Geodrill Limited T.GEO

Q3 results

[screamer99]

A great result in my view.  Look out for the "other loss / income" which relates to equity investments.

If you factor in the net change of a decrease of $650k, EBITDA is that much higher.

Gross profit - $5.6m
SG&A - ($2.7m)
Depreciation - $2.1m
=
Operating profit of $5.0m during the wet season (compared to $4m, last year) and compared to about $7mm in Q2-21.

If the market mistinterprets the flat EBITDA and doesn't consider the equity investment noise, I'll be adding.

Good utilization and increasing rig count will provide for better quarters ahead.  The company is also in a net cash position!

[FrozenInOntario]

Screamer, You are right on the equity loss (non cash btw) but this is offesetted by their VAT recovery of 600K in SG&A.   So net income is flat despite the increase in revenus.   Also notice that they are out of Zambia ? How many rigs did they have overthere ? So overall, decent quarter, they are solidely profitable.    Notice that 50% of their business is with 3

[FrozenInOntario]

Just listened to the conference call.  Most of the questions focused on the margin which slipped a bit versus last year.   From what I gather, this is mostly timing issue as well as mix of business this quarter. Did repeat that 4th quarter should be pretty solid but we should focus on 2022 which should be exceptionnal or something like this. Harper did mention that overall margin

[InFactsWeTrust]

Gross margins for Q1,Q2,Q3 respectively were 31.4, 27.3 and 20.7.  For 25% overall margin, 4th Q needs to be 20.6, not much worse than Q3.  2022 is looking great, new contracts, new customers, new regions, its all good except for cost increases, which are likely to affect most businesses.  TDSI upped their target from $3.5 to $3.75 a year out.  I think this is just a short term

[FrozenInOntario]

As they do not have equal quarters in therm of revenus, You cannot take an average of the all the quarters of the year.     So it all depends on the revenus they will generate for the 4th quarter. Anyway, agree on your take, all is good.   THe key for the drillers is not to get stuck on a fixed rate contract with rising costs.   As the supply of rigs appears to

[InFactsWeTrust]

Thanks for posting the link. Interesting read on the labour shortages in the industry.  It sure gets one thinking about the challenges for the drillers but also for the miners.  It bolsters the case for owning the commodities and streamers, just to take some of the cost inflation risk out.  If gold goes up 30%, how much more are miners willing to pay a driller, and does the driller

[FrozenInOntario]

There is also a recent article on their subsidiary in Peru. Mining is a tought business and the increase/shortages in drilling is just another one. There is a nice slide in the Major Drilling deck which makes a parrallel between this cycle and the previous one that started in 2002-2003 and peaked in 2012.   We are in the first innings with Juniors raising cash and wanting to drill for

[InFactsWeTrust]

Thanks for your insights.  They make a lot of sense.  If the explorers don't pay up, they don't get the gold out, so there's an even bigger supply shortage and gold rockets higher, which means they can afford to pay more.  May as well pay up now and get your drillers in place before your competition does.

[nodice7777]

Correct. Drillers tend to be later cycle plays in the resource cycle. Let's face it, we were hoping for better results in Q3 which resulited in the the knee jerk reaction to the downside but it's one quarter and what matters is what lies ahead not behind and things look bright for geodrill. 

[screamer99]

Shame on me for missing the VAT refund...  wonder if it's related to the years where they had 50% - 96% effective tax rate.  At any rate, better days ahead. I caught the last bit of the call and am looking forward to the next 3 quarters. Gold prices are recovering, drilling programs will start in Q4/Q1 so let's hope any increase in costs that were mentioned continue to be