Mitchell Services at the Moranbah North coal mine. Image: Mitchell Services
Mitchell Services will purchase nine new LF160 drill rigs as part of a material capital investment program the company is conducting.
The nine rigs will be delivered across a staggered schedule through to December 31, 2021, while Mitchell Services will also have the option to acquire an additional three rigs as part of the growth strategy.
The investment comes as Mitchell Services forecasts improved business conditions in the short term. The company expects its productivity to increase with the deployment of the additional nine rigs, while it also predicts price increases in the market due to an evolving supply and demand landscape.
Mitchell Services expects improvements in general contract terms going forward, citing larger mobilisation and demobilisation charges, take-or-pay contracts and pricing flexibility.
The new drill rigs will also allow then company to take advantage of the cash-flow benefit associated with the Australian Tax Office’s (ATO) instant asset write off program.
To support the material capital investment program, Mitchell Services is undertaking a fully underwritten accelerated non-renounceable entitlement offer to raise approximately $10.5 million.
As part of this, eligible shareholders will be able to subscribe to one fully paid ordinary share for every eight Mitchell Services shares they hold at 7pm (AEST) on August 18 at the issue price of $0.42 per new share.
Established in 1969, Mitchell Services has established itself as a leading provider of drilling services to the global exploration, mining and energy industries.
The company’s fleet is located in exploration and mining sites across Australia, including Kalgoorlie, Roxby Downs, Charters Towers, Mt Isa and Cloncurry.
They also have a footprint in 12 countries outside of Australia, including China, Russia, the USA, Tanzania and Papua New Guinea.
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