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Energold says South American drilling rates up

Canada’s Energold Drilling Corp (TSXV: EGD) has confirmed stronger sales and margin momentum in its core mineral drilling business in the first three months of 2018, saying “activity [was] up substantially in the period”. The company reported C$1.4 million EBITDA on first-quarter revenue of $23.9 million, its “highest quarterly revenue in four years”.
Energold says South American drilling rates up Energold says South American drilling rates up Energold says South American drilling rates up Energold says South American drilling rates up Energold says South American drilling rates up

Long mineral drilling sector winter might be starting to thaw

Staff reporter

Energold's share price was up 1.28% Monday to C40c at the close, capitalising the company at C$21.6 million. The shares hit a 12-month low of 32c last December and have traded at 53c during the period.

President and CEO Fred Davidson said the mineral drilling division was expected to continue to show improvement over the balance of 2018.

"The company's order book remains strong, especially in parts of South America and West Africa where Energold holds leading market share positions," he said.

"As capacity utilization improves, management expects pricing trends to follow while keeping costs under control.

"In the energy, sustainable energy and infrastructure division, higher oil prices and continued investment in new projects in North America are expected to further grow the order book until the end of 2018, when equipment is reallocated to the oil patch."

Energold claims to have more than 230 drill rigs in the 22 countries in which it currently operates, though it doesn't provide pivotal fleet utilisation data.

It said revenue per metre drilled in Q1 2018 fell, year-on-year, from C$152/m in the same period 12 months ago, to $149/m. But metres drilled rose to 72,400m in the first three months of 2018 compared with 63,300m in 2017 Q1. Last year's June quarter was the seasonal high-point of the year for Energold with nearly 89,000m drilled.

"Activity in the mineral segment continues to improve following stronger, sustained commodity prices and an overall improving funding environment for junior and intermediate exploration companies," the company reported Monday.

"Capacity in certain markets is tightening resulting in a stronger competitive position for the company's fleet.

"Specifically, South American activity is growing considerably compared to past years, resulting in most of the improvement in the first quarter's activity."

Energold said it had cash in hand of C$5.9 million at the end of March, and working capital of $57.5 million.