* Q3 loss 5 Canadian cts/shr, revenue falls 32 pct
* Major Drilling sees volatility affecting revenue
* Miners delay exploration due to financing crunch
* Major Drilling is world's No. 2 exploration driller
* Gold miner Iamgold outlines plans to cut costs
By Euan Rocha
TORONTO, March 4 Major Drilling Group
International Inc reported a quarterly net loss on
Monday, as the financing crunch in the mining sector pushed
metal and mineral exploration companies to cut back and delay
Shares of the Moncton, New Brunswick-based company dropped
after the results. It also warned that volatility in the mining
sector would significantly affect revenue in the current
"In a number of jurisdictions uncertainty as to the policies
of host governments or issues of land tenure are adding to the
uncertainties," said Major Drilling Chief Executive Francis
McGuire. "These factors, combined with the fact that sources of
funding for junior mining companies remain limited, has led to
pricing pressures in certain regions."
Major Drilling, the world's second largest metal and mineral
exploration drilling company behind Boart Longyear Ltd,
said it was too early to assess its outlook beyond the fourth
The company reported a loss of C$4.3 million, or 5 Canadian
cents a share, in the fiscal third quarter ended Jan. 31. That
compared with a profit of C$9.6 million, or 12 Canadian cents a
share, a year earlier.
Quarterly revenue fell 32 percent to C$123.2 million.
The results came close on the heels of a study by SNL Metals
Economics Group, which warned that the three-year surge in
exploration spending in the mining industry is likely to come to
a grinding halt this year.
The study released Sunday at the opening of the Prospectors
and Developers Association of Canada (PDAC) convention, the
industry's largest annual gathering, cautioned the sharp falloff
in financing for miners with early-stage exploration projects
would crimp spending to find and outline new mineral deposits.
Spending rose to a record $21.5 billion in 2012.
Major Drilling's stock was down 36 Canadian cents at C$8.40
in trading Monday morning on the Toronto Stock Exchange.
Metal and mineral explorers, which depend heavily on equity
financing to raise capital to fund drilling programs, flock to
PDAC's Toronto event each year in search of willing investors to
fund the programs.
Investors have panicked this year, leading many to shun the
sector, due to stagnant metal prices coupled with many
multibillion dollar asset writedowns by some of the world's
largest precious and base metal miners.
And it is not just the juniors, but also the intermediate-
and large-cap miners that are looking to cut costs, as CEOs of
many of the world's top miners have faced the ax in recent
months in the face of spiraling costs and the writedowns.
Gold miner Iamgold Corp said Monday it aimed to
reinforce its financial position and improve its return on
capital, by cutting annualized spending by $100 million.
The company said this will be achieved through reducing mine
operating costs, exploration expenditures and mine site and
"Our recent share price performance is unacceptable. We are
determined to intensify our return on capital and improve our
operating performance," Iamgold CEO Steve Letwin said in a
statement. "Our assault on costs will continue until we have
exhausted all possible opportunities to reduce spending."