Nearly a decade after it first started servicing Western Australia’s civil and mining sectors, Dynamic Drill and Blast Holdings has launched a $5 million initial public offering (IPO) with a view to listing on the Australian Stock Exchange next month.
The Perth-based company is seeking to strengthen its position as a specialist provider of services to mid-size mining projects and large construction projects, while improving its operating margins through the acquisition of ancillary equipment to complement its core fleet.
Funds raised from the issue of 25 million shares at $0.20 each will be used to steer the company through a new phase of growth, which will focus on realising a strong pipeline of medium and long-term tendering opportunities.
Included in this will be the purchase of approximately $2.83 million in additional plant and equipment to service new contracts, to be completed within 24 months of listing.
Funding will also be directed towards working capital and corporate expenses, as well as the repayment of loans.
JP Equity Partners has been appointed as lead manager for the IPO.
Dynamic’s intended growth path will follow on from a 2018 strategy to strengthen the company’s balance sheet, improve operational efficiencies and introduce new and long-term investors.
The result of that effort was a corporate transformation in size and scale, with revenue jumping from a pre-strategy total of $12.97 million in 2018 to $19.07 million in 2019.
The company also recorded a net profit after tax of $1.53 million last year in what it considered to be a “difficult operating environment”.
Since 2011, Dynamic has worked for companies in WA and the Northern Territory with a site-based service offering, which includes large production blasts to vibration-sensitive and close-proximity civil construction work.
In that time, it has focused on mid-size mining and construction projects within a range of commodity sectors including iron ore, lithium and gold.
The company has completed over 30 contracts and developed a client base of established names such as Rio Tinto (ASX: RIO), Fortescue Metals Group (ASX: FMG), Galaxy Resources (ASX: GXY), Metals X (ASX: MLX), Alcan, Water Corporation, Atlas Iron, Mount Gibson Iron (ASX: MGX) and Newmont Corporation.
Dynamic currently operates at three WA sites – the Mt Cattlin spodumene project, owned by Galaxy; the Fortescue-owned Eliwana rail project package; and the Rio-owned Western Turner Northern Access road project.
At Eliwana, Dynamic is sub-contracted through main contractor QH&M Birt, while at Western Turner (which is nearing completion), it is sub-contracted through Multiplant Holdings.
Dynamic generates additional revenue by deploying assets such as drilling equipment and expertise to other projects of various size and scale.
Dynamic non-executive chairman Garret Dixon said the company has staged its offering to capitalise on the positive outlook for the local economy.
“We are a WA-focused business and the outlook for the resource and civil sectors is very exciting,” he said.
“We believe the Australian construction market is also an exciting area where our specialty expertise in close proximity blasting can be leveraged.
“At completion of this IPO, we will be well-positioned to service these growing and important sectors,” Mr Dixon added.
Dynamic Drill and Blast plans to trade on the ASX under ticker code ‘DDB’.