I would like to introduce Dave Harper, President and CEO of Geodrill.
Thank you. It's great to be back in L.A., and thank you to LD Micro, Chris and the team for having us back to speak again. I think some of you may know the story, but let me just go through it from the beginning again. By way of introduction, Geodrill provides mineral exploration drilling services to mining and exploration companies in Africa and South America. We're not a mining company. We're a service company, a picks and shovels. Essentially, we provide the drilling services and the expertise that produce the geological samples required in mining. Earlier this month, we announced our Q1 results. It was a challenging quarter for us, for sure, and that was due largely to a slow start in January and February.
We exited this quarter or sorry, the previous quarter, that quarter, much busier than we began, and that should reflect in our June quarter numbers. If you don't like risk, don't invest. That's how we start most of our presentations. Brief history. I founded the company in 1998 with one rig and one contract, and today we operate 100 rigs across two continents and five countries. We are the third-largest pure play exploration mineral driller by market capitalization, we're very relevant in the space. We have 28 years now of proven expertise. We operate a fleet of modern high-performance drill rigs which drive our operational efficiency and keep our customers well-serviced. Our customers are Tier 1 miners, exploration junior and mid-tier exploration companies, and this split helps drive our recurring revenues.
Some corporate data, there's 47 million shares out there outstanding. As mentioned, this is a founder-led business. I am the largest shareholder and approximately 40% of the shares. We're very aligned with our shareholder base. Gold. Gold and more gold. Recall a year ago at this very conference, gold was just $3,200 an ounce. Today it's $4,500 an ounce. It's been moving around so much lately. It was $5,000. It was up to $5,000. It's back to $4,000. It's all over the place. It's basically a lot stronger than it was a year ago. It's basically up about 40% year-over-year. This is despite the oil shock sell-off, which Ray Dalio from Bridgewater Capital says is consistent with previous oil shocks.
He also goes on to say that we have not seen gold moves like this since the late 70s. I'm certainly no Ray Dalio. I'm just a driller. Recall a year ago, I said, "Ladies and gentlemen, this is what the beginning of a gold rush looks like." My perspective at the time was quite simple. From a driller's point of view, we're the canary in the coal mine, and that's because drillers are the first guys to get busy. When the drillers are busy, there's something coming down the pipe. Okay? What came down the pipe was $5,000, $5,500 gold, and some people are actually saying that gold could, beyond this oil shock and the structural mechanisms that cause gold to rise, could drive gold north of $6,000 an ounce. That could be the next up level. How do you play gold?
Well, you can buy physical gold. You can buy bullion and put it under your mattress. You can buy gold equities, juniors, miners. They're all doing very well at the moment. ETFs, of course. You can invest in picks and shovels, and that's where we come in. There's an old adage that in a gold rush, you can buy the gold equities, you can buy the ETFs, or you can buy the picks and shovels, and you're better off with the latter. Mineral drillers like Geodrill are the quintessential picks and shovels, and that's because 50%, approximately 50% of all exploration budgets are spent with the drillers. We speak for the largest of all funds raised for gold exploration. Where do we operate?
Well, we operate in West Africa, as I said, and in South America, and also in North America. We have Tier 1 customers. This slide demonstrates that we have Tier 1 customers in the three markets that we operate. These long-term relationships that we have with these customers underscore our business model of stability, visibility, and profitability. By securing long-term contracts with Tier 1 miners, this helps us secure repeat revenues through contract extensions and continual renewals which ensure predictable revenue streams. Importantly, Geodrill strategically operates in regions that offer the highest value. While significant barriers to entry come with this and the competition is less tough, that creates, you know, lucrative opportunities for us.
This strategic approach highlights our operational excellence, also reinforces our commitment to sustainable growth through shareholder value. Really, the takeaway here is that long-term Tier 1 contracts with Tier 1 miners provide us with repeat revenues through extensions and continual contract renewals. That's our business model. Now that you understand that, please understand we're not the only mineral driller out there, but we are the mineral driller with the best financial metrics, and that's because we do things a little differently. We have a motto at Geodrill, and that's, "Keep them turning and keep earning." This captures the essence of our business philosophy, and here's what it means. By maintaining continuous drilling operations, we not only maximize productivity, but we also secure long-term profitability for our company and for our shareholders.
Contributing to this strategy is our world-class workshop, which is located in Ghana in West Africa. That's where I live. That's where I have lived for the last 34 years and then obviously the last 28 years of Geodrill, that's where we come from this story a little differently. We're not trying to operate a business from a nice beach in California or, you know, somewhere in Canada or, you know, some of the more exotic places in the world. We're actually there. We're boots on the ground at our operations. That's where I live and that's where I work. This operation that you see here is the global hub of our operation.
It's actually the largest support facility of any drilling company in the world today, and it's a little different in that what we've done here is we've built a backward vertical integration model. Most of our competitors would generate revenues from their drilling services and then they would spend those profits from those revenues with their suppliers. Where we're a little different is we've managed to actually make a lot of the stuff that we use in the drilling, we actually manage to produce it ourself, and that helps us to operate when times are lean, like for instance, during the Ebola crisis.
When you couldn't get boats, you couldn't get airplanes to restock and replete our inventory with stores and the items that we need, we were able to produce these things ourself. We don't only make our own drilling rods and our own drilling bits, we actually also make our own drilling rigs. At times when gold is so strong as it is, what actually happens is the cost of everything goes up. The cost of people goes up, and the cost of supplies go up. A drilling rig like this that used to cost $1 million now costs $2 million, but we're able to produce it internally for about $1 million.
It's good in the way that it creates sort of a circular economy, and it helps us to operate more profitably and more efficiently, at times like we're currently seeing at the moment. I think this is a thought-provoking slide. It's with 2025 now behind us, we were able to actually capture these 12 years, actually now 13 years, what I'm trying to demonstrate here is that firstly, the mining industry is cyclical, therefore by definition in services, we are also cyclical. What we've managed to capture here is that Geodrill, within its operating environment, which is cyclical, still manages through the cycles to grow its revenues. What we've tried to capture here is in these 12 years, for the first four years, we averaged $50 million in revenue.
For the following four years, we jumped to $80 million. Our next jump in the most recent four years before 2025, so up until 2024, we jumped to $130 million in revenue. Now we've left this one here, and that green line graph stops here, so that you can get a flavor of what we're looking at for the next four years. For 2025, we did $185 million . This current year, 2026, analysts are saying we're gonna do about $200 million. For 2027, they're saying $217 million, and then you just keep going up from there. You get a sense that the next number we're looking at beyond the $130 million is gonna be averagely something like about $200 million in revenue.
I'll just point out one very important key point to all of this, is that all of this growth has been organic, okay? One rig, one contract, 28 years, 100% organic growth. No bolt-ons in any of that. We've not acquired anyone. This has all been growth, rig numbers that have grown, therefore the revenue base has increased with it, that has been profits, operating profits that have come from revenues regenerated back into the business. I hope I'm articulating that well, we might have a few questions later, I'm sure, I think it's a pretty interesting, pretty interesting slide because it really does show where we stand out very differently to our competitors. The Q1 results, as I said, were affected by a slow start to the year.
Also affected by some currency exposure. We came under some currency pressure from the Ghana cedi which improved 35% last year, which weighed down on our margins. The Q1 results, very high level, were $48 million, $48.4 million to be exact, and that was flat year-over-year. Not a great result in that we saw no top line growth, actually when you consider that our January and our February got off to a slow start, actually it's not a bad result. It's a pretty good result actually.
I think it's indicative if you, as I was saying, if you consider that our end of quarter run rate was much stronger than our beginning, then it's very indicative of what is coming down the pipe, which is a pretty strong quarter two. Okay. It'll be a record. GP was down. It was 15%. That was down significantly on the year before for the reasons that I gave. Of course, EBITDA was down as well. We produced a 12% EBITDA result and that's pretty light on for us. Normally we produce north of 20% EBITDA margins. In the shortest possible time, where our absolute focus is, at the moment, is to restoring those margins and we can actually see that they're coming up at the moment.
Now this will be evident when we produce our quarter two results, and I think beyond our quarter two results. It's actually pretty common. What actually happens is when the cost of gold and the commodities that we drill for go up, the first thing that happens is our costs go up, but we can't adjust our contract prices to capture that immediately. The way that we capture this is through increased pricing, and that's not something that we can do overnight. It's a work in progress. It's moving in the right direction at the moment, and I think what you'll see is as the, as the quarters unfold, as we go forward, you're gonna see that top line improving and the margins will now from here continue to improve.
Balance sheet wise, for despite the slow quarter, working capital $48 million. Shareholder equity $118 million. Net cash $1.9. Book value, this is the interesting thing, our book value as we stand here in front of you today, $2.48, and CAD 3.46. I'll just remind you that the stock is currently trading at CAD 2.78. We're currently trading at a 20 odd percent discount to book, and yet fundamentally the business has never been in better shape. I'm actually running a little bit ahead of myself. I must be talking too fast. Why own Geodrill? What we have is we've got a well-established business, cash generating business that trades at discounted multiples. We're positioned to benefit from the commodity tailwinds.
Copper and gold are at record all-time highs, as we've said. We have a solid balance sheet, one of the best in the industry, which helps us to fund our growth opportunities, and we're cheap. I know every CEO that stands here, you know, in front of you would tell you that we're cheap. We're trading at sub 1x revenue. We're actually trading as of today, six months revenue. That's the market capitalization of the company. This is a company with no debt. We're net cash. You know, we've got great prospects and the stuff that we drill for is gold, and you don't wanna be in a better place at the moment than gold. EBITDA currently trading at about 2.5x.
That compares pretty favorably to our peers which are trading at about 5 x. This is an established business with a proven track record. Revenue is trending to $200 million and as I say, we're net cash. It's a great way to invest in gold. On that note, I must have missed a slide or two out because it looks like I've got about eight minutes left. Plenty of time for questions if there are any. Sir.
The drilling, when you're mining for gold and everything else, but your backdrop is the drilling functionality that you can resell that gives you the baseline or foundation of the company. Is that correct ? The drill product, the canister and everything else that you're manufacturing, how much in revenue do you get from that product alone?
I'm sorry, I don't understand your question.
[Inaudible]
Yeah. We do explore for gold. Our drill rigs provide the service that does the gold exploration. Our customers are the mining companies and the junior exploration companies. We don't benefit if we find gold. How we benefit is, well, we do actually in the sense that there's repeat business. How we benefit is we drill, we get paid, and if the customer doesn't find gold, that's not our problem. We get paid to drill.
Yeah.
You get my point. If that customer makes a discovery and the company might have a market cap, $4 or $5 million or whatever. They make a discovery, the stock goes wild, they go and raise more money. They drill, they drill, they drill. I got customers. This is a very interesting thing. In 28 years of being in business, we were drilling for companies in West Africa that we're still drilling for today. Never stop drilling because they went to West Africa. The thing that attracted me to the West African region 28 years ago was the place had missed 50 years of modern exploration.
I was a young driller from Kalgoorlie, and I thought, "This is just a great place to start a business." I quit my job and bought a rig, and, you know, that was all history now. It was 28 years ago. The thing that attracted me was the place had missed 50 years of modern exploration. Today, 28 years on, where are we at? West Africa is the largest producing region of gold in the world today. People think that gold, the largest producer of gold is China. It's actually not. On a regional basis, it's actually West Africa. 450 metric ton of gold is being produced in West Africa. China produces about 320. It can't be overlooked, and that's why all the Tier 1s are there.
You've got Newmont there, Kinross is there, AngloGold Ashanti is there. All the Tier 1s are there. West Africa certainly comes with its risks, but it comes with its rewards as well. We were there, boots on the ground, when it all started to unfold. I guess we had a first-mover advantage. Anyway, to your point, we get paid regardless. We are in the business of drilling for gold, but if we don't find it, we still get paid. It's a pretty good gig. Yes, sir?
[Inaudible]
The good news is South America's turning around for us. Thank you for your question. It's been a really challenging decision when we decided to move into South America. We realized that we couldn't just rely on gold and gold alone, our investors were pushing us to sort of, you know, try and improve our country diversification and our commodities sort of diversification. We decided copper was probably the next big thing that was going to require a lot of drilling, we settled on Chile. It was a market that we entered three years ago. We were unfamiliar with the territory. We're unfamiliar with the environment. A lot of things in South America are very different socially to what they are in West Africa.
We went through a very steep learning curve. We basically turned money over, but didn't make any money for the first 2.5 years. We're really laser focused on growth. We needed to actually get some rigs into the market that, you know, a substantial amount of rigs. Last year, we focused really on just growing the rig fleet and increasing our amount of, you know, customers, so our customer base. We grew from eight rigs to 18 rigs. That's a 120% increase in business. Throughout the year, we were constantly in a situation where we were feeding new drill crews onto the ever-increasing drill business, but that meant that we were always carrying costs without the revenues.
In quarter one, the quarter we just reported, we actually turned the corner and we've produced a positive gross profit. That's a positive sign. From here, we expect the South American market will continue to improve incrementally. That's positive. I'm actually couldn't be more pleased with South America at this point.
[Inaudible]
The short answer is no. It's, West Africa comes with different barriers to entry and therefore, because of the, you know, the higher risk, it comes with higher margins. You know, the average gross profit margin we generate in West Africa is about 25% normally. Last year was a bit of an outlier, but normally about 25%, even higher at times. South America, I think we're probably aiming for 10%-15%. The jurisdiction is safer. You know, it's just a ton of reasons. It's more competitive. It's more mature. We're just never gonna get those sort of margins, but it's a very different market. The contracts tend to be larger and more long-term. It's just, it gives us that diversification. It gives us that commodity, and that country split diversification. Sir.
When you're striking your contracts, you're a contract driller, right?
Yeah. Contract drillers.
When you're striking these contracts. Is there an accounting for the increase in value of the commodity?
In a word, no. No, there isn't. No, no, they take a pay.
[Inaudible]
No. I mean, if the price of gold goes up, that's, you know, that's the good fortune of our customer, and we would hope that that happens.
[Inaudible]
Well, we do.
[Inaudible]
Globally, there's only so many rigs out there. When the cost of the commodity increases, the drillers get busier. What happens the first thing? Drillers want more money. The people that sell the drills and the drill rods and the drill bits and all the consumables expect more money. Another thing, you know, I don't wanna throw the straight up homers under the bus, fuel's increased as well. You know, it's risen 40%-50%, fuel is a large part. When fuel goes up, it's not only the fuel that goes up. Everything goes up with fuel. Transport goes up. The cost of air freight goes up. The cost of everything goes up. The cost of business generally has gone up.
To mitigate that, we have the opportunity, as and when contracts come off, to introduce higher pricing to capture the higher cost, and this is a work in progress. As I was saying before, we are currently repricing contracts as and when we can. It's not like our costs go up and then suddenly we can say to our customers midway through a contract, "Hey, I'd like a little bit more money." That's, you know, that's be the first way to lose one of your customers. You know, last year we generated $185 million and we made a 19% EBITDA profit. That's not the end of the world. That's actually still a pretty good result in a challenging market. This year, we'll do $200 million and we should do a similar EBITDA result.
As we get the opportunity and as we continue to move forward and deeper into this gold cycle, we will capture our higher costs by increasing our pricing as and when we can. I hope that answers your question. I think we're out of time. If anybody else wants to catch up later, we'll be outside. Thank you very much.