Mining services company Dynamic Group Holdings (ASX:DDB) has posted a revenue of $27.4 million in Q3 FY23, representing a growth of $3.9 million compared to Q2 FY23.
The company reports Q3 FY23 its earnings before interest, taxes, depreciation, and amortisation (EBITDA) is $6.6 million (24.1% margin), which is a 121% increase in margin compared to H1 FY23.
Dynamic Group Holdings reports it has experienced a sustained level of enquiries, resulting in a healthy order book and longer term tender opportunities across its 3 subsidiaries, Orlando Drilling, Dynamic Drill and Blast, and WellDrill.
During the quarter, Dynamic Drill and Blast saw a utilisation over 90% for its rig fleet, as well as the deployment of a newly purchased rig to a long-term production contract, mobilisation to a tier-one iron ore producer in the Pilbara region of Western Australia.
The company also notes cornerstone contracts remain with medium and long-term tenure. Dynamic Drill and Blast received 46% of its revenue from lithium, 33% from gold, and 21% from iron ore.
In Q3 FY23, Orlando Drilling was the preferred supplier for an anticipated 40,000m of reverse circulation (RC) drilling. The company also redeployed 2 rigs to WellDrill, while delays were experienced on short-term projects due to heritage clearance and environmental challenges.
Dynamic Drill and Blast received 46% of its revenue from lithium, 33% from gold, and 21% from iron ore
Dynamic Group Holdings also notes Orlando Drilling has increased tender activity for FY24 drilling programs. During the quarter, Orlando drilling received 60% of its revenue from gold, 21% of revenue from other commodities, and 19% from lithium.
Additionally, WellDrill received 66% of its revenue from iron ore, 19% from other commodities, 9% from gold, and 6% from lithium. Dynamic Group Holdings reports WellDrill continues to service the tier-one long-term iron ore cornerstone project, which continues to have growth in existing scope.
For Q4 FY24, Dynamic reports production contracts remain on track with medium and long-term tenure, while the company has received an increased level of enquiry across all business units and notes latent rig capacity provides the opportunity to increase margins without additional capital outlay.
The company is also focused on maintaining the EBITDA margin target of 20% to 25%, as well as focusing on improved cash conversion and an emphasis on ensuring a resilient balance sheet.
Additionally, Dynamic will potentially relocate an idle fleet within the group as part of its continued focus on realising synergies across the group, while M&A growth opportunities are continuing to be assessed.
Dynamic Group Holdings is a mining services business with 3 subsidiaries specialising in drilling and blast services. These subsidiaries include Dynamic Drill and Blast, Orlando Drilling, and WellDrill.
The company’s customers include Northern Star Resources (ASX:NST), Pilbara Minerals (ASX:PLS), Allkem (ASX:AKE), and Liontown Resources (ASX:LTR).
Images: Dynamic Group Holdings Ltd
