Geodrill Limited

Good morning everyone and welcome to GeoGeo's first 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 any 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, May 12, 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'll 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 Q1 2025 Financial Results Call. Joining me on the call today is our Chief Financial Officer Greg Borsk. So in the first quarter we achieved outstanding results setting new records for revenue and for EBITDA. These numbers are a testament to the strength of our strategy which is working well evidently as these results do speak for themselves. Indeed today's positive report card is the direct result of what operational and repositioning efforts undertaken during 23-24. The foundation built then is driving our exceptional financial performance today. To recap by level, so Greg Borsk will speak to these in more detail later. We achieved record revenue surpassing all historical benchmarks which included Two record-breaking months, one after the other, in February and March. EBITDA was also a record, a substantial plus over 100% year-over-year improver. Also, earnings per share, 12 cents year-over-year, plus 160% improver, just a penny shy of our previous record. These results significantly improved the balance sheet, also resulting in total shareholder equity. of $125 million, another year-over-year improver, 11% year-over-year improvement. Our strategy is all about balancing opportunity with risk and execution to ultimately deliver exceptional returns. Recall, key adjustments to our operating model were implemented over the past year, which were considered necessary in order to ensure the sustainability of the business. And it is pleasing that these adjustments are now fueling the momentum and validating our approach. Just to recap, these adjustments include building a diverse client portfolio of well-funded, top-tier mining companies in safe jurisdictions, effectively mitigating the risk. This strategic move has expanded into new markets and enhanced our resilience. One of the most significant achievements has been securing multi-rig contracts across both our core markets in West Africa and expanded markets of Egypt and South America. These contracts have substantially boosted our revenue visibility for the next three to five years, demonstrating our commitment to financial stability and, importantly, over the past year we've made strategic expansion in the South American market, increasing our operations to meet growing demand. Thanks to our focused execution, we are now reaping the rewards of that investment and expect continued revenue growth from this key region. These accomplishments position us for continued growth and reinforce our ability to deliver sustained value for our investors. Our team's execution and commitment have been instrumental in driving our success but it is also important to acknowledge the tailwinds of the strong commodity prices environment. Market conditions have amplified demand, creating a background where our positioning allows us to maximise opportunities. The synergy between strategy and favourable markets dynamics continues to propel our growth. Finally, it is important to say we are insulated from the effects of tariffs turmoil. ensuring stability and predictability in our operations. I'll now turn the call over to Greg Borstow, CFO, who will review our financial performance in detail. Thank you, Greg.

Thank you, Dave. I am pleased to report the financial performance for the first quarter of 2025. The company generated record revenue of $48.8 million for Q1 2025. an increase of $14.1 million or 41% when compared to $34.7 million for Q1 2024. The increase in revenue is the result of the increase in demand for Geodrill's drilling services and a robust gold price, as the majority of our clients are exploring for gold. The gross profit for Q1 2025 was $13.6 million, being 28% of revenue, compared to a gross profit of $7.4 million, or 21% of revenue, for Q1 2024. we were able to considerably increase our gross margin despite inflationary pressures facing the mining sector and mining service providers. EBITDA for Q1 2025 was $13.6 million or 28% of revenue compared to only $6.7 million or 19% of revenue for Q1 2024. The net income for Q1 2025 was $5.6 million, or 12 cents per share, compared to a net income of $2.1 million for Q1 2024, or 4 cents per share. In Q1 2025, we were able to increase the rig fleet, ending the quarter with 98 drill rigs. Building on Dave's comments, the record high revenue is fundamentally driven by two key factors. Our multi-rig, multi-year contracts and record high gold prices. Multi-rig, multi-year contracts have been instrumental in boosting our financial performance. And with robust global exploration spending, we are well positioned for fiscal 2025. At this point, I will turn the call back to Dave.

Thank you, Greg. As we move forward, focus and adaptability remain at the heart of our strategy. The mining industry and the capital markets are constantly evolving, shaped by shifting regulations and economic pressures. To stay ahead, we are proactively navigating these changes while capitalizing on emerging opportunities. Our outlook for 2025 is exceptionally strong. We are still actively pursuing new contracts in high potential geographic regions, paving the way for the next phase of growth. The synergy between our strategic long-term agreements and the booming commodities market positions us for sustained expansion, revenue growth and operational success. And this concludes our prepared remarks on our financial results. I'll now pass back to the operator for anyone who has a question. Thank you.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. And if you are using a speakerphone, please lift the handset before pressing any keys. The first question comes from Don Angelo Volpe at Beacon Securities. Please go ahead.

Hey, guys. Good morning. Congratulations on the strong results. Just looking for a breakdown on the growth you guys are seeing by geography right now. I know we had some new contracts come in in West Africa and South America. Just trying to pinpoint the strongest areas of growth you guys are seeing.

All over, really, at the moment, Donnie. Gold is exceptionally strong, has been since Liberation Day. It was doing very well before then. And so you can imagine, you know, if it averaged $2,700 through quarter three, I believe that's the number. And now it's sort of hovering around $3,300 or it's off a bit today, I think. But even at $3,200, it's up $500 on its average from last quarter. And so, you know, strong gold, that'll do it all the time, every time. We operate, we're very strong in, you know, West Africa. We're strong and we're getting stronger and bigger and more robust in Egypt. So those are essentially our gold markets. But then copper's doing very well as well. And so our South American business is actually probably where most of our growth is coming from. But really, it's a bit of both.

It's a bit of both. Yeah, Donnie, let me just add 41%. quarter-on-quarter revenue increase. It was exceptional. And what Dave's saying, to get that, to achieve that, it has to come from every region we're in. So our primary markets in West Africa, in each of those three countries, top line grew significantly. In Egypt, it grew significantly. And in South America, it also grew. So It's across the board. It's related to gold, and it's also related to other commodities.

So very, very strong Q1 for us here. Actually, just to jump in there, Greg mentioned a 41% Q over Q increase. Actually, the Q over Q was 47. It was 41 year over year. So that just really is a strong indication of the momentum when you get a It's good to have a solid quarter over quarter. I'm sorry, year over year. But when you have an even more solid Q over Q, that really tells you something about the momentum.

Okay, thanks for the call there. I appreciate that. I guess just since we were talking about the 41% year-over-year growth, on the last earnings call, we kind of talked about being happy at a 10% to 15% year-over-year growth for the year, kind of in line with the historical growth rates you guys have seen. Were there any outliers for this quarter as to why year-over-year growth was so strong, or should we kind of anticipate – a bit more accelerated growth from what we've seen throughout the historical performance?

Well, the problem with doing a 40% year-on-year improver is everybody wants you to do it again. And I think you're asking what quarter two is looking like. As you know, we don't give guidance. But happy to say at this point in time, I think that I... I think that at this point in time, it's probably going to be Q over Q flat, but a year-over-year improver.

Yeah.

Yeah. Remembering that, our quarter two last year was a record, okay? The previous record to quarter one 2025 top line was quarter two 2024. So for us to match it and beat it, you know, as I say, it'll be – You know, we've just put in a very, very solid quarter. I'm expecting at this point we're probably looking at something flat, maybe a slight improvement, but it'll more or less be in the same zip code. But in terms of a year-over-year improver, I think you can definitely, you know, we'll definitely be looking at a year-over-year improvement, yeah, for sure.

And, Donnie, if you do remember, we had a very slow start to Q1 2024. We weren't really ramping up Q1 2024 to the end of that quarter. So it is a 41% increase quarter to quarter. But the base was, I think it was around $34,035,000. So to get it up this year to where we are at $48.8 million, It is 41%, but the comparable was on the lower. We had a slower start to 2024. Q1 was slower than Q2 2024.

Okay, perfect. Thank you for that. And then final one, if I may, just curious on the commodity mix for the quarter, revenue by commodity.

It's still predominantly we drill for gold, and I think we communicate this almost every call. It's the geography of where we're drilling. West Africa is predominantly all gold, where we're drilling in other parts of Africa. Where we're seeing drilling for copper, et cetera, is in South America. So the mix for us is still very heavily weighted towards drilling for gold.

90% coal tile gold, and the 10% is for compound. I think we put that in the MD&I, actually, Donnie.

Yeah, I saw 90% and 95%. I just wanted to kind of circle in on exactly which one.

Yeah, it's going to improve a bit as we move forward because what's happening is we've got more rigs going into the copper region, but they haven't really started to produce yet. So copper will become a bigger piece of what we're doing. But to what extent, we're not 100% sure just yet.

Okay, makes sense. I appreciate you guys answering the questions. And once again, congratulations on the results. I'll hop back in the queue.

Thank you. Thank you. Thanks, Donnie. Thank you.

Thank you. The next question comes from Mark Gomez at Gomez Pipeline. Please go ahead.

Good morning. Hey, congratulations, guys. Great to see how your decision-making and sacrifices in 23 are paying off so well. Looking at drill demand in the marketplace versus your fleet size and drill availability in the marketplace, how would you characterize how that looks right now relative to your demand and hopes to further increase your rig count.

So I think you'll see that we actually quoted our rig utilization there at 75% versus 65% a year ago. 75% for your information is more or less 100%, Mark. What never happens is you never get 100% of the fleet spending. And that's because usually there's some rigs in the workshop or there's some rigs stuck in customs or mobilizing to a job or something. So we are effectively – and when we quoted that number, we're talking about the average that was achieved for the quarter. There were some months in the quarter where we actually achieved north of 80%, I think 81% and 83%. And I think January was the quieter of the three months. So we're at effectively 100% utilization. I mean, it's the highest in the industry globally at the moment on a percentage basis. We will continue as we have always. You know, the history has been that from cash generated from operations, we add rigs, we grow revenues, we continue to grow the profit. And whilst the demand is there, And if anything, it's increasing. You know, I think that pattern is just going to continue until at some point in time we decide we've got enough rigs and, you know, we make that decision. Well, maybe we'll start backing off on the rig growth and just turn Geodrill into a cash generator. And that time is actually coming. You know, it's something that we talk about all the time at these board meetings. And it's, you know, it's coming and it's coming soon. But for the moment, we're just in a very, very strong position environment and there's an enormous amount of demand and we've got to keep our customers satisfied too, you know. So in part what we're doing is largely defensive as well.

And just Mark, that utilization, the 75%, that's the group number, but behind that, you know, we are busy in each region and that kind of echoes the answer I gave on the revenue. The utilization and the revenue go hand in hand, so There's demand for our rigs in every country where we're operating. So it's a good problem to have in Q2 also. Very busy.

Right. And I took note of that 75% number and do consider that to be, you know, effectively 100% in terms of what is possible, which is, you know, leads me to ask, again, How does it look out there in terms of your ability to acquire more rigs? Is it a tight environment to find more rigs out there? I noticed that you are leasing one. How does that look?

Well, it's improving. I mean, we were leasing three, and now we're leasing one, and that's because our own rigs are coming to come. You know, we're able to replace the leased rigs with our own. And rigs are still available, and we're still building rigs in our workshop, and we're You know, where there's a will, there's a way. There's manufacturing, you know, there's a rig manufacturing industry out there. And, you know, we actually have additional rigs in the pipeline as we speak, actually, Mark. We're going to, you know, somewhere in the not-too-distant future, we'll be reporting that we've got north of 100 rigs.

Right. So it's a work in progress. It's a work in progress.

Right, right. Any sense as to where you'd like to take that number this year?

Not at this point. I've got no idea. Too many variables in there that manufacturers can let us down. I mean, at the moment, we've done pretty well. We've moved up from – we ended last year with 84 rigs, or we started last year with 84 rigs, and here we are with 98 rigs. I mean, we're – you know, considering all of this growth is organic and funded from cash generated from operations – it's as good as it's going to get, but I wouldn't like to put a hard number against it, and knowing that there's just too many variables out there. We'll be north of 100, I imagine, this year.

Yeah, and Mark, we do that, you know, as you know, we're able to do that from cash flow from operations. For the last, as long as I can remember, anything we generate, any cash, we put right back into PPE. And as long as there's client demand where if we're at full utilization and there's a need with our Tier 1 customers or with some of our other accounts, if they're looking for more rigs, we're very fortunate in that we're also able to manufacture rigs. So between our workshop, between rig suppliers in the different countries where we're operating in, So far, we've been able to deliver and keep our customers happy.

Well, your execution has been outstanding. Congratulations, and my thanks as a shareholder.

Thanks, Mark. Thank you very much.

Thank you. The next question comes from Chris Tuttle at Blue Caterpillar. Please go ahead.

Hey, thanks for taking my question, and I echo Mark's congratulations. A couple of questions for you. One is just on the receivables, kind of just looking at that line versus last year, you know, seems higher. I mean, it's not aged receivables, but I'm just curious if, you know, that has, you know, big portions of that have been collected or that's kind of the new run rate. I want some insight on that.

Yeah, good question, Mark. The receivables, they're really a reflection of how busy we were in the back half of the quarter, predominantly February and March. As Dave said, usually January, it takes a little bit of time to ramp up. So by the time we hit March, if not early April, most of the January receivables have been collected. So you're seeing that the the 30 to 60 day receivables that you're seeing at March 31, those are kind of current receivables and they're reflecting how busy we were in February and March. And then what we try to do just to give comfort is we break down the aging of those receivables. So out of the 49, almost 50 million in receivables very little are aged over 90 days this quarter. And that's a function of shifting the business, shifting the business over the last couple of years towards Tier 1 minors and just people with the ability to pay their receivables on time, which helps us. But naturally, the Our Q1 and Q2 are the busy quarters, so the receivables do ramp up Q1 and Q2.

Okay? Okay, yeah, got it. I did see these in the longer consolidated statements, so it makes sense. My second question is just so, you know, great results, and I do the math, kind of looking at the current margins and, you know, a sustainable business. And, you know, correct me if I'm wrong, but it seems like you are going to be in a position to have a considerable amount of free cash flow, perhaps in excess of what you need. And I'm wondering, like, what's your attitude around using that capital either for, you know, dividends or buybacks, or am I missing the opportunity to maybe make more investments than – I'm aware of.

Just wanted to get your thinking on that now that you guys have hit such a... I'm glad you asked that question, Chris, because you're actually talking to the largest shareholder here. Stayed up here. So, yeah, look, we have this conversation all the time, you know, what point do we have enough REITs and at what point should we start backing off on the growth? Firstly, we've never had any free cash since inception, since 1998 when we started with one REIT and one contract, this has been a 100% growth, organic growth story. But, you know, I'm a big believer in at some point in time, we've got to sort of encash that opportunity that comes from all that revenue. So if you look at our... operating cash that we spin off. We spin off about 15% and usually all of that goes back into capex and half of that is expansionary capex and the other half is recurring capex. So if we were to back off on that expansionary capex at a point in time, it would give us the opportunity to one, dividend, shore up the balance sheet by putting a bit of cash there. and buy some stock back so we plan to do all of those those three things uh on balance and that that will tick everybody's box because not everybody wants dividends not everybody wants shareback we should buy that so how do you keep everyone happy and i think the approach is just a balanced approach a little bit of everything the first thing we would like to see is just some cash on the balance sheet we could also retire some debt you know we've got debt on the books And that's expensive debt. You know, we paid 10 odd percent, which is expensive by Western standards, certainly. And so we certainly plan to do that. And the times are coming. I think the first thing that we want to do is just hit the milestone of 100 rigs and then figure out, you know, how many more rigs do we want to go? Or at what point in time should we maybe change the paradigm in terms of, you know, what companies do is they just grow, grow, grow, grow and then get bought. Well, thinking about it another way, you can just turn this thing into a cash-generating business and reward the loyal shareholders that we've had on the books for so long, and I'm very much in favour of that. So, great that you're asking the question. I just can't give you a definitive answer on that today, other than we are continuing to, and we will continue to, spit out operating cash, and at a point in time, we will start to back off on the expansionary capex and reward the shareholders somehow. Okay.

And Chris, the other way to look at it, you look at the balance sheet, the total balance sheet, we have $125 million in total equity. And the different buckets, they shift. So usually in Q1, a lot of that total equity, if you will, is tied up in receivables. And then as naturally through Q2, Q3, Q4, that shifts into more cash, et cetera. So we just, I think in Q1, Q2, we just make sure we're continuing to add total equity and then it'll work its way out into more liquid current assets in Q3 and Q4. And I think the other point to make is just it's a significant, we've been increasing the total equity quarter over quarter. So if you look at where we are now, the total equity, 125 million US, we're still trading at less than our book value, okay? The book value, if you take the shares divided by the total equity, our book value is about $3.80 Canadian. So we're still, despite record revenue, 12 cents in earnings. We did 12 cents in earnings in Q1. Last year, for the whole year, we did 20 cents in earnings. So we're about 60% of the way there through Q1. But as I said, that money, because we're extremely busy, it's kind of in different buckets where it has to work its way into the cash bucket.

Okay? Got it. Got it. Thanks for that. Really appreciate it. Thanks, Chris. Thank you.

Thank you. The next question comes from Dave Kegler, an investor. Go ahead.

Great quarter, gentlemen. Just a quick question. I believe a few quarters back you were issued shares by a company that you had done some work for in lieu of cash. Can you tell me what you've done with those shares? Are you able to share anything if they've been cashed or if you still hold them?

Yeah, they're still on the balance sheet. And it's not just one. What we do is we have a portfolio of investments. It shows up in the balance sheet under a strange name. It's financial assets at fair value through profit and loss. But we have a note on that. It's really just equity investments that we've had over the years. And depending on We look at a number of factors. We look at the underlying company that we're invested on. Is there liquidity? Are we able to sell some of this? Et cetera. And in the quarter, in the quarter, that number actually increased for us. So we went from about 6.5 million up to 6.7 million. So that portfolio increased in value, and we were also able to get off some of the underlying equity. And that helps us that that's able to turn the equity investments into cash. So hopefully I'm explaining. It's kind of a long-term process as to when does it make sense to – exit these investments, et cetera? And when does the market actually allow us to do it? So we're always kind of selling these when it makes sense.

Gotcha. Thanks.

Appreciate the question. Answer. Thank you. Thank you.

Thank you. The next question comes from George Millis at MKH Management. Please go ahead.

Great, thank you. Congratulations, gentlemen. You mentioned quite a bit the multi-year, multi-rate contracts in your prepared remarks. Can you give us some sense of what percentage of your revenue is made up of these? I mean, I guess it's not binary, but it's not exact, but maybe how many of your revenue is from these kind of contracts and also how that varies by geography?

Sure. So when we're doing our budgets, we break our revenues and potential revenues into what we have and what we have to find. And in the have bucket, through known contracts, it's currently about 60%, and the other 40% will come by way of just general inquiries. So in terms of known revenues, we're in the sort of 60% quartile. Does that mean that you start the year with 60% visibility into your... No, because that 40... We actually start the year with 100% because the audible has contracts in that 40% quartile come off, other ones come on. So you've got to have a percentage of the fleet available on the fleet, if you can imagine, if it were a taxi rank. You'd have to have some rigs on the cab rank ready to go, otherwise you... you wouldn't be able to service that part of your business. So it helps us to know what our known revenues are going to be, but we also have to keep some availability so that, you know, for walk-ins, if you will.

Got it. Does that vary by region? Because some regions you've been very established for 20 years, and, of course, in South America you quite moved.

I'm talking averagely here. Like if we look at South America at the moment, we have zero, like 100% utilization of the fleet. Every rig we have in the fleet, at least in one of the South American regions, is 100% utilized. And in the other region where we're in South America, we're actually committed just waiting to get through some community issues. And those rigs will be out in the rigs spinning. So South America's division is actually running at about 100%. other parts of Ivory Coast at the moment, for instance. We don't have spare rigs there. But I just like to talk in averages because the company is not just one region. It operates across two continents and six countries.

And what these multi-rig, multi-year contracts, what they allow us to do is, because it's such a capital-intensive business, it allows us to plan. And, you know, so if we have a two or three year contract and we know it's going to be significant amount of meters over that time period, we're able to better position and better plan in that region. So really they're key to leveraging that region or that country and they're kind of the the staple, the base which we can then continue to grow on. So very important for the business. It's a nice way of saying a really big contract. It's multi-rigs, which is numerous rigs, and it's usually multi-year. So it's a significant management opportunity for us to actually take that contract make sure we're executing on it, but to also build around it to kind of leverage that contract.

The thing about the multi-rig, multi-rig contract, multi-rig... There's some, you know, left field... event that we're not aware of, like a market capitulation or a commodity capitulation. But all things being equal, we can look at these and we can do our forecasting and we can plan.

Great. And maybe one more question. In West Africa, you've been there for a very long time, so I understand well how you have a great position. In South America, you're very new yet you're doing extremely well. I mean, probably more than extremely well. How do you explain that? How do you explain your success in a new geography? And I imagine it's new customers, but I'm not sure. Maybe there's some overlap, but I doubt it.

The thing that caught my attention when I was in South America and what drove our thinking that we should expand into the South American continent is that when we arrived in, well, if we follow our history, we operated, we saw a massive opportunity in West Africa when I started the business 26 years ago, and that was that the region was massively underserviced. I actually was at the same time thinking of expanding. I actually had, at that time, almost moved into South America instead of Africa, but I chose Africa, and I'm glad that I did. The point is I visited South America... More than 20 years later, nothing in South America had changed. The same opportunity was still there, and I saw that the same opportunity existed because I felt that the region was still very underserviced. And so when we expanded into South America, it was on the strength of relationships that we had forged out of West Africa. Basically, geologists and exploration companies that had operated in West Africa had had morphed into international companies operating across two continents, the other continent being South America. So it was a congenial thing that we could just jump from a customer that we'd operated for in West Africa, who we had history with, that we're happy to try, you know, use our services in South America. Two friends tell two friends who tell two friends. And before you know it, you've got businesses is going very well. So I think that, you know, General does a lot of things in a good way. And I think that the thing for us now is to try and mirror that same success that we've had in West Africa. And if we can do that and be as successful in South America, then effectively what we're looking at is the doubling of the business.

Okay. Wow. Great. Thank you very much. Okay. Thank you. All right. Thanks.

Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star 1. Next question is a follow-up from Mark Gomez at Gomez Pipeline. Please go ahead.

Hello. Hi. I forgot to follow up. With regard to the environment for obtaining drills, for the typical kind of drill that you guys are buying, what is the market, the going rate for new drills there?

Oh, there's no one-off answer for that market. It depends on the type of drill. There's rigs that cost $500,000. There's rigs that cost $2 million. It just depends on the application. But I'd say, look, on average, if you were to put an average against what does a rig cost, I'd say averagely you're looking at about $1 million. And then it doesn't only stop with the rig. You've got all the support equipment and everything that goes with it. So you could almost add 50% to that again. I'm talking US dollars. But again, that's just a very average number. We've got rigs in our fleet that cost more than $2 million, and we've got rigs that cost $500,000. But they're all different applications. It just depends on the demand, and the demand drives our thinking in terms of what we buy.

Right, right. I was looking for a ballpark average. That's a good number. And that would be consistent with, you know, kind of looking at your fleet as being average, just kind of looking to further validate your book value.

Book value is massively, massively understated, Mark. If I was to look at replacing these rigs with rig values today and have to go and buy them, There's 98 rigs from a rig supplier. I'd reckon I'd be paying 50% above the odds, above what we've got these rigs. These rigs have historical depreciation rates that are, you know, accounting practices and depreciation rates that are applied per, you know, accounting standards. And, you know, the market value of the rig changes. We can't just change that because it suits us to do so. Right.

Yeah, and in the meantime, you do invest in keeping them tip-top.

Oh, of course. Of course we do that. But the interesting thing is because of the sudden demand that we've been faced with recently, we had to go to market and actually buy rigs from suppliers and have to buy some late model secondhand rigs that were in the market. And we're shocked how expensive they are. Shocked. So it really validates my point that when we look at the hard book value of this company, which today is, what's our hard book value? The total equity is $175. Forget the total equity. If we were just to look on a share price basis, we're looking at Canadian shares, I think. Canadian share price. I've got it here, actually. Yeah, $380. And Mark, the hard book value is $3.80 Canadian. And we trade... at a discount to that, even though after today's good, you know, stonking financial results. I don't mind using that word, stonking, because these results were nothing short of stonking. And even with that, we are still trading under our hard-booked replacement value. And that's not the market value. The market value of these rigs would be higher, greater. Okay? And when you think of hard-booked values, you think of, You think of, you know, closing down sales. You think of a ghost town. You think of, you know, it's a western, you know, there's a tumbleweed, you know, and there's a saloon door that's opening and closing and you can hear it creaking because it's a ghost town, you know, and there's a rattlesnake that runs under one of the rigs and this thing is just all parked up because there's no drilling going on. Well, nothing could be further from the truth. This is a real going concern. You know, we don't have one spear rig in the fleet at the moment. And, you know, this is a 24-7, 365-day-a-year revenue-generating business that spits out, you know, very, very good returns for its shareholders. And yet, we trade at less than one year's revenue. If we look at our market valuation, we traded under one year's 1x revenue. We traded about two times EBITDA, and we're trading at a discount to our books. I mean, it just doesn't make any sense. There is deep, deep value in this story. I've said this for a long time, and I will continue to say it. This is a very, very overlooked story.

Mark, where do you see the legs?

Okay, thanks.

Go ahead. No, no, no, go ahead.

I was just going to say, we do disclose the carrying value of the rigs. So there's a table in the notes to the financials. It's about $43 million. Call it 98, 100 rigs. So it just really emphasized Dave's point that the book value, because of the depreciation, you know, the average rig book value is about $430,000. And it just shows you how much of a discount that is to reality to get a replacement rig. Big banner.

Exactly the point I was getting at. Thank you, gentlemen.

Yes. Yes. Deep value on the back of a very strong earning story. Thanks, Mark. Thanks, Mark.

Thank you. The next question comes from Jesus Sanchez at Castanar Investment. Please go ahead.

Hi. Thank you very much, and congratulations for the great quarter. A couple of questions on my side. You were mentioning, and you are totally right about it, that we are totally undervalued. Why do you think that our performance has not gone in line with the gold price? Because gold price have been raising for the last months, although our stock price is not. Is it because we are not listed correctly or we are not considered part of the gold mining company?

So if you look at our financial performance and our rig utilization, there's a nice correlation actually to the gold price. So as gold goes up, as gold goes up, utilization goes up, and with it, revenues go up in lockstep. And actually, I would argue with you, Jesus, that our share price performance over the last year has actually been quite solid. If you look and you mapped up geodrill, geo.t, and looked at how it performed against the S&P last year, it outperformed the S&P. It outperformed gold. It outperformed gold ETFs. So it actually did quite well. However, in my same breath, I would say that we are fundamentally still very undervalued. There are very few stories out there where you can buy cash-generating businesses that provide good returns in stable, solid markets. We do operate in West Africa. Yes, I get that. But Africa is made up of 54 countries and we operate in the best four countries in Africa. And in those countries, they produce gold. And that's why we operate in Africa. We don't actually necessarily operate there by choice. We operate there because that's where the gold is. And if the gold was in Ukraine or if it was in Brazil or whether it was in Mexico, that's where we would probably be drilling. We just happen to be in West Africa. So I would argue with you that I think our share price has performed reasonably well relative to market and relative to our sector. If you compare us against all the other drillers, we've actually done pretty well this year. However, we could definitely do better. And I was just highlighting the point there before. Where can you buy a cash generating profitable company with good fundamentals that trades at less than 1x revenue? You're just not going to find them. And this is a real, this is a derivative of gold. You know, if you want to play gold, which is a pretty smart thing to be playing at the moment, you know, with all the turmoil in the world at the moment with, you know, concerns about currencies and trade boards and tariffs, turmoils, One safe haven that seems to be doing very well is gold. But how do you play gold? How do you invest in gold? Do you go and buy a big bar of gold and take it home and put it in your safe? Only to find that your house cleaner will get the combination and run away with it. You can buy gold ETFs. You can buy gold shares or play derivatives. In general, and companies like general, are picks and shovels. That's what we refer to them as. And of the picks and shovels, We are probably the best of the picks and shovels because we speak for the largest of the exploration budgets. Approximately 50% of all exploration budgets go to drillers. From our point of view, the objective is to be the best driller out there. I hope that answers your question.

Yeah, I totally agree with you that last year's performance was exceptional. Totally agree with you that it's unjustified the fundamentals. Totally agree with you that we are a derivative play and a very cheap, actually, way of having to go. Thank you for your perspective. That's why we are invested in GeoDrill, actually. My second question is about what are you sensing in the market? You mentioned increased client demand. I guess with these gold prices, mayors or other minings are increasing their capex. Is what you are listening in the industry? Yes.

That's the short answer, yes. Very much so.

Okay. And what about us? Are we going to increase our CAPEX? We added some REITs this quarter. What are our plans for future CAPEX?

We have. We just had a really busy quarter with CAPEX. We had a very busy – we had a record quarter last year with CAPEX, and quarter two will more than likely be another record CAPEX quarter. We're increasing our expiration capex expenditure in lockstep with demand. The demand is there and so it makes perfectly good sense for us to continue to expand into an ever-increasing insatiable appetite for our services. Now, once that service or that demand starts to fall away, we'd like to be in a really strong position of having cash on the balance sheet and being able to, at that point, start thinking about making some returns to our loyal shareholders.

And just to echo on, you know, we're unique. We're fortunate to be able to continue to add to our CapEx, and that's because of the cash flow we generate from operations, plus we have facilities in place that term loans and credit lines, et cetera, where we're able to utilize those to actually add to CapEx if we need to. And, you know, not all of our competitors have that luxury. But Geodrill, because we're disciplined and, you know, we do this, we've been doing this for a long time, we're able to continue to add CapEx either through cash flow or if we need, we can utilize the lines. Yeah.

And that's something I love about you, Adriel, with the return on capital employee that you have. Yes, reinvest everything in REITs. I just want to get the sense that if we are going to continue in this space of three REITs per quarter, you might try to increase it. Even the demand, I'm happy with that.

Okay, great. Thank you.

Thank you. We have no further questions. I will turn the call back over to management for closing comments.

Thank you very much, everyone, for participating in today's call, and thanks for your great questions. Thank you very much. Thank you.

Ladies and gentlemen, this concludes the conference for today. We thank you for participating, and we ask that you please disconnect your lines.