MINERAL DRILLING DIVISION
Revenue during the course of 2012 was negatively impacted due to reduced exploration spending from the junior mining segment as challenging capital market conditions continued to weigh on their ability to raise money for exploration. Management believes the majority of the reduction in junior mineral exploration occurred in the second and third quarters. In the current market, the majority of our revenue will come from major and intermediate companies.
For the full year 2012, mineral revenue decreased to $80.4 million, down 24.0% compared to $105.8 million in 2011. Average revenue per metre in the mineral segment was $188 in 2012, compared to $181 in 2011. During the fourth quarter 2012, mineral drilling revenue decreased to $15.0 million from to $27.1 million in the fourth quarter 2011, a decrease of 44.6%. The decrease in revenue compared to the same period last year is due to reduced demand for drilling services as a result of the lack of financing of junior mining companies to fund exploration work. Gross margin decreased to $3.7 million in the fourth quarter of 2012, down 57.0% compared to $8.6 million in the fourth quarter of 2011, primarily due to increased cost in materials. During the fourth quarter, metres drilled in the mineral segment dropped to 86,600 metres from 134,500 metres in the comparative quarter of 2011. Notwithstanding this drop on a year-over-year basis and being a period of reduced activity due to the holiday season, the fourth quarter mineral metres were only slightly lower than the third quarter level of 92,300 metres where the division benefits from three full months of activity, indicating increasing stability in the segment following a challenging mid-2012 period.
Fourth Quarter and Year-to-Date Metres Drilled---------------------------------------------------------------------------- Q4 2012 Q4 2011 2012 Annual 2011 Annual----------------------------------------------------------------------------Metres Drilled 86,600 134,500 428,300 585,900----------------------------------------------------------------------------
At December 31, 2012, the Company had approximately 133 rigs in its mineral drilling fleet, with three tracked mounted rigs on order from the Company's wholly owned subsidiary, Dando Drilling International ("Dando"), located in the United Kingdom. The Company is continuing its efforts to penetrate the Asian market both from an organic and external approach. The Company's S rigs are particularly suitable in parts of Asia where there are low labour costs and a lack of infrastructure. Regional governments are widely encouraging new natural resource development and the Company is capturing these opportunities through Dando. Management considers this region as potentially one of the most important growth markets. Challenges remain with a number of governments in the region in their early stages of developing mining policies which have held up exploration funding and spending. Energold's diverse fleet and global reach allows management to act quickly on new opportunities as they arise.
ENERGY DRILLING DIVISION - BERTRAM DRILLING CORP.
The Energy division drilled 630,600 metres in 2012, compared to 444,400 metres in 2011 from the date of acquisition of Bertram in July, 2011. Revenue generated in 2012 was $47.1 million, with $8.2 million coming in the fourth quarter of 2012 compared to $3.8 million in the same period in 2011. Negative gross margin of 26.8% in the fourth quarter reflects typical retooling and setup costs.
