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Geodrill : Q2 MANAGEMENT’S DISCUSSION AND ANALYSIS (MDA Geodrill Q2 2025 FINAL)
Geodrill : Q2 MANAGEMENT’S DISCUSSION AND ANALYSIS (MDA Geodrill Q2 2025
About this update from Geodrill Limited
GEODRILL LIMITED MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE PERIOD ENDED JUNE 30, 2025 Management's discussion and analysis ("MD&A") is a review of the operations, the liquidity and the results of operations and capital resources of Geodrill Limited ("Geodrill") including its wholly owned subsidiaries, Geodrill Ghana Ltd, Geodrill Mauritius Limited, Geodrill Cote d'Ivoire SARL, Drilling Services Malta Limited, Vannin Resources, Unipessoal Limitada, Geodrill Sondagens LTDA, Silver Back Egypt for Mining and Drilling Services S.A.E., Geodrill for Leasing and Specialized Services Freezone LLC, Geodrill Leasing Company Limited, Geodrill Senegal SARL, Company AL-TANQIB AL-MUTAKHIS For Mining LLC, Geodrill Zambia Limited being Geodrill Limited's registered foreign Zambian operating entity, Geodrill BF being Geodrill Cote d'Ivoire SARL's registered foreign Burkina Faso operating entity, Geodrill Mali being Geodrill Cote d'Ivoire SARL's registered foreign Mali operating entity, Geodrill Mauritius Egypt Branch Limited being Geodrill Mauritius Limited's registered foreign Egypt operating entity, Recon Drilling S.A.C. of which Geodrill owns a 95% shareholding, Recon Drilling Chile SPA of which Geodrill owns a 95% shareholding and Geo-Drill SARL of which Geodrill owns a 95% shareholding, GTS Drilling Ltd a company under common control, collectively referred to as the "Group". The unaudited condensed interim consolidated financial statements were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS"). This discussion contains forward-looking information. Please see "Forward-Looking Information" for a discussion of the risks, uncertainties and assumptions relating to this MD&A. This MD&A is a review of activities and results for three and six months ended June 30, 2025 as compared to the corresponding period in the previous year and should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2025, and also in conjunction with the audited annual consolidated financial statements and corresponding MD&A for the year ended December 31, 2024. This MD&A is dated August 9, 2025. Disclosure contained in this document is current to that date unless otherwise stated. Additional information relating to Geodrill, including Geodrill's Annual Information Form, can be found on SEDAR+ at https://www.sedarplus.ca . All references to "US$" are to United States dollars and all references to "CAD$" are to Canadian dollars. FORWARD-LOOKING INFORMATION This MD&A contains "forward-looking information" which may include, but is not limited to, statements with respect to the future financial or operating performance of the Group, future growth, results of operations, capital needs, performance, business prospects and opportunities. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled ", "estimates", "forecasts", "intends", "anticipates" or "believes" or variations (including negative variations) of such words or by the use of words or phrases that state that certain actions, events or results "may", "could ", "would ", "might" or "will " be taken, occur or be achieved. Forward-looking information is based on certain assumptions and analyses made by the Group in light of its experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this MD&A. Although the Group has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in such forward-looking information, there may be other factors that may cause actions, events or results to differ from those anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize or should assumptions underlying such forward-looking information prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking information contained in this MD&A. Forward-looking information contained herein is made as of the date of this MD&A and the Group disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, except as required by law. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Corporate Overview The Group operates a fleet of Multi-Purpose, Core, Air-Core, Grade Control and Underground drill rigs. The multi-purpose rigs can perform both reverse circulation ("RC") and diamond core ("Core") drilling and can switch from one to the other with little effort or downtime. Multi-purpose rigs provide clients with the efficiency and high productivity of RC drilling and the depth and accuracy of Core drilling without the need to have two different drill rigs on site. The Group currently has operations in four African countries and two South American countries. The Group's rigs and support equipment also incorporate a fleet of boosters and auxiliary compressors, which enable the Group to achieve high-quality sampling and operations to greater depths. The state-of-the-art workshops and supply bases at Anwiankwanta, Ghana, at Bouake, Cote d'Ivoire, at Marsa Alam, Egypt, at La Serena, Chile and at Lima, Peru provide centralized locations for storage of inventory, equipment and supplies, which in turn minimizes trucking, shipping and supply costs and allows the rigs and inventory to be mobilized to drill sites with minimal delay. Business Strategy The Group competes with other drilling companies on the basis of price, accuracy, reliability and experience in the marketplace. The Group's competitors consist of both large public companies as well as small local operators. Management believes that the Group has a number of attributes that result in competitive advantages including: Business Development : The Group continually improves its operations in Africa and South America including the following recent and ongoing developments: Africa West Africa: The Group continues to maintain its strong presence in West Africa operating in Ghana, Cote d'Ivoire and Senegal, supported by numerous multi-rig, multi-year contracts with tier one clients. Management's plans for West Africa are to add more rigs for existing clients, add new clients and to consider new countries in West Africa to operate in. Middle East and North Africa ("MENA"): The Group continues to operate and maintain and grow its strong presence in Egypt, supported by its multi-rig, multi-year underground contract with a tier one client. The Group has incorporated a company in the Kingdom of Saudi Arabia in anticipation of tendering on drilling contracts. Management's plans for MENA are to add more rigs for existing clients, add new clients and to consider new countries in MENA to operate in. South America Chile and Peru: The Group operates in both Chile and Peru. In Chile the Group was able to secure a multi-rig, multi-year contract and was able to diversify its client base so it can drill throughout the winter season. Managements intention is to continue to add rigs and clients in Chile, Peru and other South American countries as it believes the need for specialized drilling in South America will support the Group's expansion into South America. In addition to Chile and Peru, the Group has a corporate entity in Brazil (although the Group is not active in Brazil) and the Group is considering other South American countries to operate in. A Modern Fleet of Drill Rigs and World Class Workshops: The Group has accumulated modern state-of-the-art drilling rigs, and continues to invest in additional rigs and ancillary equipment with established centrally located world class workshops to promote client satisfaction through reliable operational performance. In addition, within the workshop in Ghana is a manufacturing facility with the capacity to produce ancillary equipment such as RC drill rods and RC wire-line drill subs in-house, reducing downtime and reliance on suppliers for these items. Establishing, building and maintaining long-standing relationships with customers: The Group has strong client relationships. Typically, a longer term client relationship for the Group originally commenced as a short term drill contract won under a competitive bidding process, which has been continually renewed as the respective drilling program of the client has progressed through various phases. Support of well-established international and local vendors: The Group has maintained long standing relationships with international vendors in Australia, Europe, North and South America and China and has also been supported in West Africa, Egypt, Chile and Peru by local branches of these suppliers and other local suppliers. Local Knowledge : The Group's local market knowledge, expertise and experience have enabled the Group to further develop the local networks required to support its operations. Presence in West Africa, Egypt and South America: The Group is able to mobilize drill rigs and associated ancillary equipment on a timely basis at the request of a client. The well-resourced, centrally located workshops further reduce downtime, as the Group can fairly quickly reach most of its current customer sites. An Active and Experienced Management Team: The Group is led by Dave Harper, President and Chief Executive Officer, Terry Burling, Chief Operating Officer, Greg Borsk, Chief Financial Officer and Greig Rodger, Executive General Manager. This group is also supported by: Stephan Rodrigue, Zone Manager - Francophone West Africa and Don Seguin, Health, Safety and Environmental ("HSE") Manager. A Skilled and Dedicated Workforce: A favorable compensation and benefits package, coupled with the Group's track record of quality hiring and commitment to frequent, relevant continuous training programs for both permanent and contract employees, has reduced unplanned workforce turnover even during robust mining cycles. This has also increased efficiency and productivity, ensuring the availability and continuity of a skilled labor force. Environmental, Social and Governance (ESG) : The Group has always considered our ESG initiatives first and foremost and it is at the center of everything we do. Operating in the mining sector, our impact on the environment has been a key focus for the Group as we continually strive to improve the environment. Our Social impact has been focused on the communities we work in, giving back to the orphanages, schools and shelters but also making sure we transfer the expertise and knowledge of our most experienced employees in developing local employees. Our governance initiatives, including our code of conduct and ethics policy, whistleblower policy, bribery and diversity policy, are developed by our board of directors and carried out by senior management throughout the organization so that each stakeholder of the Group understands the importance of good governance. Maintaining a high level of safety standards to protect its people and the environment : The Group's HSE Department oversees the design, implementation, monitoring and evaluation of the Group's HSE standards, which standards are generally considered to be stringent standards for drilling firms globally and are higher than what is currently required in all local markets in which the Group currently operates. Every aspect of the Group's operations is designed to meet the highest HSE standards and includes induction meetings, at least one safety meeting per work site, including non-exploration work sites, regular safety audits and detailed investigations of incidents. Commitment to Excellence: The Group is committed to being a company of the highest standards in every aspect of its business operations. This is the framework used by the Group to guide its personnel towards the Group's goals and to be the customer-preferred partner in providing world class drilling services. Market Participants and Geodrill's Client Base The Group currently operates in Ghana, Cote d'Ivoire, Senegal, Egypt, Chile and Peru. The Group's drilling focus is still principally on gold and is still primarily in West Africa, however, the Group has diversified its geographic footprint and also provides drilling services to clients in Egypt, Chile and Peru. The Group will take advantage of drilling opportunities in other minerals, including copper, lithium, zinc, iron ore, manganese, uranium, phosphate and energy. In addition, the proximity to other Middle Eastern and African countries and other South American countries positions the Group favorably in its ability to service these markets as well, if it so chooses. In addition, given the short-term nature of certain drilling contracts, there can be no assurance that any contract that the Group currently has will be extended or renewed on terms favorable to the Group. In the event that any of its current contracts are not extended or renewed on favorable terms, or replaced with new contracts, this could have a significant impact on the Group's operations. For the three months ended June 30, 2025, two customers individually contributed 10% or more to the Group's revenue. One customer contributed 21% and one customer contributed 11%. For the three months ended June 30, 2024, three customers individually contributed 10% or more to the Group's revenue. One customer contributed 23%, one customer contributed 16% and one customer contributed 13%. For the six months ended June 30, 2025, one customer individually contributed 10% or more to the Group's revenue. That customer contributed 22%. For the six months ended June 30, 2024, three customers individually contributed 10% or more to the Group's revenue. One customer contributed 20%, one customer contributed 15% and one customer contributed 13%. OUTSTANDING SECURITIES AS OF AUGUST 9, 2025 Geodrill is authorized to issue an unlimited number of Ordinary Shares. As of August 9, 2025, Geodrill has the following securities outstanding: Number of Ordinary Shares 47,163,170 Number of Options 3,420,000 Diluted 50,583,170 For the six months ended June 30, 2025, 390,000 options were issued and 750,000 options were settled with cash. Subsequent to the quarter end and up to and including August 9, 2025, no further shares were issued as a result of options being exercised and no further options were issued. OVERALL PERFORMANCE The Group generated its highest ever quarterly revenue of US$50.4M for the second quarter of 2025, an increase of US$9.2M or 22% when compared to US$41.2M for the second quarter of 2024. The record revenue is a testament to management's strategy of continuing to focus on its primary markets and adding capacity in conjunction with clients' needs. The increase in revenue is a result of the increase in demand for the Group's drilling services. With the gold price averaging approximately US$3,280 during the second quarter of 2025 and peaking at US$3,500 in April 2025, global exploration spending continues to be strong. The majority of exploration spending is on gold and since the Group drills approximately 90% for clients exploring for gold, this has impacted positively on the Group resulting in an increase in its revenue. The majors and intermediates are continuing to generate sufficient cash flows from their operations and are continuing to spend on production and exploration drilling. The gross profit for the second quarter of 2025 was US$11.9M, being 24% of revenue compared to a gross profit of US$12.7M, being 31% of revenue for the second quarter of 2024. The gross profit decrease is a result of the increase in revenue of US$9.2M, however, this was offset by a higher increase in cost of sales of US$9.9M. See "Supplementary Disclosure - Non IFRS Measures" on page 15. The selling, general and administrative ("SG&A") expenses for the second quarter of 2025 were US$4.6M, being 9% of revenue compared to SG&A of US$4.4M, being 11% of revenue for the second quarter of 2024. The expected lifetime credit loss for the second quarter of 2025 was US$0.4M compared to an expected lifetime credit loss of US$0.3M for the second quarter of 2024. The foreign exchange gain for the second quarter of 2025 was US$0.9M compared to a foreign exchange loss of US$0.4M for the second quarter of 2024 as a result of fluctuations in foreign currencies. Other gain for the second quarter of 2025 was US$1.6M compared to an other loss of less than US$0.1M for the second quarter of 2024 relating to gains and losses on listed equity investments held at fair value through profit and loss that the Group holds. The EBIT (as defined herein) for the second quarter of 2025 was US$9.4M, compared to EBIT of US$7.5M for the second quarter of 2024 (see "Supplementary Disclosure - Non - IFRS Measures" on page 15). EBITDA (as defined herein) for the second quarter of 2025 was a Group record at US$13.9M or 28% of revenue compared to US$10.7M or 26% of revenue for the second quarter of 2024 (see "Supplementary Disclosure - Non-IFRS Measures" on page 15). The record EBITDA was a combination of the Group being extremely busy in the second quarter of 2025, plus the other income of US$1.6M on listed equity investments and the foreign exchange gain of US$0.9M. The net income for the second quarter of 2025 was US$5.3M or US$0.11 per Ordinary Share (US$0.11 per Ordinary Share diluted), compared to US$4.8M for the second quarter of 2024 or US$0.10 per Ordinary Share (US$0.10 per Ordinary Share diluted). RESULTS OF OPERATIONS SELECTED FINANCIAL INFORMATION Three Months Ended % Change Six Months Ended % Change Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 (in US$ 000's) 2025 2024 2025 vs 2024 2025 2024 2025 vs 2024 Revenue 50,350 41,176 22% 99,102 75,843 31% Cost of Sales (38,401) (28,455) 35% (73,601) (55,678) 32% Cost of Sales (%) 76% 69% 74% 73% Gross Profit 11,949 12,721 (6%) 25,501 20,165 26% Gross Profit Margin (%) 24% 31% 26% 27% Selling, General and Administrative Expenses (4,616) (4,426) 4% (9,609) (8,315) 16% Selling, General and Administrative Expenses (%) 9% 11% 10% 11% Expected Lifetime Credit Loss (374) (271) (178) (377) Foreign Exchange Gain / (Loss) 864 (403) 808 (512) Other Income / (Loss) 1,589 (87) 2,055 50 Income from Operating Activities 9,412 7,533 25% 18,577 11,011 69% Income from Operating Activities (%) 19% 18% 19% 11% EBIT* 9,411 7,533 25% 18,577 11,012 69% EBIT (%) 19% 18% 19% 15% Finance Income 12 15 25 15 Finance Cost (312) (278) (560) (514) Profit Before Taxation 9,112 7,271 25% 18,043 10,513 72% Profit Before Taxation (%) 18% 18% 18% 14% Income Tax Expense (3,783) (2,433) (7,143) (3,561) Income Tax Expense (%) (8%) (6%) (7%) (5%) Net income 5,328 4,838 10% 10,900 6,952 57% Net Income (%) 11% 12% 11% 9% EBITDA ** 13,941 10,664 31% 27,511 17,328 59% EBITDA (%) 28% 26% 28% 23% Earnings Per Share Basic 0.11 0.10 0.23 0.15 Diluted 0.11 0.10 0.23 0.15 Total Assets 189,633 157,029 189,633 157,029 Total Long - Term Liabilities 6,804 4,491 6,804 4,491 Cash Dividend Declared NIL NIL NIL NIL See "Supplementary Disclosure Non IFRS Measures" on page 15. *EBIT = Earnings before interest and taxes **EBITDA = Earning before interest, taxes, depreciation and amortization RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2025 COMPARED TO THREE MONTHS ENDED JUNE 30, 2024 Revenue The Group recorded its highest ever quarterly revenue of US$50.4M for the second quarter of 2025, compared to US$41.2M for the second quarter of 2024, representing an increase of 22%. The increase in revenue is a result of the increase in demand for the Group's drilling services. With the gold price averaging approximately US$3,280 during the second quarter of 2025 and peaking at US$3,500 in April 2025, global exploration spending continues to be strong. The majority of exploration spending is on gold and since the Group drills approximately 90% for clients exploring for gold, this has impacted positively on the Group resulting in an increase in its revenue. The majors and intermediates are continuing to generate sufficient cash flows from their operations and are continuing to spend on production and exploration drilling. Cost of Sales and Gross Profit Cost of Sales for the second quarter of 2025 were US$38.4M, compared to US$28.5M for the second quarter of 2025, being an increase of US$9.9M and reflects the following: Wages, employee benefits, external services, contractors and other expenses increased by US$5.7M consistent with the increase in drilling activity and revenue and due to higher wages and inflationary costs. Drill rig expenses and fuel costs increased by US$2.8M consistent with the increase in drilling activity and revenue. Depreciation expense increased by US$1.3M as a result of recent additions to the Group's drill rigs and plant and equipment. Repairs and maintenance increased by $0.1M as more repairs were required in the quarter. The gross profit for the second quarter of 2025 was US$11.9M, compared to a gross profit of US$12.7M for the second quarter of 2024, being a decrease of US$0.8M. The gross profit percentage for the second quarter of 2025 was 24% and for the second quarter of 2024 it was 31%. The gross profit percentage decrease to 24% in the second quarter of 2025 was due to certain jobs in South America ramping up during the quarter, resulting in significantly increased cost of sales without the corresponding increase in revenue. The gross profit percentage decrease in the second quarter was also due to higher wages, inflationary costs and the appreciation of both the Ghana CEDI and West African CFA in the quarter, resulting in higher cost of sales for payroll and other costs originating in these local currencies. Specifically, in Ghana, the Group invoices in USD and has local costs denominated in CEDI. In the second quarter of 2025, the CEDI became the world's best performing currency, appreciating by over 30% to the USD, starting Q2 2025 at approximately 15 CEDI to 1 USD, and ending the quarter at approximately 10 CEDI to 1 USD. Selling, General and Administrative Expenses SG&A expenses for the second quarter of 2025 were US$4.6M, compared to US$4.4M for the second quarter of 2024, being an increase of US$0.2M and reflects the following: Wages, employee benefits, external services, contractors and other expenses increased by US$0.1M consistent with the Group's increased activities. Depreciation expense increased by US$0.1M as a result of recent additions to the right of use assets. Expected Lifetime Credit Loss The expected lifetime credit loss for the second quarter of 2025 was US$0.4M compared to an expected lifetime credit loss of US$0.3M for the second quarter of 2024, an increase of US$0.1M relating to a change in the aging profile of the trade receivables. Foreign Exchange Gain / (Loss) Foreign exchange gain for the second quarter of 2025 was US$0.9M compared to a foreign exchange loss of US$(0.4M) in the second quarter of 2024 as a result of fluctuations in foreign currencies. Other Gain / (Loss) Other gain for the second quarter of 2025 was US$1.6M compared to an other loss of less than US$(0.1M) in the second quarter of 2024 relating to gains on listed equity investments held at fair value through profit and loss that the Group held. Income from Operating Activities Income from operating activities for the second quarter of 2025 was US$9.4M, compared to US$7.5M in the second quarter of 2024. EBIT and EBIT Margin (see "Supplementary Disclosure - Non-IFRS Measures" on page 15) The EBIT (as defined herein) for the second quarter of 2025 was US$9.4M, compared to EBIT of US$7.5M for the second quarter of 2024. EBITDA and EBITDA Margin (see "Supplementary Disclosure - Non-IFRS Measures" on page 15) EBITDA was a group record at US$13.9M for the second quarter of 2025 or 28% compared to US$10.7M or 26% of revenue for the second quarter of 2024. The record EBITDA was a combination of the Group being extremely busy in the second quarter of 2025, plus the other income of US$1.6M on listed equity investments and the foreign exchange gain of US$0.9M. Depreciation Depreciation for the second quarter of 2025 was US$4.5M (US$4.1M in cost of sales and US$0.4M in SG&A) compared to US$3.1M (US$2.7M in cost of sales and US$0.4M in SG&A) for the second quarter of 2024. Income Tax Expense Income tax expense for the second quarter of 2025 was US$3.8M compared to income tax expense of US$2.4M for the second quarter of 2024. The income tax expense of US$3.8M was comprised of US$2.8M relating to tax expense on taxable income, US$0.9M relating to a deferred tax expense and US$0.1M relating to withholding tax. Net income The net income for the second quarter of 2025 was US$5.3M, or US$0.11 per Ordinary Share (US$0.11 per Ordinary Share diluted), compared to US$4.8M for the second quarter of 2024, or US$0.10 per Ordinary Share (US$0.10 per Ordinary Share diluted). SIX MONTHS ENDED JUNE 30, 2025 COMPARED TO SIX MONTHS ENDED JUNE 30, 2024 Revenue The Group achieved record six month revenue of US$99.1M for the six months ended June 30 2025, compared to US$75.8M for the six months ended June 30, 2024, representing an increase of 31%. The increase in revenue is a result of the increase in demand for the Group's drilling services. With the gold price averaging approximately US$3,000 during the six months ending June 30, 2025 and peaking at US$3,500 in April 2025, global exploration spending continues to be strong. The majority of exploration spending is on gold and since the Group drills approximately 90% for clients exploring for gold, this has impacted positively on the Group resulting in an increase in its revenue. The majors and intermediates are continuing to generate sufficient cash flows from their operations and are continuing to spend on production and exploration drilling. Cost of Sales and Gross Profit Cost of Sales for the six months ended June 30, 2025 were US$73.6M, compared to US$55.7M for the six months ended June 30, 2024, being an increase of US$17.9M and reflects the following: Wages, employee benefits, external services, contractors and other expenses increased by US$9.6M consistent with the increase in drilling activity and revenue and due to higher wages and inflationary costs. Drill rig expenses and fuel costs increased by US$6.1M consistent with the increase in drilling activity and revenue. Depreciation expense increased by US$2.4M as a result of recent additions to the Group's drill rigs and plant and equipment. Repairs and maintenance decreased by $0.2M as less repairs were required in the period. The gross profit for the six months ended June 30, 2025 was US$25.5M, compared to a gross profit of US$20.2M for the six months ended June 30, 2024, being an increase of US$5.3M. The gross profit percentage for the six months ended June 30, 2025 was 26% and for the six months ended June 30, 2024 it was 27%. Selling, General and Administrative Expenses SG&A expenses for the six months ended June 30, 2025 were US$9.6M, compared to US$8.3M for the six months ended June 30, 2024, being an increase of US$1.3M and reflects the following: Wages, employee benefits, external services, contractors and other expenses increased by US$1.1M consistent with the Group's increased activities. Depreciation expense increased by US$0.2M as a result of recent additions to the right of use assets. Expected Lifetime Credit Loss The expected lifetime credit loss for the six months ended June 30, 2025 was US$0.2M compared to an expected lifetime credit loss of US$0.4M for the six months ended June 30, 2024, a decrease of US$0.2M relating to a change in the aging profile of the trade receivables. Foreign Exchange Gain / (Loss) Foreign exchange gain for the six months ended June 30, 2025 was US$0.8M compared to a foreign exchange loss of US$(0.5M) in the six months ended June 30, 2024 as a result of fluctuations in foreign currencies. Other Gain Other gain for the six months ended June 30, 2025 was US$2.1M compared to an other gain of less than US$0.1M in the six months ended June 30, 2024 relating to gains on listed equity investments held at fair value through profit and loss that the Group held. Income from Operating Activities Income from operating activities for the six months ended June 30, 2025 was US$18.6M, compared to US$11.0M in the six months ended June 30, 2024. EBIT and EBIT Margin (see "Supplementary Disclosure - Non-IFRS Measures" on page 15) The EBIT (as defined herein) for the six months ended June 30, 2025 was US$18.6M, compared to EBIT of US$11.0M for the six months ended June 30, 2024. EBITDA and EBITDA Margin (see "Supplementary Disclosure - Non-IFRS Measures" on page 15) EBITDA was US$27.5M for the six months ended June 30, 2025 or 28% compared to US$17.3M or 23% of revenue for the six months ended June 30, 2024. Depreciation Depreciation for the six months ended June 30, 2025 was US$8.9M (US$8.1M in cost of sales and US$0.8M in SG&A) compared to US$6.3M (US$5.6M in cost of sales and US$0.7M in SG&A) for the six months ended June 30, 2024. Income Tax Expense Income tax expense for the six months ended June 30, 2025 was US$7.1M compared to income tax expense of US$3.6M for the six months ended June 30, 2024. The income tax expense of US$7.1M was comprised of US$5.5M relating to tax expense on taxable income, US$1.4M relating to a deferred tax expense and US$0.2M relating to withholding tax. Net income The net income for the six months ended June 30, 2025 was US$10.9M, or US$0.23 per Ordinary Share (US$0.23 per Ordinary Share diluted), compared to US$7.0M for the six months ended June 30, 2024, or US$0.15 per Ordinary Share (US$0.15 per Ordinary Share diluted). SUMMARY OF QUARTERLY RESULTS 2025 2024 2023 (in US$ 000s) Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Revenue Revenue Increase / (Decrease) % 50,350 3% 48,752 47% 33,119 (3%) 34,091 (17%) 41,176 19% 34,667 15% 30,062 (1%) 30,292 (13%) Gross Profit Gross Margin (%) 11,949 24% 13,552 28% 6,160 19% 8,351 24% 12,721 31% 7,445 21% 4,850 16% 5,804 19% Net Earnings / (Loss) 5,328 5,572 (499) 2,611 4,838 2,114 (1,377) (2,950) Per Share - Basic 0.11 0.12 ( 0.01 ) 0.06 0.10 0.04 ( 0.03 ) ( 0.06 ) Per Share - Diluted 0.11 0.12 ( 0.01 ) 0.06 0.10 0.04 ( 0.03 ) ( 0.06 ) The Group's revenue of US$50.4M is the highest ever in the Group's history and represents an increase on a quarter over quarter basis by US$1.6M or 3% for the second quarter ended June 30, 2025 compared to the first quarter ended March 31, 2025. On a comparative quarter to quarter basis, the Group's revenue increased by US$9.2M or 22% compared to the second quarter ended June 30, 2024. The operations have tended to exhibit a seasonal pattern. The first and fourth quarters are affected due to shutdown of exploration activities, often for extended periods over the holiday season, however, the first quarter of 2025 was extremely busy and was not affected by the shutdown. The second quarter is typically affected by the Easter shutdown of exploration activities affecting some of the rigs for up to one week, however, the second quarter of 2025 was extremely busy and was not affected by the shutdown. The wet season occurs (in some geographical areas where the Group operates) normally in the third quarter, but in recent years the global weather pattern has become somewhat erratic. The Group has historically taken advantage of the wet season and has scheduled the third quarter for maintenance and rebuild programs for drill rigs and equipment. The winter season occurs (in some high altitude geographical areas where the Group operates, particularly in Chile) normally in the second and third quarter. The Group has historically taken advantage of the winter season in Chile and has scheduled the second and third quarter for maintenance and rebuild programs for drill rigs and equipment. Effect of Exchange Rate Movements The Group's receipts and disbursements are denominated in US Dollars and certain local currencies. The Group's main exposure to exchange rate fluctuations arises from holding foreign currencies, having receivables in foreign currencies, certain capital costs, wage costs and purchases denominated in foreign currencies. The Group's revenue is invoiced in US Dollars and certain local currencies. The Group's purchases are in Australian Dollars, US Dollars, Euros, Canadian Dollars and local currencies. Other local expenses include purchases and wages which are paid in the local currency. SELECTED INFORMATION FROM CONSOLIDATED STATEMENTS OF CASH FLOWS (in US$ 000s) Three months ended Jun 30 Jun 30 2025 2024 Six months ended Jun 30 Jun 30 2025 2024 Net cash generated from operating activities 8,161 5,924 8,407 4,773 Net cash used in investing activities (4,025) (2,845) (7,669) (7,635) Net cash generated from / (used in) financing activities 1,584 (906) 4,752 (2,747) Effect of movement in exchange rates on cash 1,148 (141) 1,311 (340) Net increase / (decrease) in cash 6,868 2,032 6,802 (5,949) LIQUIDITY AND CAPITAL RESOURCES Liquidity As at June 30, 2025, the Group had cash of US$19.9M and loans payable of US$15.5M resulting in net cash (excluding lease liabilities) of US$4.4M. The Group has US$9.5M still available on the US$9.5M Medium Term Loan and US$2.0M still available on the US$10.0M Revolving Line of Credit. Since the Group has loans payable, the Group continues to monitor its cash and its capital spending in conjunction with the loans that need to be repaid. SECOND QUARTER ENDED JUNE 30, 2025 Operating Activities In the second quarter of 2025, the Group generated net cash from operating activities of US$8.2M, as compared to US$5.9M in the second quarter of 2024. The Group realized profit before taxation of US$9.4M for the second quarter of 2025, however, the changes in non-cash items, changes in working capital items and the payment of finance costs and income taxes decreased cash by US$1.2M, resulting in cash generated from operations of US$8.2M. Investing Activities In the second quarter of 2025, the Group's net investment in property, plant and equipment was US$4.0M compared to US$2.8M in the second quarter of 2024. The Group continues to reinvest and upgrade its fleet in order to maintain a modern fleet of drill rigs and related equipment. The Group understands the importance of this and has significantly invested in its property, plant and equipment. Plant and equipment additions in the second quarter of 2025 included additional drill rigs, costs associated with rebuilding existing drill rigs and related equipment, additional trucks, additional light vehicles and costs associated with completing certain workshops and supply bases. Financing Activities In the second quarter of 2025, the Group generated net cash of US$1.6M from financing activities. The Group received loans of US$6.5M, repaid loans in the amount of US$4.7M and paid lease liabilities of US$0.2M. In the second quarter of 2024, the Group used net cash of US$0.9M relating to financing activities. The Group received loans of US$4.0M, repaid loans in the amount of US$4.9M, paid lease liabilities of US$0.2M and received US$0.2M from the exercise of stock options. SIX MONTHS ENDED JUNE 30, 2025 Operating Activities In the six months ended June 30, 2025, the Group generated net cash from operating activities of US$8.4M, as compared to US$4.8M in the six months ended June 30, 2024. The Group realized profit before taxation of US$18.0M for the six months ended June 30, 2025, however, the changes in non-cash items, changes in working capital items and the payment of finance costs and income taxes decreased cash by US$9.6M, resulting in cash generated from operations of US$8.4M. Investing Activities In the six months ended June 30, 2025, the Group's net investment in property, plant and equipment was US$7.7M compared to US$7.6M in the six months ended June 30, 2024. The Group continues to reinvest and upgrade its fleet in order to maintain a modern fleet of drill rigs and related equipment. The Group understands the importance of this and has significantly invested in its property, plant and equipment. Plant and equipment additions in the six months ended June 30, 2025 included additional drill rigs, costs associated with rebuilding existing drill rigs and related equipment, additional trucks, additional light vehicles and costs associated with completing certain workshops and supply bases. Financing Activities In the six months ended June 30, 2025, the Group generated net cash of US$4.8M from financing activities. The Group received loans of US$10.5M, repaid loans in the amount of US$5.2M and paid lease liabilities of US$0.5M. In the six months ended June 30, 2024, the Group used net cash of US$2.7M in financing activities. The Group received loans of US$7.0M, repaid loans in the amount of US$9.6M, paid lease liabilities of US$0.4M and received US$0.2M from the exercise of stock options. Contractual Obligations Contractual Obligations (in US$ 000s) Payments Due by Total 2025 2026 2027 Loans (1) 16,560 4,600 10,600 1,360 Lease liablities (2) 1,200 595 585 20 Purchase obligations (3) 1,135 1,135 - - Total Contractual Obligations 18,895 6,330 11,185 1,380 (1) Loans refer to amounts owing on the US$10.0M Revolving Line of Credit, the US$7.5M Medium Term Loan and the Equipment Loan, including the related interest. (2) The lease liabilities relate to the lease payments for the two real estate properties, as fully disclosed under "Transactions with Related Parties". In addition, the lease liabilities includes amounts for other operating sites. (3) Relates to the purchase of two drill rigs. Contractual obligations will be funded in the short-term by cash as at June 30, 2025 of US$19.9M, the US$9.5M still available on the US$9.5M Medium Term Loan, the US$2.0M still available on the US$10.0M Revolving Line of Credit and any cash flow generated from operations. OUTLOOK The Group has operated in West Africa for over 25 years and has invested a significant amount of capital into its drill rig fleet operating in the region with advantages in the form of experience in the market place, accuracy, reliability and safety, which have been key factors in the awarding of contracts and the increase in the Group's revenue. The Group also operates in Egypt, Chile and Peru and has also invested a significant amount of capital in Egypt and Chile to support the multi-rig multi-year contracts. The Group has also been successful in expanding its client base to include a mix of majors, intermediates and juniors which has contributed to the increase in overall drilling activity and a well balanced mix of drilling services. The Group is providing more drilling services to the majors and intermediates. The Group has secured numerous multi-year, multi-rig contracts and believes that these contracts will add to revenue and profitability over the next three to five years. As at June 30, 2025, the Group had 98 drill rigs of which 91 drill rigs are available for operation, two drill rigs are in the workshop, three drill rigs are in transit and two drill rigs are being manufactured. In addition, the Group rented one rig, resulting in a total drill rig fleet as at June 30, 2025, of 99 rigs. SUPPLEMENTARY DISCLOSURE - NON-IFRS MEASURES EBIT is defined as Earnings before Interest and Taxes and EBITDA is defined as Earnings before Interest, Taxes, Depreciation and Amortization. The definitions are used in this MD&A as measures of financial performance. The Group believes EBIT and EBITDA are useful to investors because they are frequently used by securities analysts, investors and other interested parties to evaluate companies in the same industry. However, EBIT and EBITDA are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS. EBIT and EBITDA should not be viewed in isolation and do not purport to be alternatives to net income or gross profit as indicators of operating performance or cash flows from operating activities as a measure of liquidity. EBIT and EBITDA do not have standardized meanings prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies. Also, EBIT and EBITDA should not be construed as alternatives to other financial measures determined in accordance with IFRS. Additionally, EBIT and EBITDA are not intended to be measures of free cash flow for management's discretionary use, as they do not consider certain cash requirements such as capital expenditures, contractual commitments, interest payments, tax payments and debt service requirements. Gross profit margin is defined as gross profit as a percentage of revenue. Gross profit margin does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies. The following table is a reconciliation of Geodrill's results from operations to EBIT and EBITDA: Three months ended Six months ended (US$ 000s) Jun 30, 2025 Jun 30, 2024 Jun 30, 2025 Jun 30, 2024 Total comprehensive income 5,328 4,838 10,900 6,952 Add: Income taxes 3,783 2,433 7,143 3,561 Add: Net finance costs 300 262 534 499 Earnings Before Interest and Taxes (EBIT) 9,411 7,533 18,577 11,012 Add: Depreciation & Amortization 4,530 3,131 8,934 6,316 Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) 13,941 10,664 27,511 17,328 DISCLOSURE CONTROLS AND PROCEDURES The Chief Executive Officer (the "CEO") and the Chief Financial Officer (the "CFO") of the Group are responsible for establishing and maintaining disclosure controls and procedures ("DC&P") for the Group as defined under Multilateral Instrument 52-109 issued by the Canadian Securities Administrators. The CEO and the CFO have designed such DC&P, or caused them to be designed under their supervision, to provide reasonable assurance that information required to be disclosed by the Group in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation and include controls and procedures designed to ensure that information required to be disclosed by an issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is accumulated and communicated to the Group's management, including its certifying officers, as appropriate to allow timely decisions regarding required disclosure. As at June 30, 2025, the CEO and CFO evaluated the design and operation of the Group's DC&P. Based on that evaluation, the CEO and CFO concluded that the Group's DC&P were effective as at June 30, 2025. INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of the Group's financial reporting and the preparation of its consolidated financial statements in accordance with IFRS. Management has evaluated the design and operation of the Group's internal controls over financial reporting as of June 30, 2025, and has concluded that such controls over financial reporting are effective. There are no material weaknesses that have been identified by management in this regard. There were no changes in the Group's internal control over financial reporting during the period beginning on January 1, 2025 and ending on June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Group's internal control over financial reporting. RISK FACTORS A complete discussion of general risks and uncertainties may be found in Geodrill's Annual Information Form for the fiscal year ended December 31, 2024 which can be found on the SEDAR+ website at https://www.sedarplus.ca , and which continue to apply to the business of the Group. The Group is not aware of any significant changes to risk factors from those disclosed at that time, however, although the Group has been transitioning to more senior and intermediate customers and away from juniors that may face capital raising challenges, credit risk is still present. Credit Risk The Group provides credit to its clients in the normal course of its operations. The Group provides for lifetime expected credit losses (ECLs) for trade receivables. The Group uses the simplified approach to recognizing ECLs for its trade receivables that do not have a significant financing component. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group's historical credit loss experience applied to the aging of receivables, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at each reporting date. In addition, in 2023 and 2024 the Group had noticed that certain accounts in the greater than 90 days category were taking longer to pay and certain accounts were having difficulty paying and therefore the Group needed to provide for certain specific accounts. The estimates and underlying assumptions of the trade receivables are reviewed on an ongoing basis. Management needs to make significant judgments, estimates and assumptions in determining the carrying values of the trade receivables. In 2023 management increased the non-cash expected credit loss provisions by approximately US$4.6M. In 2024, a large trade receivable was settled via shares resulting in the reversal in 2024 of the non-cash expected credit loss provision of approximately US$4.2M. Management will need to assess the carrying value of the trade receivables on an ongoing basis and the future estimate of the carrying value as determined each quarter may decrease significantly depending on debtors continued ability to pay and their financial well-being. As at June 30, 2025, an amount of US$5.1M or 11% of the trade accounts receivable are aged over 90 days. As at June 30, 2025 the Group has approximately US$2.0M in non-cash expected credit loss provisions against its greater than 90 day category of trade receivables resulting in net trade receivables in the greater than 90 day category of US$3.1M. As at June 30, 2025, the aging of the trade receivable balances aged over 90 days has increased from December 31, 2024 as follows: June 30, 2025 December 31, 2024 US$ Gross US$ Net of ECL US$ Gross US$ Net of ECL Less than 30 days 26,472,346 26,466,051 9,220,130 9,217,882 31 - 60 days 8,144,941 8,140,998 9,528,527 9,523,928 61 - 90 days 7,767,540 7,617,829 2,178,707 2,136,802 91 days and greater 5,093,932 3,135,056 4,897,613 3,044,825 47,478,759 45,359,934 25,824,977 23,923,437 Tax, Customs and Transfer Pricing Audits The Group has received a formal notice of recovery from a tax authority in one jurisdiction for tax amounts owing for the years 2022 to 2024. The notice of recovery is for missing payments in the amount of CFA4,714,639,248 (US$8.44M) with an additional amount of penalties of CFA4,714,639,248 (US$8.44M) amounting to a total amount of CFA9,429,278,496 (US$16.9M). The Group has obtained all of the remittance certificates from the tax authority's tax platform indicating that the missing payments have been remitted. As at the date of these financial statements, the Group has formally objected to the notice of recovery and is in discussions with the tax authorities. On August 1, 2025, the Group has entered into a guaranty with its local bank in the amount of CFA942,927,850 (US$1.7M) in accordance with the tax regulations. Based on the information obtained to date, management believes that its position is defensible and will continue to evaluate additional information as it becomes available on the matter. Management believes for all other matters that the ultimate amount of liability, if any, for any pending assessments (either alone or combined) would not materially affect the Group's operations, liquidity or financial position taken as a whole. However, the ultimate outcome of these audits is uncertain. FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying values of cash, trade and other receivables, trade and other payables and related party payables approximate their fair value due to the relatively short period to maturity of the instruments. The carrying value of loans payable approximates their fair value as the fixed rate loans have been acquired recently and their carrying value continues to reflect fair value. The fair value of financial assets held at fair value through profit and loss are measured using quoted market prices. There were no financial instruments classified as level 2 or 3 in the fair value hierarchy at June 30, 2025 and December 31, 2024. RELATED PARTY TRANSACTIONS Related party Relationship Location 2025 2024 Geodrill Mauritius Limited Subsidiary Mauritius 100% 100% Geodrill Ghana Ltd Subsidiary Ghana 100% 100% Geodrill Cote d'Ivoire SARL Subsidiary Cote d'Ivoire 100% 100% Drilling Services Malta Limited Subsidiary Malta 100% 100% Vannin Resources, Unipessoal Limitada Subsidiary Madeira 100% 100% Geodrill Sondagens LTDA Subsidiary Brazil 100% 100% Subsidiary Egypt 100% 100% Subsidiary Egypt 100% 100% Silver Back Egypt for Mining and Drilling Services S.A.E. Geodrill for Leasing and Specialized Services Freezone LLC Geodrill Leasing Company Limited Subsidiary Isle of Man 100% 100% Geodrill Senegal SARL Subsidiary Senegal 100% 100% Company AL-TANQIB AL-MUTAKHIS For Mining LLC Subsidiary Saudi Arabia 100% 100% Recon Drilling S.A.C. Subsidiary Peru 95% 95% Geo-Drill SARL Subsidiary Mali 95% 95% Recon Drilling Chile SPA Subsidiary Chile 95% 95% Geodrill BF Branch Burkina Faso 100% 100% Geodrill Mali Branch Mali 100% 100% Geodrill Limited Zambia Branch Zambia 100% 100% Geodrill Mauritius Limited Egypt Branch Egypt 100% 100% The Harper Family Settlement Significant shareholder Isle of Man - - GTS Drilling Ltd Common Control Ghana - - Transactions with related parties Transactions with companies within the Group have been eliminated on consolidation. The Harper Family Settlement owns 37.1% (December 31, 2024: 37.1%) of the issued share capital of Geodrill Limited. On October 1, 2024, Geodrill Ghana Ltd entered into new lease agreements with The Harper Family Settlement for the Anwiankwanta property and for the Accra property, both for a two year term and rent for the Anwiankwanta property of US$244,000 per annum and rent for the Accra property of US$99,000 per annum. The material terms of the two year lease agreements include: (i) the annual rent payable shall be reviewed on an upward only basis on or before October 1, 2026; and (ii) only Geodrill Ghana Ltd can terminate the leases by giving twelve months' notice. It was also agreed that all future rent increases will be based on USA inflation data. For the period ending June 30, 2025, the right-of-use assets relating to the properties above was US$400,452 (December 31, 2024: US$554,623) and the related lease liabilities were US$412,263 (December 31, 2024: US$560,849). Key management personnel and directors' transactions The Group's key management personnel, and persons connected with them, are also considered to be related parties for disclosure purposes. The definition of key management includes the close members of the family of key personnel and any entity over which key management exercises control. The key management personnel have been identified as directors of the Group and other management staff. Close members of family are those family members who may be expected to influence, or be influenced by that individual in their dealings with the Group. Key management personnel and directors' compensation for the period comprised: Three month period Six month period ended June 30, ended June 30, 2025 US$ 2024 US$ 2025 US$ 2024 US$ Short-term benefits 2,024,792 1,533,683 4,177,736 2,912,055 Share-based payment arrangements 33,328 50,189 600,361 187,579 2,058,120 1,583,872 4,778,097 3,099,634 MATERIAL ACCOUNTING POLICIES The Group's IFRS significant accounting policies are provided in Note 3 to the quarterly unaudited consolidated financial statements as at and for the period ended June 30, 2025 and Note 2 to the audited annual consolidated financial statements for the year ended December 31, 2024 and can be found on SEDAR+ at https://www.sedarplus.ca . CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The areas which require management to make significant judgments, estimates and assumptions in determining carrying values are described in the Group's audited consolidated financial statements for the years ended December 31, 2024 and 2023. Additional Information Additional information relating to Geodrill, including Geodrill's Annual Information Form can be found on SEDAR+ at https://www.sedarplus.ca .