November Industry leadership through continuous innovation

Transcription

1 November 2016 Industry leadership through continuous innovation

2 Forward-Looking Information Certain statements contained herein constitute forward-looking statements which reflect the current expectations of management regarding the Company s future growth, results of operations, performance, business prospects and opportunities based on information currently available to it. Wherever possible, words such as may, would, could, will, anticipate, believe, plan, expect, intend, estimate, aim, endeavor and similar expressions have been used to identify these forward-looking statements. These statements reflect management s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, without limitation, those listed in the Risk Factors section of the company s public filings. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements. These factors should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained herein are based upon what management currently believes to be reasonable assumptions, there can be no assurance that actual results, performance or achievements will be consistent with the forwardlooking statements. Forward-looking statements are made as of the date hereof and Orbit Garant may not, and does not assume any obligation to, update or revise these forward-looking statements other than as specifically required by applicable law. 2

3 Company Highlights Long-established, leading Canadian-based mineral driller Focused on continuous innovation Expertise in specialized drilling / management has experience in the field Vertically-integrated manufacturing subsidiary Strong health & safety and driller training programs Long-standing customer relationships Recent international expansion into Chile and West Africa Sound balance sheet Well positioned to outperform as market conditions improve 3

4 History of Orbit Garant Orbit Drilling founded, specializing in surface and underground drilling Early 90s Given strong market conditions, Orbit expands internationally and creates R&D dept. Orbit manufacturing and service division produces the first Orbit drill The Merger Orbit and Garant Drilling merge to become one of the largest surface and underground drilling companies in Canada Acquisition Orbit Garant acquires Forage+, a specialized drilling company Acquisition & New Ontario Office Orbit Garant acquires Advantage Control Technologies and opens new office in Sudbury, ON Expanded presence in South America and West Africa Orbit Garant opens new offices in Chile and Ghana Commences work on first Chilean drilling project New operating subsidiaries in Peru and Guyana Garant Brothers Diamond Drilling is established Massive expansion from operating 15 to 50 drills becoming one of the largest underground drillers in Canada IPO Acquisition Orbit Garant closes $60 million IPO and secondary offering (TSX:OGD) Orbit Garant acquires Drift Exploration Drilling, expanding the company s geographic reach to Nevada, USA and Mexico and adding RC capability Acquisition Acquisition & Expansion Orbit Garant acquires Lantech Drilling, new office in Moncton, NB. Entry to West African market. Adds iron ore and geotechnical drilling Orbit Garant acquires Morris Drilling, expanding its presence in Ontario Acquisition of Captagua Orbit Garant strengthens platform for growth in Chile and S.A. 4

5 Orbit Garant Today 900 employees / 226 drill rigs Head office : Val-d Or, QC Regional offices: Sudbury, ON, Moncton, NB, Chile, Ghana, Burkina Faso, Kazakhstan, Peru & Guyana Field operations: Canada, Chile, Guyana, Ghana & Kazakhstan Val-d Or LEGEND Head Office Regional Offices Field Operations 5

6 Market Position Revenue Customers Regions 61% 39% Underground Surface 80% 20% Juniors Majors & Intermediates 83% 17% International Canada Resources Drilling Services 20% Base Metals 38% Specialized 80% Gold 62% Conventional *As at September 30,

7 Core Strengths Specialized Drilling Drilling team expertise Innovation Health & Safety Vertical Integration Extensive Driller Training 7

8 Drilling Services & Expertise Surface Underground Specialized Drilling Standard diamond coring / core rod Standard / reverse circulation (deep hole) AWL - PWL calibre Geotechnical drilling Directional core drilling Standard rod / core rod AWL - HWL calibre Geotechnical drilling Directional core drilling Drilling projects that are in remote locations or, because of the scope, complexity or technical nature of the work, cannot be undertaken by smaller conventional drilling companies. Expertise in specialized drilling 8

9 Vertical Integration Ability to design and rapidly manufacture custom drill rigs at competitive cost Drill rig maintenance supports optimum utilization rates Health and Safety / Driller Training Focus on consistency, quality control, high performance and safety Ongoing training for new technologies, techniques and environmental standards 9

10 Innovation Computerized Monitoring and Control Technology Performance Highlights Greater accuracy Improved productivity (+30%) Fewer consumables Rig components last longer Easier to train personnel Additional Feature Benefits for Customers Real-time, remote monitoring of drilling progress Ability to view core samples remotely Competitive differentiation through innovation 10

11 Innovation Responding to customer needs Continuous innovation computerized underground drill rigs o YU 615 (first generation) o YU 1800 (second generation) o YU 1000 (next generation) YU 1800 custom designed and manufactured for specialized drilling project with Anglo American in Chile o YU 1800 can drill deeper, with larger diameters and perform up holes YU 1000 includes next generation mobile handling system YU 1000 Specialized drilling contracts are typically higher margin and for longer terms Competitive differentiation through innovation 11

12 Innovation & Environment Custom Equipment & Technology Mobile surface drills with rubber traction to minimize impact on sensitive terrain Modular, heli-portable surface drill rigs Water recirculation and filtration systems for project sites where water use is restricted Heat exchange systems Establishing leadership for the long term 12

13 Strong Customer Relationships Core strengths support long-term customer relationships 13

14 Industry Expenditures Estimated Global Nonferrous Exploration Budgets and indexed metals price 1 ( ) 1) The SNL Metals & Mining Index Metals Price measures the relative change of precious and base metals prices, weighted by the percentage of overall exploration spending for each metal as a proxy of the relative importance of each in the industry at a given time. 2) Relative prices for 2015 are based on the average through September. 14

15 TSX / TSX-V Mining Financings Y/Y Number of Financings in the Mining Sector 2,500 2,000 1,500 1, ,567 2,110 1,803 1,450 1,207 1, , YTD TSX TSXV Source: TMX Group Ltd. 1) As at October 31, 2016 Demand for drilling services is rising in Canada after an uptick in financing activity in

16 Mining Recovery S&P/TSX Global Mining Index, trailing 12-month performance 16

17 Disciplined Financial Management Debt reduced to $10.8 million 1 from $21.1 million at end of Q1 FY2013 FY2017 capex budget of $6.5 million Positive cash flow from operations on annualized basis Debt ($ millions) Q Q Maintaining financial flexibility 1) As at September 30, Includes finance leases assumed in the Captagua acquisition 17

18 Strategic Direction Supporting and improving competitive position Conventional, specialized and geotechnical drilling services Leverage vertical integration by manufacturing custom drill rigs and equipment to meet customer needs Maintain commitment to R&D, innovation and advanced drilling technologies Foster continuous improvement in skills & productivity and high standards of health & safety / environmental protection Strengthen Canadian leadership while growing international business Current market environment presents attractive tuck-in acquisition opportunities Protect and build market share 18

19 International Growth Platform Chile Largest producer of copper in the world and 5 th largest producer of non-ferrous metals Commenced first project in Q2 FY2015 (copper, underground and surface drilling). Initiating two new projects in Q2 FY2017 Acquisition of Captagua strengthens growth platform Ghana 2nd largest producer of gold in Africa Regional hub to pursue business throughout West Africa New project commenced in Q3 FY2016 Kazakhstan Promising emerging market for natural resources 4 th largest producer of copper in the world and 9 th largest proven gold reserves in the world New project with industry major commenced in Q2 FY2016 Strengthened international growth platform 19

20 Historical Metres Drilled (000s) 1,490 29% 1, * 259 Q Q1 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q

21 Historical Pricing Revenue per metre drilled ($/m)* * Q Q Q Q Q Q Q4 Q Q1 Q Q Q Q Q Q Q Q * Figures are rounded to the nearest dollar. 21

22 Financial Review Revenue ($ millions) EBITDA 1 ($ millions) Net Earnings ($ millions) Q Q Q1 17 Fiscal years ended June 30 1) EBITDA is defined as earnings before interest, taxes, depreciation and amortization. 2) Excludes impairment charges related to the write-down of goodwill and intangible assets in the amount of $28.2 million during FY

23 Business Stabilization Revenue Growth Momentum ($millions) (% calculations based on numbers in financial statements) * F2014 F2015 F2014 F2015 F2014 F2015 F2015 F2016 F2015 F2016 F2015 F2016 F2015 F2016 F2016 F2017 Q2¹ Q3 Q4 Q1 Q2 Q1 Nine consecutive quarters of y-o-y growth in domestic drilling revenue Seven consecutive quarters of y-o-y growth in international drilling revenue Q3 Q4 Q1 1) Domestic drilling revenue growth was offset by decline in international revenue. 23

24 Q1 FY2017 Financial Results Income Statement ($ millions, except per share amounts) 3 Months Ended September 30, Revenue Gross profit Gross margin (%) Adjusted gross margin 1 (%) G&A expense EBITDA ) In accordance with IFRS, reported gross profit and gross margin include certain depreciation expenses. Adjusted gross margin is shown excluding these depreciation expenses. 2) EBITDA is defined as earnings before interest, taxes, depreciation and amortization. 24

25 Q1 FY2017 Financial Results Sound Balance Sheet ($ millions) September 30, 2016 June 30, 2016 Cash Total current assets Total assets Total current liabilities Long term debt Total shareholder equity Working capital ) Long term debt as at September 30, 2016 includes finance leases assumed in the Captagua acquisition. 25

26 Capital Market Profile Recent close (November 9, 2016): $ week high / low: $2.00 / $0.57 Market Cap: ~$65 million Shares Outstanding: 35,101,419 Fully Diluted: 37,978,919 Institutional / retail: ~25% / 75% January 4, 2012: Share price: $5.40 Market cap: ~$180 million Insiders own approximately 30% of shares outstanding 26

27 Investment Highlights Industry leader in innovation and specialized drilling Solid foundation in Canada high exposure to gold related projects Positive cash flow from operations on annualized basis throughout industry downturn Nine consecutive quarters of growth in domestic drilling revenue Recent expansion into key jurisdictions Chile, Ghana, Kazakhstan, Peru & Guyana Sound balance sheet Well positioned to outperform as market conditions improve 27