Morning, everyone, and welcome to Geodrill's third quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded today, November 13, 2025. Before we begin, certain statements made on today's call by management may be forward-looking in nature and, as such, are subject to various risks and uncertainties. Please refer to the company's press release and MD&A for more details on these risks and uncertainties. I will now turn the call over to Mr. Dave Harper, President and CEO of Geodrill. Please go ahead.
Thank you, Operator, and good morning, everyone. Welcome to Geodrill's Q3 conference call. Joining me on today's call is Greg Borsk, our CFO. I'll begin. Fiscal 2025 is playing out to be a year of two halves. Our first half was evidently solid. Quarter three 2025 reflects the complex realities of strategic expansion. While our financial results show short-term cost absorption, they also highlight the strength of our long-term vision. We are executing a deliberate strategy to build a resilient, geographically diversified platform capable of delivering consistent performance across seasonal and regional cycles. South America presents challenges but also opportunity. It is a market that demands upfront investment, operational discipline, and patience. We have doubled our rig count in the region, supporting major multi-phase drilling contracts. This expansion is not just about growth; it's about positioning Geodrill where we see long-term value.
Geodrill has always operated where there is opportunity and risk. This is how the company started 25 years ago: with risk comes reward. The higher the risk, the higher the reward. We don't chase crowded, competitive markets; we never have. We go where opportunity lies. One of our key advantages is our proximity to operations. We live and work close to our drill rig fleet, boots on the ground. I live in West Africa, and we've now established hubs in South America and in Egypt that are treated with the same level of commitment. Despite these headwinds, we remain focused. Our platform in Chile is growing. Our West African operations continue to show strong post-wet season demand. Surface drill programs in Egypt are restarting, and our multi-year, multi-rig contracts provide a solid foundation for sustained performance. We have achieved 7.8 million man-hours LTI-free. Our bidding pipeline is highly active.
Commodity prices remain favorable, and our team continues to deliver with discipline and resilience. I'll now turn the call over to our CFO, who will review our financial performance in brief.
Thank you, Dave. As Dave mentioned, in Q3, we faced significant headwinds. However, we still delivered revenue of GHS 39 million, an increase of GHS 4.9 million, or 14% when compared to GHS 34.1 million for Q3 2024. The increase in revenue was a result of the company's strategy to diversify its operations to South America and to operate in a geographic region that is not impacted by wet season. The increase in revenue was predominantly the result of an increase in revenue in South America of GHS 5.8 million, partially offset by a decrease in revenue in West Africa and Egypt. The gross profit for Q3 2025 was GHS 2.4 million, being 6% of revenue, compared to a gross profit of GHS 8.4 million, being 24% of revenue for Q3 2024. The decline in the gross profit margin this quarter can be summarized regionally as follows: West Africa contributed to 66% of the decline.
The decline in the region was driven by wet season slowdown, the drilling mix, wage inflation, and the Ghana Cedi appreciation. We expect improvements in Q4 in Ghana, Côte d'Ivoire, and steady performance in Senegal. Egypt contributed to 17% of the gross profit decline. This was due to lower revenue and lower drilling activity. Q4 recovery is expected from restarting surface drill programs in Egypt. Lastly, South America contributed to 17% of the decline. Rapid rig expansion in the region led to upfront costs and operational delays, especially in Chile. Q4 improvements are expected with stabilized operations and new job starts. EBITDA was GHS 4.3 million, or 11% of revenue, compared to GHS 7.6 million, or 22% of revenue, for Q3 2024. We reported a net loss for Q3 2025 of GHS 1.5 million, or a loss of GHS 0.03 per share, compared to net income of GHS 2.6 million for Q3 2024.
EBITDA and net loss were favorably impacted by the expected lifetime credit recovery of GHS 100,000, a foreign exchange gain of GHS 800,000, and the GHS 1.8 million gain on equity investments. Despite operational challenges this quarter, our year-to-date performance reflects the underlying strength and resilience of our business. Over the first nine months, we have delivered solid financial results, maintained financial discipline, and reinforced our strategic positioning for long-term growth. We ended the quarter with shareholders' equity of GHS 129 million, including net cash of GHS 11.1 million. We remain confident in our ability to navigate the expansion in South America, leveraging our core capabilities and disciplined execution to optimize margins and capital efficiency. At this point, I will turn the call back to Dave.
Thank you, Greg. Let me jump straight to it. The drilling market is strong, and we are positioned to outperform. The global mining drilling sector is entering a multi-year expansionary cycle, driven by a number of factors, for example: rising commodity demand, governments doubling down on strategic resource security, and increased capital deployment across exploration and development drilling. This is translating into real activity on the ground, and Geodrill is uniquely positioned to capture outsized value through its disciplined execution, operational leverage, and strategic footprint. At Geodrill, we do not chase volume for volume's sake. We focus on disciplined growth, margin integrity, and operational excellence. That is what drives shareholder value. In closing, a recap. Here is what sets us apart. Global rig utilization is climbing, and Geodrill's is the highest in the industry. Our rigs are working, our teams are delivering, and our clients are extending contracts.
This is not a theory. This is happening real-time, boots on the ground. Our margins will return. We are seeing pricing power across key markets, and as we work through operational challenges in South America, we remain confident in our ability to deliver the improved returns we have achieved in prior cycles. Our balance sheet is clean. We are not over-leveraged, and we are not overextended. We have the flexibility to grow and the discipline to protect returns. Finally, our work pipeline is real. We have contracts in hand, mobilizations are done, and new tenders are in advanced stages. We are building a geographically diversified, operationally resilient business, and from here, it's head-down execution, eyes on the prize, and we are confident in the path ahead. This concludes our prepared remarks. Q&A session over to the Operator. Thank you very much.
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 prompt that your hand has been raised. 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. Your first question comes from Dona ngelo Volpe with Beacon Securities. Your line is now open.
Hey, guys. Good morning. Just looking for some clarification on the gross margin shortfall with the focus on Africa and South America. I guess related to Africa, was there an earlier shutdown and kind of later resumption of activity in the wet season, or is most of the impact through the currency appreciation of the Cedi?
Hi, Donny. It's Greg. Yeah, it was actually a combination of really three items there. We had the wet season, so the slowdown impacted us in the three countries in West Africa. It hit us in Ghana, it hit us in Côte d'Ivoire, and also Senegal. You had lower drilling activity, and then we also had two other items that contributed to that. We had significantly higher salaries in West Africa. These are salary increases that we put in at the start of the year. On a quarter-over-quarter basis, they're really amplified in Q3 2025. That led to a part of the gross margin decline. Lastly, in West Africa, the Cedi appreciated considerably. Q3 2024, the Cedi was about 15 to 16 to 1, and what we experienced in Q3 this year was about an 11 to 12 to 1 Cedi.
It's a significant increase when we convert the Cedi to US dollars for reporting, significant increase in our salary. That's the West Africa. In South America, the gross margin, we had a negative gross margin, and we were just significantly ramping up operations in South America, and I made a note on that in the revenue. What's happening when you're ramping up as quickly as we are with significant jobs and significant rigs on the continent, the costs are well ahead of the revenue. We hope to catch that up in Q4, and also, we just didn't get the drill time that we needed in Q3. That kind of explains West Africa and South America.
Okay. I appreciate the color there. Just to follow up on South America, I was going through the MD&A, and I kind of saw there were onboarding delays coupled with operational issues. I'm just kind of curious on what some of those operational issues were. Was it trying to ramp up the new employees that were brought on, or were there any delays coming from the customer themselves? Can you just provide any more color on what was happening there and if we're kind of expecting a drag on gross margins to persist out of South America as you guys are starting new projects?
It's Dave, Donny. Yeah, it was basically onboarding. The solid ramp-up, we went in quarter three last year, we've generated about GHS 2 million in revenue. This time, it was significantly higher. We've doubled the rig fleet, and basically, what happens with all of that is the training and the preparation before going to a tier-one mining site. It begins about two or three months before you actually arrive at the site. We had a solid as one rig would go out into the field, another one would come in, and we'd have to go through the cycle again. It was basically just onboarding. There is light at the end of the tunnel, I should add, and that is that the rigs are actually now in the field, and they are drilling, and they're producing.
We are expecting a pretty solid turnaround from South America in quarter four. It was a tough quarter, but we are confident that the hard yards are done. All of the costs are pre-financed and upfront, and revenue is the laggard. The rigs are in the field, they are turning, they are earning, and the heavy upfront costs are pretty much absorbed now. From here, it should be a bit of a turnaround story for sure.
Yeah. Donny, one other thing just on South America. Our high-altitude job, we only got about two weeks of drilling in Q3, call it the second half of September. That is going to be fully operational through Q4 for us, through October, November, December. Also in South America, we have another job starting which started for us in October. You will see that in Q4. We are expecting significant revenue increase in Q4 in South America.
Okay. But just size of that new project being started, are we expecting similar startup costs that we saw related to Q3, or we would anticipate a little bit of improvement on that front?
No, yeah. Sorry, we had that a bit in Q3. We did get started, but only for about two weeks, second half of September. So we were fully ramped up by the start of Q4.
Okay. Perfect.
The time is sort of the price is essentially out of the way, and from here, it's the gain that follows the pain. We will see improvement in quarter four for sure. We have had a significant increase in activity levels in South America, and all of that was essentially pre-financed throughout. Some of it was quarter two, but the majority of it was quarter three.
Okay. Thanks, guys. I appreciate the color. I'll pass the line.
Thanks, Don ny.
Thanks. Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Vitaly Kononov with Freedom Broker. Your line is now open.
Hello. Thank you, Operator, for taking my question. Hello, gentlemen. I have a question related to the gross margins that were just discussed. Yeah, I could hear the reasons for the gross margin decrease. However, in the notes to the financial statements, I also came across the drill rig expense and the contractor services that were up nearly 30% and 60% year on year. Could you please give us a little comment on that? What goes into those line items?
Yeah. What happens is the major components of our cost of goods sold are salaries and wages. If you look at that, our salaries and wages increase significantly. Typically, when we're having our normal gross margin, we're able to recover those salary and wages through drilling performance. In Q3, with the startup in South America, we didn't get the drilling performance to cover that, okay? That's due to the rapid ramp-up. I think you mentioned the drill rig expenses. Certain of those drill rig expenses are related to operations. If we're not getting their fix, their rentals, their consumables, etc., we just didn't get the revenue in the quarter in South America to capture those.
All right. Thank you. If I could hear you correctly, you mentioned that in South America, the drill rigs were only in use for two weeks. Can you give me a little approximation of that?
No, no. Sorry. No, no, no, no. No, what we communicated was in South America, we have a high-altitude job that is seasonal. It only drilled in South America. We were only able to restart that job later in September. That one job was only operational for two weeks in the quarter. We had other jobs in South America that operated throughout the quarter. If you look in the MD&A, we disclosed the revenue from South America. The revenue in the quarter was approximately GHS 6 million. I think it was about GHS 5.8 million from South America.
Great. Thank you for clarification. Since we're on the topic of South America, can you give a number estimate that you might have internally for the 19 rigs that are in use at the moment? How many are actually on site? Do you have a utilization rate that we could apply in our model?
This is specifically for South America or specifically for—oh, sorry, for the group?
Since South America is expanding at the moment, I'm more curious about it, but you can answer to both regions.
In terms of utilization in South America, utilization is 75%.
Okay. Great. Are you moving operations from Peru to Chile? What are the reasons? Do you have a real backlog of orders coming from Chile? Is that so?
All our focus at the moment in South America is Chile. We are 100% focused on Chile. We had one rig operating in the quarter in Peru. We will now have decided to focus on the Chile market. We'll actually be winding down the operations in Peru for now so that we can focus on our pipeline of work in Chile.
That's wonderful. Great news. Yeah, thank you for taking my questions, and I'll pass on the work.
Thank you.
Thank you.
There are no further questions at this time. I will now turn the call over to Dave Harper for closing remarks. One moment, please. There is another question from John Sartz with Viking Capital.
Good morning.
Good morning.
I noticed that despite the less than stellar results, you still can't avoid building cash positions. I'm wondering what plans you might have, and suggestion on my part would be perhaps you might, A, reintroduce your dividend or, B, buy your shares back.
Yeah. Thanks, John. Thanks for the question. Yeah, I think you did notice we did have the balance sheet. Our balance sheet is extremely strong. If you look at—we ended the quarter, we actually increased cash. Net cash at the end of the quarter was GHS 11.1 million. So we're very happy with our total shareholders' equity. We have GHS 129 million in shareholders' equity. End of the quarter with net cash of GHS 11.1 million. So we're extremely happy with the increase in net cash. We'll revisit the dividend. We'll look at a dividend when we return to profitability.
What about share buybacks?
Share buybacks, and we look at it in conjunction with the price of the share. Our share buyback, our NCIB is in there to use it as a floor. We will monitor the price of the stock throughout the quarter, November, December. If we need to get in and put the NCIB in place, we will. Again, that is more of just to put in a floor for the stock price. It is hard to say, but we will look at how the stock performs over Q4 and into Q1.
Okay. Thank you.
Thanks, John.
Your next question comes from Dona ngelo Volpe with Beacon Securities. Your line is now open.
Hey, that's just a quick follow-up. Just looking for some quick facts here. Q3 utilization—or yeah, the utilization rates on a regional breakdown would be appreciated. Then on a consolidated basis, the commodity mix for the quarter given the improved activity in South America.
Utilization currently is approaching—it's north of 70%. It was 70%, 72% a couple of days ago, and it continues to trend north. We're getting back to basically utilization that we saw in quarter one and quarter two. North of 70%, kind of hovering around 72% at the moment. We think we'll probably trend to about 75% as we go through November. Traditionally, what happens is we have a solid first half of December, and then we slow down for the Christmas shutdown. That pretty much goes through to about the first or second week of January. If we look at it on a semester basis between quarter four and quarter one, through that sort of growth period, if you will, coming off a low base, things get really solid and continue through quarter one and quarter two.
We do get this culling out in the trajectory, if you will. And if you look at the history of the company, this has pretty much been the norm since, I mean, every year is pretty much the same. We do our best work in quarter one and quarter two. Then come quarter three, which is essentially the quarter we've just come through that we've just reported. That's the quarter that we see as the consolidation quarter. It's the quarter in which we literally sow for what we harvest through quarter four, quarter one, and quarter two. Now, we begin with actually seeing that harvest begin just now. We do get an interruption during the second half of December and the first half of January. It normally flows into a very solid quarter one, which is usually followed by a very solid quarter two.
Does that answer your question? North of 70 at the moment, probably going to trend to about 75. I think once we hit our straps in quarter one, quarter two next year, we'll be basically possibly north of 80. Last quarter one, quarter two, we were at times there where we hit 81%, 82%, 83%. I hope that answers your question, Donny.
Yep. That answers the first part of it. The second part was on the commodity mix for the quarter and how that compares to last year, I would assume with a little bit more copper exposure.
Yeah. So looking at it, of the more or less 100 rigs, I think the rig count we closed the quarter was 98 rigs. We have 20-odd rigs in South America, of which about 15 are currently drilling. It is kind of—it is trending north, and it is moving from what was about 15% of our business to—I expect it is going to probably end the year somewhere around 20% of our business. So 80, 20, gold, copper, nothing else at the moment. Not drilling for anything else, just gold and copper with an approximate split of about 80, 20, I would say, in high-level terms.
Okay. Thank you. I'll back in the queue.
Thank you.
Thanks, Donny.
There are no further questions at this time. I will now turn the call over to Dave Harper, CEO, for closing remarks.
Thank you very much, everyone, for attending the call today. Thank you very much, Operator. I'll say goodbye.
Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.