|October 02, 2007|
Energold Consolidates Control Over Drilling Operations
|Energold Drilling Corp. (EGD: TSX.V) ("Energold" or the "Company") is pleased to announce that it has obtained 100% ownership and control of its drilling operations in Peru, Brazil, the Dominican Republic, Nicaragua, Zambia and Vietnam. The increase in the Company's interest in these operations results from an agreement entered into between Kluane International Drilling Inc. ("KID"), in which the Company held a 50% interest, and Energold's former joint venture partners in both KID and in Pac Rim Drilling S.A.C. ("Pac Rim"). As a result of the transactions, completed over the last two days, Energold now owns, directly and indirectly, 100% of both KID and Pac Rim. Its former partner acquired a 100% interest in Kid's subsidiary companies operating in Ecuador and Guatemala which have 7 drilling rigs.|
Prior to entering into this agreement, the Company shared a 50% interest in 17 drilling rigs with its joint venture partners, effectively owning an equity income interest in 8.5 drilling rigs. Following closing of the transactions, the Company will have 100% interest in all of its 35 drilling rigs, including 10 drill rigs in which it previously only had a 50% interest.
Fred Davidson, President and CEO of the Company said:
"We are extremely pleased at this new development and believe it is very beneficial to our Company and shareholders moving forward.
We believe this streamlines the Company from a legal, corporate, accounting and financial analysis perspective. The Company will be also become more cost effective and management will be able to focus totally on their own operations.
We expect to order six additional drilling rigs during the next quarter and to have at least forty-one rigs by year end. We are actively expanding and plan to grow into one of the major drilling contractors in Mexico by mid 2008. We are also planning expansion in other countries. We now control all our operations and rigs, are well financed with a strong working capital position with very positive business prospects."
As part of the agreement, all amounts due to related parties and non-controlling interests will be settled in full. Following the closing, Energold will have no long term debt or long term liabilities outstanding, other than a small allowance for deferred income taxes. The Company will have the financial strength and capacity to continue with its planned expansion plans unencumbered by issues involved with managing joint venture operations. KID will recognize
goodwill and a gain on the sale of its' previously wholly owned Ecuadorian and Guatemalan subsidiaries to Energold's former joint venture partners, net of tax thereon.
The Company expects that the implementation of this agreement should have a positive impact to net income in 2007 and in future years as the Company capitalizes on the strong growth opportunities that it sees in Peru, Brazil, the Dominican Republic, Zambia and other countries in which the Company previously had to share its profits as a result of being involved in joint venture operations. To protect their mutual interests and investments, the Company and its former joint venture partners, have agreed to enter into a 30 month non compete agreement with respect to countries in which the subject companies were operating prior to closing.
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 release.
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