With the price of gold reaching all-time highs, mining services provider Swick (ASX: SWK) is thriving having secured new contracts and extensions from some of Australia’s largest mining companies to take their order book to $244 million.
Among their bigger contracts is an extension from Northern Star Resources (ASX: NST) at their West Australian Jundee gold operations. The 2-year extension, with an option for a further 2 years, was awarded to Swick after a competitive tender process with Swick supplying 15 drill rigs in total, including 2 DeepEX rigs.
“These contracts demonstrate the ongoing robust demand for our services, which is focused on production at underground mines and heavily skewed towards tier one clients,” said Swick Managing Director, Kent Swick.
“Jundee is our largest underground diamond coring contract and I am very pleased that we will be extending our long‐term relationship to at least 15 years on site.
“The renewal at Jundee also includes scope for our specialist DeepEX underground mobile rigs that are specially constructed for deeper underground drilling and have completed holes up to 1,607 metres in depth at site to date.
“The contract renewal further strengthens our relationship with our key customer Northern Star Resources, whom we also work for at the Pogo mine in Alaska.“
Consolidating their order book, Swick has also been awarded a contract extension from Perilya Limited for operations at Broken Hill, New South Wales where Swick currently has 4 rigs on site and has been servicing since 2009.
In total Swick has 69 underground drill rigs in their fleet with the drilling business expected to deliver $25 million EBITDA for FY20 where the company has seen only minimal impact to business through COVID-19.
As the business has grown, Swick has developed their Mineral Technology business Orexplore which has continued to grow to the point where Swick will look to demerge the business as a separate entity in the coming months.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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