Troubled mining services giant Boart Longyear is confident demand for its services will pick up … eventually.
After seeing off the prospect of defaulting on its debt thanks to a private equity deal in 2014, chief executive Richard O’Brien says the world’s largest driller, which has suffered a string of losses thanks to the sharp downturn in mining investment, is now through the worst.
“Despite all of those challenges that we faced in 2014 and 2013, we do enter 2015 in a stronger and healthier position than when we talked (about) with our shareholders at this time last year,” he said.
“We no longer face the material uncertainty that we faced one year ago.”
But Mr O’Brien said the company continued to face tough competition and miners were still holding back on exploration spending. Global exploration spending, he said, dropped 46 per cent between 2012 and 2014 amid falling iron ore, copper and gold prices.
He said that would eventually change as copper and gold miners, which account for 60 per cent of Boart’s business, face the need to expand their reserves. But he said 2015 would remain tough and there was no indication when demand would pick up.
“We do, however, remain confident that a sustained multi-year recovery in demand for our drilling services and products will occur,” he said.
“We only wish we were as confident in our ability to say exactly when that will occur.”
Boart Longyear posted a first half loss of $US333 million during the 2014 calender year, which is almost half the $620 million loss it made a year ago.
Ratings agencies last year warned the driller was at risk of defaulting on roughly $US550 million in debts before it struck a $US324 million bailout deal with private equity group Centerbridge in December.
BOART LONGYEAR’S LOSS HALVES
- Net loss of $US333m, compared to $US620m loss in 2013
- Revenue of $US867m, down 29pct from $US1.223b
- No dividend, unchanged