Australian drilling services company DDH1 has agreed to acquire Swick Mining Services in an all-stock deal worth A$115m ($84.9m).

Swick offers underground mineral drilling, mineral analysis services, and underground mobile drilling equipment.

Under the terms of the agreement, Swick shareholders will receive 0.2970 new DDH1 shares for each Swick share they hold.

Upon completion of the transaction, Swick shareholders will own nearly 19.7% of the combined entity, which is expected to be a global scale mineral drilling company with a strong balance of surface and underground drilling exposures.

DDH1 shareholders will own approximately 80.3% in the combined business, which will have a fleet of more than 170 rigs and annual revenues of approximately A$445m.

Currently, DDH1 operates a fleet of 99 modern drill rigs across its three brands that include DDH1 Drilling, Ranger Drilling and Strike Drilling.

DDH1 managing director and CEO Sy Van Dyk said: “For DDH1, partnering with the leading underground diamond driller in Australia is a natural evolution to our specialised surface drilling operations and in line with the disciplined growth strategy we unveiled as part of our ASX listing in March 2021.”

The transaction is not expected to impact Swick’s announced plan to demerge Orexplore, which consists of Swick’s drilling business and mineral technology business.

It is subject is finalisation and execution of a Scheme Implementation Agreement for approval by the boards of the two companies.

The proposed transaction is also subject to securing regulatory approvals, Swick shareholder approval, Court approval and meeting other customary conditions as well as Foreign Investment Review Board (FIRB) approval.

Upon completion of the transaction, the Swick drilling business is expected to be operated as a standalone division to continue its customer service focus.

Sy Van Dyk added: “We have enormous respect for what Kent Swick and his team at Swick have delivered to their customers over the years and are very excited about their potential growth as they deploy their engineering innovations and services which demonstrate a deep understanding of their customer requirements.

“Further, with a combined drill fleet of more than 170 drill rigs in FY22, which will be Australia’s largest fleet, we expect to secure meaningful synergies over time.”

Separately, DDH1 has announced the acquisition of three new rigs to expand its fleet of surface mineral drilling rigs.

The new rigs are expected to be delivered in mid-2022.