Major Drilling grows revenue by 53% to a record $156.1 million; Earnings grow 75% to a record $22.8 million



    MONCTON, NB, Dec. 11 /CNW/ - Major Drilling Group International Inc.
(TSX: MDI) today reported results for its second quarter of fiscal year 2008,
which ended October 31, 2007.

    
    Highlights

    -------------------------------------------------------------------------
    $ millions of                                             12          12
    Canadian dollars                                      months      months
    (except earnings                                          to          to
    per share)                                           October     October
                                                              31,         31,
                       Q2-08   Q2-07  YTD-08  YTD-07        2007        2006
    -------------------------------------------------------------------------
    Revenue           $156.1  $101.8  $299.6  $196.3      $518.7      $343.7
    -------------------------------------------------------------------------
    Gross profit        54.7    33.8   102.3    64.3       171.1       103.0
     As percentage
     of sales           35.0%   33.2%   34.2%   32.8%       33.0%       30.0%
    -------------------------------------------------------------------------
    Earnings from
    continuing
    operations          22.8    13.0    41.6    23.0        65.2        31.3
    -------------------------------------------------------------------------
    Earnings per
    share from
    continuing
    operations          0.97    0.56    1.77    1.00        2.79        1.36
    -------------------------------------------------------------------------
    Cash flow
    from continuing
    operations
    (*)                 31.3    19.8    57.5    35.5        95.8        55.7
    -------------------------------------------------------------------------
    (*) before changes in non-cash working capital items


    -   Major Drilling posted the highest quarterly revenue in its history
        with revenue of $156.1 million, up 53.3 percent from the
        $101.8 million recorded for the same quarter last year.

    -   Gross margin percentage for the quarter was 35.0 percent compared to
        33.2 percent for the corresponding period last year, with good
        performance from all segments.

    -   The Company recorded the highest quarterly earnings from continuing
        operations in its history at $22.8 million or $0.97 per share, up
        75.4 percent from $13.0 million or $0.56 per share for the prior year
        quarter.

    -   Net earnings for the quarter, after loss from discontinued
        operations, were $22.6 million or $0.96 per share, up from
        $13.1 million or $0.57 per share for the prior year quarter.

    -   Cash flow from continuing operations before changes in working
        capital was $31.3 million for the quarter compared to $19.8 million
        for the same period last year.

    -   During the quarter, the Company acquired two businesses: Harris
        Drilling in Chile and Paragon Drilling in Ecuador.

    "During this second quarter, we experienced continued strong momentum in
our business and achieved record quarterly revenue and earnings," said Francis
McGuire, President and CEO of Major Drilling. "Our strong results were driven
by a combination of additional investments in people and equipment,
acquisitions and an improved pricing environment. These factors contributed to
year-over-year revenue growth of 53 percent and gross margins improved
significantly to 35.0 percent, a level not seen in the last several years.
This performance was achieved in spite of the effects of the strengthening
Canadian dollar against the U.S. dollar. The unfavourable foreign exchange
translation impact, for the quarter, when comparing to the effective rates for
the same period last year, is estimated at $9 million on revenue and
$1.8 million on net earnings."
    "During the quarter, we took delivery of 18 new rigs that contributed
revenue this period. We also added 18 rigs through acquisitions although they
did not contribute revenue for the full period as 11 were acquired in
September from Harris and 7 were acquired near quarter-end from Paragon,"
noted Mr. McGuire. "Overall margins continued to improve despite continuing
cost increases in labour, training and safety, as well as African margins
still lagging behind other regions. Investment in recruitment and training is
crucial to our continuing growth but does affect overall operating margin
growth as we incur both additional costs and lower initial productivity with
new crews. In the last quarter, we have stepped up our already significant
investments in training, and we are on track to meeting our goal of expanding
our labour force by 20 percent this year."
    "Cash flow from continuing operations before changes in working capital in
the quarter continued to improve, increasing 58 percent to $31.3 million
compared to $19.8 million in the prior year quarter," said Mr. McGuire. "The
Company invested $14.7 million during the quarter in its capital expenditure
program, bringing the total for the year to $29.7 million. During the quarter,
the Company also spent $27.4 million on acquisitions bringing the total net
debt, net of cash, to $23.8 million."
    "The mineral drilling industry outlook remains positive. Gold, which
accounts for just under half of the Company's activity, has seen its price
rise above the US$800 per ounce level. The prices of base metals, which
account for about 35 percent of the Company's revenue, remain at levels well
above what is needed to support exploration. We have also seen increased
activity in uranium as more projects in that field are moving into the
pre-feasibility stage," noted Mr. McGuire.
    "The Company expects its continued growth to come from additional
investments in people and equipment, strong market conditions and its
acquisitions. On September 6, 2007, the Company announced the acquisition of
Harris y Cia Ltda. in Chile, adding 11 drill rigs, all of which are currently
committed to work on a double shift basis conducting mainly specialized
drilling in the active northern region of Chile. This acquisition, made for
US$23.5 million, is expected to generate additional revenue of approximately
US$11 million from the time of the acquisition to the end of our fiscal year
on April 30, 2008," said Mr. McGuire. "On October 25, 2007, the Company
announced that it had acquired the assets of Paragon del Ecuador S.A. Paragon
was the largest mineral exploration drilling contractor in Ecuador, operating
7 drill rigs. The purchase price for the transaction was US$6 million and it
is expected to produce additional revenue of approximately US$3.6 million for
the balance of our fiscal year."
    "It is important to note that we are now in our third quarter,
traditionally the weakest quarter of our fiscal year, as mining and
exploration companies shut down operations, often for extended periods over
the holiday season. Additionally, the Company schedules substantial overhaul
and maintenance work on its equipment during this slower period as it prepares
for the busy fourth quarter. These factors result in reduced revenue,
increased costs, and reduced margins in the quarter," observed Mr. McGuire.
"Weather conditions also have a significant impact on operations. Last year,
weather conditions were very favourable; conditions to date have been more
challenging. These factors increase the volatility of our third quarter
results."
    "Finally, I would like to take this opportunity to thank Terry MacGibbon,
who did not re-offer as a Director, for his years of service to the Company. I
would also like to welcome Jo Mark Zurel, former CFO at CHC Helicopter
Corporation, to the Board."

    Second quarter ended October 31, 2007

    Total revenue for the second quarter was $156.1 million, up 53.3 percent
from the $101.8 million recorded for the prior year period.
    Revenue from Canada-U.S. drilling operations was up $12.6 million or
32.0 percent to $52.0 million for the quarter compared to $39.4 million for
the same period last year. Additional equipment and improved pricing
contributed to the growth in that region.
    In South and Central America, revenue for the quarter was up $15.5 million
or 52.9 percent, to $44.8 million compared to $29.3 million for the same
period last year. Revenue growth was driven primarily by Mexico, Chile
(including the Harris acquisition) and Argentina.
    Australian, Asian and African drilling operations reported revenue of
$59.3 million, up $26.1 million or 78.6 percent from $33.2 million reported in
the same period last year. Approximately 40 percent of this growth is
attributable to the African acquisition made in December 2006. Australia and a
new operation in Armenia accounted for another 40 percent of the growth, with
the rest coming from Tanzania, Mongolia and Indonesia.
    The overall gross margin percentage for the quarter was 35.0 percent, up
from 33.2 percent for the same period last year. Good margin improvements in
South and Central America, U.S. and Australia were muted somewhat by labour
productivity issues in Canada, by lower margins in the African operations, and
by the new Armenian operation, which is in its start-up phase.
    General and administrative costs were $10.8 million for the quarter
compared to $7.6 million for the prior year quarter. The increase is primarily
due to the acquisitions in Africa and Chile and increased administrative
salary expenses and staffing levels.
    Other expenses were $4.3 million for the quarter compared to $2.3 million
for the same period last year due primarily to higher incentive compensation
expenses given the Company's improved profitability in the current year, and
losses on disposal of assets.
    Foreign exchange loss was $0.7 million for the quarter compared to
$0.1 million for the prior year period as a result of unfavourable variation
in the U.S. dollar against the Canadian dollar.
    Short-term interest revenue was flat at $0.3 million for the quarter
compared to last year, while interest on long-term debt was $0.6 million
compared to $0.7 million for the prior year quarter.
    Amortization expense increased to $6.5 million for the quarter compared to
$5.0 million for the same quarter last year, as a result of the increased
direct investment in equipment.
    The Company's tax expense was $9.2 million for the quarter compared to
$5.5 million for the same period last year reflecting the increased
profitability of the operations.
    Earnings from continuing operations for the quarter were $22.8 million or
$0.97 per share ($0.95 per share diluted) compared to $13.0 million or
$0.56 per share ($0.55 per share diluted) in the prior year period.
    Loss from discontinued operations was $0.3 million, or $0.01 per share,
compared to a gain of $0.2 million or $0.01 per share for the same period last
year.
    Net earnings were $22.6 million or $0.96 per share ($0.94 per share
diluted) compared to $13.1 million or $0.57 per share ($0.56 per share
diluted) for the same period last year.

    Year to date ended October 31, 2007

    Revenue for the six-months ended October 31, 2007 increased 52.6 percent
to $299.6 million from $196.3 million for the corresponding period last year.
    Canada-U.S. revenue increased by 37.1 percent or $27.4 million to    
$101.3 million compared to $73.9 million last year with both countries
contributing to this growth.
    Revenue in South and Central America increased by 54.2 percent or    
$30.7 million to $87.3 million, compared to $56.6 million in the prior year
period. Mexico and Chile accounted for over three quarters of the growth,
while Venezuela and Argentina also made strong contributions.
    Revenue in Australia, Asia and Africa increased 68.5 percent or      
$45.1 million to $110.9 million from $65.8 million in the prior year period.
Australia and the new African operations accounted for 70 percent of the
growth in this segment. As well, all other countries in the region grew their
revenue and the Company commenced operations in Armenia.
    Gross margins for the year to date were 34.2 percent compared to       
32.8 percent last year, due mainly to an improving pricing environment and
improvements in drillers' productivity. With the increase in revenue and
improving gross margins, gross profit for the year increased by 59.1 percent
to $102.3 million compared to $64.3 million for the same period last year.
    General and administrative expenses increased to $20.9 million compared to
$14.9 million for the same period last year. This increase is primarily due to
additions to the management team to accommodate growth, administrative salary
increases and the African and Chilean acquisitions.
    Other expenses were $7.8 million for the year compared to $5.1 million for
the same period last year due primarily to higher incentive compensation
expenses given the Company's improved profitability in the current year, and
losses on disposal of assets.
    Foreign exchange loss was $1.7 million compared to $0.4 million in the
prior year period as a result of unfavourable variation in the U.S. dollar
against the Canadian dollar.
    Short-term interest revenue was $0.6 million for the year compared to nil
last year, while interest on long-term debt was $1.4 million compared to   
$1.2 million last year.
    Amortization expense increased to $12.5 million compared to $9.4 million
in the previous period, as a result of the increased direct investment in
equipment.
    The provision for income tax for the year was $17.0 million compared to
$10.4 million for the prior year reflecting the increased profitability of the
operations.
    Earnings from continuing operations were $41.6 million or $1.77 per share
($1.74 per share diluted) compared to $23.0 million or $1.00 per share
($0.98 per share diluted) last year.
    Loss from discontinued operations was $0.1 million or $0.01 per share
compared to a gain of $13.0 million or $0.56 per share last year.
    Net earnings were $41.5 million or $1.77 per share ($1.74 per share
diluted) compared to $36.0 million or $1.56 per share ($1.53 per share
diluted) for last year.
    On a rolling 12-month basis to October 31, 2007, revenue from continuing
operations increased by 50.9 percent to $518.7 million compared to       
$343.7 million for the prior year period. Earnings from continuing operations,
on the same rolling 12-month basis, more than doubled to $65.2 million from   
$31.3 million for the corresponding period last year.
    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 19 to 22 of the 2007 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.

    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, Australia, Indonesia, Mongolia, Armenia and Africa.
    Financial statements are attached.
    Major Drilling will provide a simultaneous webcast of its quarterly
conference call on Tuesday, December 11, 2007 at 9:00 AM (EST). To access the
webcast please go to the Major Drilling website at www.majordrilling.com and
click the attached link, or go directly to the CNW Group website at
www.newswire.ca for directions. Participants will require Windows MediaPlayer,
which can be downloaded prior to accessing the call. Please note that this is
listen only mode.



                   Major Drilling Group International Inc.
                    Consolidated Statements of Operations
    (in thousands of Canadian dollars, except per share information)
                                 (unaudited)

                                    Six months ended      Three months ended
                                          October 31              October 31

                                    2007        2006        2007        2006
                              ----------  ----------  ----------  ----------
    TOTAL REVENUE             $  299,556  $  196,296  $  156,136  $  101,845

    DIRECT COSTS                 197,247     131,968     101,471      68,021
                              ----------  ----------  ----------  ----------
    GROSS PROFIT                 102,309      64,328      54,665      33,824
                              ----------  ----------  ----------  ----------
    OPERATING EXPENSES
     General and
     administrative               20,856      14,860      10,830       7,629
     Other expenses                7,816       5,120       4,289       2,287
     Foreign exchange loss         1,705         413         726          89
     Interest revenue               (617)        (46)       (269)       (302)
     Interest expense on
      long-term debt               1,353       1,247         629         653
     Amortization                 12,538       9,375       6,479       4,982
                              ----------  ----------  ----------  ----------
                                  43,651      30,969      22,684      15,338
                              ----------  ----------  ----------  ----------
    EARNINGS BEFORE INCOME
    TAX AND DISCONTINUED
    OPERATIONS                    58,658      33,359      31,981      18,486
                              ----------  ----------  ----------  ----------
    INCOME TAX - PROVISION
     Current                      16,257       8,050       8,687       4,071
     Future                          762       2,300         479       1,456
                              ----------  ----------  ----------  ----------
                                  17,019      10,350       9,166       5,527
                              ----------  ----------  ----------  ----------
    EARNINGS FROM CONTINUING
     OPERATIONS                   41,639      23,009      22,815      12,959

    (LOSS) GAIN FROM
     DISCONTINUED OPERATIONS
     (note 5)                       (141)     12,983        (252)        150
                              ----------  ----------  ----------  ----------
    NET EARNINGS              $   41,498   $  35,992   $  22,563   $  13,109
                              ----------  ----------  ----------  ----------

    EARNINGS PER SHARE FROM
    -----------------------
    CONTINUING OPERATIONS
    ---------------------
     Basic (*)                $     1.77   $    1.00   $    0.97   $    0.56
                              ----------  ----------  ----------  ----------
                              ----------  ----------  ----------  ----------
     Diluted (xx)             $     1.74   $    0.98   $    0.95   $    0.55
                              ----------  ----------  ----------  ----------
                              ----------  ----------  ----------  ----------
    EARNINGS PER SHARE
    ------------------
     Basic (*)                $     1.77   $    1.56   $    0.96   $    0.57
                              ----------  ----------  ----------  ----------
                              ----------  ----------  ----------  ----------
     Diluted (xx)             $     1.74   $    1.53   $    0.94   $    0.56
                              ----------  ----------  ----------  ----------
                              ----------  ----------  ----------  ----------

    (*)Based on 23,502,226 and 23,083,444 daily weighted average shares
outstanding for the fiscal year to date 2008 and 2007, respectively and on
23,570,950 and 23,102,258 daily weighted average shares for the quarter ended
October 31, 2007 and 2006, respectively. The total number of  shares
outstanding on October 31, 2007 was 23,612,877.

    (xx)Based on 23,864,099 and 23,578,124 daily weighted average shares
outstanding for the fiscal year to date 2008 and 2007, respectively and on
23,959,055 and 23,569,533 daily weighted average shares outstanding for the
quarter ended October 31, 2007 and 2006, respectively.


                   Major Drilling Group International Inc.
              Consolidated Statements of Comprehensive Earnings
                     (in thousands of Canadian dollars)
                                 (unaudited)

                                    Six months ended      Three months ended
                                          October 31              October 31

                                    2007        2006        2007        2006
                              ----------  ----------  ----------  ----------
    NET EARNINGS              $   41,498   $  35,992   $  22,563   $  13,109

    OTHER COMPREHENSIVE LOSS
     Unrealized losses on
     translating financial
     statements of self-
     sustaining foreign
     operations                  (27,252)       (626)    (20,121)     (1,572)
                              ----------  ----------  ----------  ----------

    COMPREHENSIVE EARNINGS    $   14,246   $  35,366   $   2,442   $  11,537
                              ----------  ----------  ----------  ----------
                              ----------  ----------  ----------  ----------


                 Consolidated Statements of Retained Earnings
                     (in thousands of Canadian dollars)
                                 (unaudited)

                                                            Six months ended
                                                                  October 31

                                                            2007        2006
                                                       ---------   ---------
    RETAINED EARNINGS, BEGINNING OF THE PERIOD         $ 108,438   $  49,635

    Net earnings                                          41,498      35,992
                                                       ---------   ---------
    RETAINED EARNINGS, END OF THE PERIOD               $ 149,936   $  85,627
                                                       ---------   ---------
                                                       ---------   ---------


                 Consolidated Statements of Accumulated Other
                             Comprehensive Loss
                     (in thousands of Canadian dollars)
                                 (unaudited)

                                                            Six months ended
                                                                  October 31

                                                            2007        2006
                                                       ---------   ---------
    ACCUMULATED OTHER COMPREHENSIVE LOSS,
     BEGINNING OF THE PERIOD                           $ (30,383)  $ (30,249)

     Unrealized losses on translating
      financial statements of self-sustaining
       foreign operations                                (27,252)       (626)
                                                       ---------   ---------
    ACCUMULATED OTHER COMPREHENSIVE LOSS,
     END OF THE PERIOD                                 $ (57,635)  $ (30,875)
                                                       ---------   ---------
                                                       ---------   ---------

                   Major Drilling Group International Inc.
                    Consolidated Statements of Cash Flows
                     (in thousands of Canadian dollars)
                                 (unaudited)


                                    Six months ended      Three months ended
                                       October 31              October 31

                                    2007        2006        2007        2006
                              ----------  ----------  ----------  -----------
    OPERATING ACTIVITIES
    Earnings from continuing
     operations               $   41,639  $   23,009  $   22,815  $   12,959
    Operating items not
     involving cash
      Amortization                12,538       9,375       6,479       4,982
      Loss on disposal of
       capital assets              1,003         297         899         188
      Future income tax              762       2,300         479       1,456
      Stock-based
       compensation                1,567         532         646         171
                              ----------  ----------  ----------  -----------
                                  57,509      35,513      31,318      19,756
    Changes in non-cash
     operating working
     capital items               (17,902)     (3,912)     (7,565)        902
                              ----------  ----------  ----------  -----------
                                  39,607      31,601      23,753      20,658

    (Loss) gain from
     discontinued operations,
     adjusted for non-cash
     items                          (252)     (2,494)       (252)          6
    Changes in non-cash
     operating working
     capital items from
     discontinued operations      (2,726)      3,728      (2,726)       (397)
                              ----------  ----------  ----------  -----------
    Cash flow from operating
     activities                   36,629      32,835      20,775      20,267
                              ----------  ----------  ----------  -----------

    FINANCING ACTIVITIES
    Repayment of long-term
     debt                         (8,085)     (6,781)     (2,926)     (2,657)
    Additional long-term
     debt                              -         459           -           -
    Increase in (repayment
     of) demand loans             15,812     (16,441)     15,812         280
    Issuance of common
     shares                        2,649         382         786          24
    Discontinued operations       (3,096)          -           -           -
                              ----------  ----------  ----------  -----------
    Cash flow from (used in)
     financing activities          7,280     (22,381)     13,672      (2,353)
                              ----------  ----------  ----------  -----------

    INVESTING ACTIVITIES
    Net proceeds from sale
     of discontinued
     operations                        -      28,755           -         408
    Business acquisitions
     (net of cash
     acquired)(note 4)           (27,429)          -     (27,429)          -
    Acquisition of capital
     assets, net of direct
     financing                   (28,932)    (15,079)    (14,401)     (7,762)
    Proceeds from disposal
     of capital assets             2,415       1,712       1,695       1,073
    Discontinued operations            -          16           -         293
                              ----------  ----------  ----------  -----------
    Cash flow (used in) from
     investing activities        (53,946)     15,404     (40,135)     (5,988)
                              ----------  ----------  ----------  -----------

    OTHER ACTIVITIES
    Foreign exchange
     translation adjustment          712      (1,191)        804        (343)
                              ----------  ----------  ----------  -----------

    (DECREASE) INCREASE IN
     CASH                         (9,325)     24,667      (4,884)     11,583

    CASH POSITION, BEGINNING
     OF THE PERIOD                25,022      11,987      20,581      25,071
                              ----------  ----------  ----------  -----------

    CASH POSITION, END OF
     THE PERIOD               $   15,697  $   36,654  $   15,697  $   36,654
                              ----------  ----------  ----------  -----------
                              ----------  ----------  ----------  -----------


                   Major Drilling Group International Inc.
                         Consolidated Balance Sheets
                  As at October 31, 2007 and April 30, 2007
                     (in thousands of Canadian dollars)


    ASSETS                                               October       April
                                                            2007        2007
                                                      ----------  -----------
                                                      (unaudited)
    CURRENT ASSETS
      Cash                                            $   15,697  $   25,022
      Accounts receivable                                 91,324      78,613
      Income tax receivable                                2,064       1,610
      Inventories                                         56,403      50,976
      Prepaid expenses                                     9,947       6,545
      Future income tax assets                             2,710       1,730
      Assets of discontinued operations(note 5)            3,079       3,253
                                                      ----------  -----------
                                                         181,224     167,749

    CAPITAL ASSETS                                       165,874     158,771

    FUTURE INCOME TAX ASSETS                               1,103         619

    OTHER ASSETS                                          14,794       1,240
                                                      ----------  -----------

                                                      $  362,995  $  328,379
                                                      ----------  -----------
                                                      ----------  -----------

    LIABILITIES

    CURRENT LIABILITIES
      Demand loan                                     $   15,812  $        -
      Accounts payable and accrued charges                63,122      54,484
      Income tax payable                                   9,311       4,121
      Current portion of long-term debt                   10,692      13,649
      Liabilities of discontinued operations(note 5)       3,163       9,463
                                                      ----------  -----------
                                                         102,100      81,717

    LONG-TERM DEBT                                        12,990      18,136

    FUTURE INCOME TAX LIABILITIES                          8,045       7,020

    DEFERRED GAIN                                            411         519
                                                      ----------  -----------
                                                         123,546     107,392
                                                      ----------  -----------

    SHAREHOLDERS' EQUITY
      Share capital                                      140,352     137,703
      Contributed surplus                                  6,796       5,229
      Retained earnings                                  149,936     108,438
      Accumulated other comprehensive loss               (57,635)    (30,383)
                                                      ----------  -----------
                                                         239,449     220,987
                                                      ----------  -----------

                                                      $  362,995  $  328,379
                                                      ----------  -----------
                                                      ----------  -----------


    MAJOR DRILLING GROUP INTERNATIONAL INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    FOR THE PERIODS ENDED OCTOBER 31, 2007 AND 2006
    (in thousands of Canadian dollars)


    1. BASIS OF PRESENTATION
       ---------------------

    These interim financial statements were prepared using accounting policies
and methods consistent with those used in the preparation of the Company's
audited financial statements for the year ended April 30, 2007, except for the
adoption of new accounting policies as disclosed in Note 2 below. These
interim financial statements conform in all respects to the requirements of
Canadian generally accepted accounting principles for annual financial
statements, with the exception of certain note disclosures. As a result, these
interim financial statements should be read in conjunction with the Company's
audited financial statements and notes for the year ended April 30, 2007
contained in the Company's 2007 annual report.

    2. CHANGES IN ACCOUNTING POLICIES
       ------------------------------

    The Company adopted the Canadian Institute of Chartered Accountants (CICA)
Handbook Section 1530 - Comprehensive Income, Section 3855 - Financial
Instruments - Recognition and Measurement, Section 3861 - Financial
Instruments - Disclosure and Presentation, and section 3865 - Hedges, on     
May 1, 2007.
    As a result of the adoption of Section 1530, Comprehensive Income, the
Company now presents Consolidated Statements of Comprehensive Earnings, which
consists of net earnings and other comprehensive loss representing gains and
losses from the translation of the Company's self-sustaining foreign
operations. Accumulated other comprehensive loss (AOCL) is presented as a
separate component of the shareholders' equity section in the Consolidated
Balance Sheets. Previously, these gains and losses were deferred in cumulative
translation adjustments within shareholders' equity and are now the only
element included in AOCL.
    As a result of adopting CICA Section 3855, Financial Instruments -
Recognition and Measurement, financial assets classified as loans and
receivables and financial liabilities classified as other liabilities have to
be measured initially at fair value. The adoption of CICA Section 3855 has not
resulted in any changes to the carrying values of financial instruments.
    The Company's financial assets and financial liabilities are classified
and measured as follows:

    Asset/Liability           Classification                     Measurement
    ---------------           --------------                     -----------
    Cash                      Held for trading                    Fair value
    Accounts receivable       Loans and receivables           Amortized cost
    Assets of discontinued
     operations               Loans and receivables           Amortized cost
    Demand loan               Other financial liabilities     Amortized cost
    Accounts payable and
     accrued charges          Other financial liabilities     Amortized cost
    Long-term debt            Other financial liabilities     Amortized cost
    Liabilities of
     discontinued operations  Other financial liabilities     Amortized cost



    Section 3861 establishes standards for presentation of financial
instruments and non-financial derivatives and identifies the information that
should be disclosed about them.
    The Company does not currently have derivatives and therefore the adoption
of CICA Handbook Section 3865, Hedges, has had no impact on the Company's
financial statements.

    3. SEASONALITY OF OPERATIONS
       -------------------------

    The geographic distribution of our growth is having an impact on our
historical seasonal patterns. With the exception of the third quarter, the
Company exhibits comparatively less seasonality in quarterly revenue than in
the past since a relatively higher proportion of revenue is coming from
regions with more temperate or tropical climates that are not impacted by
winter weather conditions, and strong cyclical growth tends to mute normal
seasonal patterns. Historically, the Company's operations tended to exhibit a
seasonal pattern whereby its fourth quarter (February to April) was its
strongest. The third quarter (November to January) is normally the Company's
weakest quarter due to the shutdown of mining and exploration activities for
extended periods over the holiday season, particularly in South and Central
America.

    4. BUSINESS ACQUISITIONS
       ---------------------

    Effective September 6, 2007 the Company acquired the exploration drilling
company Harris y Cia Ltda. ("Harris") in Chile. Through this purchase, Major
Drilling acquired 11 drill rigs, support equipment, inventory, an office and
repair facilities. As part of this acquisition, the Company also acquired
Harris' existing contracts and retained key management personnel, as well as
the other employees, including a number of experienced drillers. The purchase
price for the transaction was US$23.5 (C$24.7) million, including customary
working capital adjustments, financed with cash. This transaction closed on
September 10, 2007.

    Net assets acquired at fair market value at acquisition are as follows:

    Assets & liabilities acquired
    Cash                                                          $    1,149
    Accounts receivable                                                  631
    Inventories                                                        1,060
    Capital assets                                                    10,315
    Future income tax assets                                             941
    Goodwill                                                          11,767
    Accounts payable                                                  (1,156)
                                                                  -----------
    Net assets                                                    $   24,707
                                                                  -----------
                                                                  -----------

    Consideration
    Cash                                                          $   24,707
                                                                  -----------
                                                                  -----------


    Effective October 25, 2007 the Company acquired the assets of the
exploration drilling company Paragon del Ecuador S.A. ("Paragon") in Ecuador.
Through this purchase, Major Drilling acquired 7 drill rigs, support equipment
and inventory, existing contracts and personnel. The purchase price for the
transaction was US$6.0 (C$5.8) million, subject to various holdbacks, financed
by cash and debt. This transaction closed October 25, 2007.
    Net assets acquired at fair market value at acquisition are as follows:

    Assets acquired
    Inventories                                                   $      586
    Capital assets                                                     2,023
    Goodwill                                                           3,196
                                                                  -----------
    Net assets                                                    $    5,805
                                                                  -----------
                                                                  -----------

    Consideration
    Cash                                                          $    3,871
    Long-term debt                                                     1,934
                                                                  -----------
                                                                  $    5,805
                                                                  -----------
                                                                  -----------


    5. DISCONTINUED OPERATIONS
       -----------------------

    On June 7, 2006, the Company sold its manufacturing subsidiary ("UDR") for
A$46.8 million (C$39.2 million). The consideration for the sale was      
A$43.3 million (C$36.2 million) cash and a holdback due in December 2007 in
the amount of A$3.5 million (C$3.2 million). The net gain before income taxes
is C$22.2 million. UDR previously constituted the Company's entire
manufacturing segment. The Company made the strategic decision to focus its
corporate resources on the mineral drilling business, where it competes as one
of the world's largest contract drillers.
    The Company also made the strategic decision to close its operations in
China in July, 2006. The Company opened a branch in China with the goal of
quickly developing a large pool of Chinese drillers. Having shown little
progress in building a pool of local drillers in China, the Company decided to
close the operation. Chinese operations were previously reported within the
Australian Asian and African segment.

    The gain from discontinued operations is summarized as follows:

                                2008 YTD    2007 YTD     2008 Q2     2007 Q2
                              ----------  ----------  ----------  -----------

    Revenue                   $        -  $    5,111  $        -  $      333
                              ----------  ----------  ----------  -----------
                              ----------  ----------  ----------  -----------
    Loss before income tax             -      (1,924)          -        (259)
    Net (loss) gain from
     disposal of discontinued
     operations, including
     write-down of assets,
     before income tax              (111)     21,481        (252)        585
    Income tax expense               (30)     (6,574)          -        (176)
                              ----------  ----------  ----------  -----------
    (Loss) gain from
     discontinued operations  $     (141) $   12,983  $     (252) $      150
                              ----------  ----------  ----------  -----------
                              ----------  ----------  ----------  -----------

    The assets and liabilities of discontinued operations are summarized as
follows:
                                                        Oct 2007  April 2007
                                                      ----------  -----------
    Current Assets
      Other receivables                               $    3,079  $    3,253
                                                      ----------  -----------
                                                      ----------  -----------
    Current Liabilities
      Accounts payable                                $        -  $    3,950
      Income tax payable                                   3,163       5,513
                                                      ----------  -----------
                                                      $    3,163  $    9,463
                                                      ----------  -----------
                                                      ----------  -----------


    6. SEGMENTED INFORMATION
       ---------------------

                                2008 YTD    2007 YTD     2008 Q2     2007 Q2
                              ----------  ----------  ----------  -----------
    Revenue
      Canada - U.S.           $  101,344  $   73,889  $   52,007  $   39,371
      South and Central
       America                    87,275      56,628      44,814      29,302
      Australia, Asia
       and Africa                110,937      65,779      59,315      33,172
                              ----------  ----------  ----------  -----------
                              $  299,556  $  196,296  $  156,136  $  101,845
                              ----------  ----------  ----------  -----------
                              ----------  ----------  ----------  -----------

    Earnings from continuing
     operations
      Canada - U.S.           $   22,199  $   16,029  $   11,009  $    9,331
      South and Central
       America                    25,526      12,650      13,651       6,747
      Australia, Asia
       and Africa                 22,507      13,387      12,718       6,310
                              ----------  ----------  ----------  -----------
                                  70,232      42,066      37,378      22,388
    Eliminations                    (565)       (589)       (273)       (299)
                              ----------  ----------  ----------  -----------
                                  69,667      41,477      37,105      22,089
    Interest expense, net            736       1,201         360         351
    General corporate
     expenses                     10,273       6,917       4,764       3,252
    Income tax                    17,019      10,350       9,166       5,527
                              ----------  ----------  ----------  -----------
    Earnings from continuing
     operations                   41,639      23,009      22,815      12,959
    (Loss) gain from
     discontinued operations        (141)     12,983        (252)        150
                              ----------  ----------  ----------  -----------
    Net earnings              $   41,498  $   35,992  $   22,563  $   13,109
                              ----------  ----------  ----------  -----------
                              ----------  ----------  ----------  -----------


    7. RECLASSIFICATIONS
       -----------------

    Certain comparative figures have been reclassified to conform to the
presentation adopted in the current period.
    




For further information:

For further information: Denis Larocque, Chief Financial Officer, (506)
857-8636, Fax: (506) 857-9211, ir@majordrilling.com

Organization Profile

Major Drilling Group International Inc.

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