Major Drilling Reports Record Third Quarter Profits

Major Drilling Group International Inc. today reported results for its third quarter of fiscal year 2007, ended January 31, 2007.

- Revenue increased over 54 percent in the third quarter at $90.1 million, compared to $58.4 million recorded in the same period last year. This represents the highest level of third quarter revenues in the Company's history.

- Gross margins for the quarter were 28.0 percent, compared to 21.8 percent for the corresponding period last year. Gross profit for the quarter was $25.2 million compared to $12.7 million for the prior year quarter.

- Record third quarter earnings from continuing operations at $5.7 million or $0.25 per share, up from a loss of $1.0 million or $0.05 per share for the prior year quarter.

- Net earnings for the quarter, after loss on discontinued operations, were $5.0 million or $0.22 per share compared to a net loss, after gain on discontinued operations, of $0.7 million or $0.03 per share for the prior year quarter.

- Increase of 171 percent in cash from operations, before changes in non-cash working capital items, at $14.9 million for the quarter, compared to $5.5 million for the same quarter last year.

"The third quarter is typically our weakest while exploration companies shut down operations, often for extended periods, over the holidays, and the Company has historically shown a loss in the third quarter. This year for the first time in ten years, the Company posted a profit in its third quarter, at $5.7 million on continuing operations, a record for this period. We also had our best revenue month ever in November," said Francis McGuire, President and CEO of Major Drilling. "As discussed in our press release dated January 22, 2007, shorter than expected shutdowns, generally improved pricing, and an increased number of rigs in the field, contributed to these strong results," said Mr. McGuire. "Drilling programs that would typically end during November were extended well into December. Also, January was exceptionally strong with early startups in most of our operations. Finally, rigs that were delivered late at the end of the second quarter made a contribution this quarter. All of this combined to produce not only record revenues for the third quarter, but also the Company's third largest overall quarterly revenue in its history, trailing only the first and second quarters of fiscal 2007."

"During the quarter, we announced the purchase of the operations of the Longstaff group, which carries on drilling operations in South Africa, Botswana and Namibia. As discussed on December 1, 2006, these operations were primarily conducted on a single shift basis, and we intend to gradually increase utilization of these rigs. The Company is already making good progress on that front with an expansion of the labour force since the acquisition was announced," Mr. McGuire observed. "Pricing in these countries has tended to lag trends in other parts of the world but demand is increasing significantly. As the months go by, we expect pricing and utilization to continue to improve."

"We continued to see an overall increase in demand for the Company's services during the quarter, creating a favorable pricing environment for the upcoming year. Nickel, copper, gold, silver, uranium and zinc prices remain well above economical thresholds for exploration," commented Mr. McGuire. "Given this environment and the Company's favorable financial position, we expanded our capital expenditures program this quarter, spending $14.5 million, bringing in 11 new rigs. With these additional rigs, the African acquisition, and increased pricing, the Company's positive momentum is expected to continue into the fourth quarter and beyond."

Third quarter ended January 31, 2007

Total revenue for the third quarter was $90.1 million, up 54.3 percent from the $58.4 million recorded for the prior year period. Year-over-year revenue and profit comparisons were not affected by the variations of the Canadian dollar against both the U.S. and Australian dollars.

Revenues from Canada-U.S. drilling operations were up $12.0 million or 65.6 percent to $30.3 million for the quarter compared to $18.3 million for the same period last year. In Canada, improved winter conditions, as compared to last year, allowed early startups for most of the Company's contracts. Last year, warm weather conditions slowed the development of the winter roads required to gain access to many project sites, which caused delays or cancellation of a certain number of projects. In the U.S., the Company had up to five rigs working in the energy sector during the quarter with good pricing and good performance.

In South and Central America, revenue for the quarter was $29.6 million, up 91.0 percent from $15.5 million recorded in the prior year quarter. This strong year-over-year quarterly growth was driven primarily by very strong demand in Mexico, Chile and Argentina. Also, operations in Venezuela made a significant contribution to the region's growth.

Australasian/African drilling operations reported revenues of $30.2 million, up some 22.3 percent from $24.7 million reported in the same period last year. This growth was led by Tanzania, where revenues almost doubled compared to the prior year quarter, as well as by revenue from the new African acquisition. Revenue grew moderately in Indonesia and was relatively flat in Mongolia and Australia.

The overall gross margin percentage for the quarter was 28.0 percent, up from 21.8 percent for the same period last year. Gross margin percentages improved year-over-year in all three regions due to generally improved pricing and much shorter shutdowns over the holidays. Margins were still somewhat impacted by mobilizations, demobilizations and increased repairs during this period.

General and administrative costs were $8.8 million for the quarter, compared to $7.3 million for the prior year period. The increase was primarily due to additions to management to accommodate growth and the administrative costs relating to the African acquisition.

Other expenses were $2.0 million for the quarter compared to $0.9 million for the same period last year, due to higher incentive compensation expenses given the Company's improved profitability in the current year and increased provision for bad debt, muted by a gain on sale of investments.

Foreign exchange gain was nil for the quarter compared to a loss of $0.2 million for the prior year period.

Short-term interest revenue was $0.3 million for the quarter compared to an expense of $0.1 million last year, while interest on long-term debt was $0.7 million compared to $0.6 million for the prior year quarter.

Amortization expense increased to $5.2 million for the quarter compared to $4.5 million for the same quarter last year, as a result of increased investment in equipment.

The Company's tax expense was $3.2 million for the quarter, reflecting the Company's profitability compared to nil for the same period last year as the Company still had non-tax effected Canadian losses.

Earnings from continuing operations for the quarter were $5.7 million or $0.25 per share ($0.24 per share diluted) compared to a loss of $1.0 million or $0.05 per share ($0.05 per share diluted) in the prior year period.

Loss from discontinued operations was $0.7 million or $0.03 per share compared to a gain of $0.4 million or $0.02 per share for the same period last year. Discontinued operations include the sale of the manufacturing division and the termination of operations in China. The loss from discontinued operations in the third quarter of 2007 reflects adjustments to the tax provision from the sale of the manufacturing division and ongoing costs as the Company was closing its Chinese operations and redeploying rigs to other operations. Gain from discontinued operations for the third quarter of 2006 represents operating results from the discontinued operations that have been reclassified from continuing operations.

Resulting net earnings were $5.0 million or $0.22 per share ($0.21 per share diluted) compared to a loss of $0.7 million or $0.03 per share ($0.03 per share diluted) for the same period last year.

On a rolling 12-month basis to January 31, 2007, revenues from continuing operations increased over 23.7 percent to $375.3 million compared to $303.4 million for the prior year period. Earnings from continuing operations, on the same rolling 12-month basis, increased by 56.4 percent to $38.0 million from $24.3 million for the corresponding period last year.

Year to date ended January 31, 2007

Revenues for the nine-month period ending January 31, 2007 increased 25.9 percent to $286.4 million from $227.5 million for the corresponding period last year. More than half of this increase in revenues is related to Latin America.

Gross margins for the nine-month period were 31.3 percent compared to 28.3 percent last year due mainly to an improving pricing environment. With the increase in revenues and improving gross margins, gross profit for the nine-month period increased by 38.9 percent to $89.6 million compared to $64.5 million for the prior year period.

General and administrative expenses increased to $23.6 million compared to $20.9 million for the same period last year. The increase is primarily due to additions to management to accommodate growth and salary increases across the operations.

Other expenses were $7.1 million for the nine-month period compared to $5.3 million for the same period last year due, in part, to an increase in incentive provisions as a result of improved profitability and increased provision for bad debt, muted by a gain on sale of investments.

Foreign exchange loss was $0.4 million for the nine-month period compared to $0.8 million in the prior year period.

Short-term interest revenue was $0.3 million for the nine-month period compared to an expense of $0.6 million last year, while interest on long-term debt was $1.9 million compared to $2.1 million for the same period last year.

Amortization expense increased to $14.6 million for the nine-month period, compared to $12.9 million for the same period last year, as a result of increased investment in equipment.

The provision for income tax for the nine-month period was $13.6 million compared to $5.9 million for the prior year period reflecting the increase in pre-tax earnings.

Earnings from continuing operations for the nine-month period were $28.7 million or $1.24 per share ($1.22 per share diluted) compared to $15.9 million or $0.70 per share ($0.69 per share diluted) for the same period last year.

Gain from discontinued operations was $12.2 million or $0.53 per share compared to a gain of $1.0 million or $0.05 per share for the same period last year. Discontinued operations include the sale of the manufacturing division and the termination of operations in China.

Resulting net earnings were $41.0 million or $1.77 per share ($1.74 per share diluted) compared to $17.0 million or $0.75 per share ($0.73 per share diluted) for the same period last year.

Some of the statements contained in this press release may be forward-looking statements, such as estimates and statements that describe or are with respect to the future price of minerals and metals, the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition to exist or occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements by reason of factors such as, but not limited to, the factors set out in the discussion starting on pages 20 to 23 of the 2006 Annual Report entitled "General Risks and Uncertainties", as augmented by the section entitled "General Risks and Uncertainties" in the discussion of the Company's second and third quarter MD&A, each as filed with the Canadian Securities Commission (available on SEDAR at www.sedar.com). All such factors should be considered carefully when making decisions with respect to the Company. The Company does not undertake to update any forward-looking statements, including those statements that are incorporated by reference herein, whether written or oral, that may be made from time to time by or on its behalf, except in accordance with applicable securities laws.

Based in Moncton, New Brunswick, Major Drilling Group International Inc. is one of the world's largest metals and minerals contract drilling service companies. To support its customers' mining operations and mineral exploration activities, Major Drilling maintains operations in Canada, the United States, Mexico, South and Central America, Australia, Indonesia, Africa and Mongolia. -- www.cnxmarketlink.com