Energold Investor Presentation

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Water Well Drilling MINIMAL ENVIRONMENTAL FOOTPRINT MAXIMUM SOCIAL IMPACT +

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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

Transcript of Energold Investor Presentation

Page 1: Energold Investor Presentation

Water Well Drilling

MINIMAL ENVIRONMENTAL

FOOTPRINT

MAXIMUMSOCIAL IMPACT

+

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MiningEnergold 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.

EnergyOver 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.

ManufacturingA 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 DRILLINGSOLUTIONS

WaterFrom 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.

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• 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

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OUR BUSINESS

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CORPORATE SUMMARY

Fred Davidson CA MBA President, CEO and Director

James Coleman LLB Chairman and Director

Steven Gold CFA Chief Financial Officer

Martin Fitch-RoyManaging Director (Dando Drilling Services)|

Brian BertramManaging 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

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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)

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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

RevenueMineral 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

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GROWTH IN CHALLENGING TIMES

Meters DrilledMeters DrilledRevenueRevenue

37% CAGR37% CAGR

Rig CountRig CountAdj Earnings/ShareAdj Earnings/Share

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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.

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SOCIALEnsuring we positively impact local villages and generate goodwill

OPERATION

DRILLING SUCCESSON 3 FRONTS

Running an efficient and productive program

Minimizing trees cutLess roads builtLess disturbance to areaSmall foot-print drill rigs

ENVIRONMENTAL

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MINING BRINGSBENEFITS 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

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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

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OUR TECHNOLOGY

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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.

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CUSTOMER PROFILE

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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

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Dominican Republic

Peru

Albania

Guinea

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OPERATION SNAPSHOTSMINIMAL ENVIRONMENTAL IMPACT

Frontier Drilling Specialists

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OPERATION SNAPSHOTSMINIMAL ENVIRONMENTAL IMPACT

Rehab Job site (After) in DRRod transport in DR

Helicopter Mobilization Transport in Peru

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• 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 rigs to address market demand

Bertram TH60Coring Rig

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ENERGOLD ENERGYBERTRAM INTERNATIONAL CORP.

LIS GT1 Seismic Drilling Rig

Quality name in Oil Sands

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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

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SEISMIC Drilling

• Man portable

• Tracked vehicles

• Tracked / Buggy Drills

• Heliportable

• PAT Rigs Truck mounted Sonic

• Terriers

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• 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

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ENERGOLD MANUFACTURINGDANDO INTERNATIONAL LTD.

Trusted Name in Drills for 150 years

Water WellDrilling

Watertec® Rigs

GeotechnicalDrilling Rigs

Geotec® Rigs

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• 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

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150 YEARS HISTORY IN WATER DRILLING

Water well

1867 Water Drilling During Cholera outbreak

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• 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 clientsDando caters to the WorldBank, UN, UNICEF, and Oxfams of the world.

• Market PotentialGlobal 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

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INDUSTRY DEMAND SOFTENED BUT ROOM FOR GROWTH FOR DANDO

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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

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BENEFITING AREAS WE WORK IN

Haiti BridgeInfrastructure 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

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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.

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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

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CONTINUED GROWTH STRATEGY

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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

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ANALYST COVERAGE

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• 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

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AppendixIncome 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) 296,500 428,300 587,544 346,328Energy Meters Drilled (Meters) 335,200 630,600 444,400 N/A

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AppendixBalance 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

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