Major Drilling Reports Record Third Quarter Revenue and Profits



    MONCTON, NB, March 4 /CNW/ - Major Drilling Group International Inc.
(TSX: MDI) today reported results for its third quarter of fiscal year 2008,
ended January 31, 2008.

    
    Financial Highlights

    -------------------------------------------------------------------------
    $ millions of                                             12          12
     Canadian dollars                                     months      months
     (except earnings                                         to          to
     per share)                                          January     January
                                                              31,         31,
                        Q3-08   Q3-07  YTD-08  YTD-07       2008        2007
                       ------  ------  ------  ------    --------    --------
    -------------------------------------------------------------------------
    Revenue            $120.8   $90.1  $420.3  $286.4     $549.4      $375.3
    -------------------------------------------------------------------------
    Gross profit         33.7    25.2   136.0    89.6      179.5       115.5
      As percentage
       of sales          27.9%   28.0%   32.4%   31.3%      32.7%       30.8%
    -------------------------------------------------------------------------
    Earnings from
     continuing ops       7.7     5.7    49.3    28.7       67.1        38.0
    -------------------------------------------------------------------------
    Earnings per share
     from continuing
     ops                 0.32    0.25    2.09    1.24       2.86        1.65
    -------------------------------------------------------------------------
    Cash flow from
     continuing
     ops (*)             16.3    14.9    73.8    50.4       98.9        65.1
    -------------------------------------------------------------------------
    (*) before changes in non-cash working capital items


    - Revenue increased over 34 percent in the third quarter to
      $120.8 million, compared to $90.1 million recorded in the same period
      last year. This represents the highest level of third quarter revenue
      in the Company's history.

    - Weather conditions caused gross margins for the quarter to remain
      relatively flat at 27.9 percent compared to 28.0 percent for the
      corresponding period last year. Gross profit for the quarter was
      $33.7 million compared to $25.2 million for the prior year quarter.

    - Record third quarter earnings from continuing operations were reported
      at $7.7 million or $0.32 per share, up over 35 percent from
      $5.7 million or $0.25 per share for the prior year quarter.

    - Net earnings for the quarter, after loss on discontinued operations,
      were $7.2 million or $0.31 per share, up from $5.0 million or
      $0.22 per share for the prior year quarter.

    - Cash from operations, before changes in non-cash working capital items,
      was $16.3 million for the quarter, compared to $14.9 million for the
      same quarter last year.

    "The Company achieved the highest third quarter revenue and profits in its
history. Demand for drilling services continues to increase and customers
remain anxious to secure rigs and crews," said Francis McGuire, President and
CEO of Major Drilling. "Margins for the third quarter, which is always our
seasonally weakest quarter, remained relatively flat as compared to last year
at 27.9 percent. Our operations were affected by heavy rains in Africa,
Australia, Mexico and Ecuador as well as by extreme weather in Canada, whereas
last year weather conditions were uniformly favourable. Also, our record
performance would have been even stronger if it were not for the impact of
foreign translations. For the quarter, the unfavourable foreign exchange
translation impact, when comparing to the effective rates for the same period
last year, is estimated at approximately $14 million on revenue and
$1.7 million on net earnings. As previously mentioned, we continue to make
significant investments in training, and we are on track to meeting our goal
of expanding our labour force by 20 percent this year."
    "Going forward, the outlook for the fourth quarter looks strong although
weather continued to be challenging throughout February. With our on-going
training efforts, we anticipate putting 29 new rigs into service during the
fourth quarter, rigs that either arrived in the third quarter or will be
arriving during the fourth quarter subject to delivery schedules. Seven of
these are replacement rigs. In addition, we have increased our inventory
during the quarter by $13 million in anticipation of a busy year as well as to
avoid any potential supply shortages," noted Mr. McGuire. "We expect demand
from gold and copper projects to continue to be strong in calendar 2008 as
prices should remain well above economical thresholds required for sustained
exploration. Drilling demand from uranium companies is expected to increase in
2008 given the number of projects moving into the pre-feasibility stage around
the world. In addition, most observers believe that a slowdown in the U.S.
economy would have only a small impact on the demand for base metals as
problems on the supply side and continued demand from China and India should
keep prices above levels required for exploration," said Mr. McGuire.
    "In terms of customer base, most senior and intermediate mining companies,
which represent the majority of our customers, have increased their 2008
exploration budgets from 2007. Most of the junior companies that we work for
have raised substantial amounts of cash, which should carry their exploration
programs through the next six to eight quarters. While financial markets may
become more selective in their future support for junior mining, we would
expect that projects with good fundamentals will continue to find financing.
The need to replace depleting reserves will continue to be the key driver in
the industry," said Mr. McGuire.
    The Company also takes this opportunity to thank Jonathan Goodman, who has
stepped down from the Board of Directors, for his strong input over the course
of many years and welcomes to the Board Mr. Derek Pannell, former President
and CEO of Noranda/Falconbridge and board member of Teck Cominco. Mr. Pannell
brings over 35 years of experience in mining and international business to the
Company.

    Third quarter ended January 31, 2008

    Total revenue for the third quarter was $120.8 million, up 34.1 percent
from the $90.1 million recorded for the prior year period.
    Revenue from Canada-U.S. drilling operations was up $4.8 million or
15.8 percent to $35.1 million for the quarter compared to $30.3 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 $38.8 million,
up 31.1 percent from $29.6 million recorded in the prior year quarter. Revenue
growth was driven primarily by the new acquisitions in Chile and Ecuador, and
good internal growth in Mexico.
    Australian, Asian and African drilling operations reported revenue of
$46.8 million, up some 55.0 percent from $30.2 million reported in the same
period last year. The African acquisition, better rig utilization in Australia
and a new operation in Armenia accounted for most of the region's growth.
    The overall gross margin percentage for the quarter was relatively flat at
27.9 percent as compared to 28.0 percent for the same period last year. Margin
growth was impacted by weather conditions and lower margins in the African
operations, which offset the impact of pricing and productivity improvements.
    General and administrative costs were $11.2 million for the quarter,
compared to $8.8 million for the prior year period. The increase was primarily
due to the additional administrative costs relating to the acquisitions in
Africa, Chile and Ecuador, additions in management to accommodate growth, and
overall cost increases due to increased volume.
    Other expenses were $2.6 million for the quarter compared to $2.0 million
for the same period last year, due to higher incentive compensation expenses,
given the Company's improved profitability in the current year, and to losses
on the disposal of assets.
    Foreign exchange loss was $0.4 million for the quarter compared to nil for
the prior year period. This is due to the strengthening of the Canadian dollar
against the U.S. dollar.
    Short-term interest expense was $0.2 million for the quarter compared to
revenue of $0.3 million 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 $7.0 million for the quarter compared to
$5.2 million for the same quarter last year, as a result of increased
investment in equipment.
    The Company's tax expense was $4.0 million for the quarter compared to
$3.2 million for the same period last year, reflecting the Company's increased
profitability.
    Earnings from continuing operations for the quarter were $7.7 million or
$0.32 per share ($0.32 per share diluted) compared to $5.7 million or
$0.25 per share ($0.24 per share diluted) in the prior year period.
    Loss from discontinued operations was $0.4 million or $0.02 per share
compared to $0.7 million or $0.03 per share for the same period last year.
    Resulting net earnings were $7.2 million or $0.31 per share ($0.30 per
share diluted) compared to $5.0 million or $0.22 per share ($0.21 per share
diluted) for the same period last year.

    Year to date ended January 31, 2008

    Revenue for the nine-month period ending January 31, 2008 increased
46.8 percent to $420.3 million from $286.4 million for the corresponding
period last year.
    Canada-U.S. revenue increased by 31.0 percent or $32.3 million to
$136.5 million compared to $104.2 million last year with both countries
contributing to this growth.
    Revenue in South and Central America increased by 46.1 percent or
$39.8 million to $126.1 million, compared to $86.3 million in the prior year
period. Internal growth in Mexico and Chile and acquisitions in Chile and
Ecuador accounted for most of the growth, with Venezuela and Argentina also
making strong contributions.
    Revenue in Australia, Asia and Africa increased 64.4 percent or
$61.8 million to $157.7 million from $95.9 million in the prior year period.
Australia and the new African operations accounted for about two thirds 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 nine-month period were 32.4 percent compared to 31.3
percent last year due mainly to an improving pricing environment. With the
increase in revenue and improving gross margins, gross profit for the
nine-month period increased by 51.8 percent to $136.0 million compared to
$89.6 million for the prior year period.
    General and administrative expenses increased to $32.1 million compared to
$23.6 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 $10.4 million for the nine-month period compared to
$7.1 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 $2.2 million for the nine-month period 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 $0.4 million for the nine-month period
compared to $0.3 million last year, while interest expense on long-term debt
was flat at $1.9 million compared to the same period last year.
    Amortization expense increased to $19.5 million for the nine-month period,
compared to $14.6 million for the same period last year, as a result of
increased investment in equipment.
    The provision for income tax for the nine-month period was $21.0 million
compared to $13.6 million for the prior year period reflecting the increase in
pre-tax earnings.
    Earnings from continuing operations for the nine-month period were
$49.3 million or $2.09 per share ($2.06 per share diluted) compared to
$28.7 million or $1.24 per share ($1.22 per share diluted) for the same period
last year.
    Loss from discontinued operations was $0.6 million or $0.02 per share
compared to a gain of $12.2 million or $0.53 per share last year.
    Resulting net earnings were $48.7 million or $2.07 per share ($2.04 per
share diluted) compared to $41.0 million or $1.77 per share ($1.74 per share
diluted) for the same period last year.
    On a rolling 12-month basis to January 31, 2008, revenue from continuing
operations increased by 46.4 percent to $549.4 million compared to
$375.3 million for the prior year period. Earnings from continuing operations,
on the same rolling 12-month basis, increased by 76.6 percent to $67.1 million
from $38.0 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 Administration (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 web cast of its quarterly
conference call on Tuesday, March 4, 2008 at 9:00 AM (EST). To access the web
cast 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)

                                   Nine months ended      Three months ended
                                       January 31              January 31

                                    2008        2007        2008        2007
                              ----------- ----------- ----------- -----------
    TOTAL REVENUE              $ 420,314   $ 286,388   $ 120,758   $  90,092

    DIRECT COSTS                 284,293     196,838      87,046      64,870

                              ----------- ----------- ----------- -----------
    GROSS PROFIT                 136,021      89,550      33,712      25,222
                              ----------- ----------- ----------- -----------
    OPERATING EXPENSES
      General and
       administrative             32,094      23,616      11,238       8,756
      Other expenses              10,424       7,076       2,608       1,956
      Foreign exchange
       loss (gain)                 2,154         366         449         (47)
      Interest (revenue)
       expense                      (378)       (340)        239        (294)
      Interest expense on
       long-term debt              1,922       1,931         569         684
      Amortization                19,511      14,584       6,973       5,209
                              ----------- ----------- ----------- -----------
                                  65,727      47,233      22,076      16,264
                              ----------- ----------- ----------- -----------

    EARNINGS BEFORE INCOME
     TAX AND DISCONTINUED
     OPERATIONS                   70,294      42,317      11,636       8,958
                              ----------- ----------- ----------- -----------

    INCOME TAX - PROVISION
      Current                     19,268       7,472       3,011        (578)
      Future                       1,717       6,099         955       3,799
                              ----------- ----------- ----------- -----------
                                  20,985      13,571       3,966       3,221
                              ----------- ----------- ----------- -----------

    EARNINGS FROM CONTINUING
     OPERATIONS                   49,309      28,746       7,670       5,737

    (LOSS) GAIN FROM
     DISCONTINUED
     OPERATIONS (note 6)            (575)     12,248        (434)       (735)
                              ----------- ----------- ----------- -----------

    NET EARNINGS               $  48,734   $  40,994   $   7,236   $   5,002
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------


    EARNINGS PER SHARE FROM
    -----------------------
     CONTINUING OPERATIONS
     ---------------------
      Basic(*)                 $    2.09   $    1.24   $    0.32   $    0.25
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
      Diluted(xx)              $    2.06   $    1.22   $    0.32   $    0.24
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    EARNINGS PER SHARE
    ------------------
      Basic(*)                 $    2.07   $    1.77   $    0.31   $    0.22
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
      Diluted(xx)              $    2.04   $    1.74   $    0.30   $    0.21
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    (*)  Based on 23,541,827 and 23,098,106 daily weighted average shares
         outstanding for the fiscal year to date 2008 and 2007, respectively
         and on 23,621,029 and 23,127,430 daily weighted average shares for
         the quarter ended January 31, 2008 and 2007, respectively. The
         total number of shares outstanding on January 31, 2008 was
         23,671,008.

    (xx) Based on 23,882,663 and 23,575,166 daily weighted average shares
         outstanding for the fiscal year to date 2008 and 2007, respectively
         and on 24,018,422 and 23,645,789 daily weighted average shares
         outstanding for the quarter ended January 31, 2008 and 2007,
         respectively.


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

                                   Nine months ended      Three months ended
                                       January 31              January 31

                                    2008        2007        2008        2007
                              ----------- ----------- ----------- -----------

    NET EARNINGS               $  48,734   $  40,994   $   7,236   $   5,002

    OTHER COMPREHENSIVE
     (LOSS) GAIN
      Unrealized (losses)
       gains on translating
       financial statements
       of self-sustaining
       foreign operations        (19,429)      7,606       7,823       8,232
                              ----------- ----------- ----------- -----------

    COMPREHENSIVE EARNINGS     $  29,305   $  48,600   $  15,059   $  13,234
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------


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


                                                           Nine months ended
                                                               January 31

                                                            2008        2007
                                                      ----------- -----------

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

    Net earnings                                          48,734      40,994
                                                      ----------- -----------

    RETAINED EARNINGS, END OF THE PERIOD               $ 157,172   $  90,629
                                                      ----------- -----------
                                                      ----------- -----------


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

                                                           Nine months ended
                                                               January 31

                                                            2008        2007
                                                      ----------- -----------

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

    Unrealized (losses) gains on translating
     financial statements of self-sustaining
     foreign operations                                  (19,429)      7,606
                                                      ----------- -----------

    ACCUMULATED OTHER COMPREHENSIVE LOSS,
     END OF THE PERIOD                                 $ (49,812)  $ (22,643)
                                                      ----------- -----------
                                                      ----------- -----------


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

                                   Nine months ended      Three months ended
                                       January 31              January 31

                                    2008        2007        2008        2007
                              ----------- ----------- ----------- -----------

    OPERATING ACTIVITIES
    Earnings from continuing
     operations                $  49,309   $  28,746   $   7,670   $   5,737
    Operating items not
     involving cash
      Amortization                19,511      14,584       6,973       5,209
      Loss on disposal of
       capital assets              1,268         355         265          58
      Future income tax            1,717       6,099         955       3,799
      Stock-based compensation     1,955         663         388         131
                              ----------- ----------- ----------- -----------
                                  73,760      50,447      16,251      14,934
    Changes in non-cash
     operating working capital
     items                       (16,757)     (2,252)      1,145       1,660
                              ----------- ----------- ----------- -----------
                                  57,003      48,195      17,396      16,594

    Loss from discontinued
     operations, adjusted for
     non-cash items                 (689)     (2,706)       (437)       (212)
    Changes in non-cash
     operating working capital
     items from discontinued
     operations                     (803)      3,644       1,923         (84)
                              ----------- ----------- ----------- -----------
    Cash flow from operating
     activities                   55,511      49,133      18,882      16,298
                              ----------- ----------- ----------- -----------

    FINANCING ACTIVITIES
    Repayment of long-term
     debt                        (10,916)    (11,508)     (2,831)     (4,727)
    Additional long-term debt     10,000         459      10,000           -
    Increase in (repayment of)
     demand loans                  8,489     (16,721)     (7,323)       (280)
    Issuance of common shares      3,829         913       1,180         531
    Discontinued operations       (3,064)          -          32           -
                              ----------- ----------- ----------- -----------
    Cash flow from (used in)
      financing activities         8,338     (26,857)      1,058      (4,476)
                              ----------- ----------- ----------- -----------

    INVESTING ACTIVITIES
    Net proceeds from sale of
     discontinued operations           -      28,755           -           -
    Business acquisitions
     (net of cash
     acquired) (note 5)          (27,429)    (13,058)          -     (13,058)
    Acquisition of capital
     assets, net of direct
     financing                   (45,401)    (24,329)    (16,469)     (9,250)
    Proceeds from disposal of
     capital assets                2,510       2,588          95         876
    Discontinued Operations            -       1,693           -       1,677
    Other                             36           -          36           -
                              ----------- ----------- ----------- -----------
    Cash flow used in
     investing activities        (70,284)     (4,351)    (16,338)    (19,755)
                              ----------- ----------- ----------- -----------

    OTHER ACTIVITIES
    Foreign exchange
     translation adjustment         (334)     (1,314)     (1,046)       (123)
                              ----------- ----------- ----------- -----------

    (DECREASE) INCREASE IN
     CASH                         (6,769)     16,611       2,556      (8,056)

    CASH POSITION, BEGINNING
     OF THE PERIOD                25,022      11,987      15,697      36,654
                              ----------- ----------- ----------- -----------

    CASH POSITION, END OF
     THE PERIOD                $  18,253   $  28,598   $  18,253   $  28,598
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------


                   Major Drilling Group International Inc.
                         Consolidated Balance Sheets
                  As at January 31, 2008 and April 30, 2007
                     (in thousands of Canadian dollars)


    ASSETS                                               January       April
                                                            2008        2007
                                                      ----------- -----------
                                                      (unaudited)
    CURRENT ASSETS
      Cash                                             $  18,253   $  25,022
      Accounts receivable                                 74,630      78,613
      Income tax receivable                                2,090       1,610
      Inventories                                         69,375      50,976
      Prepaid expenses                                     8,197       6,545
      Future income tax assets                             2,230       1,730
      Assets of discontinued operations (note 6)               -       3,253
                                                      ----------- -----------
                                                         174,775     167,749

    CAPITAL ASSETS                                       181,303     158,771

    FUTURE INCOME TAX ASSETS                               2,243         619

    OTHER ASSETS                                          13,735       1,240
                                                      ----------- -----------

                                                       $ 372,056   $ 328,379
                                                      ----------- -----------
                                                      ----------- -----------

    LIABILITIES

    CURRENT LIABILITIES
      Demand loan                                      $   8,489           -
      Accounts payable and accrued charges                55,786   $  54,484
      Income tax payable                                   8,356       4,121
      Current portion of long-term debt                   10,690      13,649
      Liabilities of discontinued operations (note 6)      1,996       9,463
                                                      ----------- -----------
                                                          85,317      81,717

    LONG-TERM DEBT                                        22,009      18,136

    FUTURE INCOME TAX LIABILITIES                          8,654       7,020

    DEFERRED GAIN                                              -         519
                                                      ----------- -----------
                                                         115,980     107,392
                                                      ----------- -----------
                                                      ----------- -----------

    SHAREHOLDERS' EQUITY
      Share capital                                      141,532     137,703
      Contributed surplus                                  7,184       5,229
      Retained earnings                                  157,172     108,438
      Accumulated other comprehensive loss               (49,812)    (30,383)
                                                      ----------- -----------
                                                         256,076     220,987
                                                      ----------- -----------
                                                       $ 372,056   $ 328,379
                                                      ----------- -----------
                                                      ----------- -----------


    MAJOR DRILLING GROUP INTERNATIONAL INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    FOR THE PERIODS ENDED JANUARY 31, 2008 AND 2007
    (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    Loans and receivables           Amortized cost
     operations
    Demand loan               Other financial liabilities     Amortized cost
    Accounts payable and      Other financial liabilities     Amortized cost
     accrued charges
    Long-term debt            Other financial liabilities     Amortized cost
    Liabilities of            Other financial liabilities     Amortized cost
     discontinued operations

    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. FUTURE ACCOUNTING CHANGES
       -------------------------

    Inventories

    In June 2007, the CICA issued Section 3031, Inventories, replacing Section
3030, Inventories. The new Section will be applicable to financial statements
relating to fiscal years beginning on or after January 1, 2008. Accordingly,
the Company will adopt the new standards for its fiscal year beginning May 1,
2008. It provides more guidance on the measurement and disclosure requirements
for inventories. The Company does not expect that the adoption of this Section
will have a material effect on its consolidated financial statements.

    Financial instruments

    In December 2006, the CICA issued Section 3862, Financial Instruments -
Disclosures, Section 3863, Financial Instruments - Presentation, and
Section 1535, Capital Disclosures. All three Sections will be applicable to
financial statements relating to fiscal years beginning on or after October 1,
2007. Accordingly, the Company will adopt the new standards for its fiscal
year beginning May 1, 2008. Section 3862 on financial instruments disclosures,
requires the disclosure of information about: a) the significance of financial
instruments for the entity's financial position and performance and b) the
nature and extent of risks arising from financial instruments to which the
entity is exposed during the period and at the balance sheet date, and how the
entity manages those risks. Section 3863 on the presentation of financial
instruments is unchanged from the presentation requirements included in
Section 3861. Section 1535 on Capital Disclosures requires the disclosure of
information about an entity's objectives, policies and processes for managing
capital. The Company is currently evaluating the impact of the adoption of
these new Sections on its consolidated financial statements.

    Goodwill and intangible assets

    In February 2008, the CICA issued Section 3064, Goodwill and intangible
assets, replacing Section 3062, Goodwill and Other Intangible Assets and
Section 3450, Research and Development Costs. Various changes have been made
to other sections of the CICA Handbook for consistency purposes. The new
Section will be applicable to financial statements relating to fiscal years
beginning on or after October 1, 2008. Accordingly, the Company will adopt the
new standards for its fiscal year beginning May 1, 2009. Section 3064
establishes standards for the recognition, measurement, presentation and
disclosure of goodwill subsequent to its initial recognition and of intangible
assets by profit-oriented enterprises. Standards concerning goodwill are
unchanged from the standards included in the previous Section 3062. The
Company is currently evaluating the impact of the adoption of this new Section
on its consolidated financial statements.

    4. 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.

    5. 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                                           2,121
    Goodwill                                                          10,587
    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
                                                                  -----------
                                                                  -----------

    6. 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
was 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 (loss) gain from discontinued operations is summarized as follows:

                                2008 YTD    2007 YTD     2008 Q3     2007 Q3
                              ----------- ----------- ----------- -----------
    Revenue                    $       -   $   5,111   $       -   $       -
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Loss before income tax             -      (2,235)          -        (311)
    Net (loss) gain from
     disposal of discontinued
     operations, including
     write-down of assets,
     before income tax              (274)     21,472        (163)         (9)
    Income tax expense              (301)     (6,989)       (271)       (415)
                              ----------- ----------- ----------- -----------
    (Loss) gain from
     discontinued operations   $    (575)  $  12,248   $    (434)  $    (735)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    The assets and liabilities of discontinued operations are summarized as
follows:

                                                        Jan 2008  April 2007
                                                      ----------- -----------
    Current Assets
      Other receivables                                $       -   $   3,253
                                                      ----------- -----------
                                                      ----------- -----------

    Current Liabilities
      Accounts payable                                 $       -   $   3,950
      Income tax payable                                   1,996       5,513
                                                      ----------- -----------
                                                       $   1,996   $   9,463
                                                      ----------- -----------
                                                      ----------- -----------


    7. SEGMENTED INFORMATION
       ---------------------

                                2008 YTD    2007 YTD     2008 Q3     2007 Q3
                              ----------- ----------- ----------- -----------
    Revenue
      Canada - U.S.            $ 136,477   $ 104,181   $  35,133   $  30,292
      South and Central
       America                   126,093      86,275      38,818      29,647
      Australia, Asia and
       Africa                    157,744      95,932      46,807      30,153
                              ----------- ----------- ----------- -----------
                               $ 420,314   $ 286,388   $ 120,758   $  90,092
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Earnings from continuing
     operations
      Canada - U.S.            $  25,282   $  19,756   $   3,083   $   3,727
      South and Central
       America                    33,317      19,432       7,791       6,782
      Australia, Asia and
       Africa                     27,960      14,277       5,453         890
                              ----------- ----------- ----------- -----------
                                  86,559      53,465      16,327      11,399
    Eliminations                    (833)       (905)       (268)       (316)
                              ----------- ----------- ----------- -----------
                                  85,726      52,560      16,059      11,083
    Interest expense, net          1,544       1,591         808         390
    General corporate expenses    13,888       8,652       3,615       1,735
    Income tax                    20,985      13,571       3,966       3,221
                              ----------- ----------- ----------- -----------
    Earnings from continuing
     operations                   49,309      28,746       7,670       5,737
    (Loss) gain from
     discontinued operations        (575)     12,248        (434)       (735)
                              ----------- ----------- ----------- -----------
    Net earnings               $  48,734   $  40,994   $   7,236   $   5,002
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    




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.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890