is retaining the operations' management teams, as well as the other employees, including a large number of experienced drillers.
The purchase price for the transaction is US$12.5 million, subject to customary working capital post closing adjustments.
"We are very pleased to welcome these new operations into the Major group. Not only does this acquisition provide us with assets, experienced drillers and existing contracts in southern Africa, but it will also facilitate our expansion into other countries in the region," said Francis McGuire, President and CEO of Major Drilling Group International Inc. "The former owners had chosen to operate the majority of this fleet on a single shift basis, which will produce revenues for calendar 2006 of approximately US$14 million. It is Major's intention to significantly increase the utilization of these rigs over the next two years as we expand the labor force. As such we hope to double current revenues over that time frame."
The transaction is expected to close in December, 2006.
Based in Moncton, New Brunswick, Major Drilling Group International Inc. is one of the world's largest metals and minerals contract drilling service companies. To support its customers' mining operations and mineral exploration activities, Major Drilling maintains operations in Canada, the United States, South and Central America, and in Australia, Africa, Indonesia, and Mongolia.
Some of the statements contained in this press release may be forward-looking statements, such as estimates and statements that describe or are with respect to the future price of minerals and metals, the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition to exist or occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements by reason of factors such as, but not limited to, the factors set out in the discussion starting on pages 20 to 23 of the 2006 Annual Report entitled "General Risks and Uncertainties", as filed with the Canadian Securities Commission (available on SEDAR at www.sedar.com). All such factors should be considered carefully when making decisions with respect to the Company. The Company does not undertake to update any forward-looking statements, including those statements that are incorporated by reference herein, whether written or oral, that may be made from time to time by or on its behalf, except in accordance with applicable securities laws.