TORONTO (Reuters) - Mine drilling activity has fallen off its "frantic" peak and will likely soften further in the near term, but there are still regions where demand is outpacing supply, the head of Canada's top mine drilling company said on Thursday.
And while current market conditions have prompted miners around the world to shelve major development projects, there has not yet been a dramatic drop in drilling activity, said Francis McGuire, chief executive of Major Drilling Group International Inc (MDI.TO).
"We are seeing a less frantic pace, but we are still seeing a good pace," McGuire told Reuters in an interview. "The majority of projects out there continue - they may not get the headlines, but they are continuing."
Mine drilling and exploration activity is seen as a good barometer of the health of the mining industry, with demand for drill rigs soaring in an upswing and falling as sentiment sours.
"There's a lot areas where we still can't meet demand," McGuire said. "But, obviously, there are many areas where there is slack, unlike last year when just about everywhere we just couldn't meet (demand)."
Africa, Latin America and Canada top the list of regions where mine drilling activity remains strong, he said. At the other end of the spectrum, demand for drill rigs has fallen sharply in Australia and Mongolia.
McGuire also noted that most miners are sticking to their budgets on drilling this year, in sharp contrast to 2011, when they were quick to find the funds to add extra holes.
Major Drilling on Wednesday slashed its capital spending budget for fiscal 2013 by 30 percent to C$70 million ($71.2 million) and warned that it expects revenues to fall off peak levels.
The company, however, reported a record high quarterly profit and said it will continue to invest in both staffing and equipment, sending its shares up more than 11 percent on Thursday.
"We're being much more cautious with our spending, both capex and our operational spending, but we have not gone into what I would call a cost-cutting exercise," McGuire said.
Major Drilling's revenue is driven by specialized drilling, which includes projects that require very deep holes, that are at high altitudes or in inhospitable climates. The company is also called on when miners require some sort of special equipment that the average local drilling firm cannot provide.
The Moncton, New Brunswick-based company's stock closed up 11.71 percent at C$10.20 on Thursday on the Toronto Stock Exchange. The stock is down 34 percent on the year.
Reporting by Julie Gordon; Editing by Peter Galloway