EDS Everyday mining services

[donnie]

Heres another mining service group that should do well over the next few years. its just listed.

Fibrecrete

EDMS provides an end to end Fibrecrete service for mining companies and contractors. Functions include:

Mine site fibrecrete production
Mine site fibrecrete delivery
Concrete production and delivery
Underground agitator hire
On site batch plants



Fabrication

EDMS has a highly experienced team who specialise in fabricating made to order underground steelworks. EDMS has a fully resourced workshop, in Cobar, NSW.
Such fabrication work includes:

Ventilation systems
Underground doors and barricades
Safety systems
Backfill systems
Pump support systems


Labour Hire

EDMS recruits, trains and hires skilled and unskilled labour to a number of mines to fill the shortfall in their labour requirements.



Pumps

The Company has a purpose built workshop and testing facility dedicated to the electrical submersible pump sector. With 415volt and 1000volt testing facilities, pumps can be tested to design specifications before leaving the facility.

EDMS provides submersible pump:

Servicing and testing
Rebuilds
Modifications



Down the hole hammer

EDMS is the only provider of this service on the east coast of Australia. Our Down the Hole Hammer Drills deliver 6-30 inch holes up to 300 meters in depth. We also have a V 30 attachment.

Down the Hole Hammer Drills can be used for:

Air
Water
Ventilation
Production slots & burn holes

Contracting

EDMS provides clients with specialised mine work required on a project by project basis throughout the year at irregular intervals.

Examples include:

Backfilling
Underground and surface ground control
Underground construction
Barricade walls
Ventilation
Waste Management
Maintenance services



Drilling is provided by GOS Drilling, an arm of EDMS. Its focus is on geological drilling required by exploration and mining companies. GOS has a fleet of 11 surface rigs, four underground rigs and three DTH. Several new rigs will be made available mid 2007.

[macduffy]

It's over three years since the initial post on this company - and no comment since! In the intervening period the drilling business has grown with 21 rigs now employed with a total fleet of 33. More significantly, EDS has diversified from its original "metalliferous" client business with a major push into the coal mining regions of NSW and Queensland. Major clients added in the last year or so include Donaldson Coal, Xstrata, Peabody, China Shenhua and Apollo Energy. Head office has been re-located to the Hunter Valley in recognition of this new emphasis.

EDS traded at a loss last year but was profitable at the EBITDA line in the latest quarter. Re-capitalisation to finance current expansion is proceeding with shares being placed at prices up to 16c. Two new directors have recently been appointed, including a new chairman. The significant point here is that they have stakes of 15% and 6% respectively so should have a big incentive to see EDS succeed. Overall, the board controls 41% of the capital after recapitalisation.

They recently purchased their first CSG rig and have plans to expand this side of the business. CSG is, of course, a "big thing" at present and a lot of other companies will have plans to grow here. But there should be plenty of opportunites for the early movers.

EDS is still a small company and the market for the shares is rather thin. I bought a few over the last week or so at 16c/16.5c.

I'd be interested in others' comments.

[mark100]

I've been keeping an eye on them macduffy. Could be a good turnaround play but so far the poor liquidity has meant I've only watched and not purchased

[shasta]

I've been keeping an eye on them macduffy. Could be a good turnaround play but so far the poor liquidity has meant I've only watched and not purchased

Mark100

As i know you like AOE, have you looked into WDS?

Another mining services company, but has alot of work in the CSG area.

With all the proposed projects, someone has to build them!

[mark100]

Mark100

As i know you like AOE, have you looked into WDS?

Another mining services company, but has alot of work in the CSG area.

With all the proposed projects, someone has to build them!

I haven't looked into WDS much shasta but I have noticed they are pushing the CSG theme. My main concern with contractors is that they spend a huge amount on capex in the booms increasing capacity (often debt funded capex) and them in the bust they have a huge amount of idle equipment that is near worthless.

Even though I am backing AOE and have made some good money out of CSG I am still skeptical of the whole CSG to LNG process. For the moment anyway AOE's capex is delivering reserve increases which increases their value in the eyes of the market. For as long as this is the case I will keep holding. However at some stage the market will want to value the likes of AOE on a multiple of earnings and I am skeptcial that CSG can be produced at a fat profit margin. Of course I could be wrong!

For the moment my preferred contractor is SND. Trading at 35c at the bottom of the cycle earnings. $14m cash in the bank (18c/share). FF yield of 8.5%. PE at bottom of the cycle earnings of 7.6x. They could return 15c per share to shareholders and still be earning the same amount of profit. That would bring the PE down to 4.5x bottom of cycle earnings. A change of sentiment around SND could see them double from here quite easily

[macduffy]

News today that EDS have signed their first contract to supply drilling services to Vale.

SP up by almost 10%.

http://asx.com.au/asxpdf/20100120/pdf/31n7v6xb04923s.pdf

[Dr_Who]

How much is that contract worth?

[macduffy]

How much is that contract worth?

No amount mentioned. It is for one rig with the possibility of a second being mobilised and runs for an initial 6 months. The significance is in it being EDS's first contract from Vale - and Vales' status as a major player.

Follows on a recent first contract from Xstrata, another major.