Ladies and gentlemen, and thank you for standing by. For today's call, phone participants are in listen-only mode. Following the presentation, we will conduct a question and answer session, and instructions will be provided at that time for you. If anyone has any difficulties hearing the call, please press star followed by zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded on Monday, November 13th, at 10 A.M. Eastern Standard Time, and is being broadcast live via the Internet. During today's call, management will make statements regarding management's expectations for the company's future financial and operational performance. These statements are considered forward-looking statements.
Each forward-looking statement speaks only as of the date of this call, and actual results may differ materially from management's expectations for a variety of reasons, including market and general economic conditions, and the risks and uncertainties detailed from time to time in the company's SEDAR filings. I will now turn the call over to President and CEO of Geodrill Limited, Mr. Dave Harper.
Thank you, operator. Good morning, and welcome to Geodrill's quarter three 2023 quarterly financial results call. I will begin with an overview of our operations and performance for the quarter. Our CFO, Greg Borsk, will then give us a more detailed review of our financial results, after which I'll discuss our outlook for the remainder of 2023 and beyond. In quarter three, Geodrill faced headwinds on a number of fronts. I'll first begin with the repositioning of the rigs post the wind down of our Burkina Faso operations. This was met with slower than expected take-up of rigs in other countries, which hit revenues and weighed on our costs. Well, from the outset, quarter three was always gonna be a high bar. The call with revenue in the corresponding quarter a year ago surprised us to the upside.
This was due to a peculiar rather late wet season. In quarter three 2023, this quarter just finished. Revenues were negatively impacted, firstly by very low revenue in Burkina Faso, the country that we've just exited. And Mali, which was also slower than expected, and this was partially due to weather, inclement weather. It's also partially due to operations. It's partially due to capital markets. And when I say capital markets, I mean the difficulties faced with junior exploration companies are facing in today's challenging markets. Also, in South America, our Chile operations were completely shut down by the snow season. As a result, quarter three average utilization declined to 55% from what was 70% a year ago. This, in turn, drove meters down by 13%, which drove down revenues by 14%.
Yeah, and that's all she wrote. Regarding margins, in quarter three, we were faced with some abnormal costs. In South America, we kept employees on in readiness for the post-winter ramp up. The back story to this is that we recently secured contracts with new Tier 1 customers. We secured contracts with First Quantum, Rio, which is a joint venture in Peru, and we've secured a contract with Antofagasta Barrick, which is a joint venture in Chile. Which I'm pleased to report have since commenced operations and are both going well. In West Africa, the repositioning of rigs was met with higher costs and longer preparation times as we pivoted away from juniors and intermediates towards senior miners and Tier One customers.
Senior miners have higher specs in terms of with regards to training, health and safety. For example, automated rod handling systems that need to be built or retrofitted to the rigs in order to operate on their sites. Working with senior miners also comes with greater community relations issues, and all of these things cause delays. All of the above drove costs higher. Higher costs on lower revenue negatively impacted our market margins, and that was that. The final piece with regards to financials was aging debtors. The aging debtor situation has triggered IFRS 9, which is a large non-cash provision that significantly affected our year-to-date profit, and I believe Greg Borsk will be speaking to this point a little bit more in detail.
In any case, as a result of the foregoing and all other things considered, our board of directors took the prudent and necessary decision to suspend the pending second semiannual dividend. This was purely communicated in a press release on the August 31st. Unsurprisingly, the market reacted negatively, taking our market cap down by 25%, and we're currently trading at $1.80 a share. I'm just gonna take a moment to reflect and remind investors that even after the provisions. Our hard book value is CAD 3.20 a share, or $2.37, $2.37 a share. Our market cap today is now trading at effectively six months revenue on a 12-month trailing basis. At that point, I will pass the call over to Greg, our CFO, to review the financial highlights in more detail. Thank you, Greg.
Thank you, Dave. As a reminder, all figures are reported in US dollars. We generated revenue of $30.3 million, representing a decrease of $4.9 million, or 14% when compared to $35.2 million for Q3 2022. In our primary countries in Africa, being Ghana, Côte d'Ivoire, and Egypt, revenue increased on a quarter-to-quarter basis by $1.2 million. We made the decision to wind up Burkina Faso and redeploy the rigs to other countries. And as a result, revenue decreased in Burkina Faso by $3.1 million in the quarter. Our gross profit for Q3 2023 was $5.8 million, being 19% of revenue, compared to a gross profit of $10.9 million, or 31% of revenue for Q3 2022.
We recorded EBITDA of $600,000, or 2% of revenue, for Q3 2023. This includes a $3.6 million non-cash expected credit loss provision. Excluding this provision, EBITDA would have been $4.2 million, or 14% of revenue for Q3 2023. The net loss for Q3 2023 was $3 million, or a loss of $0.06 a share. Again, excluding the provision, we would have reported net income of $600,000, or $0.01 per share, in Q3 2023. Overall, we ended the quarter with net cash, excluding our right of use liability, of $3.6 million. With the gold price averaging 1,965 during Q3 2023, global exploration spending continues to be strong and provides strong fundamentals for the mineral industry going forward. At this point, I will turn the call back to Dave.
Thank you, Greg. Before I move to the Q&A portion of the call, I'd like to provide a brief outlook for the remainder of 2023 and beyond. Despite a strong gold price, precious metals equities continue to struggle in raising sufficient capital to fund their exploration programs. We have therefore begun shifting our focus to senior miners and Tier 1 operations with long-term programs with reliable funding from mine production. Otherwise, Q4 is off to a pretty good start. Ghana, Côte d'Ivoire, Egypt, are all performing well with multi-rig, multi-year contracts. Senegal, which is our newest market, is off to a good start. We're looking to add a rig there, as is Egypt, where things are also going very well, so we're looking to add a rig there.
In South America, things are ramping up nicely, so we're also looking at adding rigs there. For 2024, our order book is strong in our core regions, especially in South America, where we recently signed two new senior miners. While on the subject of contracts, we still have a number of tenders that are ongoing at the moment. But for now, we believe the tough quarters are behind us. That said, I would hasten to add that top of mind and looming large is quarter one, 2024, which will be a tough one to beat. Recalling that quarter one, 2023, was a behemoth quarter with revenues of $37.6 million, which was a record for a quarter one, and it was actually stronger than our quarter two by 14%.
On aging debtors, we still have some work to do in keeping this, this situation in check. As we return, we will continue to rely upon our decades of experience and operational efficiencies as we adjust to the conditions and challenges for the remainder of 2023 and beyond. We take a long-term approach that this, that is flexible enough to adjust to the day-to-day realities of the business, while maintaining a focus on our core values and our shareholders. This concludes our prepared remarks. I'll now hand back to the operator to move us to the Q&A portion of the call. Thank you.
Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone pop acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Ahmad Shaath with Beacon Securities. Please go ahead.
Hey, guys, hey, Dave. Thank you. I appreciate all the, all the color on the, on the quarter. I guess my first question is, now that we're almost halfway through Q4, are we fully ramped up, or how is the ramp up looking in South America? And any color you can provide us on what should we expect from Q4? Was Q2 a good run rate? How, how are things looking for the top line?
As I alluded to on the call, Ahmad, quarter four is actually off to a pretty good start. We had a pretty solid October. I think November's gonna be flatter. And December, honestly, it's a little hard to say at this point in time, but quarter four's looking okay. It's looking okay. So as I was saying, I think the worst of these quarters is behind us. You know, we're back to—we'll get back to, you know, a semblance of normalcy. We're looking very much at this now as a 2024 story. You know, and as I was saying on the call, I hasten to add that recall our quarter one last year, it was actually our strongest month of the year.
You've been covering this, this story for a long time, and you'll know that quarter two is normally our strongest quarter. So we do have a behemoth. If we, if we were to make a year-over-year improvement in quarter one, which at this stage would be a bridge too far, for sure. Quarter four, just winding back, stepping back a step, we will be okay. Well, actually, if anything, it's showing at this point in time, it's trending towards a single-digit improvement. Beyond quarter one is where we will start to see the full benefit of the likes of South America, which is ramping up to what will become 100% utilization. We'll actually be at 100% utilization before December.
But we'll be adding a rig in the latter part of the year, and then, and so as we go to the seventh rig and get that into the field and get it commissioned and out to site, that'll probably hit the tape for us around January, I'm guessing, at this point. And so at this point in time, South America looks like it will be busy right up until the snow season next year. Full steam ahead. I'm not 100% sure that we're really shutting down for Christmas at this point. We haven't had that communicated back to us at the head office. At this stage, it appears we're gonna be-- we may be drilling through.
Okay, that's okay. That's great color. So I guess it sounds like single-digit growth, unless we get a couple of weeks of seasonal shutdown, then we might be flat year-over-year or something like that.
For December?
Yes.
I'm sorry, for quarter four?
For Q4, yeah.
Quarter four-
Yeah, it's, I didn't-
Yeah.
Ahmad, I didn't hear what you said. What-- Can you just-- Did you say-- I think what we're communicating is the utilization will ramp up through the quarter, 55%. We saw a strong October, we're seeing a strong November, and then, December, we have to wait and see based on the holiday season.
Got it. That, that's helpful. And then, Dave, how should I look at, like, the change in your customer profile going forward with this mix to more seniors? And you mentioned your, the extra cost and of training since the higher standard with the seniors and all, and all that. So on a go-forward basis, we should see some pressure on gross margins as we work through these. And are you able to help us understand maybe how much of those costs that, that you took on from the senior content cost, and how much is gonna be just structural changes the way you do things because of the requirements of the seniors?
Yeah -
You'll definitely see margin compression as you move to seniors. Bigger jobs are more competitively bid because of the long-term duration, and the fact that you're working for names that are not beholden to capital markets, you know, so your paycheck is more or less guaranteed, so to speak. I mean, to the specifics of where we'll end up, I'll hand it to Greg.
Yeah, it's-- I think if you look at the year-to-date margin, Ahmad, we're 26%. We had, we had a strong Q1, and then Q2 and Q3 were weaker. But it, it's, it's a function of the capital markets. And, you know, in 2022, when the capital markets were open for juniors, they were drilling, and, and they were able to raise money. We had, you know, some, some juniors with four or five rigs spinning. Now, now, you know, they're lucky to have one spinning, maybe, maybe two. So it, it's just, it, it, it's part of the reaction to where we are. And, moving towards the intermediate and senior miners, you're right, there is a cost to that, because a lot of times they are more competitively bid.
But it, it eliminates a lot of the credit risk that we've seen over the last couple of years, and especially this quarter, because they're, you know, they're, they're producers. They, they have the ability to pay and they have the ability to pay on time. So it, it really will help the company, but it will take some time, you know, and you're seeing this. It's not only in terms of moving to a, a higher tier customer. It's also moving out of certain jurisdictions. So when, when we pulled all of the rigs out of Burkina, and we're redeploying them into other jurisdictions, it takes time. But I think, you know, in the long run, being in better, more secure, more stable jurisdictions, having more intermediate senior customers, I think it will serve Geodrill much better in the long run.
Got it. That's, that's very helpful. So I guess we should look back at maybe 2020, 2021 period for margins, which was, we're looking at like a 25%.
Yeah.
Yeah, I think if you look at the, we had three years in a row, I think, 2018, 2019, 2020, we had a 25% gross margin.
Yeah.
We were happy with that. We modeled around that. 2021, it got up to 27%, and I think last year, 2022, our record year, it got up to 29%. But the reason it got so high is because the revenue spiked. And like I said, you know, drilling was open for everyone, juniors, intermediate, seniors. Our utilization rate was the highest it's ever been. So what you're seeing now, with utilization coming back, we expect the margin will come back to years when we had it around 25%.
That's very helpful. I appreciate it. I guess one last one for me, and you guys touched on it. So I in terms of the receivables and the amount that's older than 90 days jumped about $9.9 million and change. So how should we think about that on a go-forward basis? Are you guys expecting to recoup some of that, or should we consider the $9.5 million gonna be recognized as another provision? Do you guys have more-
Yeah.
More detail on this?
No, we're working. We... Yeah, we haven't written these amounts off. For accounting, we've taken a provision against them because, you know, there's over $15 million in our 90 days. So we've been collecting some of that subsequent to quarter end. We're working hard, but what you have to do with these provisions is, at the end of each quarter, you know, we assess, Dave and I assess where we are, how much were we able to collect. Some of it we're gonna have to collect over time.
And then just, you know, at the end of December, we'll look at our provision. What I can tell you is we took a big hit in Q3, $3.6 million, and, you know, we're working hard with these accounts to collect the money and work with them. So we'll have to-- Short answer is, you look at this every quarter, so it's something we're working on.
No, I appreciate it. And from the credit facilities perspective that are secured by these, has that raised any issues or concerns there with your lenders, or how are the that conversation going? And I'll jump back in the queue. That's the last one for me.
Yeah. No, no issues. We have the security we have is receivables, and we have some PPE, so it hasn't been an issue. We have enough of a cushion there. It's. And there's no covenant, so it's, we're fine on that.
Your next question comes from Gordon Lawson with Paradigm Capital. Please go ahead.
Hey, good morning, everyone.
Good morning.
With regards to your Latin American operations, how much revenue is currently attributed to that region? If there's any guidance you can provide there for the next year, that'd be very helpful.
Is Gordon, is that a question? We don't disclose that segment. It's less than 10%, so, it's not material. But where we are now, we have about seven rigs there, and in Q3, we only had one rig working near the end of the quarter. So effectively, we weren't really working in South America. As we sit here today, we're working both in Chile and Peru, and our expectation for the accounts we're drilling for, and some new ones, is to continue to ramp up there. So we're hoping that continues to ramp up in Q4, and then into 2024, Q1 and Q2.
And that's where you're seeing the-
In terms of-
Sorry, go ahead.
I was just gonna say, in terms of overall consolidated financial statements, it's, it's still a smaller part of the business, but the intention is to continue to grow it.
Okay. And, I gather that's where you're seeing the highest competition for contracts?
Sorry, I just missed that last question.
Well, given Chile and Peru, can I assume that that's where you're getting the higher competition for these contracts?
No. Not really. Do you want to speak to competition or?
Well, if you look at it, Gordon, it's actually where we're enjoying our highest utilization. I know looking at quarter three, that sounds like crazy statement, but we were the reason, you know, the, the rigs, the rig in quarter three couldn't work because of the snow, so that was beyond our control. What was going on for us during that time is we were busy, you know, negotiating contracts with senior miners. We would sign, you know, two new big names, and they've effectively taken all of the rigs that we had.
We're adding rigs, to meet the demand, and, and when those rigs get into the field and drilling, we'll effectively be at 100% utilizations. And whenever we get to-- As you know, whenever we get to 70% or 80% utilization, we start looking at adding rigs to, to our regions. So we're now faced with the good problem of, you know, potentially sending more rigs to that market.
Is it competitive over there? Not for the type of drilling that we're doing. We entered that South American market providing a specialized deep directional drilling service, something that most of the other drilling companies over there don't provide. And so that specialized service in that specialized service space is far less competitive and generally comes with reasonable margins. The most competitive markets that we would operate in are your West African markets, Ghana and Ivory Coast. These are essentially our core markets, and those markets are competitive. But again, you know, we're busy in those markets.
You know, aside from the fact that we have gone through a massive repositioning exercise, taking rigs out of one country, and in doing so, deciding to pivot away from juniors and intermediates or anyone, basically, capital-beholden to the capital markets toward the senior miner space. In this, we've been successful, and we've signed a number of contracts, and we're in the middle of tendering some much larger drills, which are not news ready today, unfortunately, for today's you know quarter results.
But we will be very busy in those markets come from 2024. So very much at this stage, a 2024 story. I think what we can do at this point is recover what we can from the setbacks that we've had in 2023 and, you know, build the launching pad, as it were, for 2024 and beyond. Evidently, that seems to be heading in the right direction, although we'll see, we'll see how that pans out, I guess, as 2024 unfolds.
Okay, that's great. You answered my second question with that. So thanks, guys.
Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. There are no further questions at this time. Please proceed.
Thanks, Jamal. Thanks, everyone. Thank you, everybody, for joining today's call. Thanks very much, and have a great day. Thank you, all.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.