Energold Announces Record Revenue And Increased Margins
In First Quarter 2011
Energold Drilling Corp. (EGD: TSX.V) ("Energold" or "the Company") is pleased to
announce continued strong demand for contract drilling services resulting in
record revenues of $22.7 million, up 181% from $18.1 million for the first
quarter of 2010. The Company recorded another profitable quarter of $1.9
million in consolidated net earnings, as compared to a $1.3 million net loss in
the same period of 2010. This included a first quarter loss of $0.6 million
from its recent manufacturing acquisition of Dando
Drilling International Ltd. ("Dando"), due,
in part, to certain non-recurring costs. Gross margins improved to 28.3% in the
first quarter, compared to 14.7% in the comparative quarter in 2010 and 18.6%
in the prior quarter.
Traditionally, the first quarter is considered one of the slowest quarters of
the drilling cycle; however, the Company drilled a new record of 125,800
meters, up 132% from 54,300 meters drilled in the same period of 2010, and up
22% from the prior quarter (see Energold
news release dated May 12 2011). The previous record number of
meters drilled in any quarter was 103,400 meters recorded in the fourth quarter
of 2010.
The Company remains in excellent financial position with a working capital
position of $63.8 million and cash and cash equivalents of $22.4 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 11.22% interest in IMPACT Silver Corp. is accounted for on an equity
basis. Based on closing market prices at March 30, 2011, the investment has a
quoted market value of $18.2 million, amounting to $12.8 million more than our
carrying value.
First Quarter Results Comparison
(CAD 000s except per-share amounts and meters drilled)
|
Three
Months Ended
March 31
|
|
|
2011
|
2010
|
% Change
|
Revenues
|
22,730
|
8,072
|
+182
|
Gross Margins
|
6,422
|
1,190
|
+440
|
Net Earnings (Loss)
|
1,855
|
(1,253)
|
n/a
|
Earnings Per Share -
Basic
|
0.05
|
(0.04)
|
n/a
|
- Diluted
|
0.05
|
(0.04)
|
n/a
|
Cash and Cash Equivalents
|
22,398
|
12,825
|
+75
|
Working Capital
|
63,803
|
46,006
|
+39
|
Meters Drilled
|
125,800
|
54,300
|
+132
|
Rig Fleet
|
110
|
91
|
+21
|
The Company has entered into its eighth quarter of consecutive growth in meters
drilled. In addition, the average revenue per meter increased to $181 in the
first quarter of 2011 as compared to $148 in the first quarter of 2010, despite
a continuing strong Canadian dollar. The higher revenues per meter and gross
margins improvements reflect the steady addition of more frontier drilling
programs into the overall mix. This trend is expected to accelerate during the
remainder 2011 and 2012. Energold's manufacturing
arm, Dando Drilling International Ltd., recorded $1.3
million in sales and is expected to increase in
subsequent quarters, reflecting a strong current order book and a sizeable
prospect list of current tender requests.
Mexico remains the strongest market for the Company with over 35 rigs located
in the region and contributed approximately half of the total meters drilled.
Brazil, Peru and specifically Argentina showed significant growth in the South
America operations. Over 30 rigs are located in the Africa operations with
planned rig additions throughout 2011.
At March 31, 2011, the Company had 110 drilling rigs with an additional 5 more
rigs under construction in response to continued demand for highly mobile
drilling rigs and increased exploration expenditures in frontier drilling. The
fleet includes 86 EGD Highly Mobile Surface Rigs, 7 Underground Rigs as well as
a number of conventional rigs. Further investment into research and development
has resulted in retrofitting a number of the rigs to enhance their performance
and the field testing of new prototypes designed to expand the potential of its
highly mobile fleet and the value of the Company's service offering to its
clients.
Despite the difficult environment experienced last year, the first quarter of
2011 further demonstrates the continued strong positive trend of growing
drilling demand across our markets. Energold's
strategic goal is to continue to utilize our cash reserves to capitalize on the
favourable market conditions and build the foundation
to fuel further growth. Energold's primary focus
continues to be on organic growth through new rig development, expansion into
new markets, and a focus on strategic acquisition targets.
The Company will be reviewing its First Quarter 2011 results via Conference
Call at 11:30 am ET, 8:30 am PT, Wednesday June 1st. 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 info@energold.com. The recorded conference call can
be accessed at our website on June 1st 2011: http://www.energold.com/s/Events.asp
Energold Drilling Corp. is an environmentally and
socially-sensitive diamond drilling company that services the international
mining industry. Energold holds 6.87 million shares
of IMPACT Silver Corp.
On behalf of the Directors of Energold
Drilling Corp.
"Frederick W. Davidson"
President, CEO
For further information, please contact:
Sunny Pannu - Investor Relations
(604) 681 9501 or via email at info@energold.com
Neither TSX
Venture Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Some statements in this news
release contain forward-looking information. These statements include, but are
not limited to, statements with respect to proposed activities, work programs
and future expenditures. These statements address future events and conditions
and, as such, involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by the statements. Such factors include, among others, the
effects of general economic conditions, the price of commodities, changing
foreign exchange rates, actions by government authorities, title matters,
environmental matters, reliance on key personnel, the ability for operational
and other reasons to complete proposed activities and work programs, the need
for additional financing and the timing and amount of expenditures. IMPACT does
not assume the obligation to update any forward-looking statement.
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