There are plethora of mining plays available to investors – everything from junior explorers to major cap miners and producers. But one of the most savvy investment opportunities may belong to the companies that do the actual, boots-on-ground drilling. The contractors doing the digging. And one such company based in the gold-producing giant of Ghana in West Africa has the stock chart numbers to prove it.
Geodrill Ltd. (
TSX.GEO,
OTCMKTS: GDLLF,
Forum) primarily operates a fleet of multi-purpose, core, air-core, and grade control drill rigs, providing reverse circulation, diamond core, air core, grade control, geo-tech, and water-bore drilling services to all levels of mining companies…mainly in West Africa. Geodrill currently has a rig fleet of 71 drill rigs operating in West Africa, Egypt, and Peru. Today, we’re glad to be joined by, once again, Geodrill’s President, CEO and Director Dave Harper – a mining industry veteran with more than 30 years’ experience in the global drilling industry.
Stockhouse Media’s Dave Jackson was joined, once again, by company President, CEO, and Director Dave Harper to update our investor audience on all the latest and greatest happenings with Geodrill Ltd.
(CLICK IMAGE TO PLAY VIDEO)
TRANSCRIPT BELOW:
SH: So first off, for Stockhouse our metals & mining investor audience that may have missed our prior interviews, can you give us a bit of background about yourself and Geodrill?
DH: Okay. Geodrill is a leading exploration drilling company with operations in two continents and six countries, namely Ghana, Burkina Faso, Cote d’Ivoire, Mali in West Africa and in North Africa, we are in Egypt and in south America, we are in Peru. Essentially, we provide exploration drilling services for what eventually becomes gold mines, simply put where picks and shovels business.
SH: Can you update our investor audience and your shareholders on any new company developments in the wake of COVID-19 and the Omicron variant, especially its effect on the Sub-Saharan African continent?
DH: Well, Geodrill did pretty well through COVID. We actually announced our fiscal 2021 results yesterday. It was actually a record year for us actually. So we did pretty well through COVID.
SH: Recently, the Company announced it had been awarded a “significant multi-rig long-term drilling contract with Endeavour Mining PLC.” Can you elaborate?
DH: Yeah. So, Endeavor Mining are a very prominent gold miner in West Africa. They, they have been very successful in growing their resources through the drill bit. This particular contract is for 25 million US dollars over two years. We are very fortunate to have been the leading driller for some years now and this contract really just fortifies that relationship while it also underscores EDV’s commitment to increasing their mine reserves as well as is adding some additional future discovery answers on shore.
SH: And in February, you reported the Geodrill had inked a long-term drilling contract with Centamin PLC at their Sukari Gold Mine in Egypt. What are some of the takeaways from this deal?
DH: So the Centamin Sukari is the largest contract in Geodrill's history. We've actually had a long relationship with Centamin in West Africa. The value of this contract is $54 million over five years and it's, it's quite significant because for us, this is a new region, Egypt. Egypt is our newest market and therefore this is all essentially new business as well as it's really a massive vote of confidence for our newest division, which is Silverback general Egypt.
SH: Staying on topic…another of long-term contact with Perseus Mining Ltd – a West African-based mining company with gold production and exploration activities in Ghana and the Ivory Coast. Can you update our investor audience on some of the numbers here, as well?
DH: Yeah. So again, another prominent name in West Africa here, Perseus mining. Perseus have also been very successful in growing their resources through the drill bit. This particular contract is worth $45 million over a period of two years and so in total, if we add the three to together, we are looking at a total contracts of $130 million, which is massive. It's a massive start to the year for us.
SH: Dave, I have to mention your stock has had an extremely robust stock performance over the last three months…an over 50-percent increase in value since early December. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good buy right now?
DH: Well, it's a good point that you make but the stock the stock has done very well in recent times but to be fair in the past year, our revenue has also gone up by 40%. However data has gone up by 55% and our net earnings have gone up by 88%. In fact, in over the last three years on average, our earnings per share has increased by 77% per year and yet our share prices only increased by 23% per year. So on a relative basis, we're actually cheaper today than we've ever been relative to our peers, Geodrill trades at three times multiple while some of our peers enjoy a six to eight times multiple and based on yesterday's results analysts are suddenly of course taking their targets up. So we are due for a rewrite and there's still a lot of deep value in this story.
SH: Can you explain to our investors how Geodrill’s business model is different from most tradition mining companies, in that you’ve developed a way to mitigate risk and generate and profit by sticking to drilling for the most part?
DH: So, firstly Geodrill is not a miner. We're rather a service company that operates within the mining industry. So we use typical picks and shovels business. In a gold rush, investors can buy physical gold, they can buy ETFs, they can buy gold miners or junior explorers or they can buy picks and shovels businesses. Now, investors who like picks and shovel businesses tend to really like drillers because drillers speak for the largest of expiration budgets. Approximately 50% of expiration budgets gets spent on drilling. Now, Geodrill provides a best in class drilling service and this has enabled us to be profitable even through a down cycle, mining is a cyclical business. You need to understand that we've just come off a seven year down cycle, and yet it's been cashflow positive since 2016. We're now in the first innings of an up cycle and we expect the next five to six used to be very, very strong.
SH: Dave, can you update our audience a little bit about your corporate management team along with the experience and innovative ideas they bring to the exploration drilling space?
DH: Well, starting with myself, I have 35 years industry experience. I began as a drill operator in Calgo in Western Australia and found health out here in West Africa and this is where I've really found my niche. Our COO is also from the drilling background. Pretty much everyone on the team comes from a drilling background except for our CFO. The best drilling companies are run by drillers, that's a fact and I think Geodrill is a pretty good example of this.
SH: Can you discuss the overall long-term strategy for the company moving forward in 2022…and beyond?
DH: Very simple, our focus will be on consolidating our west African business also expanding into new markets, such as Egypt and Peru in South America.
SH: And finally, Dave, if there’s anything else that I’ve overlooked, please feel free to elaborate.
DH: A delighted happy International Women's Day for yesterday for all the strong women out there and of course our thoughts and prayers go out to the people Ukraine for what they're going through at this difficult time on. Thank you.
To find out more, visit
www.geodrill-gh.com
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.