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RENEWAL AND REBIRTH

Boart Longyear

Resources Feature

RENEWAL AND REBIRTH 2

Issue 102 · Business Enquirer Magazine

PROJECT DIRECTED BY

WRITTEN BY

Greg Finch

Jay Benmehidi

Boart Longyear year has become a byword for drilling excellence – much as you’d expect of a company with an illustrious pedigree stretching back to its beginnings in the late 19th century:

n business as in life, silver linings can come from the unlikeliest of places. Take the mining sector, for example: after eight years of labouring through the most gruelling and prolonged global downturn in generations, the outbreak of the COVID-19 pandemic last year saw the industry reach its lowest ebb as mining and exploration, and consequently drilling, all-but ground to a halt. However, far from being a coup de grâce to the then embattled industry, instead the pandemic proved to be the catalyst for its revival. As restrictions have been gradually lifted over the course of 2021, like a coiled spring, the global economy has rebounded powerfully, and in doing so brought down the curtain on the downturn that so blighted mining since 2012. Demand for commodities from a newly unshackled, resource-hungry world is ravenous and

Issue 102 · Business Enquirer Magazine

“Boart Longyear was established in 1890 so we’ve been around a long time. Quite simply, we’re the world leader in drilling services for the mining industry today - we’ve got more surface and underground rigs than any of our competitors, we also have a more expansive geographic spread than any of our competitors, and we offer a broader portfolio of drilling services than anyone else out there.

And then there’s our new technology division which we call geological data services or GDS. Growing this segment organically has been a real challenge but we’ve seen very, very strong growth in this area. We’ve created some pretty remarkable industry-changing technologies that can create real value- add for our customers. An example of this is TruScan which provides highly accurate geochemical and structural information to make real-time exploration decisions, quality sample photos both wet and dry, and auto lithological and structural logging. This technology dramatically improves accuracy, speed, and cost, streamlining the exploration process.”

We are a full-service integrated provider of drilling services, which accounts for around 70% of our revenue, and we also offer a wide portfolio of drilling equipment and performance tooling for mining and mineral drilling companies; these are manufactured out of six sites in the US and Canada, Germany, Poland and China.

With a highly trained and dedicated 5,500-strong workforce and a global footprint stretching from established jurisdictions such as Australia to frontier nations like Tanzania, a who’s who customer list that includes many of the most prestigious names in mining, and a strong balance sheet, Boart Longyear is strong-

growing, and the resulting boom in prices and mining activity appears promisingly reminiscent of the famed 2004-2012 industry supercycle. Needless to say there is much optimism, and more than a little relief within the mining community at this turn of events. “The industry is coming back to life in a big way. Mining has performed strongly in 2021, and we’re seeing a very strong and rapid resurgence within our own business,” observed Boart Longyear’s CEO, Jeffrey Olsen. As the market leading global provider of drilling services for the mining industry, Boart Longyear is a name that requires little introduction. From drilling for core samples in mineral exploration to dewatering for groundwater control, water well drilling for municipal and industrial applications, and even its role in supplying drill equipment for moon exploration, Boart Long-

Business Enquirer Magazine · Issue 102

Boart Longyear ly positioned to ride the wave of the emerging mining boom. However, the company’s rude health and stable fundamentals today are a far cry from the existential difficulties Boart Longyear faced seven years ago when a debt crisis pushed the company to the brink – a challenging period indeed that coincided with Olsen joining the business as CFO after leaving Rio Tinto in 2014. “In this industry it shouldn’t come as a surprise that there are cycles, we have to be prepared for them. However, nobody anticipated that the last downturn would last so long and unfortunately Boart Longyear went into the downturn with way too much debt When I joined the company, I knew it was a company in distress albeit one with an incredible brand and industry recognition. The balance sheet had to be addressed and so we brought in some new investors as the first step, then we committed to transforming Boart Longyear into a much more efficient, streamlined business. I’ll give you an example - when I joined in 2014 our general and administrative expenses were around US$312 million dollars. Last year we were just in the mid-US$80 million range. So, we’ve taken a lot of costs out of the business, improved the efficiency of our operations, and now as the market has come back in 2021 in a strong way, we’re very well positioned to take advantage of that. Boart Longyear has a good, strong cost base and a group of people that are very motivated and ready to take it to the next growth phase. We’re very well positioned now.”

Resources Feature by the financial side of business because, as far as competitive advantage goes, Boart Longyear is without rival, particularly when it comes to its people in the view of Olsen. For a company like Boart Longyear, it is the people that drive success. That isn’t to say people aren’t important in a mining company, of course, but the assets available at a project will always take precedence. “Do you have an orebody that has the potential to be in the lowest cost quartile? That’s the kind of key asset that’s most important for a mining company. We don’t have those kinds of assets. Everything we have can be duplicated. In fact, our products are sold we sell to our biggest competitors. This being so, our most important competitive advantage is our people – to have great people and great leaders – and we believe it’s important to invest in them. We want people to feel part of something bigger than themselves and also understand how important it is to think globally as a business. We spend a tremendous amount of effort, attention and resources on training our people to make them the best in the industry. We have a few programmes that we have initiated, one being the Boart Longyear Academy through which we educate our employees about Boart Longyear itself. What company do you work for? When you’ve got 5,500 employees but you work in as many countries as we do, not everybody easily knows what happens in other areas of the business.

And then there’s our leadership programs, such as the Foundational Leadership Program and the Advanced Leadership Program, through which we partner with the University of Utah and their executive MBA program. This ensures our are people are exposed to fundamentally sound leadership principles.” And then there’s safety – a primary focus for any top-tier miner in the world today. On this front, yet again, the company is in pole position to the extent that simply by hiring Boart Longyear, which in terms of its lagging indicators has the best safety statistics in its industry, client companies are improving their safety score straight off the bat.

We spend a tremendous amount of effort, attention and resources on training our people to make them the best in the industry.

The foundations upon which such root-andbranch reform could be achieved were already in place, of course – for all the difficulties the company faced in balancing the books, both in 2014 and during the depths of the COVID-19 pandemic last year between March and May when business dropped off a cliff, Boart Longyear remained the leader in its field. It’s ability to attract new business from clients was unharmed

Issue 102 · Business Enquirer Magazine

Business Enquirer Magazine · Issue 102

Resources Feature

Boart Longyear

So the question is, what next for Boart Longyear? Following the recapitalisation of the business this year, which has greatly deleveraged the company, the company is in a strong financial position to capitalise on the commodities bull market and grow with the market. Additionally, Boart Longyear has also announced its intention to redomicile the business as part of a strategy to explore a dual listing that will see Boart Longyear listed on both the Australian exchange and the Canadian exchange. When asked what the strategy is behind this decision, Olsen explained: “The reason for this is two-fold - one, most of our shareholders are North America-based. Two, our headquarters is North America-based, and most importantly the move will open up a bigger pool of investors for Boart Longyear.” All-in-all there is justifiable optimism at what the future holds for the business going forward. On this, Olsen concluded: “The market has turned and is now in growth mode and we’ve done our internal work to make ourselves more efficient from an operating perspective and from a capital structure perspective. We’re now very well placed to take advantage of the opportunities ahead and I think that’s something I’m very excited about. I think that that excites pretty much everybody here, in fact. It excites our customers because they see growth and they really want a strong Boart Longyear to help them achieve growth as well. It’s a win for our shareholders and for everybody else who is part of Boart Longyear.”

Issue 102 · Business Enquirer Magazine

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