|August 30, 2006|
Energold Announces Second Quarter Results
|Energold Drilling Corp. ("the Company") is pleased to announce the consolidated results for the quarter ended June 30, 2006. The Company fully consolidates its 50.01%-owned Pac Rim Drilling S.A.C., 50%-owned subsidiary Kluane International Drilling and its affiliates. The Company's 17.5% interest in IMPACT Silver Corp. (IPT: TSX.V) is accounted for on an equity basis. |
Results of Operations:
Gross drilling revenues for the year-to-date were a record $11 million on 84,000m drilled and for the second quarter were $7 million on 52,000m. The Company recorded a year-to-date profit of $776,000 ($0.04 EPS) and for the second quarter a profit of $627,000 ($0.03 EPS). As a result of the rapidly rising value of the Canadian dollar, IMPACT recorded a foreign exchange adjustment of $276,000 during the quarter. The Company continues to maintain a strong balance sheet with a net consolidated working capital position of $15.3 million and a consolidated cash position of $5 million.
Summary of Quarterly Results (Canadian $ 000's except per-share amounts and meters drilled)
June 30, 2006 2006 2005 % Change Gross Profit 2,381 1,865 28 Net Income 627 345 82 Earnings Per Share 0.03 0.02 50 Consolidated Working Capital 15,300 13,300 15 Meters Drilled 51,804 37,259 39
In addition, our balance sheet strength does not reflect the current market value of our equity investment in IMPACT, of which the Company currently owns 6.6 million shares. Based on closing market prices at August 28th, the investment has a current market value of $7.2 million or $6 million more than our carrying cost.
Contract Drilling Operations
The Company is pursuing a strategy of aggressively expanding into new markets while maximizing its presence in existing ones with the ultimate goal of being the driller of choice in the developing world. To meet its objectives, the Company is focusing on constructing additional drill rigs, increasing inventories, training drill personnel, and investing heavily in research and development.
As of this date, the Company has a total of 25 drills ?either jointly or wholly owned? in the field and one additional drill under construction. The Company is also looking at developing at least one new market in the 2006 year for its services, and is currently mobilizing a man portable rig in Canada and a second rig to Africa.
Our investment in drilling supplies inventories to support our operations has increased by approximately $2.3 million in the past twelve months, from $5.0 million at June 30, 2005 to $7.3 million at June 30, 2006. Part of this increase in inventory carrying value is attributable to higher supplier prices and part is due to our decision to put more inventories into the field to have supplies closer to hand to service our client drilling needs. Because of the man portable nature of our equipment and the need to be self sustaining in remote operating locations, we estimate that we require an investment in inventory of approximately $300,000 for each new drill that we put into the field.
The Company's equipment is amongst the newest in design and performance, but we continue to redesign our rigs and are now producing a new Series III rig with additional power and pullback while retaining its high degree of mobility. We anticipate that we will build approximately four to five more of the Series II and Series III rigs during the next 18 months. Combined with a new program of redesign and retrofitting older models, we anticipate improved performance capabilities from our rigs in the coming year. The Company is continuing to conduct research and development to keep its equipment on the leading edge technically.
Crews remain a significant bottleneck in our expansion, as it requires trained personnel with additional social skills to work in remote locations. We also continue to train personnel from local communities to fill a number of positions, including some positions as drillers. Especially for smaller programs, these personnel can substantially reduce our mobilization costs. This also provides an effective statement of our willingness to ensure there are social benefits to the local communities from our activities.
Social and political issues are actively interfering with the industry throughout the world; during last year some of our larger projects were delayed or cancelled despite responsible efforts on our clients' part to address local concerns. However, increasing demand for commodities continues to put pressure on the service industry for rigs and the industry as a whole is almost fully employed. Overall, new contracts and requests for tenders suggest that 2006 will continue to be extremely busy. With new rigs in place and new equipment under construction we hope to capitalize on the continuing demand.
Energold will be reviewing its 2006 Second-Quarter results via the Internet at 1:00 pm ET, 10:00 am PT, Wednesday, August 30, 2006. The webcast (audio only) can be accessed at: http://events.onlinebroadcasting.com/energold/082906/index.php and will feature management discussing the Company's financial and operational results ending with a question and answer period. Investors are encouraged to forward any questions they may have to email@example.com.
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 Silver Corp. and a project portfolio 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 does not accept responsibility for the adequacy or accuracy of this news release.
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