Energold Drilling Group Announces Third Quarter 2017 Financial Results - Strong Sequential Improvement Amidst Strengthening Environment in Key Markets

Trading Symbol: "EGD: TSX.V"

VANCOUVER, Nov. 22, 2017 Energold Drilling Corp. ("Energold" or "the Company") announces third quarter revenue in 2017 of $19.8 million compared to $17.8 million in the previous quarter, representing a positive improvement of 11%.  Improving volumes in the mineral and energy segments have contributed to improved year-over-year performance as commodity prices stabilize and exploration capital returns.

The Company is pleased that revenues continue to improve on a quarter-over-quarter basis in 2017 while losses have decreased amidst a more positive overall trend across the industry in general, and for the Company in particular.  Meanwhile, the overall profit margin improved to 14% from 10% in the second quarter of 2017.

"The third quarter increased dramatically in terms of revenue and profitability compared to the second quarter.  We continue to see a recovery across all sectors which has caused an increase in operating expenses as we prepare for a ramp up in our activities in the next few quarters." said Energold Drilling Corp. CEO & President, Fred Davidson.

In the mineral and energy divisions, improving conditions are leading to higher drilling volumes; however, the Company's overall gross margin in the third quarter of 2017 declined to 14% from 17% in the same period of 2016 due to varying types of drilling contracts which carry different profit margins.  Meanwhile, costs associated with the ongoing restructuring of the manufacturing division were borne by the Company during the recent period.

Energold continues to maintain a well-capitalized balance sheet with $6.2 million in cash and $55.1 million in working capital at September 30, 2017.  Management intends to carefully select new projects that could require working capital investments but also deliver suitable returns to the Company.

MINERAL DRILLING DIVISION

During the third quarter of 2017, revenue increased by 8% to $11.6 million from $10.7 million in the comparable period of 2016.  The mineral division drilled 75,600 metres compared to 66,300 metres in the same period in 2016, representing an increase of 14%.  Pricing on a per metre basis in the period fell to $153 per metre from $162 per metre in the same period of 2016 due to a greater amount of cheaper-priced metres drilled in the recent quarter.

Gross margin for the three months ended September 30, 2017 in the mineral division was $1.3 million or 11% compared to $1.8 million or 17% in the comparable period in 2016.  Pricing remains competitive and there is still excess rig capacity in the industry.  However, capacity utilization is rising industry-wide and average pricing should eventually strengthen, depending on drilling mix.  Higher costs in the division are associated with start-up costs including mobilization and other setup charges associated with new contracts.

ENERGY DRILLING DIVISION – BERTRAM DRILLING

Revenues for the three months ended September 30, 2017 were $6.4 million compared to $4.4 million in same period for 2016.  The gross margin was $1.4 million or 22% in the third quarter of 2017 compared to $0.7 million or 15% in the comparable period of 2016.  Improving drilling volumes in green energy and infrastructure markets should continue through 2018 with traditional oil sands coring work picking up this winter.

Ongoing cost controls implemented in 2016 have contributed to better profitability during what is typically a seasonally slower period for the business.  Activity in the oil patch is improving as energy prices stabilize while activity in the United States has started to recover.  

MANUFACTURING – DANDO

Revenues for Dando in the third quarter of 2017 were $1.8 million with a gross margin of 5% compared to revenues of $3.8 million with a margin of 17% in same period of 2016.  The division continues to suffer from a soft market for new drilling rigs in the commodity markets while the profit margin is further impacted by costs associated with the division's ongoing restructuring, including costs related to a significant reduction in overhead.

The Company has introduced new management with a mandate to significantly reduce operating costs and improve revenues.

INDUSTRY OUTLOOK

There have been positive trends recently in the Company's key drilling markets. These trends are expected to continue and show financial improvement for the Company in 2018.

Specifically, gold and precious metal drilling in Africa and Latin America continues to strengthen as metal prices stabilize at current levels, providing some visibility for our clients.  Meanwhile, oil prices at current levels make certain types of drilling economic and therefore, management anticipates a stronger winter drilling season in Northern Alberta this coming winter.

Over the last two to three years, the Company has sought to reallocate idle rigs to new markets.  This has benefited the Company as it developed a meaningful and growing green energy and infrastructure drilling operation in North America while bidding on several tenders in Latin America.

Due to the downturn over the last several years in the mineral drilling market, significant working capital must be allocated to restarting programs. The Company anticipates using available cash and working capital to meet the financial demands of winning and building on new opportunities in all of its core markets.

A conference call is planned for Wednesday, November 22, 2017 at 10:00 am Eastern time.  Dial-in numbers for the call are 647-792-1278 or 1-888-504-7961.

Energold Drilling Corp. is a leading global specialty drilling company that services the mining, energy, water, infrastructure and manufacturing sectors in approximately 25 countries.  Specializing in a socially and environmentally sensitive approach to drilling, Energold provides a comprehensive range of drilling services from early stage exploration to mine site operations for all commodity sectors and has an established drill rig manufacturer, Dando Drilling International, based in the United Kingdom.

On behalf of the Directors of Energold Drilling Corp.,

"Frederick W. Davidson"
President, CEO

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements: Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to proposed activities, work programs and future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others, the effects of general economic conditions, a reduction in the demand for the Company's drilling services, the price of commodities, changing foreign exchange rates, actions by government authorities, the failure to find economically viable acquisition targets, title matters, environmental matters, reliance on key personnel, the ability for operational and other reasons to complete proposed activities and work programs, the need for additional financing and the timing and amount of expenditures. Energold Drilling Corp. does not assume the obligation to update any forward-looking statement.

SOURCE Energold Drilling Group