March Industry leadership through continuous innovation

Transcription

1 March 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 and 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 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 Market Position Revenue 4% Customers Regions 4% 54% 42% Underground Surface Manufacturing 78% 22% Juniors Majors & Intermediates 96% International Canada Resources Drilling Services 77% 23% Base Metals Gold 58% 42% Specialized Conventional *For the six-month period ended December 31,

6 Orbit Garant Today 850 employees / 226 drill rigs Head office : Val-d Or, QC Regional offices: Sudbury, ON, Moncton, NB, Chile & Ghana Field operations: Canada, Chile, Guyana, Ghana & Kazakhstan Val-d Or LEGEND Head Office Regional Offices Field Operations 6

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

8 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 8

9 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 9

10 Innovation & Environment Custom Equipment & Technology Mobile surface drills with rubber traction to minimize impact on sensitive terrain Modular, heli-portiable 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 10

11 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 11

12 Vertical Integration Ability to design and rapidly manufacture custom drill rigs at competitive cost Drill rig maintenance supports optimum utilization rates Respond to customer needs Ability to sell conventional drill rigs to third parties 12

13 Health & Safety / Driller Training Comprehensive Health & Safety Program Qualified trainers provide thorough training for driller and driller helpers Continuous evaluation and improvement of prevention mechanisms, technology and equipment, training and policy compliance Developing Qualified Drillers Certification program requires hundreds of hours of classroom and field training Focus on consistency, quality control, high performance and safety Ongoing training for new technologies, techniques, health and safety, and environmental protection enhancements 13

14 Established Mineral Drilling Expertise Core strengths support long-term customer relationships 14

15 Industry Expenditures 15

16 Strategic Direction Disciplined Financial Management Adjusted G&A expenses down ~ 26% since FY Debt reduced to $8.7 million 2 from $26.4 million in FY2012 FY2016 capex budget of $6.5 million Positive cash flow from operations on annualized basis Adjusted G&A expenses ($ millions) Debt ($ millions) F2012 F F2012 H Maintaining financial flexibility 1) Based on total G&A expenses incurred during FY ) As at Dec. 31,

17 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 17

18 Acquisition of Captagua Creating a strong platform for growth in Chile and South America Captagua provides surface drilling (diamond and reverse circulation) and water drilling services 50 years of operating history worked with many leading international mining companies Provide greater exposure to base metals (copper) 180 employees / 17 drill rigs Head office: Santiago, Chile Trailing 3-year revenue range: ~$17 to $25 million ~$16 million in assets as at November 30, 2015 Purchase price: ~$4.0 million¹ 1) Purchase consideration satisfied through the issuance of 1,824,900 common shares of OGD and the assumption of ~$2.2 million in debt 118

19 International Growth Platform Chile Largest producer of copper in the world and 5 th Largest producer of nonferrous metals in the world Commenced first project in Q2 FY2015 (Copper, underground and surface drilling) 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) 1,413 1, * 504 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 H Q1 1) Represents metres drilled during H1 FY

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

22 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 $28.2 million during FY Financial Review Revenue ($ millions) EBITDA 1 ($ millions) Net Earnings ($ millions) H1 15 H H1 15 H H1 15 H1 16 Fiscal years ended June 30

23 Business Stabilization Revenue Growth Momentum ($millions) * F2014 F2015 F2014 F2015 F2014 F2015 F2014 F2015 F2015 F2016 F2015 F2016 Q1 Q2¹ Q3 Q4 Q1 Q2 Q1 Six consecutive quarters of y-o-y growth in domestic drilling revenue Four consecutive quarters of y-o-y growth in international drilling revenue 1) Domestic drilling revenue growth was offset by decline in international revenue. 23

24 YTD F2016 Financial Results Income Statement ($ millions, except per share amounts) 3 Months Ended Dec. 31, 6 Months Ended Dec. 31, Revenue Gross profit 1.3 (0.4) Gross margin (%) Adjusted gross margin 1 (%) Adjusted G&A expense EBITDA (0.8) ) 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 YTD F2016 Financial Results Sound Balance Sheet ($ millions) Dec.31, 2015 June 30, 2015 Cash Total current assets Total assets Total current liabilities Long term debt Total shareholder equity Working capital

26 Capital Market Profile Recent close (March 4, 2016): $ week high / low: $1.33 / $0.57 Market Cap: ~ $32 million Shares Outstanding: 35,101,419 Fully Diluted: 38,038,919 Institutional / retail: ~25% / 75% March 5, 2012: Share price: $5.30 Market cap: ~$175 million Insiders own approximately 30% of shares outstanding 26

27 Investment Highlights Orbit Garant is an 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 Six consecutive quarters of growth in domestic drilling revenue Recent expansion into major global mining jurisdictions Chile, Ghana & Kazakhstan Sound balance sheet Well positioned to outperform as market conditions improve 27