Explomin Perforaciones CEO Noe Vilcas has just returned to Lima from a tour of Colombian gold sites and is encouraged by the rising tempo of exploration in the country, which wants to double its annual gold production by 2030.
The plus-20-year-old Peruvian company is one of a number of mining service firms impacted by ongoing domestic political turmoil and particularly new uncertainties around mining investment. It is seeking to diversify its sector exposure on the continent, and beyond, to maintain recent growth momentum.
Explomin Perforaciones has promoted itself as a “top 10” international mineral drilling company and Vilcas told InvestMETS it had more than 1500 employees and a fleet of about 100 drill rigs. Its turnover is understood to be approaching US$100 million.
“We currently are focused in Peru where, due to the political situation, most of the exploration and [mining] work is related to existing mines, including infill and brownfield drilling, and engineering,” Vilcas said.
“Colombia is very active in gold exploration.
“Chile, with their new constitution and leftist government taking place, are still holding some investment.
“We are very exposed to the South America market. Our plans are to go to North America and take Spain as a hub for Europe and Africa. Spain’s historic pyritic belt is regaining some of its old [attractiveness].”
Explomin Perforaciones’ growth strategy includes mergers and acquisitions, though it seems the former Layne Christensen mineral drilling business bought by Granite in mid-2018 for more than US$500 million, and now for sale again, is too big a bite at this stage.
Vilcas, a geologist who spent nine years managing exploration companies and seven years doing LatAm business development with ALS, has been at Explomin Perforaciones for more than eight years.
He says the company has been focused on building a more sustainable shape with exploration, production and engineering drilling at its core, and a decent split between surface and underground activity.
“Our strategy has been always to diversify the activity,” he said.
“As you know in low markets companies reduce significantly exploration and they focus on production. Our business is 50% surface rigs and 50% underground. Underground is less [cyclical] than surface work due to the fact that reserves need to be replaced every year as mines advance. Besides that underground rigs can work all year without weather concerns.
“Surface rigs are also very affected by low exploration levels so we shift to engineering work and can have part of the fleet busy.
“The biggest issue today is the human resource considering that not many youngsters want to work in the country. You can see this effect multiplied in first-world countries where you can find rigs but not operators.
“That is why some companies are working very hard in developing equipment that is easier to operate and does not require all the skills required today.
“In today’s global market, working for major mining companies like Glencore, Rio Tinto, Barrick Gold and others drives service companies to provide the latest available technology.”
The company had recently been recognised by the Safety Institute of Peru (ISEM) for implementing advanced rod handlers and autonomous data-centre connected technology in its active fleet.