Geodrill Reports Record 2011 Fourth Quarter and Year End Results

- Rig Fleet Expansion Drives Revenue -

TORONTO, March 1, 2012 /CNW/ - Geodrill Limited ("Geodrill" or "the Company") (TSX: GEO), a leading West African based drilling company, reported its financial results for the three-month and twelve-month periods ended December 31, 2011. All figures are reported in US dollars (US$), unless otherwise indicated. Geodrill's financial statements are prepared in accordance with IFRS.

Financial Highlights

US$ 000s (except earnings per share)	For the three months ended December 31		For the twelve months ended December 31
	Q4-11	Q4-10	2011	2010
Revenue	$20.9	$11.6	$70.1	$45.1
Gross profit	$10.7	$8.8	$38.1	$22.4
As percentage of revenue	51%	76%	54%	50%
Net Earnings	$1.2	$(586)	$12.4	$5.1
Earnings per share - basic	$0.03	$(0.02)	$0.29	$0.17
EBITDA^(1)	$7.9	$3.6	$25.2	$14.4
EBITDA margin^(1)	38%	31%	36%	32%

(1)

Please see "Non-IFRS Measures" below for additional discussion .These figures account for and include the dissolution of the subsidiary in Cote d'Ivoire and a reduction in an obsolescence provision. EBITDA for the 12 month period ended December 31, 2011 would have been $22.58 million and an EBITDA margin of 32% if these adjustments were not taken into account.

Fourth Quarter and Year End 2011 Operational Highlights:

• Revenue increased 56% for 2011; Q4 revenue increased 80%;
• Net Earnings increased 144% for 2011;
• Increased the number of drill rigs in operation from 18 to 26;
• Completed 921,471 meters of drilling for 2011 up 92% with addition 14 rigs to be in operation by the end of 2012;
• Strengthened management and operational team with the addition of Roy Sinke, Alan McConnon, and Jocelyn Gingras;
• Strengthened Board of Directors with the addition of Ron Sellwood
• Began construction of a 50 man camp and workshop facilities at North West Ghana for the ramp up of drilling the Wa Gold project;
• Increased footprint in Burkino Faso with additional drills and construction of a 80 man camp and workshop facilities, currently underway
• Expansion of Kumasi engineering facilities with the addition of one new CNC mill; and
• Increased inventory levels to maintain high levels of mechanical availability for ongoing rig expansion. 

"2011 was an outstanding year with record financial and operational achievements for Geodrill. In the first twelve months since our Initial Public Offering, we expanded our rig fleet by 144%, locked in new commitments with existing and new customers and drilled in excess 900,000 meters," said David Harper, President and CEO of Geodrill Limited. "As we enter 2012, the exploration market in West Africa remains robust opening new opportunities to focused players like Geodrill. With our singular focus on West Africa, we are well positioned for continued growth in 2012."

Financial Review

Revenue
Revenue increased 56% to $70.15M in 2011 from $45.06M in 2010. Total revenue for Q4-2011 was $20.86M compared to $11.58M Q4-2010. Revenue growth was driven by new drilling contracts and the deployment of new drilling rigs throughout the year and the quarter.

Gross Profit
Gross profit was $38.06M or 54% of revenue for 2011 compared to $22.39M or 50% for 2010. The increase in gross margins for the year is attributable to an increase in operational drill rigs, meters drilled and operational efficiency. Gross profit for Q4-2011 was $10.74M or 51% compared to $8.81M or 76% for Q4-2010. The decrease in the gross margin for Q4-2011 was primarily due to $1.55M of cost of sales expenses being re-classified as selling, general and administrative expenses in Q4-2010.

Selling, General and Administrative ("SG&A") Expenses
SG&A expenses were $19.54M in 2011 compared to $12.17M in 2010.  SG&A expenses were $5.04 million in Q4-2011 compared to $6.38M in Q4-2010.  The increase in SG&A for the year was primarily due to costs associated with acquiring new drill rigs and business expansion, including increases in mobilization and labour costs; increases in travel costs and professional fees.

Depreciation and Amortization
Depreciation and amortization of property, plant and equipment expenses increased to $6.64M for 2011, compared to $4.06M for 2010.  For Q4-2011 depreciation and amortization of property, plant and equipment expenses increased to $2.15M compared to $1.18M in Q4-2010. The increase for the year and the quarter is as a result of the Company acquiring additional drill rigs and property, plant and equipment throughout the year as part of its expansion.

EBITDA
EBITDA was $25.17M in 2011 or 36% of revenue in 2011, compared to $14.35M or 32% of revenue in 2010.  The EBIDTA margin improved as a result in reduction of cost of sales associated with VAT and salary taxes and a reduction of inventory obsolescence provision resulting in additional income of $0.55M. Without these impacts, EBITDA margin would have been 32% for 2011.

For Q4-2011 EBITDA was $7.86M or 38% compared to $3.63M or 31% in Q4-2010. The increase is due to increased utilization of drill rig fleet, meters drilled and other operational efficiencies.  Q4-2011 was also affected by reduction of inventory obsolescence provision resulting in additional income of $0.55M and the reversal of a provision for SG&A costs resulting in additional income of 0.84M. Without these changes, EBITDA for Q4-2011 would have been $4.04M or 31% of revenue.

Net Earnings
Net earnings were $12.41M or $0.29 per share in 2011, compared to $5.08M in 2010 or 0.17 per share in 2010. Net earnings were primarily affected by the dissolution of the Cote d'Ivoire triggering a positive resolution of VAT and salary tax obligations. For Q4-2011 net earnings were $1.22M or $0.03 per share compared to a loss of 0.59M or a loss of $0.02 per share for Q4-2010. Net earnings for Q4-2011 were affected by change in depreciation policy and recognition of a deferred tax expense of $3.5M.

Cash from Operations
The Company maintained positive cash flow from operations in the amount of US$7.98M for 2011 compared to positive operating cash flows of US$9.33M for 2010.The lower positive cash flows in 2011 compared to 2010 reflected increased prepayments for drill rigs and other property, plant and equipment of US$6.31M and increased inventory levels of US$5.68M.

For Q4-2011 the company generated positive cash flows in the amount of $6.50M compared to $1.71M in Q4-2010.  Cash flows for the year and the quarter continue to be driven by an overall increase in revenues.

As at December 31, 2011 the Company had cash and cash equivalents equal to US$8.17 million.

The Company currently has 42,476,000 ordinary shares issued and outstanding.

Outlook

The Company views the industry dynamics underlying demand for its services to be favourable and, accordingly, has added significantly to its capacity through the acquisition of additional drill rigs. All of the Company's drill rigs, as at December 31, 2011, were committed to contracts. With 26 of the Company's drill rigs commissioned and being utilized on client sites, 1 drill rig is in transit and 13 drill rigs on order and with the supplier under manufacture (which are expected to arrive in Ghana and be operational in 2012) the Company will be able to leverage increased capacity.

The Company's drill rig fleet and the drill rigs deployed or planned to be operational in the field are noted below:

Make - Model	Type	In Operation as at Mar 31, 2011  No. of Rigs		In Operation as at Jun 30, 2011  No. of Rigs		In Operation as at Sep 30, 2011  No. of Rigs		In Operation as at Dec 31, 2011  No. of Rigs		Planned to be Operational in 2012 No. of Rigs
UDR - 650	Multi-Purpose	2	1 X 2003 1 X 1993
UDR - KL900	Multi-Purpose	4	1 X 2007 1 X 2003 1 X 1999 1 X 1998
Sandvik - DE820	Multi-Purpose	4	1 X 2010 3 X 2008
Sandvik - DE810	Multi-Purpose									6	6 X 2012
EDM - 2000	Multi-Purpose	2	2 X 2011							2	2 X 2012
Austex - X900	Multi-Purpose					2	2 X 2011	1	1 X 2011	4	4 X 2012
Sandvik - DE710	Core	7	1X 2011 5 X 2010 1 X 2009			1	1X2011
Austex - X300	Aircore	2	2 X 2010	1	1 X 2011					2	2 X 2012
Total Drill Rigs		21		1		3		1		14
Cummulative		21		22		25		26		40

 

	As at Mar 31, 2011		As at Jun 30, 2011		As at Aug 31, 2011		As at  Dec 31, 2011
	No. of Rigs	Type	No. of Rigs	Type	No. of Rigs	Type	No. of Rigs	Type
Operational	12 7 2	Multi- Purpose Core Only Air core	12 7 3	Multi- Purpose Core Only Air core	14 8 3	Multi- Purpose Core Only Air core	15 8 3	Multi- Purpose Core Only Air core
TOTAL OPERATIONAL	21		22		25		26
In transit	1	Air core	1	Multi- Purpose			1	Air core
Total In Transit	1		1				1
In W/Shop	1	Core only	1	Core Only
Total In W/Shop	1		1				0
Under Manufacturing	1	Multi- Purpose	4 1	Multi- Purpose Air core	4 1	Multi- Purpose Air core	10 1	Multi- Purpose Air core
Total Under Manufacturing	1		5		5		11 *
TOTAL DRILL RIGS	24		29		30		38
Split
Multi- Purpose	13		17		18		25
Core Only	8		8		8		8
Air Core	3		4		4		5
TOTAL	24		29		30		38

*  In addition to 11 rigs under manufacturing, there are 2 drill rigs for which manufacturing has not yet started.

Geodrill's interim financial statements and management's discussion & analysis ("MD&A"), for the three-month and twelve month periods ended December 31, 2011 are available via Geodrill's website at www.geodrill-gh.com and will be available on SEDAR at www.sedar.com.

Notice of Conference Call

The Company will host a conference call on March 1^st at 10:00 am EST to discuss the financial results.  The call will be hosted by David Harper, President and Chief Executive Officer, and Ian Lacey, Chief Financial Officer.

You can join the call by dialing 1-888-231-8191 or 647-427-7450. A live audio webcast of the conference call will also be available through:
http://www.newswire.ca/en/webcast/detail/923105/985891

Non-IFRS Measures

EBITDA is defined as Earnings before Interest, Taxes, Depreciation, and Amortisation and is used as a measure of financial performance. The Company believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in the Company's industry.  However, EBITDA is not a measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS.  EBITDA should not be viewed in isolation and does not purport to be an alternative to net income or gross profit as an indicator of operating performance or cash flows from operating activities as a measure of liquidity.

EBITDA does not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies, and EBITDA should not be construed as an alternative to other financial measures determined in accordance with IFRS.

Additionally, EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as capital expenditures, contractual commitments, interest payments, tax payments and debt service requirements.  Please see the Company's MD&A for the three-month and twelve-month periods ended December 31, 2011 for the EBITDA reconciliation.

About Geodrill Limited

Geodrill Limited is a leading West African based drilling company currently operating in Ghana and Burkina Faso. Geodrill provides exploration and development drilling services to major, intermediate and junior mining companies with exploration and development operations in West Africa.  The Company specializes in providing reverse circulation, diamond core and air-core drilling services using a modern fleet of drill rigs.  The Company plans to grow organically and build its current client base while continuing to assess expansion opportunities throughout West Africa and other jurisdictions of Africa, to meet demand for its services and expertise.

Forward Looking Information

This press release and the planned conference call may contain "forward-looking information" which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company, its subsidiaries, future growth, results of operations, performance, business prospects and opportunities.  Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "believes", or variations (including negative variations) of such words and phrases, or by the use of words or phrases that state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate.  Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements contained in this press release including, without limitation those described in the Management's Discussion & Analysis for the quarter ended September 30, 2011 and the Company's Annual Information Form dated March 30, 2011 under the heading "Risk Factors". Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in such forward-looking statements, there may be other factors that may cause actions, events or results to differ from those anticipated, estimated or intended.  Should one or more of these risks or uncertainties materialize or should assumptions underlying such forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking statements contained in this press release.  The forward-looking information and forward-looking statements contained herein and statement which may be made on the conference call are made as of the date of this press release and the Company disclaims any obligation to update or review such information or statements, whether as a result of new information, future events or results of otherwise, except as required by law.

 

 

 

Joanna Longo
[phone] ext 233
[email protected]