Cabo pp october_29_2013(f)

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Cabo pp october_29_2013(f)

  1. 1. CABO Drilling CORPORATE PRESENTATION
  2. 2. CABO Drilling FORWARD LOOKING STATEMENTS Certain information set forth in this presentation contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties. All statements within, other than statements of historical fact, are to be considered forward-looking. Such forward-looking information and statements are based on current expectations, estimates and projections about global and regional economic conditions as well as industries that are major markets for Cabo Drilling Corp. The Company does not guarantee that any of the forward looking statements will materialize and accordingly the reader is cautioned not to place reliance on these forward-looking statements. Oct 29, 2013 2
  3. 3. CABO Drilling Serving the International Mining & Mineral Exploration Communities Cabo Division Cabo Field Operation FOCUSED ON DELIVERING THE BEST VALUE FOR ALL OF OUR CLIENTS IN NORTH AMERICA, CENTRAL AMERICA AND EUROPE 3
  4. 4. CABO Board of Directors Drilling      John A. Versfelt, Chairman, President, Chief Executive Officer & Director Mr. Versfelt has over 31 years experience providing leadership, management consulting, chief financial office, administration and paralegal/regulatory services to private and public companies. Serving in a variety of roles as a Managing Director, Chief Executive Officer and Chief Financial Officer for the Company over the last 21 years, he has been responsible for strategic planning, corporate development and finance, administration and accounting, and legal and regulatory compliance. Terry Aimone, BSc. P.Eng., General Manager, Europe Operations & Director Mr. Aimone started his career as a mining consulting engineer followed by 17 years in the U.S. banking sector, working in mine project financing. He has extensive experience in the mineral drilling industry as the current General Manager, Europe Operations, the former General Manager, Mexico Operations and past managing director of Heath & Sherwood Drilling. He brings a strong mix of technical, financial and management expertise to the Company. Peter Freeman, Director Mr. Freeman has extensive experience in public markets, finance and compliance. His experience includes six years as Director of Markets and Compliance at the OFEX Market (now PLUS). In 2005, he joined Loeb Aron & Co as a director and head of compliance and advisory services for their London, England, based, mining corporate finance house. Mr. Freeman has been a director of two public companies admitted to the AIM market (OFEX Holdings plc and Capital Lease Aviation plc). Tom Oliver, Director After a 25 year career in real estate development, primarily in the Vancouver, BC area, Mr. Oliver served as Business Administrator for a national church organization for 5 years. He is currently the CEO of a number of private corporations and, in addition, acts as a consultant in financial administration and management. Robert W. Schellenberg, CPA, Director Mr. Schellenberg is a Certified Public Accountant, Vice President and owner of Schellenberg & Evers, P.C. in Grand Rapids, Michigan. He has extensive experience in valuations, employee benefit plans, financial planning, individual and corporate taxation and litigation support, business planning, performance measures, mergers, acquisitions and arbitration. 4
  5. 5. CABO Drilling History  Acquired five drilling services companies in 2004 and 2005  Revenue bottomed in 2010 at $28.99 million  2012 revenues increased 36% from 2011 to a record of $58.95 million and exceeded 2008’s record revenue of $58.65 million  2013 revenue decreased 28% from 2012 to $42.53 million  100 Drill Rigs  300+ Employees  C$23.72 Million Shareholders’ Equity 58.95 58.65 28.79 2006 41.16 38.45 2007 2008 2009 43.42 42.53 28.99 2010 2011 2012 2013 5
  6. 6. CABO Drilling Corporate Overview Key Highlights as at October 29, 2013 Share Price: 52 Week High/Low: Shares Outstanding: Fully Diluted: Market Cap: $0.04 $0.09 - $0.035 78,968,175 85,478,175 $3,158,727 As at June 30, 2013 Working Capital: Assets: Liabilities: October 29, 2012 – October 29, 2013 $13,454,104 $37,552,278 $13,833,263 Insider Holdings President & CEO Directors & Management 6.14% 4.21% Source: Stockwatch 6
  7. 7. CABO Drilling Global Presence & Diversified Commodity Exposure 5% 4% 18% 63% 59% 18% 33% Canada & US Gold Latin America Copper Iron Other Base Metals *As a percentage of FY’13 Revenue Europe Cabo’s clients include:  Kirkland Lake Gold Inc.  Anglo American Exploration (Canada) Ltd.  Osisko Mining Corporation  Century Iron Ore Mining Corp.  New Gold Inc.  Minera Panama SA (First Quantum)  Cliffs Natural Resources Inc.  Goldcorp Inc.  Red Eagle Mining Corporation  Capstone Mining Corp. 7
  8. 8. CABO Key Drivers for Exploration Drilling Three-Year Avg. Trailing Gold Price* Key Drivers Current discovery rates are not sustainable, as a general rule – to be sustainable the exploration industry need to find at least 2x as much as is mined $1,634 $1,677 $1,700 $1,600 $1,442 $1,400 $1,258 $1,200 $1,024 $1,000 US$/oz  $1,800 $848 $725 $800 $582 $600 $406 $487 $400    Low conversion rate for Resources to Reserves & Mine conversion rates are very low (not all discoveries turn into mines) $200 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E Exploration Expenditures: Global by Commodity** $20.0+B in 2012 Lag time between discovery and development Current, and more importantly, future demand for all metals Sources: *SME, Capital IQ, Federal Reserve, IMF **MineEx Consulting based on data from ABS, NRCan, MLR (China), OECD and MEG SNL 8
  9. 9. CABO Market Environment Drilling  Worldwide Exploration Budget 2003 – 2017E $25 $22 $21 $19 US$ Billion $20 $16 $15 $15 $18 $12 $12 $9 $10 $17 $16 $9 Global mining exploration market was worth $22 BB in 2012  38% Y/Y increase over 2011  Well above 2008 peak levels $6 $5 $4  $3 $0 2004 2005 2006 $50 2007 2008 2009 44.7 Transaction Value (US$BB) $40 33.4 $30 25.6 31.3 28.3 $25 $20 15.5 16.4 $15 $10 2011 2012 2013e 2014e 2015e 2016e 2017e 1.9 1.8 $45 $35 2010 4.9 $5 Number of Equity Issues (000's) 2003 McKinsey forecasts a 5.6% compounded annual growth rate (“CAGR”) in spending from 2013 to 2017, from $16 BB to $21 BB 1.5 1.6 1.3 1.4 1.2  1.3 1.1 1.1 1 0.8 0.8 0.6 0.6 0.4 High commodity prices attracted significant risk capital for mining exploration and development activities in 2012, which was reduced significantly in 2013; however, 2014 could be a turnaround year like 2005 0.2 0 $0 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012 Source: SME, Capital IQ 9
  10. 10. CABO Drilling Drill Fleet 100 Total Drill Rigs 27 Conventional Surface 15 Deep Hole Surface 14 Helicopter Support 5 Man Portable 6 Reverse Circulation 27 Underground 6 Geotechnical FY’13 Revenue Mix 11% Reverse Circulation 17% Underground Geotechnical Surface 70% 2% Drill Rig Age* 30.0% 30.5% 25.0% 21.1% 20.0% 17.9% 16.8% 15.0% 9.5% 10.0% 4.2% 5.0% 0.0% < 10 10 < x < 15 15 < x < 20 20 < x < 25 25 < x < 30 > 30 *Does not take into account 70% of drills that have been rebuilt 10
  11. 11. CABO Drilling Operations (CDN $000s except earnings per share) FY2010 FY2011 FY2012 FY2013 EBITDA per Share (Basic)(1) $ 0.03 $ 0.04 $ 0.08 $ 0.05 Earnings (Loss) per Share (Basic) $ (0.03) $ (0.01) $ 0.02 $ (0.01) Cash from Operations(2) $ 1,057 $ 1,402 $ 3,348 $ 2,606 Gross Margin % Adjusted(3) 25.3 22.1 22.7 25.1 (1)Net Earnings before interest, tax, amortization, stock based compensation and other items (EBITDA) changes in non-cash working capital items (3)Gross margin adjusted to exclude amortization (2)Before C$ millions Revenue 58.65 58.95 42.53 43.42 41.16 28.99 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 11
  12. 12. CABO Cash Management Focus Drilling     Capital expenditures are controlled Stable working capital Continuing to implement field cost control systems Secure new credit facilities for growth Working Capital C$ millions 12.72 13.54 8.14 4.59 FY2009 5.74 FY2010 FY2011 FY2012 FY2013 12
  13. 13. CABO Drilling Strong Balance Sheet (CDN $000s) June 30, 2013 Cash & cash equivalents $ 134 Current assets $ 22,488 Non-current assets $ 14,930 Total assets $ 37,552 Current liabilities (including current portion of long-term debt) $ 9,168 Long-term debt $ 4,316 Future income tax $ 349 Equity $ 23,719 Total equity and liabilities $ 37,552 13
  14. 14. CABO 2013 Quarterly Results Drilling (CDN $000s except earnings per share) 1st QTR 2013 Ended Sep 30, 2012 Revenue $ EBITDA(1) as a % of gross revenue 13,843 2nd QTR 2013 Ended Dec 31, 2012 $ 13.2% 9,161 3rd QTR 2013 Ended March 31, 2013 4th QTR 2013 Ended June 30, 2013 $ $ 6.8% 10,616 10.1% 8,914 4.8% EBITDA(1) per Share(2) $ 0.02 $ 0.01 $ 0.01 $ 0.01 Earnings (Loss) after Taxes $ 560 $ (435) $ 20 $ (710) Earnings (Loss) per Share(2) $ 0.01 $ (0.01) $ 0.00 $ (0.01) Cash from Operations(3) $ 1,354 $ 331 $ 458 $ 463 Gross Margin %(4) (1) (2) (3) (4) 26.0% 25.8% 25.7% Net Earnings before interest, tax, amortization, stock based compensation and other items (EBITDA) Per Share (Basic) June 30, 2013: Before changes in non-cash working capital items  Working Capital of $13.45 Gross margin adjusted to exclude amortization expense 21.7% million  Assets of $37.55 million  Shareholders Equity $23.72 million 14
  15. 15. CABO Drilling Objectives and Achievements      Expand effective capacity per drill Establish and maintain long term relationships with our clients Build and maintain a highly cost effective organization Retain skilled workers and enforce high safety standards Increase community training programs and expand community relationships  Enforce higher environmental standards 2013 Achievements  Working capital increased to $13.45 million  59% of drills turning on gold projects  Re-structured two Canadian operations to improve margins and profitability 15
  16. 16. CABO Drilling Prepared for Future Growth  Cabo Drilling is in a position to move forward despite the stressed global financial and economic environment  High capital expenditures in fiscal 2006-2008 and 2011 have positioned Cabo to respond to market changes in 2014  Offering a variety of drilling services – including deep hole, conventional surface, helicopter support, man-portable, directional, reverse circulation, geotechnical and underground drilling. Cabo is equipped to provide drilling services to its customers in each of its global areas, regardless of location, terrain, geology, depth to target or environmental considerations  Cabo can “migrate” to meet market demands and needs and has the ability and expertise to shift equipment and personnel to match changing market conditions 16
  17. 17. CABO Drilling The Cabo Advantage Raving Fans  Raving Fans is an initiative to deliver consistent high-quality services based on customers’ needs  Cabo is committed to building relationships with its customers – discovering how we can meet and exceed our customers’ requirements for each drill project Human Resources       Employee Relations Strategies Retention Strategies Training! Training! Training! Tapping the International Talent Pool Health and Safety Plans Fitness for Work Program Retaining qualified staff enables Cabo to provide the results its customers demand and deserve 17
  18. 18. CABO Key Differentiators: Safety and Community Support Drilling Safety First Culture Cabo - Communities  Cabo is committed to keeping safety front and  Cabo has entered into alliance agreements with a   center through education, engineering and enforcement of best practices Cabo provides all employees with extensive safety training prior to starting any job and follows up with weekly safety meetings Cabo’s comprehensive approach towards safety and health on the job has resulted in a continued improvement in its safety performance Injury Frequency Freq (Per 200,000 man-hours) 25.00 20.00 15.00   number of Canadian aboriginal bands, which provides Cabo with significant competitive advantages in winning contracts with clients such as Goldcorp, First Quantum (Inmet), and Galway Cabo is committed to a culture of sensitivity and responsibility to the aboriginal communities in which it operates Cabo facilitates aboriginal community participation in its drilling programs, including:   10.00  5.00  Hire local workers and provide training and skills development opportunities Allocate available jobs throughout the community and provide mentoring Provide assistance to clients in regard to local customs and values Utilize local services and suppliers 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Medical Aid Frequency Lost Time Injury Frequency 18
  19. 19. CABO Near-term Growth Opportunities Drilling European Expansion  Expansion into Europe began in 2007 in Spain   and continued into Albania in 2008 Cabo is currently in negotiations with potential clients in Portugal, Greece, Bulgaria, and Serbia Additional drill capacity may be required in these regions in 2014 Acquisition of Blasting Services Company  Cabo  is evaluating opportunities to acquire an explosives and blasting services business Blasting services are complementary to drilling services and would allow Cabo to diversify into road/bridge construction, commercial demolition and general contracting to smooth out the impact of economic cycles Repair & Maintenance Services  Cabo is evaluating opportunities to provide contract repair and maintenance services to the mining industry 19
  20. 20. CABO Drilling Mission Statement  To be the first choice for mineral exploration, mining & geotechnical customers by offering the best value in the drilling services industry  To partner with our clients and the community, fostering a culture of sensitivity and responsibility to the communities and environment in which we work.  To be the first choice among employees by offering the most stable, safe and rewarding workplace in the drilling services industry  To be the first choice for investors by consistently generating superior value and providing excellent corporate governance to shareholders and stakeholders 20
  21. 21. CABO Drilling Relative Size of Contract Drillers Tier 1 Boart Longyear 1,035 Layne Christensen 750 Major Drilling 736 Tier 2 Foraco 308 Ausdrill 275 Energold Drilling 258 Orbit Garant 214 Cabo Drilling Corp. 100 21
  22. 22. CABO Drilling Summary  Expanding global market presence  Focused on long-term growth in the mineral drilling services sector through exposure to mid-tier and major mining and exploration companies  Revolutionary approach to customer service  Improved operational efficiencies  Increased capacity per drill 22
  23. 23. CABO Drilling PROFESSIONALS TO THE CORE 23

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