DDH1 has agreed to merge with Swick’s drilling business to create a world-leading mineral driller with around $445 million in annual revenue.
The merger will consolidate both surface and underground drilling with a combined fleet of 170 drill rigs.
DDH1 and Swick’s market capitalisation are $397.65 million and $76.06 million, respectively.
“For DDH1, partnering with the leading underground diamond driller in Australia is a natural evolution to our specialised surface drilling operations and in line with the disciplined growth strategy we unveiled as part of our ASX listing in March 2021,” DDH1 managing director and chief executive officer Sy Van Dyk said.
“We have enormous respect for what Kent Swick and his team at Swick have delivered to their customers over the years and are very excited about their potential growth as they deploy their engineering innovations and services which demonstrate a deep understanding of their customer requirements.
“Further, with a combined drill fleet of more than 170 drill rigs in (the 2022 financial year), which will be Australia’s largest fleet, we expect to secure meaningful synergies over time.”
According to Swick, its drilling business is valued at 35 cents per Swick share with shareholders to own 19.7 per cent of the merged drilling company. The merger will also give Swick shareholders 0.2970 new DDH1 shares per Swick share.
Van Dyk said there is strong market demand in Australia across iron ore, gold and battery minerals after the company also acquired three automated drill rigs.
“These three new rigs, which will be delivered mid calendar year 2022, are part of our organic growth plan for (the 2023 financial year) and build on the significant expansion of the DDH1 fleet that we have already announced,” he said.
“Expanding our rig fleet is part of our commitment to pursue a disciplined growth strategy that allows us to safely deliver on our customers’ expectations alongside delivering value for all shareholders.”
Swick stated the merger will not impact its separate plan to demerge Orexplore, which is expected to occur before the end of the year.