MONCTON, N.B. - Major Drilling Group International Inc. (TSX:MDI) is citing a slowdown in the mining industry for a big drop in revenue and earnings in its fiscal 2014 first quarter.
The New Brunswick-based contract driller for the mining and mineral exploration industry around the globe says net earnings plummeted to just $1.5 million, or two cents per share, in the three months ended July 31.
That compared with $31.9 million, or 40 cents per share, in the same fiscal 2013 period.
Revenue fell to $108.2 million, less than half the previous year's $237.6 million.
"With the uncertainty around economic matters impacting the mining market, we continued to see some customers delaying or cancelling their exploration drilling plans," company president and CEO Francis McGuire said in releasing the results after markets closed Monday.
"In a number of jurisdictions, uncertainty as to the policies of host governments or issues of land tenure also continues to have an impact on activity levels. These factors, combined with the fact that sources of funding for junior mining companies remain limited, have led to decreased activity in all regions."
Meanwhile, McGuire noted that lower demand has significantly increased competitive pressures and will likely continue to have an impact for the rest of calendar 2013.
"Despite lower pricing levels, we maintained good margin performance thanks to the improved productivity of our crews and to the cost-cutting measures that we have implemented," he said.
McGuire added that despite the difficult environment the company expects to generate positive cash flow in fiscal 2014 and remains in "excellent financial position with $61.1 million in cash and total debt of $30.6 million at the end of the quarter, for a net cash position of $30.5 million."
On the Toronto Stock Exchange, Major Drilling shares closed up 27 cents, or 3.84 per cent, at $7.30 on Monday.
© Copyright 2013