|November 27, 2008|
Energold Announces Record Revenue And Meters Drilled
|Energold Drilling Corp. ("Energold" or "the Company") is pleased to announce record net income of $3.4 million for the quarter and $7.5 million for the first nine months of 2008, compared to net income of $2.8 million for the quarter and $5.4 million for the first nine months of 2007. Energold ended the quarter with a strong balance sheet with a working capital position of $45.9 million and cash and cash equivalents of $17.4 million.|
Group gross drilling revenues for the year to date were $34.3 million, up 80% from $19.0 million in the comparable period of 2007. Margins (gross revenue less direct costs) were 42% for the period. Quarterly revenues were $14.2 million (2007 - $6.9 million). Energold drilled over 73,000 meters in the current quarter, compared to 44,000 meters for 2007.
Summary of Quarterly Results
** Calculated on equitable meters drilled in 2007. Under a prior arrangement with certain non-controlling interests, Energold shared the operations in Peru, Ecuador, Guatemala, Brazil, the Dominican Republic, Nicaragua, Zambia and Vietnam. Equitable meters would include 50% of those meters and 100% of the meters drilled on its own account.
With revenues denominated in U.S. dollars, Energold's margins remain sensitive to foreign exchange fluctuations resulting in part in an increase in the average revenue per meter to $194 per meter. It is expected that strength in the price per meter charged in the fourth quarter will continue as the U.S. dollar continues to strengthen in relation to the Canadian dollar.
Meters drilled in the quarter only partially reflected Energold's ongoing program of rapid expansion. At the beginning of 2008, Energold owned a total of 41 drill rigs. Since then, Energold has built 25 additional rigs and acquired a further six drill rigs in southern Africa. By the end of September, the Company had 72 drill rigs, all 100% owned, achieving its year-end target six months early. Due to the remote locations that the new rigs are being mobilized into, the mobilization period has increased from approximately three to five months. Once market conditions have stabilized, the rig expansion program is expected to continue.
Approximately 10% - 20% of accounts receivable at September 30, 2008 is with clients whom are experiencing current financial difficulties because of the tightening of equity capital markets and bank loan financing opportunities. Energold has established a partial allowance for doubtful accounts with respect to these amounts, but expects that with patience most of these accounts will be realizable over time as liquidity returns to the debt and equity markets.
On November 21st, Energold was named winner of the Professional and Services Category in the 2008 BC Export Awards. Presented annually, the BC Export Awards recognize outstanding export success and celebrate the contribution of British Columbia's business community to the economy of the province. During the quarter, Energold's Dominican Republic subsidiary received an award for business excellence from the World Confederation of Businesses. The World Confederation of Businesses promotes public interest in the education and recognition of elite managers, leaders and executives in corporations, and professional service firms worldwide.
Over the last three years, increasing demand for commodities, along with stricter environmental regulations, has pushed the industry into "frontier areas", where the lack of infrastructure has held back exploration in the past. Exploration in these new areas generated a number of social and environmental issues which Energold's rigs are designed to address. As a direct result of all of the trends outlined above, Energold believes that the demand for its style of drilling will remain more active than the industry as a whole. With financings for "small cap" companies disappearing, Energold's already established strategy, to move more toward larger capitalization companies with sufficient working capital ("Majors") as its clients, has paid dividends. Currently, Majors represent 100% of Energold drill contracts. Energold is confident, based on contracts signed and those currently under negotiation, that its fleet of drill rigs will be fully booked with utilization approaching normal rates in 2009.
With excellent working capital, no significant long term debt and new rigs in place or under construction, Energold has the ability to not only support its normal operating requirements on an ongoing basis, but also to capitalize on the continuing demand for drilling especially in frontier areas, into the immediate future. Energold also holds 6.6 million shares of IMPACT Silver Corp.
Energold will be discussing its 2008 Third Quarter Earnings results and hosting a question-and-answer period via a conference call at 1:00 pm ET, 10:00 am PT, Tuesday, December 2, 2008. The dial-in numbers are 416 695 9701 and 800 769 8320. The webcast (audio only) can be accessed at: http://events.onlinebroadcasting.com/energold/120208/index.php
Energold Drilling Corp. is an environmentally and socially sensitive diamond drilling company that services the mining industry.
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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