Good evening, ladies and gentlemen. Thank you for standing by. For today's call, phone participants are in a 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'd like to remind everyone that this conference is being recorded on Monday, August 8th at 10 A.M. Eastern Standard Time and is being broadcast live via the Internet. During today's call, management would 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 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 would now like to turn the call over to the President and CEO of Geodrill Limited, Mr. Dave Harper.
Thank you, operator. Good morning and welcome to Geodrill's Q2 2022 quarterly financial results call. I'll 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 second quarter financial results. After which, I will discuss our outlook for the remainder of 2022. During Q2, we achieved new milestones and demonstrated continued strength as demonstrated by our financial performance. On the financial front, we generated record revenue of $39 million, which was up 28% year-over-year. We also achieved record EBITDA being 29% of revenue, which was up 51% year-over-year. Now, on net income, we were just shy of the record. We delivered $5.9 million or $0.13, which was up 49% year-over-year.
Significantly, we continued to strengthen the balance sheet, surpassing a new milestone total equity of $100 million, and that's up $17.7 million or 21% year-over-year. Aside financial, we also had a number of operational and strategic wins. Operationally, we increased our drill rig fleet to 75 rigs and recorded increased rig utilization of 78% on this increased rig fleet. We also exceeded target projections on all recently commenced contracts, especially Egypt. Outlook wise, we continued seeing a strong pipeline of bidding. Finally, strategically, management and insiders demonstrated their confidence in the business by exercising over 1.3 million share options at an average price of CAD 2.18, resulting in CAD 2.9 million in fresh equity. Geodrill's continued strength is more than the sum of our strong financial measures.
Each quarter that we are able to fortify our position further entrenches the company, not only in West Africa, but now extending beyond those borders and into new geographical regions. The bottom line, rig for rig, Geodrill continues to outperform, generating record profitability and demonstrating that our model works. Thank you.
Thank you, Dave. As a reminder, all figures reported are in U.S. dollars. The company generated record revenue of $39.2 million in Q2 2022, a 20% increase when compared to $30.6 million in Q2 2021. The increase in revenue is a result of the increase in demand for the company's drilling services. Importantly, the company has invested a significant amount of capital into its drill fleet and has advantages in the form of reputation and experience, accuracy, reliability, and safety. All of which serve as key factors in the awarding of contracts and in the increase in the company's revenue.
In addition to significantly expanding its rig fleet, the company has also been successful in expanding its client base to include a mix of majors, intermediates, and juniors, which all contribute to the increase in the overall drilling activity. The gross profit for Q2 2022 was $12.4 million, compared to $8.3 million for Q2 2021, being an increase of $4.1 million. The gross profit percentage for Q2 2022 increased to 32%, compared to only 27% for Q2 2021. In terms of EBITDA, the company realized record EBITDA for Q2 2022 of $11.2 million, being 29% of revenue, compared to $7.4 million for Q2 2021 or 24% of revenue.
The company also realized net income for Q2 2022 of $5.9 million or $0.13 per share, compared to $4 million or $0.09 per share for Q2 2021. We ended the quarter with our strongest balance sheet ever with total equity of over $100 million. We had net cash of $2.9 million and have recently renewed our banking facilities and credit lines to fund any future opportunities. At this point, I will turn the call back to Dave.
Thank you, Greg. With a growing drill rig fleet, an outstanding track record, strong balance sheet and exceptional financial metrics, Geodrill is ready to meet the robust demand for exploration drilling services. We believe in the inevitable cycles in commodities. We also believe that we are currently in the early stages of an upcycle. Gold is doing particularly well, relatively to the markets. Considering the enormous amount of metals needed towards greening the economy, batteries and electric vehicles, it is clear that demand will only grow from here and that new resources will need to be discovered and developed and therefore drilled. For investors, Geodrill provides a great way to participate in this commodity boom without direct exposure to price fluctuations or country or geographical risk. With Geodrill primed to continue to deliver outsized performance and growth, investors searching for value and earnings should consider Geodrill.
On that note, some good news for our U.S. investors. Our OTCQX listing is now well advanced and once listed, it should be in the next week or two. This should increase shareholder visibility and credibility. This concludes our prepared remarks on our financial results. I thank you for participating in today's call. We will now be pleased to answer any questions that you may have. At this time, I'll ask the operator to provide directions for anyone who wishes to ask a question. 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 touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled 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. One moment please for your first question. First question comes from Ahmad Shaath of Beacon Securities. Please go ahead.
Ahmad, good morning.
Ahmad, your line is open. You may be on mute.
Yeah, sorry about that. I was on mute. Good morning, Dave. Congrats on a solid quarter. I was just wondering if you can give us a little more color on the demand environment. I see a lot of commentary on exploration companies, so maybe give us a little color on that, either compared to the beginning of the year or compared to last year. Any color on that side of the demand environment will be very helpful.
Demand is as strong as I've ever seen it in my 35 years in the industry, Ahmad. That's the simple statement. You know, gold is doing particularly well at the moment, just shy of $1,800 which I think is holding up very well under the circumstances relative to the rest of the market. I think I made that point in the commentary. You know, what's the interesting dynamic at the moment is that we're also seeing all this EV activity.
I do not believe ever in my time and, you know, in the career, if I was to say 35+ years, where we've not been running for, say, one or two, you know, say gold and nickel or gold and copper or, you know, there's usually one or two things going at once, right? To have everything going, it's kind of really it seems to be the industry that we're in is in a different dimension to the rest of the world. That perhaps is because of the cyclicalities of, you know, the contrarian nature of gold mining and commodity mining in general. I gotta say, you know we are completely tapped out for rigs. We cannot get rigs out to our customers fast enough, even us.
You know, to the extent that we are actually renting drills to keep up with demand. Yeah, I - you know, really busy and getting busier.
That's great color. Maybe I have a couple of expansion points on what you mentioned. First, on the other metals, like what is your exposure right now, if you're able to mention outside of gold, and specifically anything related to green energy? I mean, we've seen some expansion into lithium and other metals into Africa. Are you able to capture some of that business or that's out of your geographical scope so far? And then secondly with what you just mentioned on the demand environment, and I've seen this is your first time in maybe the last four or five quarters that we see the EBITDA outpace revenue.
Is it fair to say that this is the beginning of such trend given where we are in the cycle and the demand commentary you just mentioned?
I'm gonna answer the first half of your question, and I'll maybe I'll just quickly speak to the you know, the demand and the commodities, and I think I'll let Greg answer the back half of your question. Again, on the actual breakdown of the split between say, gold and other, whereas it is you know, traditionally single digits, 2-3%, that pendulum has swung now to the extent that gold is about 85%-90% of our business. Other being you know, your lithium, zinc, and so on and so forth is between 10%-15%. It fluctuates, you know, it goes up and down a bit.
It could be 81%-19%, it could be 80%, 87.5%, 12.5%. I would say, you know the needle is moving to a larger portion of the battery metals. Yeah, kind of moving in the direction of about 85%/15%. This is on the enlarged numbers on the, you know, on the enlarged meter, it's enlarged big numbers, the enlarged revenues. I can hand over to Greg Borsk.
Yeah. Just Ahmad, I think on the demand, it's really a global thing and an industry thing. You know not only Geodrill, we had tremendous revenue growth last year. We've also been able to build on that again this year. You see, you know, in the quarter revenue increased 28%. Again, as Dave mentioned, you know, 90% of our drilling is for gold, and that's just geographically where the majority of our rigs are. We're able to drill for anything. We drill for lithium, copper, zinc, so it really doesn't. We can benefit from any base metal or any precious metal. What you're seeing in terms of demand, as Dave mentioned, we've never seen demand this strong. Dave's never seen demand this strong in 35 years.
Well, our success is being able to keep up with our clients and our clients' demands. In terms of, I think he had a question on the EBITDA growth and yeah, what we're realizing, what we're able to do is, as you see the revenue increase, we're able to maintain our margins. The you know, through the first six months of 2022, we have a gross margin of 31%. That's as high as I remember, the kind of year to date. Q2, that even with all the inflationary costs, our gross margin in Q2 was 32%. A big factor of that is, as revenue increases, I think is kind of the point you were getting at. You'll see revenue went from $30.6 million to $39.2 million.
We have a lot of fixed costs in there. As it increases, a lot of that just drops to the bottom line. You see significant EBITDA number, $11.2 million, which was 29% of revenue. As I mentioned, this, you know, Q1 and Q2 were two very strong quarters. If you look at where we are halfway through the year, we have EBITDA of $21.5 million. Very strong start to 2022. As we mentioned, it's based on demand and I think everyone's seen an increase in demand. We're just well positioned to take advantage of it. Okay?
Gotcha. No, that's a great call and I appreciate it. I'll jump back on the queue , congrats again on the good numbers.
Thanks, Ahmad.
Thank you.
Thank you. The next question comes from Daryl Young, TD Securities. Please go ahead.
Hey, good morning, guys. Just the first question around Q3 outlook and the rainy season. Obviously, you're more geographically diverse now. Just curious if you got any early indicators of how we should be thinking about the wet season this year?
Yeah, we're just chatting about that as we're coming onto the call, actually. Wondering whether we might get that question. You know, traditionally, on a year-over-year, our Q4, our Q2 is generally our strongest quarter. Relative basis, I think you're gonna see a nice surprise in Q3. We would have normally been sort of parking a few rigs around the end of June into July. That gives us the opportunity to jump in, do a bit of maintenance and send some of the guys on break and stuff like that. We're now in the middle of the wet season, what is traditionally the wet season, and we haven't seen it. We have seen. It has fallen away, but not to the extent that it normally does.
I think Q3 is gonna be one to watch. You know this all makes for an interesting, you know, bigger story, which is of course the fiscal 2022. Its quarter four is looking like a blockbuster as well.
Yeah.
Sure. That's great.
Daryl, let me just add to that too. I think just kind of my earlier comments to Ahmad, if you look at the year-over-year, if you look at last year, Q3 significantly dropped off from Q2. I think Q3, 2021 was about $27 million. Q4, even Q4, we saw a very strong half of 2021, and then Q3 and Q4 were a bit lighter. We're not seeing that this year. Not only are we expecting strong numbers, I think on a year-over-year comparative, we're set up pretty nicely throughout the second half of this year.
Okay, great. Just with respect to labor, I mean, it sounds like you've got robust demand just across the board. Just curious if it's really labor that's preventing you from maybe winning even more work at this point?
We just don't have any rigs, Daryl. We're kind of tapped for rigs. You know, you see the number 78% utilization and you think, well, there's still the 22% to go, but it doesn't work that way. You know, you'll never get to a 100%. In reality, 80%-85% for us is about as high as it ever gets. Given that we are currently towards the tail end of quarter two, which these numbers relate to, you know, you generally would be starting to taper off, particularly considering that we have added to the fleet and that utilization number that we quoted is on the enlarged fleet number.
The thing is that, you know, it, you know, you're just never get to 100%. For all intents and purposes, we're currently tapped out and we are, you know, plans are well and truly afoot to ensure that as new rigs do come out of the workshop, they'll be added hopefully, you know, manned with, you know, able, you know, trained technicians and so on and so forth. It's all part of the machine. Is labor holding us back? Good question. You know, I mean, it's a tightened labor market that we're working in.
You know, we kind of, you know, we were working on this sort of stuff a year ago, so, you know, I think we're in pretty good shape.
Okay, great. Just one final one. Have you seen any changes, significant changes in the drilling mix? Just any kind of color or commentary there, more directional or deep hole or what you can give us there?
Yeah, good question. A lot more diamond drilling in this current quarter. A lot more. You know, historically, we do between 15%-20% of our total meters drilled in a quarter would be diamond drill, and this particular quarter it was 27%. That's emblematic of mining companies doing more delineation drilling. In other words, bringing resources onto the ROM pad so they can produce gold. So it's kind of the transition you see when a miner goes from resource to reserve definition. A lot more diamond though. Which tends to actually lower the total meters drilled for the same amount of shifts drilled.
That's the quite simple, you know, reason for that is diamond drilling, lower productivity, typically higher price. Yeah, definitely a lot more diamond drill.
Okay, great. That's all for me. Thanks, guys.
Thanks, Daryl.
Thank you. Ladies and gentlemen, if there are any additional questions, please press star one at this time. The next question comes from Gordon Lawson of Paradigm Capital. Please go ahead.
Hey, good morning, everyone.
Hello.
Congratulations again on an excellent quarter.
Thank you.
For your newer contracts and ongoing negotiations, are you able to comment on the structure you're targeting in terms of labor and energy inflation?
Sorry, I'm not sure -
Go ahead.
I didn't understand the question. For newer contracts, comment on labor what? Sorry?
Well, in terms of labor and energy inflation, is there any cost sharing? Are the clients paying for the energy? Like how exactly are these newer contracts getting structured?
Yeah, no. O n a large contract, there's always rise and fall clauses that capture that. Like, if we're, you know, we have a long-term two, three five -year contract. That's reviewed annually. On the new contracts, what we do is we, you know, build it in. If we're doing a wet rate, if we're building a wet rate, we'll build in the fuel. Then again, that's reviewed with the client. Not really any concerns there. We do a lot of underground drilling now with the LM, the electric rigs, so there's no exposure. We do have some contracts where the clients supply fuel. I guess to your question, we're on top of it.
We do see fuel rising but it's not something that, you know, we're exposed 100% to. We work with the client on that and build it into the rates. Same in terms of labor. Labor increases annually. You know, so do our rates. We, you know, make sure we balance that. We have a pretty good handle on. I think if you understand the industry and our clients and the drillers, there's always been a history of kinda working together. It's part of the chain.
If we need to increase rates and we're able to back up why we have to increase rates because of, you know, the spike in fuel or the spike in labor, you know, easily we're able to share that with our accounts.
Okay, t hank you. Partially reflecting the 6 rigs that are currently being rented, if I were to parlay that back over to labor, how is the hiring process going on that front? I mean there's been a lot of previous commentary on shortage of skilled labor. Has there been much progress there?
I think a lot of our competitors who struggle with labor, and from what I understand, it's predominantly in North America. We're not seeing that. I think, you know, at Geodrill, our history of investing in our labor force and training them and we've constantly given staff raises every year, even in bad times for us. So we have - w e're not really seeing significant labor challenges like I think some of our competitors. It's as Dave mentioned earlier, it's more rigs and making sure, you know, we have rigs available to suit our clients.
In terms of labor, I think if you continue to invest in your labor force and treat them well, you know, in good times, they're there to support the company.
Yeah. We're training today's workforce, tomorrow's workforce today. You know, we're not gonna stop at whatever it is, 75 rigs. Gordon, you know, we invested immensely. We're gonna hit 100 rigs. I don't know whether it's gonna be next year or the year after. You know, we're already training that next pool of talent. You know, as in our academy up at site, you know. This is something that we've done since the get-go. You know, just talking about 25 years in business next year. We started with a bunch of expats many years ago. We hired a bunch of young fellas out here in Africa to do the heavy lifting.
Over the years, those young fellas went through the hoops and, you know, through our various, our approach to training, which we think is second to none. As a result, we developed an Africanized local, effectively, workforce with fully trained technicians as good as what would be, what you would expect in the Western world. These people are very, very trainable. They're hardworking. They're nice people. You know, they're very loyal and honest. It's, you know, Africa actually has one of the, if not the youngest population in the world. A lot of unemployment. It's really a great place to be looking. When you look at our side of this, one of the things that we struggle from, can't get rigs, can't get people.
You know, the people side of it, I think we've got it fairly well covered. I think it's worth mentioning that those people that joined the company 25 years ago are still with us today, only they're not lifting heavy things. They're actually all managers in their own right. This is a great, you know, story in terms of local content and putting something back into the community. I mean, in terms of ESG boxes, I just don't know how many we tick. I hope that answers your question.
Yeah, that does and t hat's helpful to hear. Just one more for me, kind of generic. I mean, your financials continue to outperform. You're beating consensus every quarter. What do you feel it will take for your company to trade more in line with peers?
That's a great question. I'm not sure if Greg wants to jump in, but I'm gonna give it my two cents worth here at the moment. You know, we're a small story. We're a great story, but we're a small story. Relative, on a pound-for-pound basis, Geodrill probably punches harder than any driller out there. As the story continues to grow, I think, you know, people are becoming more used to the story but we're still a small liquid story. Now, plans are afoot at the moment to expand our investor base into the U.S. We think we're getting, you know, better eyeballs and better audience in the U.S. at the moment.
We've been marketing down there in the last year, but found that it was still difficult for those people that wanted to buy the story and own it. They, you know, to buy it on the Toronto Exchange. Effectively been trading with an OTC listing, but it was more like a pink sheet listing. It's sort of in the small pools for the trades. It was quite illiquid, very difficult to buy, even harder to sell. That will change in a couple weeks time. We've actually been working hard on an OTCQX listing, and that is now finalized. We have a code, and we've been given an official listing date, which I can't recall exactly, but I think it's in the next week to ten days.
Once that is up and running, I think that just opens up a whole new market for us in terms of investors. The actual story itself, the Geodrill story, I think you'd go a long way to find a company that has $100 million of net equity. You know, consistently grows year in, year out, even you know, through difficult times like COVID, we still managed to be cash flow positive and reinvest in our business. I think you'd go a long way to find a company where management and insiders continued to demonstrate their belief in the business.
You know, I've - m yself and Greg and the other managers just pulled out our checkbooks and literally converted our options, you know, putting $2.7 million back into the business. We believe in this business. We just got to get other folks to believe in it as well. I do believe that this is actually one, if not the best growing company in the world. We're not the biggest, but we're certainly, if we're not the best, we're in the top quartile.
Let me just add.
Okay.
Yeah. I think Gordon, like we manage the business on the balance sheet. If you look at our balance sheet and Dave, you know, we thought it was important to highlight, you know, surpassing $100 million in total equity. You know, we've continually invested in the business, in the balance sheet, and you see that in the PPE. We're constantly adding rigs and we're upgrading rigs and we're, you know, reacting to what the clients want. Whatever the clients want, we're able to deliver. Same with inventory. I mean we ended Q2 with almost $30 million in inventory. For us, that's inventory spread throughout the countries we operate in. You know, it's in CI, it's in Egypt, it's in Ghana, it's throughout our group network.
When large jobs and jobs we're working on continue, we're able to continue to service those clients because we've invested and we have that inventory in place. I think just two more quick points. You mentioned us versus our competitors. Again, it's a strong balance sheet. We effectively have no debt. By that I mean, we have net cash. If you look at, we always Q2, I think we had net cash of about $2.9 million. We have more cash than debt. The other kind of delta I look at is our receivables versus our payables. You'll see in Q2 that delta builds up. Because we're so busy in Q1 and Q2, we kind of bank a lot of trade receivables.
Trade receivables at the end of Q2 were $40 million. I think it was about $40.4 million. Through Q3 and Q4, that makes its way into cash. We just have a very healthy balance sheet. I think as over time, as we're consistent with revenue and earnings and keep increasing our total equity, it should get recognized. I guess just quickly, we pay a dividend. I'm not sure, just off the top of my head I think only one other driller pays a dividend. We initiated a dividend in 2021. We paid semi-annual cents, and then we've increased that in 2022.
I think if you for shareholders and stock value, if you're consistent, you're consistently growing, you're strengthening your balance sheet and you're returning cash to shareholders, I think you know that's what we're continuing to do, and hopefully it will get recognized.
Just one final point on that, if you don't mind, Gordon, I'm sorry to take so much time, but it's an important point and I missed it before. We're obviously an African focused driller. This is where we started. This is where our DNA is. There's actually a reason for that. It wasn't a mistake. You know, I recognized this region 25 years ago as a region that was very, very under-drilled. I thought that, you know, if this place was gonna grow up to become the mining region that I believe it will, it's gonna need a lot of drilling. This is a great place for anyone starting a drilling company 25 years ago, and evidently I was correct. Today, we drill 1.8 million meters a year of drilling.
You know, that makes us, you know, somewhere in the top five or six drillers in the world by meterage. As a result of all that drilling and that gold boom conditions that I predicted 25 years ago, today the countries that we operate in, Ghana, Burkina Faso, Ivory Coast, Mali, that's just the West African countries, account for seven of the major producing nations in West Africa. Now, if you look at the production that comes out of West Africa, you think China and Australia and North America is the largest producers in the world. Run the sums. Majority of the world's gold is currently coming from West Africa. Actually, I think if you add the seven countries up, it'd be the seventh largest producer in the world.
We will soon, if another couple of years things keep going the way they're going, West Africa will, as a region, become the largest producing gold region in the world. Anyway, I keep trying to sell the African gold story, and some folks don't like it. Some investors are just, "I don't like Africa," so that's cool. Now we're expanding the business model into South America. That's come with its challenges but it's actually going well, and despite challenges. I believe as we become more of a global story, which is the intention, I think we'll be more acceptable to investors. By that stage, we'll be trading at much higher multiples. The fact remains that today we traded at, what, 2.5x EBITDA multiple.
You know, investors looking to dig value now on the back of a strong earnings story that want to get set at the beginning of a boom, I gotta tell you, two drills to go to, you know.
Yeah, I'm seeing more and more of that. Thank you very much for your detailed response. I really appreciate that comment.
Yeah. Thank you. Cheers.
Thanks, Gordon.
Thank you. The next question comes from Ray Gibbons, a private investor. Please go ahead.
Hey, guys. Can you hear me?
Yeah. Good morning.
You guys hear me?
Morning, Ray.
Morning, guys. Congratulations. Incredible quarter. I think I might have a long career and not be in a business as good as yours. You know, buying a lot of stocks, I might not, you know, ultimately find an entity that combines capital and labor in a way that is, you know, leaves such an impact. But anyways, following a lot of miners, not necessarily in Africa, but around the world the past 18 months, I often hear about how we're adding rigs. We added another rig. There's a rig, you know, coming to drill, you know, juniors, intermediates. Then I look at some of your competitors, and like, their utilization just doesn't seem to change. I guess I wonder, you know, big picture, where are these rigs coming from? Are miners choosing to buy rigs now themselves?
Is there any of that going on? Like, are they getting into your business to any degree? Can you give any color on that?
I'm seeing it announced, certainly not in my space, out here. I really don't get too involved in what's going on around the countryside where we're operating. I just try to focus on what we're doing here. High level, I'm not so sure. No, I don't think so. I think people are possibly increasing their fleet sizes, and therefore the utilization possibly not changing as quick as you might expect it to see. Like if you look at our utilization, for instance, it moves. What also moves is the rig count. As long as the two are working in lockstep, we're fine.
I mean, +70% utilization is probably as busy as anyone else in the world would be at the moment. That's just fine with us.
One thing that -
Actually, Ray, what I beg to differ just o n your comment there. Thinking about it, internationally what I actually have noticed, and this is important from a pricing perspective. Let's say in the last sort of two years, we've seen international utilization move from about 30% up to about 40-45%. 50% is actually where we see an inflection point where the pendulum changes on pricing, and that's where drillers start to see leverage. We're actually at that point now. I would, you know, as I say, I don't follow the other guys that closely, but I would beg to differ. I think utilization globally must be approaching 50%. Yeah, I stand corrected.
Let me add on that, Ray, too. Yeah, I believe, like, if you look at our competitors, their utilization is increasing also. When you see, you know, from the mining side, adding a rig or adding two or, you know, it benefits the drilling industry.
Yeah. I guess the lag is kind of what has me a little baffled. One thing that sticks in my mind about kind of through the downturn, when Dave, you used to talk about the industry, you'd say things like, "I'd hate to be managing, like, a motley group of rigs through this downturn." I just, that motley kind of sticks in my mind. How is it that you guys have been able to find six rigs for lease that were kind of within your framework of the type of rigs that you guys work with?
It's more out of necessity than c areful planning. We took on a big job in a new country, and the customer's requirement was start drilling yesterday. The only way we're going to be able to do that -w e essentially took over the existing contract from another contractor. That meant that there was a fleet of equipment that was sitting there idle and a fully trained workforce. I mean it was a perfect storm. It was a no-brainer. We just asked the client whether they could rent us their rigs. The rigs were actually owned by the miner. The other contractor was essentially managing them. The contract that we signed is to supply our own equipment. That equipment, only two of the eight rigs, six rigs, sorry, were required were immediately available.
While we were shipping them, I guess the question was asked, "What are we gonna do for production in the meantime?" The answer was, "You're gonna ship rigs. We'll take this workforce, and we will put them through our training rigs and start there." It was the quickest startup of a new contract I've ever seen. I've never seen such a soft start in all my years of drilling. It was great. Worked out well for the client, worked out well for us. Worked out well for the employees, because they managed to, you know, maintain their jobs. Yeah.
Great. Thanks so much, guys. Thanks to everyone.
Thanks, Ray. Cheers.
Thanks, Ray.
Thank you. The next question comes from Daryl Young, TD Securities. Please go ahead.
Sorry, just one bit nitty-gritty question. You had a $600,000 odd non-operating loss in the income statement this quarter, and it doesn't look like you backed it out of EBITDA. EBITDA would be stronger, the way I'd look at it. Just curious what that $600,000 hit was.
You're absolutely correct, Daryl. That's our what we call the drill equity investments. Those are equity that we hold in certain clients. If you look at that year to date, we have a gain of $444,000. In the quarter, there's a loss of $620,000. What that's telling you is some of the investments that we had on our balance sheet, we've crystallized a lot of that. In the quarter, they, like a lot of the other mining companies, decreased in value. That's the $620,000. We don't report an adjusted EBITDA, but I know some of our analysts do.
In Q1 they adjusted that one way, so they'll probably adjust it again by the $6.20 in Q2.
Okay. That's great color. I don't know if you guys would consider reporting an adjusted EBITDA or not, but FX was a big hit this quarter as well, so. Anyway, great quarter, guys. Congrats.
Okay. Thanks, Daryl.
Thank you. There are no further questions at this time. Please continue.
Okay. It was a great call and a lot of questions. Thank you very much for everybody that participated in today's call. Yeah, thank you very much. Have a great day. Bye.
Thank you, everyone.
Ladies and gentlemen, this does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.