RE:RE:Massive 54 million $ winWow. There is a lot to unpack on this. First, the location : this gives them a new hub to pursue their operation in East Africa. Capital Drilling is the other driller in Egypt and it appears that business is booming over there.
Second, this is for underground drilling which is typically done at a lower rate than surface drilling. Still, the rate appears to be close to 50% higher thatn their average rate per rig (all type included) during the last quarter. Typically, you would get a discount in exchange for a long term contract but here, they got a pretty nice bump. Mind you, the current rate are probably higher right now.
Third : where will they get these 5 underground rigs ? Probably need to purchase them which woulld explain Harper mentionning at TD's that adding rigs was the thing to do with excess cash flows instead of buying back share. So we have probably an increase in total rigs.
4th, There is another annoncement to come as Harper was mentionning at TD. And he did mention that they loved copper.
5th The stock is now trading at a few cents over the price reached when they annonced the Perseus contract. Wow. If they were trading at 2.5 time EBITDA before, what are they trading at right now ?
6th If rigs are getting snatched for long term contracts, what could be the spot rate now ? WHen do miners start to fight for rigs ? Afterall, MDI was mentionning that they can not accomade all the demand....
GLTA