Boart Longyear Ltd. : Market Update and Recent Canada Tax Developments

Boart Longyear Limited ABN 49 123 052 728

26 Butler Boulevard, Burbridge Business Park

Adelaide Airport

South Australia 5950, Australia

Tel: [phone] • Fax: [phone] www.boartlongyear.com

23 December 2013

Market Update and Recent Canada Tax Developments

Boart Longyear Limited (ASX:BLY), the world's leading supplier of drilling services, drilling equipment and performance tooling for the mining and drilling industry, today provides an update on the market and an update on tax assessments currently under review by the Canada Revenue Agency.

Market and Company Update

The Company expects that its full-year 2013 results for revenue and adjusted EBITDA will not vary materially from the outlook provided in early October 2013. The rate of decline in demand experienced in recent months has been more moderate than earlier in the year, although market conditions remain challenging. The Company confirms that its previously announced cost reductions are on target and are delivering their expected financial benefits and operational efficiencies.
The business' periodic update on its reported key performance indicators (KPIs) as of the date of this release is provided in the table below.

	2013		2012		2013
	M id-Dec		Mid-Dec		Mid-Sep	M id-Aug	M id-M ay	Mid-Feb
Rig Count	~1,030		~1,160		~1,035	~1,035	~1,040	1,065
Rig Utilisation	~40%		~55%		~45%	~50%	~60%	58%
Product Backlog	~$20M		~$50M		~$22M	~$20M	~$35M	$51M
Headcount	~5,800		~9,200		~6,100	~6,300	~8,000	8,680
Net Debt	~$535M		~$520M		~$540M	~$545M	~$585M	$554M

The Company notes the following regarding the KPIs and pricing:
Certain metrics in December, such as rig utilisation, reflect the annual seasonal holiday slowdown in exploration and production activity. This is a temporary event and is consistent with seasonal slowdowns experienced in recent years.
The decrease in product backlog, from higher levels in early 2013, is due in part to reduced demand levels from early in 2013 and in part to the Products division's ability to supply customer orders immediately from stock on hand in its distribution centres. Although not necessarily an indication of an improvement in market conditions, recent ordering activity suggests that certain of the Products divisions' drilling customers have depleted their performance tooling inventories and are placing orders to support current drilling activity. Net debt levels reduced further despite challenging industry conditions. The Company
continues to make progress on reducing excess inventory levels, executing its cost reduction efforts and maintaining disciplined capital spending.
Pricing pressure in the Drilling Services business in the current year is consistent with
declines in the high single-digits, as anticipated. The Company intends to provide updates on anticipated 2014 pricing effects in conjunction with future market updates as the ongoing contracting season progresses and further information is available.

Boart Longyear Limited ABN 49 123 052 728

26 Butler Boulevard, Burbridge Business Park

Adelaide Airport

South Australia 5950, Australia

Tel: [phone] • Fax: [phone] www.boartlongyear.com

Conditions in the Company's core markets remain volatile and uncertain, and public information and other indicators suggest that 2014 also could be challenging. The impact of market conditions and other material risks on 2014 performance remain difficult to reliably anticipate or predict.

Canada Revenue Agency Developments

As previously reported, the Canada Revenue Agency ("CRA") has been reviewing the Company's tax returns for the 2007 through 2009 tax years. The CRA's Audit Division has completed its review for that period and notified the Company of income adjustments that will result in tax assessments and interest of approximately $C59 million, of which approximately C$12 million is related to expected provincial assessments. Transfer pricing penalties of up to C$11 million are also possible, but the CRA has not indicated whether it will pursue such penalties. The assessments generally have been determined on a basis consistent with prior disclosed assessments for the 2005 and 2006 tax years and mainly relate to: 1) transfer pricing for products sold from the Company's Canadian Products division to international affiliates; 2) management fees paid to a United States affiliate; and 3) intellectual property royalties paid to a United States affiliate.
The Company will appeal the assessments for the 2007 through 2009 tax years, including by requesting relief through the multinational mutual agreement procedure ("MAP"). The MAP is a dispute resolution process conducted between interested taxing jurisdictions pursuant to international tax treaties. Once completed, it mitigates a taxpayer's exposure to double taxation (except for
interest and penalties that may be due for underpayments to a jurisdiction) by permitting the taxpayer to recover overpayments to a jurisdiction by amending historical tax returns to reflect the outcome of the MAP. Whilst the amounts for the 2007 through 2009 tax years are under dispute, security will need to be provided to the CRA and provincial authorities totaling approximately C$41 million, or C$46 million if maximum penalties were pursued, which likely will be required in the first quarter of
2014. The foregoing security will be in addition to security of C$37 million posted in 2013 to contest
the assessments for 2005 and 2006.
In July 2012, the Company appealed similar assessments by the CRA for the 2005 and 2006 tax years. Notwithstanding the most recent assessments, the Company remains optimistic regarding the prospects of a successful appeal for the 2005 and 2006 tax years and anticipates a decision in 2014. A favorable appeal outcome would also result in the release of security posted for the 2005 and 2006 tax years.
The Company will review its tax reserves in light of the new assessments from the CRA and notes that the nature and magnitude of the assessments are consistent with previous advice from the Company.

Disclaimer

This announcement contains certain "forward-looking statements". The words "anticipate", "believe", "expect", "project", "forecast", "estimate", "likely", "intend", "should", "could", "may", "target", "plan" and other similar expressions are intended to identify forward looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Due care and attention has been used in the preparation of forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Group that may cause actual results to differ materially from those expressed or implied in such

statements. There can be no assurance that actual outcomes will not differ materially from these statements.

About Boart Longyear

With over 120 years of expertise, Boart Longyear is the world's leading provider of drilling services, drilling equipment and performance tooling for the global mining and drilling industries. It also has a

Boart Longyear Limited ABN 49 123 052 728

26 Butler Boulevard, Burbridge Business Park

Adelaide Airport

South Australia 5950, Australia

Tel: [phone] • Fax: [phone] www.boartlongyear.com

substantial presence in aftermarket parts and service, energy, mine dewatering, oil sands exploration and production drilling.

The Global Drilling Services division operates in over 40 countries for a diverse mining customer base spanning a wide range of commodities, including copper, gold, nickel, zinc, uranium and other metals and minerals. The Global Products division designs, manufactures and sells drilling equipment, performance tooling and aftermarket parts and services to customers in over 100 countries.

Boart Longyear is headquartered in Salt Lake City, Utah, USA, and is listed on the Australian Securities Exchange in Sydney, Australia. More information about Boart Longyear can be found at www.boartlongyear.com. To receive Boart Longyear news directly, visit http://www.boartlongyear.com/rssfeed.

Investor Relations: Media: Jay Clement David Symons

Acting CFO Cato Counsel
Vice President, Investor Relations/Treasury Sydney: [phone]
Australia 08 8375 8300 Mobile: [phone]
USA [phone] [e-mail] [e-mail]