Master Drilling is reinventing itself. For years the group was known primarily as a raise-boring specialist — a niche in underground mining where a pilot hole is drilled and then widened from the bottom up to create vertical shafts for ventilation, ore passes or access tunnels.
But now Master Drilling is shifting towards joint ventures (JVs), collaborations and digital partnerships, positioning itself as a more comprehensive mining services company, one that wants to win a bigger share of the mining value chain, including the popular open-pit segment.
Open-pit mining is the global industry workhorse. Roughly 70%-80% of today’s mines, particularly in battery metals and green-economy commodities, are open cast. For Master Drilling, that represents a far bigger addressable market than the underground sphere it traditionally operated in. The company now wants to use two avenues to penetrate open-pit work: its Master Drilling Exploration business — which provides exploration drilling, including splitting and sampling — and new surface robotic rigs designed to automate the core drilling process.
Another strategic shift is into mechanical rock cutting — the process of using specialised machinery to cut and break rock continuously rather than relying on explosives or traditional drill-and-blast methods. Expanding into this technology requires additional capital spending, but it aligns with Master Drilling’s goal of staying ahead of global trends towards safer, automated mining. As CEO Danie Pretorius says: “If you want to be part of the future, you need to invest in the future.” The company has done exactly that. During the six months to June 2025, every rand of operating cash flow was reinvested into capital expenditure, with 41% allocated to expansion and 59% to maintaining existing equipment.
This aggressive research & development investment means that the depreciation shown in the income statement understates the real cash being spent on capital assets, making the company appear optically cheap on a p:e basis.
The period also included a $4.6m partial reversal of the prior impairment on its mobile tunnel-boring machine, triggered by the signing of a new contract in 2025. At group level, revenue grew 4.9% year on year to $133.2m, lifting operating profit to $26.6m and pushing profit after tax to $18.1m — a 399% jump due largely to the impairment reversal.
If you want to be part of the future, you need to invest in the future
— Danie Pretorius
One weak point was fleet utilisation. Raise-bore rig utilisation fell to 65% against a 75% target. The softer utilisation stemmed from project deferrals, a major contract in Africa placed on hold and an operation that ceased due to lower diamond prices. Despite the weaker utilisation, revenue still increased because average monthly revenue per operating rig rose as the fleet mix shifted towards larger, higher-earning rigs.
The geographical spread reinforces the company’s diversification story. South America remains the anchor, contributing 32% of revenue in the period. The region benefits from structural growth in copper and strategic minerals tied to the energy transition. Master Drilling reported strong financial performance here and a growing pipeline of contracts, supported by new technology deployments and a strategic JV aimed at more turnkey service offerings.
Central and North America — previously loss-making — has stabilised, delivering a much-improved 16% operating profit margin versus just 2% a year earlier. Operational turnaround plans, improved cost control and new technology adoption have paid off.
Africa is in transition. Revenue grew, but margins compressed as a large project was deferred and a diamond-drilling operation wound down due to weak rough diamond prices. Still, a new contract was secured and more machines are being mobilised into the region. One “first of its kind” unit was also launched in Africa, signalling that technology will drive future growth rather than pure drilling volume.
South Africa contributed 23% of group revenue, while the “rest of the world” segment delivered above-expectation profitability through efficient staffing and tight cost control.
From a commodity perspective, revenue remains well diversified. For the period, the largest contributors were silver/lead/zinc (31%), copper (23%), gold (20%) and platinum group metals (9%). Awarded orders for future work are similarly weighted — essentially a portfolio aligned with electrification and decarbonisation.
This diversification across commodities, currencies and geographies gives the business a natural hedge. About half of revenue is earned in hard currencies, while most operating costs sit in emerging-market currencies. However, during the period a weaker dollar worked against that advantage, reducing profit before tax by $1.3m.
The investment case rests on three pillars. First, Master Drilling’s earnings base is becoming less cyclical as it diversifies into open-pit work, continuous mechanical rock excavation and digital services such as proximity-detection systems and integrated data platforms. Second, its heavy capital investment programme is dampening short-term cash flow but building long-term strategic value. And third, a record pipeline and committed order book provide visibility on future revenue.
If this strategic shift — from being seen mainly as a drilling contractor to becoming a technology-enabled mining solutions partner — plays out as planned, the business may well rerate.
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