|April 24, 2006|
Energold Announces Year-End Results
|Energold Drilling Corp. (EGD:TSX.V) ("the Company") is pleased to announce its consolidated results for the year ended December 31, 2005. The Company fully consolidates Pac Rim Drilling S.A.C. (50.01%), Kluane International Drilling Inc. (50%) and its affiliates, and had until June 30, 2005, consolidated IMPACT Silver Corp. (IPT:TSX.V) ("IMPACT"). After June 30, the Company's interest in IMPACT has been accounted for on an equity basis. Earnings for the year were $902,000 (2004- $1,790,000), which includes a "stock based compensation expense" of $762,000. Excluding that deemed (non-cash) expense, earnings for the year would have been $1,665,000 compared to $1,886,000 for 2004. The Company ended the year with a very strong balance sheet with a net consolidated working capital position of about $13.5 million, an increase of just over $4.0 million from its net consolidated working capital position of $9.5 million at December 31, 2004. Consolidated group cash and cash equivalents at the end of the year were about $5.4 million. A significant portion of our increased working capital position reflects our increased investment to $6.3 million in drilling inventories. |
The Company's results were achieved in spite of executing a number of smaller drilling contracts rather than the large contracts we experienced in 2004. Gross drilling revenues for the year were $14.9 million on 118,000m drilled. (2004 - $15.4 million on 121,000m) With smaller contracts, the start-up costs are higher, the relative administrative costs are higher and overall drill utilization is reduced. What appears to have been a temporary decline in activity in Peru in 2005 also meant that our strongest division did not provide the contribution we anticipated, but new contracts and increased activity in Guatemala and Ecuador offset most of this decrease in activity in Peru.
2004 was a year of tremendous revenue and profit growth that occurred on the back of infrastructure virtually unchanged from previous levels of demand. Realizing that such growth is unsustainable without a commensurate investment in logistics, the Company in 2005, invested in inventories, new warehouses in Vancouver and Ecuador, an office in Mexico and the purchase of a deep-hole rig. Energold also brought on new staff including a new CFO and signed a Technology and Services Contract with an outside party to act as an Operations Manager to Energold. The results of these investments paid dividends in the first quarter of 2006, when we drilled in excess of 32,000m, compared to 20,800m in 2005, a fifty-percent increase in our first quarter activity level.
Over the next 12 to 18 months, Energold will be increasing its research and development in order to stay ahead of the industry. As well, the Company will be expanding its product offerings. The Company anticipates the addition of approximately 6-7 new rigs during the period, and plans to more deeply penetrate existing markets while expanding into at least one new market. Additional heavy rigs will be added in response to demand.
A web cast discussing the annual results has been scheduled for 3:00 PM PT, Wednesday April 26, 2006, and will be broadcast via the Internet at 3:00 PM PT at http://events.onlinebroadcasting.com/energold/042606/index.php Energold Drilling Corp. is an environmentally and socially sensitive diamond drilling company that services the mining industry. Energold also holds a controlling interest in silver miner IMPACT and a portfolio of exploration projects in the Dominican Republic.
On behalf of the Directors of Energold Drilling Corp.
"Frederick W. Davidson"
For further information, please contact:
Darrell Rader - Corporate Development
The TSX Venture Exchange has neither approved nor disapproved this news release.
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