Moody’s changes Ausdril outlook to negative

Moody's Investors Service said it changed the outlook on the Ba3 corporate family rating of Ausdrill Ltd. to negative from stable.

The agency also changed the outlook on the B1 senior unsecured rating of Ausdrill Finance Pty. Ltd. to negative from stable.

All ratings were affirmed.

Moody’s said the outlook change follows the company's announcement that Resolute Mining Ltd. (unrated) decided to defer mining of the Stage 2 cutback at the Syama mine in Mali. Ausdrill stated that the impact of the deferral will be a reduction of about $3.5 million in revenues per month over the next eight months.

"As a result of Ausdrill's announcement, earnings and cashflow will be lower than our previous expectation, and reduces the headroom within the rating," Moody's analyst Saranga Ranasinghe said in a news release.

"The deferral of this mining work, while initself is not significant, comes at a time when Ausdrill is facing tough conditions in the gold and iron ore sector with prices hovering at very low levels compared to recent years. As a result mining companies continue to defer projects and reduce the cost base, adding pressure to the already weak industry environment for mining services companies."

“Ausdrill's announcement is the second earnings downgrade in two months, reflecting the very volatile conditions the mining services companies are operating under," Ranasinghe added in the release.

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