Energold Investor Presentation


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Energold Investor Presentation

Speaker: Fred Davidson - President, CEO and Director,
Energold Drilling

Mining On Top: Africa - London Summit
24-26 June 2014 | London

Published in: Business
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Energold Investor Presentation

  2. 2. 2 Mining Energold Drilling’s original and primary line of business. Market leader in frontier drilling services, operating 133 rigs in 24 countries spanning broad spectrum of minerals. Minimizes environmental and social impact with proprietary man- portable drills. Energy Over 50 years of experience in the Energy Services space catering to oil sands coring and oil/gas seismic needs. This business division also handles geotechnical drilling for engineering and construction for larger extractive projects. Manufacturing A drilling brand with heritage of more than a century, we design, manufacture, and maintain rigs and supplies for clients globally. Specializing in mineral, multi-purpose, water wells, and geotechnical drilling machines and parts. Manufactured and designed in UK. GLOBAL DRILLING SOLUTIONS Water From the first water wells drilled more than 150 years ago during the cholera outbreak in UK, Energold’s water drilling division brings water related services such as de-watering, water recycling, & fresh water well drilling to existing clients across the globe.
  3. 3. • Global Drilling Solutions Provider Providing socially & environmentally sensitive drilling services to the international mining & energy sector. • Market Leaders in ‘Frontier Drilling’ Proprietary mineral drilling rig platform designed for drilling in remote and diverse sub-terrain locations with limited infrastructure as well as sensitive environmental and social issues. • Global Footprint Operating 240 rigs in 24 countries across a wide range of metals and energy projects. • Proven Track Record of Performance Strong continued growth with diversified business in mineral contract drilling, energy services, and rig manufacturing and sales. Energold’s Highly Mobile Surface Rig in Operation Durango, Mexico 3 OUR BUSINESS
  4. 4. 4 CORPORATE SUMMARY Fred Davidson CA MBA President, CEO and Director James Coleman LLB Chairman and Director Steven Gold CFA Chief Financial Officer Martin Fitch-Roy Managing Director (Dando Drilling Services)| Brian Bertram Managing Director (Energold Energy Services) H. Walter Sellmer Director Michael J. Beley Director Wayne Lenton Director Trading Symbol EGD:TSXV Share Price (Apr 2014) $1.65 Shares Outstanding 47.6 Million Shares Fully Diluted 47.6 Million Market Cap $78.5 Million Institutional Ownership 25% Insider Ownership 10% Cash $26.6 Million Long Term Liability $715K
  5. 5. CDN$ (000’s) 2010 2011 2012 2013 (Year End) Revenue $54,591 $133,482 $141,514 $122,807 Net Earnings / (Loss) $1,449 $26,428 ($8,650)* ($17,319) Cash $28,225 $22,782 $28,493 $26,608 Working Capital $61,461 $69,341 $91,249 $65,450 Adjusted Earnings* $1,505 $14,143 $2,339 ($9,143) Adjusted EPS* $0.04 $0.35 $0.05 ($0.19) 5 FINANCIAL HIGHLIGHTS Note $5.1 million was for the earn-out payment related to the acquisition of Bertram. There will be no earn-out expense in future years due to a revised agreement. * Adjusted Earnings - Excludes earn-out payment and non-cash items which include accretion expense on debenture, finance cost related to sales-leaseback finance lease, share-based payments, foreign exchange, dilution and equity gain/loss on IMPACT, impairment/write-down of assets, gain on acquisition. Q4 2012 Q4 2013 % Change Revenue Mineral 14,971 6,084 -60% Energy 8,220 11,840 +44% Manufacturing 2,513 11,191 +345% Total Revenue $25,704 $29,115 +13% Challenging Mineral Market Persists – DIVERSIFIED revenue stream and expected growth from non-mining sectors in 2014
  6. 6. 6 GROWTH IN CHALLENGING TIMES Meters DrilledMeters Drilled RevenueRevenue 37% CAGR 37% CAGR Rig CountRig CountAdj Earnings/ShareAdj Earnings/Share
  7. 7. 7 WORLD WIDE OPERATIONS World-Wide Operations Energold has offices and/or operations in 24 countries with complete jurisdictional compliance and logistical support. Contractor Of Choice Commence relationships with frontier drilling programs that historically continue through to downstream stages of development. Current & historic client list includes many of the leading global mining companies. Rig Fleet Energold has increased its fleet size in response to demand by an average of 70% per year over the last 6 years with a current rig count of 264(mineral and energy rigs). Mobile rig platforms can be re-deployed more efficiently and cheaper than conventional rigs.
  8. 8. SOCIAL Ensuring we positively impact local villages and generate goodwill OPERATION DRILLING SUCCESS ON 3 FRONTS Running an efficient and productive program Minimizing trees cut Less roads built Less disturbance to area Small foot-print drill rigs ENVIRONMENTAL
  9. 9. MINING BRINGS BENEFITS TO LOCALS Numbers Jobs mine will provide Ounces of Gold P+P 11,000 >25M $500 $US Dollars per oz the State receives $12+ Billion dollars the State will collect over 25 years Pueblo Viejo mine In Dominican Republic
  10. 10. Modular Component Design – Easy to transport within country, across challenging terrain as well as rapid mobilization globally to reduce downtime Proprietary Technology – Depth capabilities of over 1,000m with ¼ inch greater core diameter using (TW) Thin Wall rod system – Competitive portable rigs only reach depths between 200–300m BTW Rigs Built In-House – Ensures proprietary nature of rig designs – Continual upgrades are implemented from input of field personnel – Ability to upgrade portable rigs seamlessly to conventional drill rig as project evolves 10 OUR TECHNOLOGY
  11. 11. Energold’s clientele includes many of the world’s largest mining companies. Existing clientele range from early-stage junior explorers to well known, mature producers spanning all base and precious metals, as well as industrial commodities. MAJORS • Barrick Gold • BHP Billiton • Goldcorp • Grupo Mexico • Rio Tinto • Newmont Mining • Penoles • Vale • AngloGold • Fresnillo • El Dorado Gold • Codelco JUNIORS • Grayd Resources (now Agnico-Eagle) • US Gold (now McEwan Mining) • Great Panther Silver • First Majestic Silver • Olympus Pacific Resources (now Besra Gold) • Magellan • GoldQuest Mining Corp. 11 CUSTOMER PROFILE
  12. 12. EXAMPLE IN DOMINICAN REPUBLIC 5,000 meters drilled 50 Holes Zero trees removed No access road built No expentures on helicopters ________________ More $ for local jobs More $ for client to continue drilling
  13. 13. Dominican Republic Peru Albania Guinea 13 OPERATION SNAPSHOTS MINIMAL ENVIRONMENTAL IMPACT Frontier Drilling Specialists
  14. 14. 14 OPERATION SNAPSHOTS MINIMAL ENVIRONMENTAL IMPACT Rehab Job site (After) in DRRod transport in DR Helicopter Mobilization Transport in Peru
  15. 15. • Proven player in sizable oil sands market dating back to 1963 • Niche, high-margin market with short and long-term growth • Oil Sands coring – smooth out Energold traditional slow mineral seasons (Q4/Q1) • Re-allocation under-utilized drill fleet (seismic and specialty) within Energold’s global network • Synergy of talents – trained drillers in energy drilling can transition to mineral drilling and vice-versa • 2013 addition of 2 new oil sands coring Bertram TH60 Coring Rig 15 ENERGOLD ENERGY BERTRAM INTERNATIONAL CORP. LIS GT1 Seismic Drilling Rig Quality name in Oil Sands
  16. 16. 16 RENEWABLE GREEN ENERGY SERVICES - GEOTHERMAL • Geothermal & Geotechnical Drilling services for sustainable energy projects • Expertise in Oil Sands coring and oil/gas seismic drilling – conventional energy
  17. 17. SEISMIC Drilling • Man portable • Tracked vehicles • Tracked / Buggy Drills • Heliportable • PAT Rigs Truck mounted Sonic • Terriers
  18. 18. • Over 150 years of experience in designing and manufacturing of larger rigs in the UK • Maintenance, servicing, and sales of rigs and parts to third parties • Expertise in water well drilling • Building a new services division that can leverage the existing Energold logistics network Mineral Multipurpose Mintec® Rigs 18 ENERGOLD MANUFACTURING DANDO INTERNATIONAL LTD. Trusted Name in Drills for 150 years Water Well Drilling Watertec® Rigs Geotechnical Drilling Rigs Geotec® Rigs
  19. 19. • Designing and manufacturing of larger rigs in the UK • Maintenance, servicing, and sales of rigs and parts to third parties • Expertise in water well drilling • Building a new services division that can leverage the existing Energold logistics network Mineral Multipurpose 19 150 YEARS HISTORY IN WATER DRILLING Water well 1867 Water Drilling During Cholera outbreak
  20. 20. • Continued growth with reputable name brand Difficult 2-3 years but improvements in 2013 in US, China, and most of developing world. 1 • Different categories of clients Dando caters to the WorldBank, UN, UNICEF, and Oxfams of the world. • Market Potential Global mining equipment market is $61 billion. At $22.9 million (2013 record high revenue), Energold is just 0.01% of the market. 2 1. Caterpillar Q2 2013 Earnings http://www.caterpillar.com/investors/events-and-presentations/presentations 2. Standard & Poors – Credit Week Feb 2012 20 INDUSTRY DEMAND SOFTENED BUT ROOM FOR GROWTH FOR DANDO
  21. 21. Positive Social Impact – Provide jobs for locals – Training in work-safety and mechanical experience Minimal Environmental Impact – Portable rigs leave a small environmental footprint – Avoid tree clearcuts and save cost on road building Third Party Recognition – PDAC Environmental Excellence in Exploration Case Study (E3 Initiative) – BC Business Innovators of Year 2012 Energold’s approach is win-win for clients and local communities 21 BENEFITING AREAS WE WORK IN Haiti Bridge Infrastructure Project Donated Waterwell in Chihuahua, Mexico Donated backpacks and textbooks to local schools in Dominican Republic Donated shoes, clothing, soccer balls, mosquito netting to Guinea
  22. 22. 22 Energold provided clothing, shoes, mosquito nettings, and soccer balls to Guinea village Donated backpacks and textbooks to local schools in Dominican Republic CASE STUDY: Textbooks & Cloths for Kids In 2012 Energold provided textbooks and backpacks to local school in Dominican Republic where employee’s children are attending. In Africa (Guinea), Energold provided new clothing and soccer balls for Village Bourata, Gouamo, and Keoulenta.
  23. 23. 23 PRESERVE MARGINS AND CAPITAL IN MINING • Grow mineral drilling rig fleet to solidify existing markets • Continued growth of frontier drilling and transitioning with clients to mature projects with larger conventional drills • Organic growth and search for acquisitions in existing and new markets • Continue technological advancements in rig design and capabilities. SEED AND EXPAND INTO NEW MARKETS • Capitalize on high growth frontier regions such as South/Central America, Southeast Asia & Africa. • Pursue additional ‘bolt-on’ acquisitions in target regions. • Seek new markets for under utilized platforms such as seismic drills in Alberta • Grow water well drilling business • Expand drilling services and multi- purpose and reverse circulation (RC) GROW ENERGY AND MANUFACTURING DIVISIONS • Energold Energy division continues to benefit from niche market expertise in unconventional and conventional markets • Grow manufacturing services and utilize capabilities to build larger rigs over time • Grow new business divisions including the historical Dando footprint in water well activity 23 CONTINUED GROWTH STRATEGY
  24. 24. Analyst Company Contacts Michael Mills CFA MBA Beacon Securities 416-643-3871 Stephen Kammermayer Clarus Securities 416-343-2782 Maggie MacDougall BBA Cormark Securities 416-362-7485 Ben Jekic CFA Industrial Alliance 416-203-5826 Kam Mangat CFA Salman Partners 416-861-1270 Steve Green CFA Toronto Dominion (TD) 416-983-3276 24 ANALYST COVERAGE
  25. 25. • Energold presents a compelling opportunity to invest in a broad range of commodities and projects worldwide • Catalysts for growth – diversified business continues to find niche pockets of strength in market • Favorable balance sheet allows EGD to capitalize on opportunities • Value play on commodities – trading at 50% discount to one year revenue and low multiples25 INVEST IN ENERGOLD TODAY 5 Year Chart on EGD:TSXV
  26. 26. Appendix Income Stmt Income Statement Highlights 2010-2013 2013 2012 2011 2010 Net Revenues ($Millions) $122.81 $ 141.51 $ 133.48 $ 54.59 Net Income ($Millions) $ (17.32) $ (8.65) $ 26.43 $ 1.59 Earnings Per Share (EPS) - Basic $ (0.36) $ (0.19) $ 0.65 $ 0.04 Earnings Per Share (EPS) - Diluted $ (0.36) $ (0.19) $ 0.64 $ 0.05 Cash Per Share (CPS) $ 0.56 $ 0.62 $ 0.62 $ 0.77 Net Working Capital ($Millions) 65.45 81.85 69.34 63.65 Minerals Metres Drilled (Meters) 296,500 428,300 587,544 346,328 Energy Meters Drilled (Meters) 335,200 630,600 444,400 N/A
  27. 27. Appendix Balance Sheet Balance Sheet Highlights 2010-2013 2013 2012 2011 2010 Current Assets ($Millions) $107.74 112.1 99.58 71.88 Total Assets ($Millions) $163.65 172.816 163.49 91.02 Cash and Cash Equivalents ($Millions) $26.61 28.493 25.267 30.7 Current Liabilities ($Millions) $42.28 30.253 30.24 8.23 Long-Term Debt ($Millions) $4.97 9.4 9.079 0.17 Shareholder Equity ($M) $116.85 129.861 111.895 78.32
  28. 28. info@energold.com 604-681-9501 We benefit the areas we work in. Join Us. info@energold.com 604.681.9501