May 28, 2010 (TheNewswire.ca) --
Energold Drilling Corp. (EGD: TSX.V)("Energold" or "the Company") is pleased to announce continued increased demand for drilling services in the first quarter resulting in 54,362 meters drilled, up 165% from 20,490 meters in the first quarter of 2009. The Company experienced an increased level of activity across all geographic markets. Over 25,000 meters were drilled in April 2010; the strongest month since the third quarter of 2008, demonstrating the general recovery in the industry. However, pricing still remains below traditional levels due to a significant portion of the Company's drilling programs being conducted at mine sites, which command lower prices than the Company's traditional frontier drilling. As the Company shifts back towards a greater amount of frontier drilling average drilling prices will increase.
Revenues in the first quarter were $8.1 million, up 110% from $3.9 million in the first quarter of 2009, and up 12% from the prior quarter. Energold incurred a net loss of $1.4 million, largely due to an unrealized foreign exchange loss of $0.5 million. Gross margin increased to $1.2 million, up 39% from $0.9 million in the first quarter of 2009.
The Company remains in excellent financial position with a working capital position of $44.7 million and cash and cash equivalents of $12.8 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. (TSXV:IPT) (IPT: TSX-V). The Company's 13.69% interest in IMPACT Silver Corp. is accounted for on an equity basis. Based on closing market prices at May 27, 2010, the investment has a quoted market value of $7.8 million, which is $4.1 million more than our carrying value.
First Quarter Results Comparison
Three Months Ended March 31
2010 2009
Revenues ($CAD 000s) 8,072 3,851
Gross margin ($CAD 000s) 1,190 858
Net earnings (loss)($CAD 000s) (1,357) 403
Earnings per share - Basic ($CAD) (0.04) 0.01
- Diluted ($CAD) (0.04) 0.01
Meters drilled 54,362 20,490
Balances at
March 31, 2010 Dec 31, 2009
Cash and cash equivalents ($CAD 000s) 12,825 18,460
Working capital ($CAD 000s) 44,681 46,519
Rig fleet 91 80
As expected, the first quarter proved to be a substantial improvement from the first quarter of 2009. The Company continues to experience positive quarterly growth towards traditional levels of drilling demand and is on track to continue this trend in 2010. During the quarter, Energold experienced larger than usual one time mobilization costs as the focus shifted to aggressively remobilizing rigs back into the field based on demand, which resulted in increased transportation, mobilization, maintenance and inventory costs. In addition, the Company continued to invest in current and emerging markets in order to capitalize on opportunities as drilling demand increases. Currently, the largest demand is coming from customers drilling for precious metals.
The Company also invested in expanding and upgrading its rig fleet and drilling services. At March 31, 2010, the Company had a total of 91 rigs which included 2 new surface rigs delivered in 2010. There are currently 3 additional rigs under construction. A portion of the existing 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, including an expansion of its underground drilling segment. A prototype surface rig is 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.
On March 8, 2010, Energold announced the strategic acquisition of the assets and drilling operations of Envirodrill Ltd. of the United Kingdom, which included 9 diamond and reverse circulation rigs, related support equipment, inventories and existing contracts. The Company is very pleased with the transition of these new rigs, crews and local management as they have positively contributed to Energold's operations in Africa.
Despite the difficult environment experienced last year, the first 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 and explore suitable acquisitions. 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 First Quarter 2010 results via Conference Call at 4:15 pm EDT, 1:15 pm PDT, Monday, May 31, 2010. 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: 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 6.65 million shares of IMPACT Silver Corp.
On behalf of the Directors of Energold Drilling Corp. (TSXV:EGD)
"Frederick W. Davidson"
President and Chief Executive Officer
For further information, please contact:
Craig Geier, Vice President, Corporate Development
(604) 681-9501 or via email at info@energold.com
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.
1100 - 543 Granville Street Telephone (604) 681-9501
Vancouver, BC V6C 1X8 Facsimile (604) 681-6813
www.energold.com info@energold.com
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