Orbit Garant Drilling
Continued Canadian drilling success
Orbit Garant Drilling, based in Val-d’Or, Quebec, is in a truly advantageous position of late. With Canada’s economy strengthening and projects in mining ramping up as the resource sector picks up pace, the company is maximizing a lean management strategy to capitalize on its market position.
Originally the Canadian mining services company was two separate companies: Orbit Drilling, founded by brothers Pierre and Bernard Alexandre, and Garant Brothers Diamond Drilling. After these companies merged (successfully) at the beginning of 2007, the momentum of both original companies propelled it to become one of the “largest surface and underground drilling companies in Canada”. By combining the two companies’ expertise in diamond drilling and collective customer base, Orbit Garant has been able to “consolidate their resources and provide better service to their customers”, Eric Alexandre, President and COO, told CBJ in an interview in 2009.
Orbit Garant’s specialty is diamond drilling, and they work with major players in underground and surface mining exploration. Canada is an ideal place for Orbit Garant to concentrate its business as there are hundreds of exploration miners in the country. Diamond core drilling is a niche industry, and Orbit really has a foothold in this very specialized area.
Alain Laplante, CEO, spoke to CBJ recently to provide a refresher on today’s business, which has since begun trading on public markets; the company has been trading on the TSX under OGD since June 26, 2008, just before the global financial crisis hit. He says that the merger between Orbit and Garant has had lasting benefits to the company’s customer base. “Orbit was focused on surface drilling, whereas Garant was operating underground more—so it was easy to integrate them in order to better take advantage of our manufacturing division,” Laplante relates.
Machinery and equipment
Manufacturing is a key piece of the puzzle for Orbit Garant. The company builds its own machines and customers know that the company’s machines are second-to-none. Alexandre originally told CBJ that building its own machines is a significant competitive advantage: “The fact that we build our own machines means that we can adapt to [clients’] needs,” he said, and Laplante expands saying that this piece of Orbit’s business is the driver for the company to acquire Advantage Control Technologies (ACT) in December. As part of the acquisition of ACT, Orbit acquired specialized technologies and equipment that in part were developed to reduce the operating costs associated with mineral drilling—an obvious plus for Orbit Garant customers.
Orbit Garant tested the technologies offered by ACT extensively, and they are applicable to both new machines and those already in use in the Orbit Garant fleet. As a result of the acquisition, the company believes it will be able to generate cost efficiencies during 2011. “With the acquisition of ACT, we are continuing to grow,” Laplante explained. “Customers are looking for the latest technology to be implemented with our fleet, and they want to hit their drilling targets and want drilling information more rapidly,” he added—the acquisition simply makes sense for Orbit’s growth strategy.
In the drilling business, performance is key and nothing helps performance like having the best equipment. According to the company website, Orbit Garant has adapted standard drills to enable deployment in difficult terrain, and also movable surface drills equipped with rubber traction, maximizing mobility while limiting the impact on the environment. “Our drills have been designed to adjust to numerous situations that occur at the drill site, thereby increasing their efficiency by reducing down-time. They use less energy and require less space, without compromising their safe use or power,” Orbit attests.
Where an Orbit Garant competitor must get equipment from outside sources, Orbit Garant can respond to customer requests right away—a piece of equipment can be built within two or three weeks whereas competitors who buy equipment from suppliers have to wait months. The manufacturing division of Orbit is growing rapidly, led by a capable team committed to the utmost in equipment quality. However, no matter how fast the company grows, they are aware that equipment stability is at top of mind. Of all of Orbit’s rigs, 85 per cent are committed to projects. “That is almost the maximum we’re comfortable having in operation at one time,” Laplante says, because “we are always doing maintenance as much as we can.”
Goals and growth
When CBJ last spoke with the company, Orbit Garant had almost 500 employees, and operated 134 drills. Now, the company has more than 700 employees and has 162 drills in operation. Its list of clients included at the time includes GoldCorp, Xstrata, and IAMGOLD (running a history with the company of more than five years) and although the economy took a turn for the worst in 2008, the company retained its customer base. Orbit has a very strong presence domestically and internationally, offering them a significant amount of stability.
Laplante says that this year and last showed that the outlook for junior and mid-tier mining companies was getting better. “More of these companies have been able to raise funds and the need for drilling services increases accordingly.” Now, Orbit Garant sees contracts coming in for 10,000 to 20,000 metre-deep drilling, whereas contracts were previously coming in for drilling for 3,000 to 5,000—showing the breadth of Orbit Garant capabilities. “Before, customers would call the company and say they would send us a tender, now, they ask if you have any rigs available then. Demand has increased and we believe it will continue to do so this year,” Laplante elaborates.
“We did not suffer [the economic downturn] as much as other companies,”Laplante continues. Currently, Orbit Garant sees 10 per cent of its revenue coming in from international clients, and has about 5 to 6 per cent of the drilling market in Canada. Laplante says that the company intends to continue the same approach to growth, and plans to grow that capitalization on the current domestic market. “We would consider doing business with larger players if they would like to see us at an international level—we would like to keep that 10 per cent of international business.”
Orbit Garant has other plans for expansion, in a regional capacity. In Canada, the company has indicated to its shareholders that it plans to duplicate their radius of service. In Val-d’Or, the company can dispatch its equipment to anywhere in a six hour radius. They would like to duplicate that region somewhere else in the company. So far, Sudbury is the biggest contender. “We think Sudbury is the place to be, and this would be a step to moving forward to western territory,” Laplante says.The company intends to double its size every five years, and grow at 20 per cent every year through organic growth or acquisition. Moreover, Orbit Garant continues to be committed to unflinching levels of health and safety “which are very important to customers,” says Laplante.
“These focuses are all keys of success,” he concludes.