Mining contractor Mitchell Services, through subsidiary Well Drilled, will acquire privately-owned Radco Drilling for $5.3 million.
Based in Queensland and New South Wales, Radco is a specialist underground coal drilling and gas drainage services company.
Radco, which has a fleet of 11 underground drill rigs, operates in the underground coal drilling industry and currently services Tier 1 global coal mining clients under long-term contracts.
According to Mitchell, the strategic rationale for the acquisition includes increased revenue diversification through the niche market of underground coal drilling and gas drainage, which is linked to production and required by long life mines.
“The highly regulated nature of this type of drilling creates a barrier to entry for new competitors which can be further leveraged given the combined entity’s ability to offer packaged services,” Mitchell said in an ASX announcement.
Mitchell expects to complete the acquisition during the second quarter of 2018.