I'd like to introduce our next presenter of the afternoon, Dave Harper, President and CEO of Geodrill. Welcome.
Thank you, Gina. Well, it's great to be back in L.A. Thank you, LD Micro, for inviting me back. Certainly honored to be speaking here at your 20th anniversary. It's actually our fifth year of attending this conference, and thank you to Chris and the guys for having us back. By way of introduction, Geodrill provides mineral exploration drilling services to mining and exploration companies in Africa and in South America. We are not a mining company per se. We are actually a service company. We provide the drilling rigs and the expertise or the personnel and the expertise that produce the geological samples that are required in mining. I guess you could say we're picks and shovels. That's what they call us. We drill for gold, and we drill for copper, both of which are doing very well at the moment.
The experts are predicting that the current bull market for commodities will remain so for some time yet to come. We'll jump straight into it. This is our disclaimer, so if you don't like risk, don't invest. So a brief history. I know some of you people know the story. I can see some old faces out there in the audience. Great to see you back, guys. So brief history is that I founded Geodrill 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 in the space, so we're very relevant. We have 28 years of proven expertise. We operate a fleet of modern, high- performance drills, which drives our operational efficiency and keeps our customers well-serviced.
Our customers are Tier- 1 miners and exploration companies, and this split helps drive our recurring revenues. Quick corporate data, we have 47 million shares out there. As mentioned, this is a founder-led business. I am the largest shareholder. I own approximately 40% of the shares, and so we're very aligned with our shareholders. Gold. Much has been said about gold in recent times. A year ago at this conference, gold was actually $4,200 an ounce, and it's had a bit of a rollercoaster ride this last 12 months. It's been up to $5,500 an ounce, and it's back down to $4,200 an ounce now. That is really as a result of the oil shock situation that's going on at the moment in Iran.
Most of our customers are actually mining gold at $2,000 an ounce. Whether it's $4,200 an ounce or it's $5,000 per ounce, the only difference is how much our customers are making. Quoting someone much more well-known than I, a billionaire hedge fund investor, Ray Dalio. Ray Dalio says that basically the cycles or the volatility in the gold price currently is pretty consistent with previous trends, harking back to the 1970 oil shock situation. His thesis seems to also be supported by global ETF holdings of gold, which are increasing despite the latest pullback in the gold price. It seems that ETF holders are looking well past the next U.S. rate move and are probably more focused on things like U.S. dollar debt, which I'm sure you're aware just passed $40 trillion.
Much has also been said about gold being the only real hedging play. There's some digital solutions apparently, but as for gold, gold is the only real physical hedging play. How does one invest in gold? You can buy physical gold, you can invest in gold equities, you can invest in junior exploration companies, ETFs, et cetera, or you can invest in picks and shovels, and that's where we come in. There's an old saying there that in a gold rush, you buy the guy who's selling the picks and shovels, and I would agree with that. Specifically within the sector, exploration, the drilling companies actually are the quintessential picks and shovels because we account for 50%, about half of exploration budget. Of the money that gets raised for gold exploration, approximately 50% of that money goes to a driller somewhere.
We operate in Africa, and we operate in South America. This slide demonstrates that we have blue-chip customers that operate in three essential key markets, being the two continents. But within the two continents, we have West Africa, we have Egypt, which is in North Africa, and then South America, we have Chile. In these places, we have long-term relationships that underscore our business model of stability, visibility, and profitability. By securing repeat revenue through contract extensions and contract renewals, we ensure predictable revenue streams. Also importantly, Geodrill strategically operates in regions offering the highest value. While significant barriers to entry make competition tough, they also create lucrative opportunities. This strategic approach not only highlights our operational excellence, it also reinforces our commitment to sustainable growth and shareholder value. Back to where we operate, West Africa. It's a long way from home.
There's no infrastructure per se, so we had to build our own infrastructure. We have a motto at Geodrill, and it's, "Keep them turning, keep them earning." This captures the essence of our business philosophy. 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 investors. Contributing to this strategy is a world-class workshop and a manufacturing facility. This photograph that you see here is our operations base. It is located in Kumasi in Ghana. It is the beachhead of our hub of operations in Africa. It's the largest support facility of a drilling company in the world today.
This conscious decision to invest in vertical integration is really, as we see it, an investment in our future because it delivers a mechanical advantage over our competitors, and also derives less downtime in the field, which is very important to our customers. Changing gears, getting away from the actual operations of the business here. Speaking from an operational perspective, the mining industry is inherently cyclical in its nature. Therefore, by extension, so too is the drilling sector, apparently. I say apparently, because that doesn't look very cyclical to me. I'd say that Geodrill's rather bucked this trend by demonstrating consistent and impressive growth throughout the cycles. We've managed to do this by staying busier longer and by always reinvesting our profits back into the business. What this slide essentially demonstrates between the years 2014, 2025, which is 12 years.
It shows revenue growth and rig fleet growth. What we do with our revenues is we generate profits. With those profits, we invest them back into the business by adding drills, organic growth. Of course, things don't go up in a straight line. I think Geodrill's been the model of consistency. You could almost run a 12 in ruler across that, and it'd be pretty hard to say that there's to pick the cycles. But within our nuances, I'll draw your attention. I've basically broken this down into three distinct four-year periods. I call them the 60s, the 90s, and the 150s. That is the average revenue achieved for each of these four-year periods, which demonstrates a direct correlation between rig additions and rig growth. More importantly, what it shows is that our revenue has grown significantly over our rig growth.
The rig's revenue has actually grown at 15% CAGR over 12 years, rig additions at 9%. You can see it makes sense for us to reinvest in ourselves. I'll just point out and I'll just highlight once again, all of this growth is organic, us reinvesting back in ourselves. Since inception, we have not bought a company, anyone else's assets. This is 100% organic reinvesting because it works for us. Each additional rig that we add to our rig fleet essentially grows our rig, our revenue base, averagely by $2.2 million. That's the average across the 12 years. What's changing at the moment is headwinds in gold. We're seeing significant top-line growth and that $2.2 million average is actually going up significantly as I speak.
Which I guess is not really great if you're an investment banker, because this is a business that actually makes money and self-funds itself. You're supposed to laugh. Thank you. On cue. Zooming in, five-year snapshot here. Things were going along swimmingly. What happened? The rig fleet was expanding nicely, which was supported by strong utilization levels. New geographical startups were in play. The seeds were planted. Green shoots were popping. Next harvest was coming. Then came the oil shock. Costs suddenly spiked. Unfortunately, drilling contracts don't capture black swan events like this, and so our margins got squeezed. The bottom line, revenue up, gross profit down. It happens. What are we doing about it? Here's what's coming down the pipe.
To the extent that there's only so much we can do about our costs, please know we are in a bull commodities market with record utilization levels of our fleet. As such, we have pricing leverage. Therefore, pricing of new contracts and repricing or renegotiating of non-performing contracts is ongoing. Actually, it has been for some time. This is evidenced by our quarter two results on the far right-hand side there. Record revenue, $55 million for the quarter. That was up year-over-year 10%. Okay, so nice year-over-year improvement there, but more importantly was the sequential improvement quarter-over-quarter. It was a 14% quarter-over-quarter improvement. Then move on to gross profit, $9 million, 16% result. Also sequential improvement, but 22% over quarter one. EBITDA, $8 million or 14%.
These are still fairly respectable numbers, far from our best, but still fairly respectable. Again, ditto, sequential improvement, 35% quarter-over-quarter. Again, as I say, far from our best, but still healthy margins and they're improving. This will be evident shortly. We're currently in a blackout. Our quarter three is due for release in the first week of November. Analysts have us at $51 million, I think, in top line against $39 million a year ago. I will say that we're very comfortable with that. I mentioned the cyclicality in the business before. Mining, and by extension, picks and shovels or drilling companies or derivatives, tend to react positively and gradually to good news, but aggressively to negative news. In the past five-year period post-COVID, Geodrill has had two such situations.
Most recently, the Iran war oil shock, which caused diesel fuel to rise, which inadvertently had a far-reaching effect on other costs, which put pressure on margins. We've discussed that. Previous to this, we took a conscious and strategic decision to geographically redeploy from a couple of countries in West Africa that we considered to be areas that we had been in for a decade and that we didn't want to be in any longer, because we saw better opportunities in other jurisdictions, namely Egypt and South America. The immediate decision to redeploy rigs from one region to another resulted in a drop in revenues. I think this was expected, and it was the right thing to do.
Midway through that program, elsewhere on one of our other jobs in another country, a large customer was midway through a financing, and that financing became delayed and delayed until we got the wrong side of 180 days. Our auditors said, "You're going to have to take a provision on this." So we took a provision, which hit our earnings. That's the result. Okay? A company that had a market cap of, I don't know, probably $140 million, $150 million at the time, basically halved. The thing had a happy ending. The customer raised the money eventually, or I think we took shares, if I recall. We sold the shares and the stock recovered.
I will just hark back to that previous slide, which I can put up again later if anyone wants to have a look at it, but the point of the matter is, fundamentally, nothing changed in the business. The business was still as strong as ever. That was a buying opportunity. What I am highlighting here is that that situation and the current situation that we are looking at with Iran, the Iran situation for us will correct itself because we are introducing pricing increases that will capture our higher profits and we will basically get back to what we are known for, which is 20% EBITDA margins. What I am highlighting here is that this up on the stairs, down on the elevator creates a buying opportunity, and I think that is what I would like to just leave you with as a takeaway with this particular slide.
The stock currently trades at about CAD 2.60, which is 3x EV/ EBITDA, and that is versus our global peers, which are currently trading at about 5x-7x EV / EBITDA. I tend to be a walker, not a talker on these things. I am personally buying in the dip myself, and I will be when we come out of blackout in November. This adds to my topping up of 420,000 options, which I converted earlier this year at a total cost of CAD 815,000 . So by the time this year is done, I would have reinvested myself personally out of my own personal checking account near on CAD 900,000 . I think you call that skin in the game. The balance sheet in my last five minutes that we have got.
We are not the biggest driller out there, and we see that actually as an advantage because we are agile. This has enabled us to build one of the strongest balance sheets relative to our size in the industry. As at the June quarter, we had working capital of $60 million, shareholder equity, $118 million. We have debt of $12 million, but cash of $11 million. So we are more or less a $1 million net debt. Book value, and that is the point that I will just highlight to you, is that that is the current hard book value of the company. $2.48 or CAD 3.52. So we are certainly currently trading at a fairly significant disconnect to our book value.
That is pretty much in the last five minutes that I have got, in case we have got a couple of questions, where I will leave you, and that is why you want to own Geodrill. There are just three things that you need to remember. It is that we are an industry leader with a 100-rig platform and growing. We are directly leveraged to exploration spending in a strong gold environment and copper environment. We have significant operating leverage as utilization is increasing. This combined with founder-led management and a strong balance sheet, we believe that Geodrill offers a compelling risk-reward opportunity. Thank you. We have got a few minutes if anybody has a question, wants to know what a drill looks like, wants to know what a driller looks like.
Have you guys done a scenario where if [model] gold prices are going down, then what happens to the rig [audio distortion]? How are you operating that much time, that [flips] the other way when, let's say, gold goes down to $3,000 an ounce?
I am just trying to figure out what a solid benchmark or threshold point for gold would be for Geodrill to be profitable.
Well, I think you have got to look at who we are drilling for. Our customers are gold mining companies, and they are mining gold at $2,000 an ounce. Currently, they are getting $4,200 an ounce for their gold. But I think, again, not to keep harking back to this particular slide, but the thing that you have mentioned there is what creates that cyclical environment that makes investors really shy of investing in mining. I think what we have done probably better than most is we have made a business like I do not know. What have we got here? When was COVID, 2021?
2021.
Well, what did our revenues do in 2021?
Going up.
Thank you. What did everybody else's do? They went down. If I go back to the beginning of the company, again, I don't want to give you 28 data points here. But when my second rig arrived, gold was $248 an ounce, and I was 100% utilized. We had the best rig in town. It was brand new. It was high- performance. The company was predicated on a state-of-the-art model. We're in West Africa, which is traditionally, until we arrived, considered a dumping ground. We changed that paradigm because we knew that West Africa had missed 50 years of modern exploration. It's a great place to be starting a drilling company. We knew that companies like Newmont and Kinross would be coming, and that they would be expecting the best of the best in the industry. They would accept nothing less.
We were on pole position to take all of that business when they arrived, and they did. Those customers have kept us busy, which has driven our revenues, which has driven our profits, which has driven that reinvestment back into the rig fleet. I think we've done that better than most. The industry will always, all industries will suffer some sort of cyclicality. The way that we mitigate it is we continue to deliver value to our customers. Our customer is key. Number one, customers who have a business, keep the customer satisfied, and that'll be the last thing you'll ever have to worry about. The next thing is debt. We don't take on serious levels of debt. We've never seen the market that far out that we've gone and borrowed to build 10 or 20 rigs. We've only ever borrowed very wisely.
That's the other thing that'll kill you in business is seeing the market too far out and getting tapped out with a bank, and we've managed that pretty well, I think. That's it, really. Anybody want to know what a rig looks like? I don't really have too many.
What's the rig inventory situation like? Is it like it's over? What's the supply-demand balance looking like in terms of people demanding the rigs in the market?
At the moment, the world cannot get enough rigs. There is an insatiable appetite for everything out there. But the two things that I like the most are gold and copper. Copper, we only just entered the copper market four years ago, and that is growing really, really quickly. Not without its problems. South America has really given us some issues. I've got to be honest with you. But we're turning that around, and it's going to be a great turnaround story. And you cannot ignore the fact that one great way to actually invest in all this AI stuff, just buy copper. Copper stocks, they're doing really well. I think we've got to go. Thank you.