|August 26, 2010|
Energold Announces Profitable Second Quarter and Revenues Up 106%
|Energold Drilling Corp. (EGD: TSX.V) ("Energold" or "the Company") is pleased to announce continued increased demand for contract drilling services resulting in a profitable second quarter of $1.3 million in net earnings, as compared to a $0.2 million net loss in the same period of 2009. Revenues in the second quarter were $12.9 million, up 106% from $6.3 million in the same period of 2009. |
The Company drilled a record 86,000 meters in the second quarter, up 131% from 37,200 meters drilled in the same period of 2009, and up 58% from the prior quarter. The previous record number of meters drilled in any quarter was 73,400 meters drilled during the third quarter of 2008. Furthermore, over 140,000 meters were drilled in the six months ended June 30, 2010, up 143% from the comparable period of 2009, demonstrating continued strong demand for exploration drilling.
The Company remains in excellent financial position with a working capital position of $46.2 million and cash and cash equivalents of $11.1 million and no long-term debt. The Company's balance sheet strength also does not reflect the market value of its equity investment in IMPACT Silver Corp. (IPT: TSX-V). The Company's 13.56% interest in IMPACT Silver Corp. is accounted for on an equity basis. Based on closing market prices at August 25, 2010, the investment has a quoted market value of $6.6 million, amounting to $2.8 million more than our carrying value.
Second Quarter Results Comparison (CAD 000s except per-share amounts and meters drilled)
The second quarter proved the continued positive growth from the first quarter of 2009 towards traditional levels of drilling demand, and is on track to continue this trend for the balance of 2010 and into 2011. During the quarter, pricing still remained under pressure, however, gross margins for the second quarter increased to 23.8% from 14.7% in the first quarter 2010, reflecting the gradual addition of more frontier drilling programs which command higher rates and is expected to grow significantly in the second half of the year and into 2011.
The Company continued its initiative to invest in current and emerging markets in order to capitalize on opportunities as drilling demand continues to increase. As a result, Energold mobilized a significant number of rigs based on demand in the first four months of the year, which resulted in increased transportation, mobilization, maintenance and inventory costs. Precious metal drilling still remains a large portion of the Company's drilling programs.
The Company also invested in expanding and upgrading its rig fleet and drilling services. At June 30, 2010, the Company had a total of 94 rigs which included delivery of two new surface drilling rigs in the first quarter and an additional three new surface drilling rigs in the second quarter. A portion of the rigs were outfitted with new inventories and in some cases upgraded. The Company continues to expand its rig fleet with a target of 100 rigs by year-end 2010. Two prototype surface rigs are being designed to access depths beyond 1,000 meters and a modification to increase the capability of the standard EGD Highly Mobile Surface Type II rigs is currently underway.
Despite the difficult environment experienced last year, the second quarter of 2010 has shown significant positive growth as drilling demand is increasing on a quarterly basis. Energold's strategic goal is to continue to enhance cash reserves to fuel further growth. Energold's primary focus continues to be on organic growth through new rig development and expansion into new markets.
The Company will be reviewing its Second Quarter 2010 results via Conference Call at 12:00 pm ET, 9:00 am PT, Friday August 27. The dial-in numbers are 1-866-782-8903 or 647-426-1845. Management will be 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 firstname.lastname@example.org. The recorded conference call can be accessed at our website: http://www.energold.com/s/Events.asp
Energold Drilling Corp. is an environmentally and socially-sensitive diamond drilling company that services the mining industry. Energold holds 6.6 million shares of IMPACT Silver Corp.
On behalf of the Directors of Energold Drilling Corp.,
"Frederick W. Davidson"
For further information, please contact:
Sunny Pannu -- Investor Relations
(604) 681 9501 or via email at email@example.com
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.
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