Suppliers News (September 18, 2006)

Major earnings up 170%, revenue hits $94.5M

The good times continue to roll for Moncton, N.B.-based Major Drilling Group International (MDI-T, MJDLF-O).

The driller reports that its earnings ballooned 170% to $22.9 million or 99 per share during the first quarter of fiscal 2007, ended July 31, 2006. The numbers are a marked increase from the $8.4 million, or 37 per share, posted in the corresponding period of last year.

Meanwhile, revenue was a record $94.5 million in the first quarter, an increase of 13% from $83.3 million in last fiscal year’s first quarter.

The results were aided by $15.4 million on the books from the June sale of its UDR rig manufacturing division to Sweden’s Sandvik.

But not all was rosy for the drilling company, as its operations in China have ended owing to “seasonal” hiccups and “lots of cultural problems.” The seven rigs in China will be redeployed to places such as Mongolia and central Asia. Earnings from operations there were $10.1 million, 44 per share, up from $8.1 million or 36 per share.

Quarterly revenue at Latin American operations was up 35% from a year earlier, with a 52% gain in Argentina, Chile and Mexico, while revenue was halved in Venezuela due to political issues.

Major is spending $40 million on more drilling equipment this year, with 19 new drill rigs set to enter the 450-unit fleet this quarter.

Major Drilling shares trade in a 52-week range of $13.49 to $30.16.

Aker Kvaerner to study Toromocho

Peru Copper (PCR-T, CUP-X) has selected engineering firm Aker Kvaerner Metals, in Tucson, Ariz., to conduct a feasibility study on the miner’s Toromocho copper project in Peru.

“We have been working on the project on a fast-track basis since its acquisition and the commencement of the feasibility study continues the project on that path,” said Charles Preble, Peru Copper president and CEO, in a press release.

Aker Kvaerner provides engineering and construction services to a number of industrial sectors, including mining and metals, oil and gas, refining and chemicals, pharmaceuticals, and pulp and paper.

In June, Peru Copper signed an option agreement with Empresa Minera del Centro del Peru (Centromin), a Peruvian state-owned mining company, whereby Centromin gave Peru Copper the right obtain its interest in the mining concessions and related assets of Toromocho.

Meanwhile, Peru Copper has added former Barrick Gold (ABX-T, ABX-N) executive Luis J. Baertl to its advisory committee.

Baertl helped found Peru Copper and is known for his financial and technical expertise, as it relates to mining in Latin America.

Baertl began his career with Banco Continental Del Peru and helped finance some mining projects through other executive positions he has held with Citicorp Citibank and Chase Manhattan Bank. As senior vice-president of corporate development with Barrick Gold, Baertl helped acquire LAC Minerals and Arequipa Resources, and helped consolidate the Pascua property in Chile, as well as the Veladero and Lama joint ventures in Argentina.

BioteQ signs second development deal in Mexico

BioteQ Environmental Technologies (BQE-V, BTQNF-O) has signed a contract with Columbia Metals (COL-V, CBMLF-O) to develop a second water treatment facility in Mexico.

The second plant would be built at Columbia’s Lluvia de Oro gold property in Sonora state, Mexico, not far from Columbia’s La Jojoba project, which both companies signed an agreement on earlier (T.N.M. May 5-11/06).

BioteQ will supervise the test work for both projects, on a cost-recovery basis. Should the test results warrant a second copper recovery plant at Lluvia de Oro, then BioteQ will build it — under the same terms agreed on for La Jojoba.

The deal works like this: BioteQ provides a plant to Columbia to recycle free and copper-complexed cyanide from barren solutions, which can then be recycled for further use in gold extraction. During this process, the biological sulphide technology converts copper in the cyanide solution to copper sulphide, which is then recovered and refined.

The La Jojoba agreement says both companies will develop the process during engineering, followed by a build-own-operate commercial plant run by BioteQ in return for metals recovered and fees for recycled cyanide.

Lluvia de Oro is situated in northern Mexico, about a 3-hour drive from Tucson, Ariz. The existing infrastructure consists of a heap-leach pad, which currently contains unleached gold from previous operations; a complete solution refining plant with ancillary storage ponds; power and maintenance facilities; warehouses; and offices.

Finning selling materials unit, buying notes

Mining equipment supplier Finning International (FTT-T, FINGF-O) is getting out of the materials handling business.

Finning is selling its British materials handling division to U.K.-based Briggs Equipment for 85 million ($178 million). The sale will result in a one-time $33-million charge against earnings, or 37 per share.

“The sale of this division will allow us to focus our financial and management resources on those U.K. businesses that are more closely associated with our Caterpillar equipment-related core strengths,” said Finning CEO Doug Whitehead in a statement.

These businesses, noted Whitehead, are the company’s Caterpillar heavy equipment dealership for England, Scotland and Wales, as well as Hewden, which rents heavy equipment to the U.K. construction industry, and Diperk UK, a distributor of Perkins engines and parts.

Finning says it will use money from the sale to repay debt. The deal with Briggs is expected to close by Sept. 29.

Meanwhile, Finning also says it will buy back up to 50 million ($105 million) of a previous 200-million ($420 million) offering of 5.625% notes due in 2013.

Finning sells, rents, finances and provides customer support for Caterpillar equipment and engines in Western Canada, the U.K., and South America.