Suppliers News (June 26, 2006)

Major Drilling unloads UDR on Sandvik

Contract drilling titan Major Drilling Group International (mdi-t, mjdlf-o) has sold drill-rig manufacturer UDR Group to Sandvik AB, a Swedish industrial tool maker, for A$46 million ($38.3 million).

Moncton, N.B.-based Major says the deal includes UDR operations in Chile and Australia. And as part of the sale, Major and Sandvik signed a 5-year supply contract under which the Canadian company will buy a minimum amount of drills, related equipment and services.

“We have made the strategic decision to focus our corporate resources on the mineral drilling business, where we compete as one of the world’s largest contract drillers,” says president and CEO Francis McGuire “We believe that, strategically, contract drilling and rig manufacturing should be separated to maximize the performance of each business. The decision to withdraw from the drill-rig manufacturing business was made easier by Sandvik’s attractive offer.” He adds that Sandvik, a long-time manufacturer of drill equipment, could improve on existing UDR technology.

Major says cash from the sale will be used to reduce debt, and partially fund future acquisitions.

“We have increased our capital budget to some $40 million in the coming year to expand our capacity to respond to the growing demand for drilling services,” McGuire says. “And we continue to actively seek out acquisitions.”

Major recently reported earnings of $28.6 million or $1.26 per share for the year ended April 30, up from $15.5 million or 71 per share over the same period a year earlier. Annual revenue climbed to $350.3 million over the year from $269.3 million the year before.

Major Drilling is one of the world’s largest metals and minerals contract drilling service companies, with operations in Canada, the U.S., Mexico, South and Central America, and in Australia, Indonesia, and China.

Cabo unit gets Yukon contract

Vancouver-based Cabo Drilling (cbe-v, cbeef-o) says its Advanced Drilling division was awarded a 5,000-metre underground drilling contract for Tagish Lake Gold’s (tlg-v) Skukum Creek gold-silver project, situated 80 km southwest of Whitehorse in the Yukon.

Drilling has started from the extension of the underground workings some 300 metres farther into the mountain at Skukum Creek. Further drilling will focus on definition drilling of the Rainbow Two zone to expand its dimensions. Drilling is aimed at increasing the mineral resource to production level.

The 5,000-metre program will also test the Ridge zone, where surface drilling provided intersections up to 9.15 grams gold per tonne and 18.2 grams silver, and the 2 zone, with an intersection of 7.82 grams gold and 234.2 grams silver.

Cabo Drilling provides mining-related and specialty drilling services through its subsidiaries Advanced Drilling of Surrey, B.C.; Forages Cabo of Montreal; Kirkland Lake, Ont.-based Heath & Sherwood Drilling; and Petro Drilling of Springdale, Nfld.

SGS goes online with Qmine

SGS Minerals Services is now offering Qmine, a web-based application that allows SGS clients to access their geochemical and related quality data over the Internet.

Akin to online banking, a company can log in to its Qmine account and see the results from SGS’s global labs.

The system started on June 1 for clients using SGS’s Canadian labs. The site can be accessed by visiting qmine.sgs.com.

Founded in 1878, SGS has more than 43,000 employees through a network of almost 1,000 offices and laboratories around the world.

Russian copter aids Canadian Arctic exploration

The world’s largest helicopter, the Russian MI-26, recently arrived in Canada to help companies search for oil and gas properties in the Mackenzie Delta and Mackenzie Valley of northwestern Canada.

The Mackenzie delta has a short drilling season and companies rely on ice roads from mid-December to late-March for the deliveries. When there is no ice, these areas are without roads and runways, and thus need helicopters to deliver heavy equipment and supplies. Enter the MI-26. It is capable of delivering an air-portable drilling platform without significantly disturbing the local ecosystem — a huge sticking point with environmentalists and local First Nations bands.

The Russian-designed and manufactured MI-26 can lift 20 tons with an external boom or the same amount internally. It is controlled by a crew of 10 (five flight crew and five maintenance engineers) and cruises at 150 mph using an average of 3,000 litres of fuel per hour. Previously, the largest load carried by a helicopter in western Canada was 12 tons by an American-built Chinook.

The helicopter will airlift virtually all equipment and supplies into and out of the drill site from mid-April to mid-December and will be operated by a group consisting of Airborne Energy Solutions, Nabors Drilling, SkyLink Aviation, and Utair Aviation.

The helicopter made its way from the manufacturing plant in southern Russia to Alaska, then into Whitehorse and finally to Yellowknife, where it is helping local mining operations suffering from the lack of ice roads last winter.

Vector to look over Dynacor study

Contract miner Dynacor Mines (dyn-v) has hired California-based Vector Engineering to review the National Instrument 43-101-compliant prefeasibility study of the Pasto Bueno tungsten project in Peru, which was prepared by Dynacor itself.

Dynacor recently acquired control of Minera Malaga Santolalla, owner of the past-producing Pasto Bueno tungsten mine.

Proven reserves at Pasto Bueno stand at 49,620 tonnes averaging 1.83% tungsten oxide, and probable reserves are 173,950 tonnes grading 2.09% tungsten oxide, for a total of 223,570 tonnes averaging 2.04% WO3.

At 250 tonnes per day, the current reserves would allow the mine to operate for three years.

Reserves at Pasto Bueno are located in the Huaura sector of the property and are found in five different veins between levels 10 and 12.

In January, Dynacor started work on restarting the mill, while redesigning the milling plan to achieve greater efficiency. Dynacor also owns the Acari gold mine in Peru where it has operated a mill since 1998.

Vector has a staff of over 250 and specializes in civil engineering, hydrogeology, geology, geotechnical engineering, solid and mine-waste management, heap-leach pad tailings disposal, and construction management.