UPDATE 1-Major Drilling profit falls as mining projects shelved

Mon Nov 26, 2012 5:20pm EST

* Fiscal Q2 profit C$0.28 v Street view C$0.33

* Revenue down 7 percent at C$199.6 million

* Project cancellations, delays weigh

* Company sees seasonal loss in slow fiscal Q3

Nov 26 (Reuters) - Major Drilling Group International Inc reported a 29 percent drop in quarterly profit on Monday as many mining companies did not extend drilling programs beyond their original budgets and as more projects were delayed or canceled.

The mine drilling company also warned it expects to post a seasonal loss in its fiscal third quarter, which extends into January 2013, as drilling activity slows for the holiday season.

"Holiday breaks are expected to be longer this year and November will not have the benefit of the program extensions that we had last year," said Chief Executive Francis McGuire in a statement.

"As we have experienced in some past years, we expect to generate a seasonal loss in the upcoming (fiscal) third quarter before recovering to Q2 activity levels in the fourth quarter."

Net earnings in the quarter ended Oct. 31 were C$22.3 million, or 28 Canadian cents a share. That compared with C$31.6 million, or 43 Canadian cents a share, in the year-earlier period at the mine drilling company.

Analysts, on average, had expected earnings of 33 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Revenue fell 7 percent to C$199.6 million, dragged down by project cancellations and a lack of activity from junior miners.

Moncton, New Brunswick-based Major Drilling said its Australian operations slowed as high costs and new mining taxes led to project cancellations, while operations in Mongolia were hit by political uncertainty.

Revenue from the company's South and Central American segment fell 25 percent, mainly hit by slower activity in Mexico as junior miners struggled to secure financing, and as political uncertainty weighed on development in Argentina.

The Canadian-U.S. segment bucked the trend, with revenue rising 12 percent in the quarter.

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