Energold Drilling Corp. started out as an exploration company, pursuing a number of projects in the Dominican Republic. Like many mining firms, the company’s goal was to structure its operation to provide the greatest return for its shareholders. In the late 1990s, however, Energold realized drilling extensively on a portfolio of projects didn’t yield the greatest value because of the significant odds in developing a major mine – its strength was in its expertise of providing drilling services.As a result, the company used its drilling expertise to evolve and provide a greater value to its shareholders and clients.
“We realized the current method of drilling and mining can’t last because many clients – and more so the industry as a whole – are more conscious of the social and environmental impacts a mining project can have in the host country,” Investor Relations Manager Sunny Pannu explains.
Pannu stresses the current incarnation of Energold is “quite unique in the industry.” The Vancouver-based company retained its exploration expertise and skills, and used them to develop its own line of ‘highly-portable’ rigs.
It leases out its rigs and crews to junior, mid-tier and major mining companies, and provides contract drilling services ranging from early stage reconnaissance to advanced stage drilling projects. At this time, the company primarily works in South America, Africa and Asia.
Energold’s fleet contains 100 diamond-drilling, deep-hole, underground-drilling and RAB rigs, and they exceed industry standards in a number of ways, Pannu says. Primarily, the EGD Highly Mobile S-Series Surface Rigs are portable, light and can drill in excess of 900 meters and in remote areas. Energold continually improves on its rigs’ capabilities with in-house development.
“Our initial diamond rig was the Series 1,” Pannu says. “That rig could drill down 250 meters, but it only drilled a certain size of core. We continually improved on that technology and expanded its capabilities with additional new competitive features. Now, our drills can go down to 900 meters, but we are currently working to develop a rig that can break that 1,000-meter barrier.”
Not only does Energold develop its rigs to go deeper, it also designs them to be more powerful. Energold’s rigs are modular in structure and use multiple small turbo-charged engines to run hydraulic pumps. Pannu says the rigs’ thin wall rod system provides a higher ratio of horsepower per square centimeter of cutting face, resulting in improved cutting efficiency and recovery.
Its standard and high-altitude drills can drill BTW to depths of 900 meters; NTW core to depths more than 300 meters; and HQ core to depths of more than 100 meters. On a worldwide average, Energold drills from 25 to 30 meters per 12-hour shift, and completes 1,200 to 1,500 meters per month with one drill.
“Our drills are comparably powerful to standard rigs because of their design, so they can go deeper and provide a cleaner cutting surface,” Pannu says. “By using hydraulic pumps, the drills are more efficient, so they waste less fuel and manpower by using stored energy.”
The rigs’ modular structure provides other benefits, he explains. A damaged part can be repaired or replaced in the field, instead of returning it to the shop. Additionally, with modular parts, the rigs are easily disassembled – in 45 minutes or less, it says – so moves can be completed in one shift or less.
Pannu says Energold can mobilize a drill to any location in the world in the cargo hold of a conventional aircraft. The rigs’ compact design allows everything to be carried on roads by a five-ton truck or in five pick-up loads.
Pannu says market conditions have improved in the last several months, so much so that Energold has a more optimistic view of 2011. “The outlook is definitely more positive next year just based on the demand we’ve seen,” he says. “The main reason why we’re optimistic is that over the last year, we’ve generated continued increases in the number of meters drilled for each quarter, for the last seven quarters, actually.”
This is due to the fact that many mines around the world are depleting their reserves. “The simple fact is that at a lot of these mines, the grade is getting lower,” Pannu says. Much of the exploration of these mines was conducted by juniors that are no longer in operation, meaning that majors will begin doing much of the drilling themselves until the juniors can get back in the game. The juniors are coming back as there is more money available now as compared to earlier in the year, and more of that money is being used for exploration.
Energold is preparing to help meet the future demands of the industry, as well. Pannu says it is developing a new rig that it hopes to release in the first half of 2011 but also expand its markets and extend its rig fleet to between 120 and 130 by end of 2011. Pannu says the company also is looking into opportunities for acquisitions that can help Energold meet the demands of the next several years.