Major drilling deal builds rig royalty

DDH1 is taking over fellow mineral drilling business Swick Mining Services in a $115 million deal to form a global scale drilling group. The combination of the two WA-based companies will bring together a fleet of more than 170 rigs, with underground and surface operations generating about $445 million in revenue and $103 million in EBITDA last financial year. Sy Van Dyk, DDH1 “For DDH1, partnering with the leading underground diamond driller in Australia is a natural evolution to our specialised surface drilling operations and in line with the disciplined growth strategy we unveiled as part of our ASX listing in March 2021," DDH1 managing director and chief executive officer Sy Van Dyk said. “We have enormous respect for what Kent Swick and his team at Swick have delivered to their customers over the years and are very excited about their potential growth as they deploy their engineering innovations and services which demonstrate a deep understanding of their customer requirements. “Further, with a combined drill fleet of more than 170 drill rigs in FY22, which will be Australia’s largest fleet, we expect to secure meaningful synergies over time.” DDH1 and Swick have agreed to in-principle terms to merge their respective drilling businesses in an all-scrip transaction by way of a scheme of arrangement. The proposed transaction values Swick’s drilling business at $115 million, with Swick shareholders set to receive 0.2970 new DDH1 shares for each Swick share held. The transaction is expected to occur following completion of the Orexplore demerger by Swick. Upon completion, Swick Mining Services shareholders will own approximately 19.7 per cent of the combined business. Consistent with DDH1’s current practice for its own three business brands – DDH1 Drilling, Ranger Drilling, Strike Drilling – the company expects to maintain the Swick drilling business as a standalone division to ensure a continuation of the successful branding and customer service focus. Swick managing director Kent Swick said that business had grown to become the largest underground drilling contractor in Australia, with solid margins and established top-tier clients in Australia and internationally. "There is a strong commercial logic in combining the DDH1 and Swick businesses and being able to offer our customers a complete range of high quality and innovative mineral drilling services from the discovery phase, through to mining and completion, " he said.

Major drilling deal builds rig royalty

Industry Queensland

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