The Swick Mining Services Ltd (ASX: SWK) share price is rising high today. At the time of writing, shares in the mining services company are trading for 20 cents each – up 17.65%.
Today's positive price movement comes after Swick announces an earnings update and the latest on the demerger of its Orexplore business.
Swick Mining Services provides mineral drilling contract services to the mining industry. It also engages in research and development of mineral analysis technologies.
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Why is the Swick share price rising?
Earnings update
In its first statement to the ASX, Swick Mining Services says it expects revenue for its drilling business in FY21 to be between $153 million and $156 million. It also expects earnings before interest, taxes, depreciation, and amortisation (EBITDA) to be within $29 million and $31 million for the drilling business.
In its FY20 accounts, drilling business revenue was $150 million and drilling business EBITDA of $24.6 million.
As this year's results are forecast to be stronger than last years, this potentially explains at least one aspect of today's strong price rise.
Swick managing director Kent Swick said:
We are performing strongly in the second half of FY21 and expect to deliver improved results and greater rig utilisation. The operational performance across all our drill sites is now strong and our largest international site – Pogo in Alaska where we operate ten underground drills – is now performing as per expectations.
We have a solid platform for growth both in the drilling business which is now laser-focused on its specialty of underground diamond coring and our world-class rig manufacturing facility. The current utilisation of our fleet is at 90% based on allocated rigs or 84% on a full-time equivalent basis, and demand from our clients is on the increase…
Demerger update
In its other announcement, Swick advised it would recommence the demerger of its Orexplore Technologies business, with a commitment to complete the process by the end of this year. The demerger was deferred in February this year.
According to its website, Orexplore enables mining companies to more easily analyse rock samples to see what, if any, minerals are embedded within them.
Swick said Swick Mining had progressed the demerger of its mineral technology business from the drilling business to "unlock its full value" as a separate entity.
Progress towards commercialisation has continued steadily as we have tested and refined the technology. The potential for the technology is real and can unlock benefits for our customers throughout the whole mining life cycle, from exploration to processing.
Swick share price snapshot
Over the past 12 months, the Swick share price has increased 53.9%. Its current valuation is only just off its 52-week high of 24 cents per share.
Swick Mining Services has a market capitalisation of $56.4 million.
