September 5, 2012 / 10:08 PM / in 5 years

UPDATE 1-Major Drilling posts record profit, cuts capital budget

* EPS C$0.40/share v year-ago C$0.25/share

* Revenue rises 45 percent to C$237.6 million

* Driller cuts capital spending for fiscal 2013 by 30 pct

* Sees strong demand from majors, mid-tiers; juniors to decline

Sept 5 (Reuters) - Major Drilling Group International Inc reported record quarterly earnings on Wednesday and the mine drilling company said demand for its services from senior and mid-tier miners remains strong.

Major Drilling added it is continuing to aggressively recruit and train new drillers as it looks to meet solid demand for specialized drilling services, especially from the gold industry.

Despite the positive outlook, the Moncton, New Brunswick-based company cut its capital spending budget for the year by 30 percent to C$70 million, noting that junior mining companies are becoming more cautious on spending.

“While we are optimistic that our senior customers will continue with the majority of their projects, we anticipate that overall drilling activities will decline somewhat over the next six months, particularly with respect to our junior mining clients,” Chief Executive Francis McGuire said in a statement.

McGuire added that the company retired 10 rigs in the quarter while adding 24 new rigs and has another 15 rigs on order to meet demand for specialized services.

More than three quarters of its revenue was from specialized drilling as of the end of July, the company said, and nearly half of its projects were drilling for gold.

Spot gold rose to a near six-month high just below $1,700 an ounce earlier this week as concerns over the U.S. labor market encouraged investors to buy more gold on the view that the door was open for more stimulus measures.

Major Drilling earned C$31.9 million, or 40 Canadian cents a share, in the period ended July 31. That compared with C$17.9 million, or 25 Canadian cents a share, in the year-earlier period.

Earnings were slightly below analyst expectations of 42 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Revenue in the quarter rose 45 percent to C$237.6 million as the company’s efforts to train more staff resulted in an increase in shifts and productivity.

Major Drilling also boosted its semi-annual dividend to 10 Canadian cents per common share.

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