|April 16, 2009|
Energold Announces Record Revenue And Meters Drilled
|Energold Drilling Corp. ("Energold" or "the Company") is pleased to announce record net income of $3.1 million for the quarter and $10.7 million for fiscal year 2008, compared to net income of $2.2 million for the quarter and $4.7 million for fiscal year 2007. Energold ended the quarter with a strong balance sheet with a working capital position of $49.4 million and cash and cash equivalents of $22.6 million.|
Group gross drilling revenues for the year were $42.3 million, up 61% from $26.2 million in the comparable period of 2007. Margins (gross revenue less direct costs) were 43% for the period. Quarterly revenues were $8.0 million (2007 - $7.1 million). Energold drilled over 43,966 meters in the current quarter, compared to 52,847 meters for 2007.
Summary of Quarterly and Annual 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.
The fourth quarter remained relatively strong with activity up until late October; however, by the middle of November most of the drill programs came to a halt, where in prior years most customers worked well into December. From November 2008 through to March 2009, there was wide-spread volatility in all facets of the business and due to the uncertainty in the economy, many customers delayed or cancelled their exploration programs. As such, actual results varied substantially from those in comparable quarters of 2007 and 2008.
Drilling in the short to medium-term, particularly on base metal projects has significantly slowed down. Numerous highly leveraged senior and intermediate mining companies have reduced their exploration spending for 2009, in order to conserve cash. Even gold producers with good balance sheets have delayed exploration plans due to the uncertainty in the economy. Sources of funding for all but a select few junior mining companies also continues to be limited.
All of this uncertainty limits the Company's visibility for the short-term. The Company has undertaken actions to reduce its costs. The Company employs a variable cost structure where most of its direct costs, including drill crews and logistics directly correlate with contract revenue.
The Company remains in an excellent financial position during these turbulent times. With an industry leading balance sheet of over $49.4 million in working capital, including $22.6 million of cash and no long-term debt, the Company is well positioned to have both a running-start as drilling activities resume as well as to expand and acquire struggling or cash starved competitors.
With a modern fleet and new operating regions, the seeds have been laid for future growth in five continents. With many of the new contracts, Energold hopes to pioneer new markets working in partnership with its exploration clients. Energold has targeted the early stage drilling segment of the industry but is more than capable of holding its own in reserve and in mine drilling. Especially in the sector of frontier exploration, over the last twelve months the demand has certainly exceeded supply and with current precious metal prices, Energold anticipates ongoing pressure for our services during 2009.
Due to the ongoing volatility in the economy, there remains considerable uncertainty and our results will depend on how quickly drill programs resume. In March 2009, Energold has seen a tentative increase in activity along with a number of new contracts and quotes.
With the combination of a decreasing number of large economic deposits being discovered and the demand for commodities globally, mineral exploration expenditures look poised to resume their upward trajectory in the not too distant future. In the longer-term, the fundamentals behind our business remain very strong with worldwide supply for most metals expected to tighten due to the continuing lack of significant discoveries.
Energold will be discussing its 2008 Earnings results and hosting a question-and-answer period via a conference call on Monday April 20, 2009, at 12:00 PM Pacific / 3:00 PM Eastern. Dial-in numbers for participants are: 416-340-8018 and 866-223-7781.
The webcast (audio only) can be accessed at: http://events.onlinebroadcasting.com/energold/042009/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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