MONCTON, NB, March 25, 2014 /CNW/ - Major Drilling Group International Inc. ("Major Drilling" or the "Company") (TSX: MDI) announces that further to its press release dated March 3, 2014 it has now completed its review of restructuring options for its Australian operation, and has concluded to proceed with a full closure of that branch.
This decision is based on the current industry downturn, which has hit Australia particularly hard, and which has resulted in little work and highly competitive pricing in that region. Australia is also our highest cost jurisdiction. The Australian operation contributed only approximately 2% of global Company revenue in the most recently completed fiscal quarter, and only about 4% of global Company revenue in the first nine months of this fiscal year.
Many of the assets used by this operation can be used by the Company elsewhere. The Company will now determine which assets should be moved to other jurisdictions and which should be sold. It is expected that the close-down process will take approximately six months to complete.
The Company will incur asset write-downs and cash close-down costs, the amount of which is currently being evaluated. The total amount of the write-down will be determined over the next two months and announced with the Corporation's fourth quarter financial information. These will include employee severance, building lease related costs, the costs of moving assets out of Australia, and other closure costs.
Some of the statements contained in this press release may be forward-looking statements, such as, but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals industry and the demand for the Company's services, the Canadian and international economic environments, the Company's ability to attract and retain customers and to manage its assets and operating costs, sources of funding for its clients, particularly for junior mining companies, competitive pressures, currency movements, which can affect the Company's revenue in Canadian dollars, the geographic distribution of the Company's operations, the impact of operational changes, changes in jurisdictions in which the Company operates (including changes in regulation), failure by counterparties to fulfill contractual obligations, and other factors as may be set forth, as well as objectives or goals, and 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 on pages 16 to 18 of the 2013 Annual Report entitled "General Risks and Uncertainties", and such other documents as 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' varied exploration drilling requirements, Major Drilling maintains field operations and offices in Canada, the United States, South and Central America, Asia, and Africa.
SOURCE: MAJOR DRILLING GROUP INTERNATIONAL INC.
For further information: Denis Larocque, Chief Financial Officer, Tel: (506) 857-8636,Fax: (506) 857-9211, [email protected]