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Energold Drilling posts Q2 loss, misses analyst expectations

Published: 15:19 29 Aug 2012 EDT

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Energold Drilling Corp. (CVE:EGD) swung to a second-quarter net loss Wednesday, which masked a 15 per cent revenue gain that came despite declining sales in its mineral exploration unit.

The Vancouver-based contract diamond drilling services' company makes customized drill rigs and equipment for water well, mineral exploration and geotechnical drill companies. 

Net loss, for the second-quarter, was $2.03 million, or four cents per share, versus a year-earlier profit of $3.65 million, or nine cents a share.

Revenue grew to $32.6 million, up 15 per cent from $28.4 million in the same quarter a year ago.

Analysts polled by Bloomberg expected a per-share profit of 10 cents, on $48.7 million in sales. 

Shares, in Wednesday afternoon trade, lost nearly 20 per cent, slumping to $3.10 on the TSX Venture Exchange. 

"We are pleased to report second quarter results as they are testaments Energold continues to focus on delivering growth and generating shareholder value," chief executive Fred Davidson said in a statement.

"The company is well positioned to weather the current market environment and is in a strong position to take advantage of acquisition opportunities with its strong balance sheet consisting of $36.5 million in cash and over $93 million in working capital," he added. 

The company's mineral division sales fell 15 per cent to $22.2 million from $26 million, while its energy segment reported sales of $4.4 million.

Mineral drill activity fell 26 per cent due to a cautious drilling environment among junior miners, which have been hit by weak capital markets, crimping their ability to raise capital to fund exploration programs.

Sales at its manufacturing unit, however, rose to $5.9 million, up 152 per cent from $2.35 million a year-earlier.

The company's fleet grew 11.3 per cent to 128 mineral exploration rigs, with another five rigs on order. Two track mounted rigs are being built by Energold for the West Africa market.

Mexico, the Caribbean, and Central America continues to be a boon for Energold, with 45 rigs in the region and accounting for over 51 per cent of the metres drilled for the second quarter of 2012.

In the second quarter, the company's mineral unit drilled 114,900 metres, while its energy division drilled 88,000 metres. 

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