Development back on agenda
Driller picks up Oaky Creek contract
Wednesday 21 June 2017
In another sign that the region's big miners are feeling more positive about the future viability of coal mining, Glencore has entered into a contract with driller Mitchell Services for exploration work.
In a short statement, Executive Chairman Nathan Mitchell said the work would generate significant revenue.
“Mitchell Services Ltd is pleased to announce that is has entered into a two-year contract with global resources company Glencore at its Oaky Creek coal mine,” they said.
“The contract includes a one - year extension option and is material [significant] in size based on the anticipated revenue.
“The company will utilise existing surface drill rigs to provide large diameter and exploration drilling services.”
“The award demonstrates the strong working relationship that Mitchell Services and Glencore have fostered in recent times driven by safety and operational performance.”
In November last year, Mitchell Services' cash balance went from $131k in the red to $330k in the black in just three months, as improving coal prices drove demand for drilling work.
CEO Andrew Elf said at the time they had seen a significant upturn in drilling demand and utilisation.
“In the September quarter just passed, we saw the company continue its growth path with the average operating rig count increasing to 21 rigs -up from 18 rigs during the same quarter in 2015,” he said
“More significantly the average number of monthly operating shifts has increased by 45% during the quarter.
“This growth was driven in part by an increased number of Tier One contracts, but also by an increase in the scope of work from existing clients following increases in key commodity prices.”
The increased drilling activity is again another sign that the current improved prices - while not immune from falling - signal a longer term shift upwards in the floor price for coal.