Energold Drilling Corp. (TSX VENTURE:EGD) ("Energold" or "the Company")
announces year-to-date revenues of $115.8 million, an 18% increase from $98.2
million for the nine months ended September 30, 2012.
During the third quarter, the Mineral division drilled 92,300 meters, a decrease
of 46% compared to Q3 2011, due to the continued weakness in the overall capital
markets. The division remains profitable, generating $17.3 million in revenue
this quarter and a net earnings of $0.6 million. The Energy division drilled
61,700 meters during the third quarter, generating $9.0 million in revenues,
while the division's year-to-date revenues increased 302% to $38.9 million
compared to the same period in 2011. The Manufacturing division's revenue for
the first nine months in 2012 was $11.4 million, a 16% increase from $9.8
million in the comparable period in 2011.
Excluding non-cash and extraordinary items such as bonus acquisition expense for
Energold Energy Drilling Services ("EEDS"), foreign exchange, and share-based
payments, Energold generated $2.1 million in adjusted EBITDA on combined gross
margins of 21%. Without the adjustments, the Company recorded a net loss of $2.5
million in Q3 2012. Fred Davidson, President and CEO, states, "Our results this
quarter reflect the uncertain business environment, the decline in activity in
some markets due to ongoing external factors including politics, weather issues,
and difficulty in accessing capital for junior exploration companies. The
Company's revenue remains robust in several diversified markets, with a strong
senior and intermediate clientele who are committed to their projects."
Energold's growth has been significant over the past three years, and has
broadened its revenue base to diversify the risk exposure of a purely mineral
based business. EEDS in Alberta and the Manufacturing division, operating as
Dando in the U.K., continue to perform above management's expectations. In the
current period of softer demand for mineral exploration, the Company is
leveraging relationships from its market leading position in frontier drilling
and expand complementary service offerings to existing clients. Energold is
focused on identifying new growth opportunities, increasing productivity, and
capitalizing on synergies for growth within the Energy and Manufacturing
divisions. With $27.8 million in the treasury, and over $96.0 million in working
capital, management believes the Company remains in an enviable position to
weather the current market environment and capitalize on acquisition
opportunities.
Third Quarter Results Comparison
($CAD '000s except per-share amounts and meters drilled)
---------------------------------------------------------------------------
For Three Months For Nine Months
Ended September 30 Ended September 30
---------------------------------------------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Revenue
---------------------------------------------------------------------------
Mineral 17,251 31,244 65,468 78,684
---------------------------------------------------------------------------
Manufacturing 3,603 6,113 11,414 9,821
---------------------------------------------------------------------------
Energy 9,036 9,676 38,928 9,676
---------------------------------------------------------------------------
Total Revenue $29,890 $47,033 $115,810 $98,181
---------------------------------------------------------------------------
Earnings (Loss)
---------------------------------------------------------------------------
Mineral 628 7,910 4,102 14,198
---------------------------------------------------------------------------
Manufacturing (288) 571 (294) (204)
---------------------------------------------------------------------------
Energy (2,848) (291) (7,463) (291)
---------------------------------------------------------------------------
Total Earnings $(2,508) $8,190 $(3,655) $13,703
---------------------------------------------------------------------------
Earnings Per Share - Basic (0.05) 0.20 (0.08) (0.34)
---------------------------------------------------------------------------
- Diluted (0.05) 0.20 (0.08) (0.33)
---------------------------------------------------------------------------
(i) EBITDA - Earnings before interest, taxes, depreciation and amortization (see
non-GAAP (generally accepted accounting principles) financial measures).
(ii) Adjusted Earnings - Extraordinary and non-cash items include bonus expense
to Energold Energy, accretion expense on debenture, share-based payments,
foreign exchange, dilution and equity gain/loss on IMPACT, impairment/write-down
of assets.
MINERAL DRILLING DIVISION
Meters drilled during the third quarter decreased over the comparable quarter in
2011 as a result of the challenging capital markets, particularly in the junior
mining sector. The Mineral division drilled 92,300 meters in the quarter, a 46%
decrease from the comparable quarter in 2011 generating revenues of $17.3
million, a 45% dip from the comparable period in 2011. Average revenue per meter
was $192 in the first nine months of 2012 compared to $174 in 2011. Management
anticipates this to trend lower as excess rig capacity in the markets may lead
to lower competitive bids. Gross margin percentage is historically tied to the
business mix of frontier-style drilling and established brownfield drill
programs, with the latter moving the average revenue per meter lower. With a
higher percentage of programs dedicated to majors' brownfields projects during
the third quarter, gross margin was 28%, compared to 31% in the comparable
period 2011.
Meters Drilled During the Quarter
---------------------------------------------------------------------------
9 Months 9 Months
Q3 2012 Q3 2011 2012 2011
---------------------------------------------------------------------------
Meters Drilled 92,300 170,300 341,700 451,400
---------------------------------------------------------------------------
Drill Rigs 130 122 N/A N/A
---------------------------------------------------------------------------
As of September 30, 2012, Energold had a total of 130 mineral exploration rigs,
with two track mounted rigs on order from the Manufacturing division, Dando.
Mexico, the Caribbean, and Central America and accounted for over 52% of the
meters drilled for the third quarter of 2012 with 45 rigs in the region. With
local offices in Mexico City and a depot in Chihuahua to service field
operations, the Company has expectations of further growth in Central America.
South America currently has 42 drill rigs across Brazil, Colombia, Peru, Chile,
and Argentina, contributing 21% of the total meters drilled for the quarter.
During the quarter, demand stabilized in Brazil after declines in the second
quarter; however costs remain elevated to retain key personnel. The market, in
general, saw rapid growth in 2010 and 2011, but has recently experienced a
decline in activity and utilization and increasing political risk. Colombia's
growth remained positive, with several ongoing programs and commitments from
existing clients in the area. The modular S rigs continue to be well suited for
challenging and remote projects within this region and the Company expects the
area to pick up as macro-economic issues continue to resolve. Energold currently
has 40 rigs in Africa, and meters drilled here accounted for 27% of total meters
drilled in the mineral division, a 7% increase from the comparable quarter in
2011. Additionally, there are currently two rigs in Asia, with efforts
continuing to penetrate the Asian market where the Company's S rigs are ideal
for the combination of challenging infrastructure and low labour costs.
ENERGY DRILLING DIVISION
EEDS generates the majority of its revenue during the winter months due to
favorable ground conditions. As expected, the historically lower levels of
activity during the third quarter resulted in a slight decrease in revenue of
$9.0 million during the third quarter compared to $9.7 million in the third
quarter of 2011. There were no seismic contracts worked on during the quarter;
however, there are several outstanding tenders.
Oil sands operations account for $7.0 million revenues for the third quarter and
$23.9 million of year-to-date revenue, approximately 61% of total revenues in
EEDS. The Company drilled for oil sands clients despite the warmer months, a
sign of the backlog of work available in the industry. As a testament to the
robustness of the industry, in August 2012, EEDS was awarded multi-year energy
drilling contracts valued at $45 million annually, scheduled to commence in 2013
(see News Release dated August 21, 2012:
http://www.energold.com/s/NewsReleases.asp?ReportID=543036&_Type=News-Releases&_Title=Energold-Drilling-Announces-Multi-Year-Energy-Drilling-Contracts).
Currently, all of EEDS's oil sands rigs are committed for the 2012 to 2013
winter season, and management's growth target for 2013 is 25% to 50% above the
2012 figures.
Meters Drilled During the Quarter
---------------------------------------------------------------------------
9 Months
Q3 2012 2012
---------------------------------------------------------------------------
Oil Sands coring 14,000 50,200
---------------------------------------------------------------------------
47,700 205,500
---------------------------------------------------------------------------
Seismic (Track and Heli portable) - 335,500
---------------------------------------------------------------------------
TOTAL 61,700 591,200
---------------------------------------------------------------------------
MANUFACTURING DIVISION
Energold Manufacturing, operating as Dando, continued to expand its business
clientele and marketing globally, generating $3.6 million in revenue accounted
for using the percentage-of-completion method during the quarter, while
incurring a net loss of $0.3 million this quarter as the group continues to work
through lower margin legacy contracts. Year-to-date, the division is growing
with revenues of $11.4 million and gross margins of 23% compared to $9.8 million
and margin of 18% in 2011. The Company expects a strong Q4 to close out 2012
with contracts being completed before year end. With a sizable order book
globally resulting from the implementation of a structured approach to
procurement, increased sales and marketing efforts and synergies, Dando
manufactured and shipped a variety of mining and water rigs to Uganda,
Kurdistan, Nigeria, Ghana, and Indonesia during the quarter.
As part of the efforts to strengthen internal competencies and efficiencies,
Industrial Processes Chihuahua, S.A.C. ("IPC"), a manufacturing facility in
Chihuahua, Mexico, acquired by Energold in 2011, is now supplying the group
globally. Previously, IPC was producing specific parts for the Company's Mexican
operations and provided ongoing support for rig fleets in the area only.
Energold Drilling Corp. is a leading global specialty drilling company that
services the mining, energy, and manufacturing sectors in over 22 countries
globally. Specializing in a socially and environmentally sensitive approach to
drilling, Energold provides a comprehensive range of drilling services from
early stage exploration to mine site operations for both metals and energy
sectors and has an established drill rig manufacturer, Dando. Energold also
holds 6.98 million shares of IMPACT Silver Corp., a profitable silver producer
in Mexico.
On behalf of the Directors of Energold Drilling Corp.,
Frederick W. Davidson, President, CEO
Forward-Looking Statements: Some statements in this news release contain
forward-looking information. These statements include, but are not limited to,
statements with respect to proposed activities, work programs and future
expenditures. These statements address future events and conditions and, as
such, involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by the
statements. Such factors include, among others, the effects of general economic
conditions, a reduction in the demand for the Company's drilling services, the
price of commodities, changing foreign exchange rates, actions by government
authorities, the failure to find economically viable acquisition targets, title
matters, environmental matters, reliance on key personnel, the ability for
operational and other reasons to complete proposed activities and work programs,
the need for additional financing and the timing and amount of expenditures.
Energold Drilling Corp. does not assume the obligation to update any
forward-looking statement.
FOR FURTHER INFORMATION PLEASE CONTACT:
Energold Drilling Corp.
Jerry Huang
Investor Relations Manager
(604) 681-9501
(604) 681-6813 (FAX)
jhuang@energold.com
Energold Drilling Corp.
Steven Gold
Chief Financial Officer
(416) 648-4065
sgold@energold.com
www.energold.com
Iplayco (TSXV:IPC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Iplayco (TSXV:IPC)
Historical Stock Chart
From Jul 2023 to Jul 2024
