Its operations have been only minimally affected by the Queensland floods and the company is confident it can reach the turnover figure of $133 million forecast in its prospectus, Mastermyne managing director Tony Caruso said.

The business had also taken on additional costs to expand its range of services, to start the underground training centre and to invest in overseas recruitment.

“These costs and investments in additional people are necessary for us to continue to grow the business in the short and longer term,” Caruso said.

Mastermyne decided to write off the $3.6 million it paid for the Sandvik ABM20 that was being used at Pike River for roadheading for about four months.

In a statement, Mastermyne confirmed its EBITA margin was expected to be behind budget at the half-year point due to the bad debt write-off.

“Even with the Pike River write-off we are still tracking on budget for the full year,” Caruso told ILN.

“Our position is we’ve written off 100 per cent [of] the ABM20 as a bad debt.

“It’s not a good outcome for the machine but we wanted to get the whole experience sorted and then get a new machine because they are in big demand.”

At his maiden annual general meeting as Pike River chief executive, Peter Whittall attributed the slow development progress at the Pike mine to its two “unreliable” Waratah Engineering continuous miners, while he said its Sandvik Alpine Bolter Miner 20 was a “superb” machine.

Mastermyne’s trading update is “positive and broadly as expected”, according to broking house Wilson HTM.

“The bad debt associated with the Pike River mine is a left-field event and, while unfortunate, highlights a good performance in 1H11 given the favourable EBITA results even after absorbing the bad debt expense,” it said in a report.

“Mastermyne is a mining services company and is sensitive to many industry-specific variables (eg weather, contracts, timing), and we are encouraged that it is tracking well so far in FY11, despite several one-off events.”

Caruso said the company was not materially affected by the recent wet weather in the Bowen Basin, though one site had experienced some geological impact as a result of the prolonged wet season.

He said Mastermyne worked very closely with all its customers and workforce to minimise the impact of the flooding to the business and to ensure that all projects resumed operations safely and expeditiously.

Following the peak of the flood in Queensland, Mastermyne staff have been actively assisting in the recovery efforts of many businesses and individuals who have been affected by the severe flooding.

The company expects to meet forecast earnings before interest, tax and amortisation, and net profit after tax for the full year with the planned introduction of additional mining equipment and the contribution from the directional drilling division.

Caruso cited the major efforts to replace subcontracted labour as playing a significant role in the full-year results.

The company also decided to take up long-term contract opportunities in excess of those originally forecast; this necessitated significant increased use of subcontracted resources at the expense of some short-term reduction in margin. However, actions taken to recruit additional personnel would reduce this impact in the second half of the year.

Mastermyne operating staff numbers have already increased by more than 50% in this financial year, reflecting the success of recruitment activities, such as targeting experienced miners in other domains and the new training centre.

The company is continuing to see an excellent response to its initiatives to grow its operating employee numbers through these strategies and has been pleased to see the high quality of people applying for employment, Caruso said.

“Mastermyne continues to experience strong demand for its services and has maintained a strong pipeline of opportunities to win work at existing mines already in production,” he said.