June 5, 2013 / 9:50 PM / 5 years ago

UPDATE 1-Major Drilling Group profit drops 93 pct on mining sector woes

* Q4 EPS C$0.03 vs $0.38 a year earlier

* Revenue drops 43 percent to C$135.5 million

* Scaling back units in Tanzania, United States

June 5 (Reuters) - Major Drilling Group International Inc reported a 93 percent year-on-year drop in fourth quarter earnings on Wednesday as hard-hit mining companies canceled or delayed their exploration plans.

Earnings fell to C$2.2 million ($2.1 million), or 3 Canadian cents a share, from C$30.7 million, or 38 Canadian cents, a year earlier. Revenue slid 43 percent to C$135.5 million.

The company said uncertainty in the mining sector and a shortage of funding for junior miners has cut its revenue and boosted competition for contracts.

As a result, it is restructuring parts of its operation, cutting an unspecified number of salaried workers and aiming to reduce general and administrative costs by 20 percent from their peak in the first quarter of this year.

Major Drilling, one of the world’s top metal and mineral exploration drilling companies, is a bellwether for the mining industry, exposing industry shifts as miners ramp up exploration programs or cut back on spending.

The company said it has decided to “significantly scale down” operations in Tanzania, as well as its U.S. environmental drilling operation, which is focused on monitoring water and soil and treating groundwater. It took a C$5.4 million restructuring charge in the fourth quarter to April 30.

In recent quarters, stagnant metal prices and rising costs have prompted junior miners and established companies alike cut back on exploration, hurting Major Drilling and competitors like Boart Longyear Ltd.

Analysts, on average, had been expecting earnings of 9 Canadian cents a share on revenue of C$151.8 million, according to Thomson Reuters I/B/E/S.

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