Orbit Garant Drilling Annual Report 2020

FY2020 Annual Report · Orbit Garant Drilling

Loading PDF…

2020 ANNUAL REPORT

STRONG CANADIAN FOUNDATION | EXPANDING GLOBAL PRESENCE

PROFILE
Headquartered in Val-d’Or, Quebec, Orbit Garant Drilling (TSX: OGD) is one of the largest
Canadian-based mineral drilling companies, providing both underground and surface
drilling services in Canada and internationally through its 231 drill rigs and more than
1,100 employees. Orbit Garant provides services to major, intermediate and junior
mining companies, through each stage of mining exploration, development and production.
The Company also provides geotechnical drilling services to mining or mineral exploration
companies, engineering and environmental consultant firms, and government agencies.

Head Office

Regional Offices

Field Operations

MARKET POSITION (BY PERCENTAGE OF REVENUE¹)

DRILLING ACTIVITY

CUSTOMERS

40%

60%

Surface

Underground

17%

83%

Majors &
Intermediates

Juniors

REGIONS

RESOURCE EXPOSURE

21%

79%

Canada

International

34%

Gold

66%

Base Metals / Other

1. For the year ended June 30, 2020

To our shareholders,

We entered fiscal 2020 with positive momentum as demand for drilling services in Canada was steadily increasing
compared to fiscal 2019, reflecting the strengthening price of gold and the resulting improved access to capital
for mining companies. For the first half of fiscal 2020, our revenue increased 15% compared to the same period
in fiscal 2019, while our gross profit and EBITDA were up 10.0% and 40.7%, respectively. This growth was driven
by the strong performance of our Canadian operations, which more than offset a 4.1% decline in revenue from our
international operations that reflected the completion of a multi-year drilling contract in Chile in the fourth quarter of
fiscal 2019, in addition to civil protests in Chile and regional security concerns in Burkina Faso.

Our positive momentum in our domestic drilling business
continued into our third quarter of fiscal 2020, and
the outlook for our
international operations was
improving, up until we were impacted by the COVID-19
outbreak. On March 11, 2020, the World Health
Organization declared the COVID-19 outbreak a global
pandemic. Governments responded by implementing
emergency measures to minimize the spread of the
virus, including the temporary shutdown of businesses
deemed to be non-essential. Our operations were
significantly impacted by these measures, as a number
of our drilling projects were put on hold or postponed.
In Quebec, as a result of the provincial government’s
order
to minimize non-essential business activity,
our operations were suspended from March 24 until
April 20, 2020, at which time they were permitted to
resume in a gradual manner. In addition, our drilling
activities on certain projects in Nunavut Territory and
Ontario were temporarily reduced or suspended. Our
international drilling operations were also affected,
either as a result of government restrictions on certain
business activities, or customer decisions to reduce or
delay certain projects in this challenging environment.

In response to the pandemic, we acted quickly in
implementing precautionary measures across our
operations to prioritize the health and safety of
our employees and the communities in which we
operate. As part of our business continuity plan, we
implemented multiple initiatives to lower our costs
and manage our liquidity position during this period of
reduced drilling activity, including a reduction in capital
expenditures and reduced
in working
capital. Importantly, we implemented these measures
without impacting our ability to ramp up our business
as market conditions improve.

investment

Further, effective April 1st, our senior management
team and directors agreed to a temporary 15%
the
reduction
Company. We also amended or modified the financing
agreements with our lenders and secured financing

their remuneration

to support

in Chile through our Chilean subsidiary, thereby
generating additional financial flexibility. As at our
fiscal year-end, we complied with all covenants in our
Credit Facility and our EDC Loan Agreement, and we
expect to continue to remain in compliance given the
amendments with our lenders.

We also recorded $3.6 million dollars in financial
support from the Canada Emergency Wage Subsidy
program in our fourth quarter that helped to mitigate
the impact of the pandemic on our business.

As governments have now eased COVID-19 related
business restrictions, we are gradually ramping our
operations back up, and look forward to resuming our
pre-pandemic momentum. We cannot predict how
long the pandemic will last, or when our drilling activity
will reach pre-pandemic levels. However, we believe
we have effectively managed through the initial stages
of this crisis, and we are well positioned to continue
ramping up our operations as circumstances permit.

We are seeing positive signs in our business, with
several new opportunities being presented to us for
potential projects in both Canada and our international
operations. We expect drilling activity in Canada to
continue to steadily increase barring any significant
change in business restrictions due to the ongoing
COVID-19 pandemic, while our international drilling
activity will likely lag our Canadian operations for the
time being due to ongoing restrictions. Nonetheless,
we expect to see increased project activity in the
months ahead.

With the price of gold currently at more than
US$1,900 per ounce, the economics of gold mining
have improved significantly, and with approximately
66% of our revenues generated from gold related
operations, we expect demand for our services to
strengthen as global economic conditions stabilize and
our customers start to fully re-engage and advance
their mineral exploration and development programs.

Further, many industry experts expect that declining
copper reserves may necessitate increased exploration
activity for new reserves
in the coming years.
Our well-established operations in Chile are positioned
to compete for any potential increase in customer
demand for copper drilling services.

In closing, we extend our appreciation to all of our
employees, management team and their families for
their ongoing commitment to the success of Orbit
Garant, particularly during this highly challenging
period. We also thank our shareholders for their
continued support.

Sincerely,

Jean-Yves Laliberté
Chair

Éric Alexandre
President and Chief Executive Officer

Paul Carmel retired from our Board of Directors in
June 2020, and Jean-Yves Laliberté assumed the role
as Chair of the Board. Bill Gula, who has served on our
Board since 2011, has also decided to retire and will
not stand for re-election this year. We are pleased to
welcome Pierre Rougeau and Nicole Veilleux as new
members of our Board.

Mr. Rougeau has more than 30 years of senior
in finance and business administra-
experience
tion, having formerly served as a senior executive
for both Richmont Mines and AbitibiBowater. Prior
thereto, he worked in investment banking and has
previously served as a director for Canadian public
companies. Ms. Veilleux has more than 30 years of
experience in finance, including extensive experience
in the Quebec mining sector. She was Vice President,
Finance of Richmont Mines when it was acquired in
2017. Ms. Veilleux was formerly an Auditor at KPMG
and has served as a member of the audit and finance
committee of the Quebec Mining Association.

We thank Paul Carmel and Bill Gula for their leadership
and many contributions as members of our Board and
look forward to the future contributions and strategic
guidance from Pierre Rougeau and Nicole Veilleux.

Looking ahead, as we pursue future growth, our focus
on innovation and leading-edge technology will remain
a priority for us and a competitive advantage in our
industry. We currently have 43 drill rigs outfitted with
our computerized monitoring and control technology.
These
increase
technologically-advanced
rig
accuracy and productivity, have
components, are ideal for training less experienced
drillers, and have proven to be in high demand from our
customers. In addition to our strength in innovation, our
expanded global operations and scale, sound balance
sheet, expertise in both surface and underground
drilling, vertically-integrated manufacturing capabilities,
and a highly experienced leadership team, position us
favourably to compete for new projects as our industry
recovers and demand for drilling services resumes.

drills
long-lasting

MD&A and
Consolidated Financial
Statements

YEAR END AND FOURTH QUARTER FISCAL 2020

SEPTEMBER 28, 2020

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management Discussion and Analysis (“MD&A”) is a review of the results of operations, the liquidity and the
capital resources of Orbit Garant Drilling Inc. This discussion contains forward-looking statements. Please see
‘‘Forward-Looking Statements’’ for a discussion of the risks, uncertainties and assumptions relating to these
statements.

This MD&A should be read in conjunction with the audited consolidated financial statements for the fiscal years ended
June 30, 2020 (“Fiscal 2020”) and June 30, 2019 (“Fiscal 2019”) and the notes thereto which are available on the
SEDAR website at www.sedar.com.

The Company’s Fiscal 2020 audited consolidated financial statements and the accompanying notes were prepared in
accordance with International Financial Reporting Standards (“IFRS”). All amounts in this MD&A are in Canadian
dollars, except when otherwise noted.

In this MD&A, references to the “Company” or to “Orbit Garant” shall mean, as the context may require, either Orbit
Garant Drilling Inc. or Orbit Garant Drilling Inc. together with its wholly-owned subsidiaries.

This MD&A is dated September 28, 2020. Disclosure contained in this document is current to that date unless
otherwise stated.

Percentage calculations are based on numbers in the Financial Statements and may not correspond to rounded figures
presented in this MD&A.

Additional information relating to the Company, including the Company’s Annual Information Form for the most recently
completed fiscal year, can be found on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

Securities laws encourage companies to disclose forward-looking information in order for investors to have a better
understanding of a company’s future prospects and make informed investment decisions.

This MD&A contains forward-looking statements about the Company’s objectives, strategies, financial condition,
results of operations, cash flows and businesses. These statements are “forward-looking” because they are based on
current expectations, estimates and assumptions about: the markets in which the Company operates; the world
economic climate as it relates to the mining industry; the Canadian economic environment; and the Company’s ability
to attract and retain customers and to manage its assets and operating costs. They are not guarantees of future
performance and involve risks and uncertainties that are difficult to control or predict. Risks and uncertainties that could
cause actual results, performance or achievements to differ materially include the ability of the jurisdictions in which
the Company operates to manage and cope with the implications of COVID-19, the impact of measures taken by such
jurisdictions to control the spread of COVID-19 on the Company's operations, and the economic and financial
implications of COVID-19 to the Company.

Actual results could be materially different from expectations if known or unknown risks affect the business, or if
estimates or assumptions turn out to be inaccurate. The Company does not guarantee that any forward-looking
statement will materialize and, accordingly, the reader is cautioned not to place reliance on these forward-looking
statements.

The Company disclaims any intention and assumes no obligation to update any forward-looking statement, even if
new information becomes available, as a result of future events or for any other reasons except in accordance with
applicable securities laws. Risks that could cause the Company’s actual results to materially differ from its current
expectations are discussed in this MD&A. For a more complete discussion of the risk factors that could cause the

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Company’s actual results to materially differ from its current expectations, please refer to the Company’s Annual
Information Form dated September 28, 2020, accessible via www.sedar.com.

COVID-19

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic.
Governments responded by implementing emergency measures to minimize the spread of the virus, including the
temporary shutdown of businesses deemed to be non-essential. These measures caused significant economic
disruption, as well as volatility in equity markets, commodity prices and foreign exchange rates.

Orbit Garant’s operations were significantly impacted by these measures beginning late in its fiscal 2020 third quarter
(“Q3 FY2020”), as a number of its drilling projects were put on hold or postponed. In Quebec, as a result of the
provincial government’s order to minimize non-essential business activity, the Company’s operations were suspended
from March 24, 2020 until April 20, 2020, at which time they were permitted to resume in a gradual and supervised
manner. In addition, drilling activity on certain projects in Nunavut Territory and Ontario was temporarily reduced or
suspended. Orbit Garant’s international drilling operations were also affected, either as a result of government
restrictions on certain business activities, or customer decisions to reduce or delay certain projects in this challenging
environment.

Orbit Garant considers the health and safety of its personnel, customers, suppliers, and the communities in which it
operates to be a top priority. The Company has implemented precautionary health and safety measures across its
operations, based on the recommendations, or directives, issued by the public health authorities and governments in
the various jurisdictions in which the Company operates.

Management has taken several measures to mitigate the economic impact of COVID-19 on its business and
operations. To ensure Orbit Garant’s continuing ability to meet its financial and contractual obligations, the Company
has: (i) applied for government grants and subsidies made available by various governments in response to COVID -
19; (ii) reworked its cost structure and postponed non-essential expenses; (iii) made arrangements with Export
Development Canada (“EDC”) to temporarily suspend principal and interest payments on its loans from EDC until
October 2020 (see Note 16 in the FY2020 Financial Statements); and (iv) made arrangements with National Bank of
Canada (“National Bank”) to modify the covenants in its senior credit facility (the “Credit Facility”). The Company
believes that as a result of these measures it will continue to meet its obligations under its credit facilities and have
sufficient resources to carry on its business operations.

Operationally, the Company has undertaken multiple initiatives to reduce costs and manage its liquidity position during
this period of reduced drilling activities. These include lower purchases of inventory items and a program to
progressively reduce overall inventory levels. Importantly, these measures were implemented without impacting the
Company’s ability to ramp up its business. In addition, effective April 1, 2020, Orbit Garant’s Management and Directors
agreed to take a temporary 15% reduction in their remuneration to further support the Company.

In its Fiscal 2020 fourth quarter (“Q4 FY2020”), Orbit Garant recorded a benefit related to the Canadian Emergency
Wage Subsidy (“CEWS”) program in the amount of $3.6 million, of which $3.2 million was recognized as a reduction
of cost of contract revenue and $0.4 million was recognized as a reduction of general and administrative expenses.

The long-term impact of COVID-19 is unknown. While Management is encouraged to see provincial and federal
governments in Canada and the governments of other jurisdictions where Orbit Garant operates now gradually re-
opening their respective economies, it is uncertain if or when the Company’s drilling activity will reach pre-pandemic
levels. Management will continue to monitor the situation carefully. As part of its business continuity plan, Orbit Garant
continues to manage its variable cost structure and cash to support its reduced level of operations during this period
along with reduced capital expenditures while maintaining the flexibility required to resume more normalized operations
as more COVID-19 related restrictions are lifted, customer drilling projects are resumed or ramped up and general
economic conditions improve.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

FISCAL 2020 SUMMARY

• Revenue totalled $137.8 million, compared to $152.8 million in Fiscal 2019
• Gross margin was 9.4%, compared to 10.7% in Fiscal 2019
• Adjusted gross margin(1) (excluding depreciation expense) was 16.3%, compared to 16.4% in Fiscal 2019
• EBITDA(1) totalled $6.8 million, compared to $8.3 million in Fiscal 2019
• Net loss was $7.4 million, compared to net loss of $3.5 million in Fiscal 2019
• Metres drilled totalled 1,297,838, compared to 1,427,587 metres drilled in Fiscal 2019

(1) See Reconciliation of non-IFRS Financial Measures

CORPORATE OVERVIEW

Orbit Garant (TSX: OGD) is one of the largest Canadian-based mineral drilling companies, with 231 drill rigs and more
than 1,100 employees. Headquartered in Val-d’Or, Québec, the Company provides both underground and surface
drilling services in Canada and internationally to major, intermediate and junior mining companies, through each stage
of mineral exploration, mine development and production. Orbit Garant also provides geotechnical and water drilling
services to mining or mineral exploration companies, engineering and environmental consultant firms, and government
agencies. The majority of Orbit Garant’s business activity is currently conducted in Canada. The Company has regional
offices and facilities in Sudbury, Ontario and Moncton, New Brunswick, to support its Canadian business activities.
Orbit Garant has worked on international projects in the United States, Mexico, Guyana, Chile, Argentina, Kazakhstan,
Burkina Faso, Ghana and Liberia. The Company has established international operating subsidiaries in: Winnemucca
(Nevada), U.S.A.; Santiago, Chile; Lima, Peru; Georgetown, Guyana; Ouagadougou, Burkina Faso; and Takoradi,
Ghana, to support its international operations.

Orbit Garant has a comprehensive infrastructure that is vertically integrated with its Val-d’Or, Québec, based
subsidiary, Soudure Royale, which manufactures drill rigs for the Company and third parties. Soudure Royale provides
the Company with a competitive advantage in the provision of drilling services and equipment. Orbit Garant focuses
on “specialized drilling”, which refers to drilling projects that are in remote locations or, in the opinion of Management,
because of the scope, complexity or technical nature of the work, cannot be undertaken by smaller conventional drilling
companies.

The Company has two operating segments: Canada (including surface drilling, underground drilling and manufacturing
Canada), and International.

For Fiscal 2020:

• Specialized drilling services, which typically generate a higher gross margin than conventional drilling
services, accounted for approximately 45% of the Company’s total revenue, compared to 55% in Fiscal 2019.

• Approximately 66% of the Company’s revenues were generated by gold related operations, and

approximately 34% were generated by base metal related and other operations.

• Surface and underground drilling services accounted for approximately 60% and 40%, respectively, of the

Company’s revenue.

• Approximately 83% of Orbit Garant’s revenue was generated from major and intermediate mining company
projects, compared to 88% in Fiscal 2019. Orbit Garant’s drilling contracts with major and intermediate
customers are typically from one to five years in length.

• Approximately 79% of Orbit Garant’s revenue was generated from domestic drilling projects, and

approximately 21% was generated from international drilling contracts.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

CONTINGENCIES

The Company is subject to various claims that arise in the normal course of business. Management believes that
adequate provisions have been made in the accounts where appropriate. Although it is not possible to estimate the
extent of potential costs and losses, if any, management believes that the ultimate resolution of such contingencies
will not have a material adverse effect on the financial position of the Company.

In June 2020, a claim by a financial institution (the “Claimant”) for damages against a subsidiary of the Company in
the amount of 843.7 million West African Francs (“XOF”) ($1.97 million) was confirmed by a court in Burkina Faso.
This claim relates to an amount of XOF 8.6 million ($0.02 million) owed by the Company’s subsidiary to a supplier,
which was indebted to the Claimant. The Company vigorously disputes this claim and has filed an appeal. Based on
legal advice, management believes that the claim is unfounded, and that the appeal will be successful.

In August 2020, an amount of XOF 266.8 million ($0.62 million) was required to be deposited in a restricted cash
account by the Company’s financial institution in Burkina Faso at the request of the Claimant. The Claimant also
threatened to seize certain business assets of the Company’s subsidiary in order to satisfy its claim. Although
management expects to be successful in its appeal, in September 2020 the Company drew from its Credit Facility and
deposited cash in the amount of XOF 576.8 million ($1.35 million) with its financial institution in Burkina Faso, in order
to prevent the seizure of some of its assets and prevent any business disruption to the Company and its subsidiary,
pending resolution of the Company’s appeal. Management expects to recover these deposited amounts at the time
the appeal is confirmed as successful, or earlier if certain conditions are met.

Nonetheless, given the original claim was confirmed by the court, the Company recorded a provision of
XOF 871.5 million ($2.03 million) in Q4 FY2020 for this claim and additional legal fees. If and when the facts and
circumstances change (including if the Company is successful in its appeal), the liability recognized will be revised in
the period in which the change occurs.

BUSINESS STRATEGY

Orbit Garant’s goal is to be the leading Canadian-based mineral drilling company. This will be achieved through the
pursuit of both domestic and international market opportunities, and through the provision of best-in-class underground
and surface drilling services, equipment and personnel for all stages of the mining and minerals business, including
exploration, development and production. The Company employs the following business strategies:

•

Focus primarily on major and well-financed intermediate mining and exploration companies operating in
stable jurisdictions;

• Provide conventional, specialized and geotechnical drilling services;
• Manufacture customized drills and equipment to fit the needs of customers;
• Maintain a commitment to technological innovation and advanced drilling technologies, such as the

Company’s current implementation of computerized monitoring and control technologies;

• Provide training for the Company’s personnel to continuously improve labour efficiency and the availability of

a skilled labour force;

• Maintain a high level of health and safety standards in the workplace and promote protection of the

environment;

• Establish and maintain long-term relationships with customers;
• Cross-sell drilling services to existing customers;
• Expand the Company’s base of operations in strategic regions, such as: the Company’s acquisition of
Orbit Garant Chile S.A. (“OG Chile”) based in Santiago, Chile in December 2015, and the acquisition of the
drilling business of Projet Production International BF S.A. (“PPI”) in Ouagadougou, Burkina Faso in
October 2018;

• Maintain a sound balance sheet and a judicious deployment of capital; and
• Evaluate strategic acquisition opportunities to enhance value for the Company’s stakeholders.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

INDUSTRY OVERVIEW

Orbit Garant provides drilling services, in Canada and internationally, to the minerals industry through all stages of
mine development, from exploration through production. Client mining companies consist of major (or senior),
intermediate, and junior companies (which generally focus on exploration only). Mining companies’ budgets for
external drilling services, such as those offered by Orbit Garant, are typically determined by ferrous (iron) and non-
ferrous (precious and base) metals prices, and the availability of capital to finance exploration (particularly in the case
of juniors) and development programs, and/or ongoing mining operations.

Gold

Gold prices are determined by the balance between supply (primarily mine production) and the many sources of
demand including global demand for gold jewelry, investment demand, and to a much lesser extent, demand from
industrial applications.

The price of gold has increased significantly in the last 12 months, with the spot price reaching a record high of
approximately US$2,075 per ounce in August 2020. At the time of this report, the spot price of gold was approximately
US$1,881 per ounce, representing an increase of approximately 26% compared to a year ago and an increase of
approximately 79% from its trailing five-year price low in late 2015.

Base Metals

Base metals’ prices generally reflect global economic conditions, as these metals are used primarily in infrastructure,
industrial and manufacturing applications. Demand from emerging markets, particularly China and India, has a major
influence on base metals markets. As emerging markets advance their economic development, their infrastructure and
industrial bases expand. Further, residents typically become more affluent, driving increased demand for manufactured
goods.

Aluminum, copper, lead, nickel and zinc are the primary base metals. The spot price of copper is higher compared to
12 months ago, the spot prices of aluminum and zinc are similar to 12 months ago, and the spot prices of lead and
nickel are lower compared to 12 months ago. The spot price for copper, the metal widely considered to be the most
sensitive to macroeconomic activity, was approximately US$2.60 per pound a year ago and at the time of this report
was approximately US$2.98 per pound, an increase of 15%. The spot prices of copper and nickel are currently above
the mid-points of their respective trailing five-year-price ranges, while the spot prices of aluminum, lead and zinc are
currently below the mid-points of their respective trailing five-year price ranges.

Iron Ore

Iron ore prices are determined by the global demand for steel, as more than 95% of mined iron ore is used to make
steel. As both the world’s largest consumer and producer of steel, China is widely regarded as having the most
influence on global iron ore market prices. Continuing urbanization of the world’s population, particularly in China and
India, the world’s most populous countries, is fueling global steel consumption, and long-term demand is expected to
continue to trend higher. In the short term, the spot price of iron ore is principally affected by seasonal effects, short-
term mismatches between supply and demand and other factors. At the time of this report, the spot price of iron ore
was approximately US$124 per tonne, compared to approximately US$92 per tonne one year ago. The spot price of
iron ore is currently near a five-year high.

Market Participants

The mining sector began to recover from a prolonged downturn in early 2016. Metal prices increased, driving higher
mining equity valuations and increased financing activity. While the mining sector as a whole is currently in a stronger
position compared to the start of the recovery, the stock performance of gold mining companies has outperformed
base metal companies during the last 12 months as the price of gold increased to record levels. The S&P/TSX Global

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Gold Index increased approximately 49% in the last 12 months (September 27, 2019 to September 28, 2020), while
the S&P/TSX Global Base Metals Index increased approximately 6% in the same period. During March 2020, base
metal prices declined sharply as the COVID-19 pandemic negatively impacted the global economy. However, prices
have subsequently recovered from those lows.

TSX / TSX-V Mining Sector Financings (2008 to the eight months ended August 31, 2020)

3 000

2 500

s
g
n
i
c
n
a
n
i
F
f
o
r
e
b
m
u
N

2 000

1 500

1 000

500

)
s
n
o

i
l
l
i

B
$
(
d
e
s
i
a
R

a
t
i
p
a
C
y
t
i
u
q
E

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

YTD
2020

Financings - TSXV

Financings - TSX

Equity Capital Raised - TSXV

Equity Capital Raised - TSX

Mining financing activity in the Canadian capital markets was stronger during the first eight calendar months of 2020
compared to the same period in 2019. According to TMX Group, mining companies listed on the Toronto Stock
Exchange (“TSX”) and the TSX-Venture Exchange (“TSX-V”) completed 1,064 financings in the first eight months of
2020 that raised a cumulative $4.6 billion of equity capital. In the same period in 2019, these firms completed
802 financings that raised $3.3 billion of equity capital. The total number of mining financings completed in the first
eight months of 2020 on the TSX and TSX-V was also higher than the comparable periods in 2018 and 2017, but the
amount of total equity capital raised was lower. There were 849 mining financings that raised $5.0 billion of equity
capital in the first eight months of 2018, and 947 mining financings that raised $4.9 billion in the first eight months of
2017, according to TMX Group.

A report from S&P Global Market Intelligence Metals and Mining Research (August 2020) stated that global mining
financing for junior and intermediate companies totaled US$1.13 billion in July 2020, the highest level in 11 months.
Junior and intermediate gold companies raised US$740 million during July 2020, which was a 14-month high. S&P
noted that financing for junior and intermediate mining companies began to recover in May 2020 after a slow start to
the year.

Beginning in March 2020, global mining exploration activity declined significantly due to government restrictions that
were implemented to reduce the spread of COVID-19. However, activity rebounded during the late spring and summer.
According to S&P Global Market Intelligence Metals and Mining Research (August 2020), drilling results were reported
from 220 projects in July 2020, an increase of 18% from 186 projects in the prior month. Results were reported from
152 projects in March 2020, the lowest monthly level of the year.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

OVERALL PERFORMANCE

Revenue for the Fiscal year ended June 30, 2020 totalled $137.8 million, compared to $152.8 million in Fiscal 2019.

Gross margin percentage for Fiscal 2020 was 9.4%, compared to 10.7% for Fiscal 2019.

Drilling volume in Fiscal 2020 was 1,297,838 metres, compared to 1,427,587 metres drilled in Fiscal 2019.

The Company recorded a net loss of $7.4 million, or $0.20 per share, for Fiscal 2020, compared to net loss of
$3.5 million, or $0.09 per share, for Fiscal 2019. Earnings before interest, taxes, depreciation and amortization
(“EBITDA” – see Reconciliation of non-IFRS financial measures) totalled $6.8 million in Fiscal 2020, compared to
$8.3 million in Fiscal 2019. The $2.0 million provision for litigation in Burkina Faso, as discussed above, combined with
the year-over-year decrease in revenue and gross margin contributed the decline in EBITDA and the increased net
loss in Fiscal 2020.

Results of operations for the year ended June 30, 2020

FISCAL YEARS ENDED JUNE 30
* ($millions)

Fiscal 2020

Fiscal 2019

2020 vs. 2019
Variance

Revenue *

Gross profit *

Gross margin (%)

Adjusted gross margin (%) (1)

Net earnings (loss) *
Net earnings (loss) per common share - Basic ($)

- Diluted ($)
EBITDA * (2)

137.8

12.9

9.4

16.3

(7.4)

(0.20)
(0.20)

6.8

152.8

16.3

10.7

16.4

(3.5)

(0.09)
(0.09)

8.3

(15.0)

(3.4)

(1.3)

(0.1)

(3.9)

(0.11)
(0.11)

(1.5)

Metres drilled

1,297,838

1,427,587

(129,749)

(1) Reflects gross margin, excluding depreciation expenses. See “Reconciliation of non-IFRS financial measures”
(2) EBITDA = Earnings before interest, taxes, depreciation and amortization. See “Reconciliation of non-IFRS financial measures.”

Beginning in mid-March 2020, the Company’s operations were negatively impacted by the COVID-19 pandemic, as
activity on some projects was reduced, while other projects were suspended. The pandemic impacted all regions in
which the Company operates. In Quebec, all drilling activity was suspended between March 24, 2020 and
April 20, 2020 as a result of the provincial government’s order to minimize non-essential business activity. In addition,
drilling activity on certain projects in Nunavut Territory, Ontario, and the Company’s international operations was
reduced or temporarily suspended. The Company’s drilling activities gradually resumed or ramped up in Q4 FY2020
but did not reach pre-pandemic levels.

During Fiscal 2020, Orbit Garant drilled 1,297,838 metres, compared to 1,427,587 metres drilled in Fiscal 2019.
Average revenue per metre drilled in Fiscal 2020 was $105.53, compared to $106.74 in Fiscal 2019. The decrease in
average revenue per metre drilled is primarily attributable to a lower proportion of specialized international drilling
activity, which is priced at a higher rate than the conventional drilling. The Company recorded $3.6 million in financial
aid from the Government of Canada through the CEWS program in Q4 FY2020, of which $3.2 million was recognized
as a reduction of cost of contract revenue and $0.4 million was recognized as a reduction of general and administrative
expenses.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

The Company had 231 drill rigs as at June 30, 2020, compared to 235 drill rigs at the end of Fiscal 2019. During
Fiscal 2020, Soudure Royale manufactured five new computerized drill rigs and two conventional drill rigs, while nine
conventional drill rigs were dismantled and two were sold. Orbit Garant currently has 43 drill rigs outfitted with
computerized monitoring control technology.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

SELECTED ANNUAL FINANCIAL INFORMATION

For the years ended June 30 *($millions)

Fiscal 2020

Fiscal 2019

Fiscal 2018

Contract revenue

Drilling Canada *

Drilling International *

Total *

Gross profit *

Gross margin (%)

Adjusted gross margin (%) (1)

Net earnings (loss) *

Net earnings (loss) per common share ($)

Net earnings (loss) per common share diluted ($)

Total assets *

Long-term debt including current portion *

Lease liabilities including current portion*

EBITDA * (2)

EBITDA % (2)

Total metres drilled (million)

109.0

28.8

137.8

12.9

9.4

16.3

(7.4)

(0.20)

129.8

37.4

4.0

6.8

4.9

1.3

109.5

43.3

152.8

16.3

10.7

16.4

(3.5)

(0.09)

134.7

29.6

8.3

5.4

1.4

120.9

52.2

173.1

21.5

12.4

17.0

4.5

0.12

123.3

20.0

14.7

8.5

1.5

RESULTS OF OPERATIONS

FISCAL 2020 COMPARED TO FISCAL 2019

Contract Revenue

Revenue in Fiscal 2020 totalled $137.8 million, compared to $152.8 million in Fiscal 2019. The decrease in revenue
was primarily attributable to a decline in drilling activities in Canada and internationally due to the impact of the COVID-
19 pandemic starting in mid-March 2020, which resulted in reduced drilling activities on certain customer projects and
the temporary shutdowns of others. Prior to the COVID-19 pandemic, revenue was higher in Fiscal 2020 compared
to Fiscal 2019, due to increased drilling activity in Canada, partially offset by a slight decline in international drilling
activity.

Canada revenue was $109.0 million in Fiscal 2020, a decrease of $0.5 million, or 0.4%, from $109.5 million in
Fiscal 2019. The decrease was primarily attributable to a significant decline in metres drilled starting in mid-March
2020 due to the pandemic.

International revenue totalled $28.8 million in Fiscal 2020, compared to $43.3 million in Fiscal 2019, a decrease of
$14.5 million, or 33.6%. International includes $15.4 million in revenue from Chile in Fiscal 2020, compared to
$26.1 million in Fiscal 2019. The decrease in international revenue is attributable to the conclusion of a multi-year
drilling contract in Chile at the beginning of the fourth quarter of Fiscal 2019 (“Q4 FY2019”) and the negative impact
of the pandemic.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Gross Profit and Margins (see Reconciliation of non-IFRS Financial measures)

Gross profit for Fiscal 2020 was $12.9 million, compared to $16.3 million in Fiscal 2019. Gross margin was 9.4%
compared to 10.7% in Fiscal 2019. Depreciation expenses totalling $9.5 million are included in cost of contract revenue
for Fiscal 2020, compared to $8.8 million in Fiscal 2019. Adjusted gross margin, excluding depreciation expenses, was
16.3% in Fiscal 2020, compared to 16.4% in Fiscal 2019. The decrease in gross profit and gross margin was primarily
attributable to the impact of the COVID-19 pandemic and a decline in international specialized drilling activity, partially
offset by increased drilling activity in Canada prior to the onset of the COVID-19 pandemic in mid-March 2020. In
Q4 FY2020, the cost of contract revenue was reduced by $3.2 million as a result of financial support recorded from
the CEWS program.

General and Administrative Expenses

General and administrative (G&A) expenses were $15.4 million representing 11.2% of revenue in Fiscal 2020
(including depreciation of right-of-use assets of $0.4 million), compared to $17.3 million representing 11.3% of revenue
in Fiscal 2019. The decrease in G&A expenses primarily reflects the $1.1 million of acquisition and integration costs
related the acquisition of the drilling business of PPI in Q2 FY2019, a $0.4 million reduction in G&A expenses in
Q4 FY2020 resulting from the CEWS program, and cost saving measures implemented in the second half of Fiscal
2020.

Operating Results

Earnings from operations for Fiscal 2020 were $1.2 million, compared to $3.5 million in Fiscal 2019. As discussed
above, the decline in drilling activities due to the impact of the COVID-19 pandemic starting in mid-March 2020,
negatively affected the earnings from operations.

Drilling Canada’s operating earnings in Fiscal 2020 totalled $6.7 million, compared to an operating loss of $2.9 million
in Fiscal 2019. The positive variance reflects improved gross margins in the first nine months of Fiscal 2020 and
$3.2 million in financial support from the CEWS program recorded in Q4 FY2020.

Drilling International’s operating loss in Fiscal 2020 totalled $5.5 million, compared to earnings from operations of
$6.4 million in Fiscal 2019. The negative variance is primarily attributable to the impact of COVID-19 starting in mid-
March 2020 and an overall decrease in specialized drilling activity for the year.

Foreign Exchange Gain (Loss)

Foreign exchange gain was $0.1 million in Fiscal 2020, compared to a foreign exchange loss of $0.7 million in
Fiscal 2019.

Provision for litigation

As disclosed in the Contingency section of this MD&A, in June 2020, a claim against a subsidiary of the Company for
XOF 843.7 million ($1.97 million) was confirmed by a court in Burkina Faso. The Company recorded a provision
of XOF 871.5 million ($2.03 million) in Q4 FY2020 for this claim and additional legal fees. If and when the facts and
circumstances change (including if the Company is successful in its appeal), the liability recognized will be revised in
the period in which the change occurs.

EBITDA (see Reconciliation of non-IFRS financial measures)

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) totalled $6.8 million in Fiscal 2020,
compared to $8.3 million in Fiscal 2019. The decline in EBITDA in Fiscal 2020 reflects the impact of the pandemic and
the $2.03 million provision for litigation in Burkina Faso, as discussed above, partially offset by the Company’s year-
over-year increase in revenue prior to the pandemic, cost saving measures implemented in the second half of Fiscal

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

2020 and the $3.6 million grant recorded from the CEWS program in Q4 FY2020. EBITDA in Fiscal 2019 also reflects
$1.1 million of acquisition and integration costs related to the acquisition of the drilling business of PPI in Fiscal 2019.

Financial Expenses

Interest costs related to long-term debt and bank charges were $2.7 million in Fiscal 2020, compared to $2.1 million
in Fiscal 2019.

Income Tax Expense (Recovery)

Income tax expense was $0.2 million for Fiscal 2020, compared to an income tax recovery of $0.3 million for
Fiscal 2019.

Net loss

The Company’s net loss for Fiscal 2020 was $7.4 million, or $0.20 per share, compared to a net loss of $3.5 million,
or $0.09 per share, in Fiscal 2019. The decline in drilling activities due to the impact of the COVID-19 pandemic starting
in mid-March 2020 and the $2.03 million provision for litigation, as discussed above, contributed to the Company’s net
loss for Fiscal 2020. These factors were partially offset by the $3.6 million recorded from the CEWS program in
Q4 FY2020. The Company’s net loss for Fiscal 2019 included $1.1 million of acquisition and integration costs, before
income taxes, related to the acquisition of the drilling business of PPI in Q2 FY2019 (or $0.8 million of acquisition and
integration costs, net of income taxes).

SUMMARY ANALYSIS OF FISCAL 2019 COMPARED TO FISCAL 2018

Revenue for Fiscal 2019 totalled $152.8 million, compared to $173.1 million for the fiscal year ended June 30, 2018
(“Fiscal 2018”). Lower revenue in Fiscal 2019 was attributable to a decrease in metres drilled in Canada and Chile.

Gross profit for Fiscal 2019 was $16.3 million, compared to $21.5 million in Fiscal 2018. Gross margin for Fiscal 2019
was 10.7% compared to 12.4% in Fiscal 2018. Adjusted gross margin, excluding depreciation expenses, was 16.4%
in Fiscal 2019, compared to 17.0% in Fiscal 2018. The decrease in gross profit, gross margin and adjusted gross
margin was primarily attributable to lower drilling volumes in Canada, partially offset by improved gross profit and
margins for international operations.

Net loss in Fiscal 2019 totalled $3.5 million, or $0.09 per share, compared to net earnings of $4.5 million, or $0.12 per
share, in Fiscal 2018. Lower gross profit and margins, as discussed above, contributed to the Company’s net loss for
Fiscal 2019. The Company’s net loss for Fiscal 2019 also includes $1.1 million of acquisition and integration costs,
before income taxes, related to the acquisition of the drilling business of PPI in Q2 FY2019 (or $0.8 million for the
acquisition and integration costs net of income taxes).

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

SUMMARY OF QUARTERLY RESULTS

* ($millions)

Contract revenue *

Gross profit (1)*

Gross margin %

Net earnings (loss) *

Net earnings
(loss) per
common share ($)

- Basic

- Diluted

Fiscal 2020

Fiscal 2019

June 30

Mar. 31

Dec. 31

Sept. 30

June 30

Mar. 31

Dec. 31

Sept. 30

20.2

2.3

11.5

(2.7)

(0.08)

36.0

1.3

3.5

(3.4)

(0.09)

38.3

2.4

6.3

(2.4)

(0.06)

43.3

6.9

16.0

1.1

0.03

44.4

4.7

10.6

(0.8)

37.4

33.7

3.1

8.2

2.9

8.6

(1.4)

(1.7)

(0.02)

(0.04)

(0.02)

(0.04)

37.3

5.6

15.0

0.4

0.01

(1) Includes amortization and depreciation expenses related to operations.

SEASONALITY

The Company’s quarterly revenue reflects certain seasonal factors. In underground drilling operations, scheduled mine
shutdowns over holiday and summer periods at some locations reduce revenue during these periods. In domestic and
international surface drilling operations, weather conditions often cause drilling programs to pause, or to be planned
around seasonal fluctuations.

ANALYSIS OF THE FOURTH QUARTER OF FISCAL 2020 COMPARED TO THE FOURTH QUARTER OF
FISCAL 2019

Contract Revenue

Revenue for Q4 FY2020 totalled $20.2 million, compared to $44.4 million for the quarter ended June 30, 2019
(“Q4 FY2019”). The decrease in revenue was primarily attributable to a global decrease in drilling activities due to the
impact of the COVID-19 pandemic, resulting in reduced drilling activities of certain projects and the temporary
shutdown of others.

Canada revenue totalled $ 16.4 million in Q4 FY2020, compared to $31.6 million in Q4 FY2019, reflecting the negative
impact of the pandemic on drilling activities.

International revenue decreased to $3.8 million in Q4 FY2020, from $12.8 million in Q4 FY2019. The decrease was
primarily attributable to the impact of the pandemic and to lower revenue in Chile ($2.5 million in Q4 FY2020 compared
to $5.6 million in Q4 FY2019), reflecting the completion of a multi-year drilling contract at the beginning of Q4 FY2019.

Gross Profit and Margins (see Reconciliation of non-IFRS financial measures)

Gross profit for Q4 FY2020 was $2.3 million, a decrease of $2.4 million from $4.7 million in Q4 FY2019. Gross margin
for Q4 FY2020 was 11.5% compared to 10.6% in Q4 FY2019. Depreciation expenses totalling $2.4 million are included
in the cost of contract revenue for Q4 FY2020, compared to $2.3 million in Q4 FY2019. Adjusted gross margin,
excluding depreciation expenses, was 23.3% in Q4 FY2020, compared to adjusted gross margin of 15.8% in
Q4 FY2019. Lower gross profit is primarily attributable to the impact of the pandemic, which resulted in a reduction of
drilling activities. In Q4 FY2020, the cost of contract revenue was reduced by $3.2 million as a result of financial support
recorded from the CEWS program, which positively impacted gross margin and the adjusted gross margin.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

General and Administrative Expenses

G&A expenses were $2.9 million (representing 14.1% of revenue) in Q4 FY2020, compared to $4.4 million
(representing 9.8% of revenue) in Q4 FY2019. G&A expenses in Q4 FY2019 included $0.2 million of acquisition and
integration costs related to the Company’s acquisition of the drilling business of PPI in Q2 FY2019. The Company
implemented certain cost control measures following the onset of the COVID-19 pandemic that reduced G&A expenses
during Q4 FY2020. The Company expects that some of these measures will result in year-over-year G&A expense
reduction in future quarters. The Company’s G&A expenses for Q4 FY2020 also reflect a $0.4 million reduction
resulting from financial support from the CEWS program.

Operating Results

Earnings from operations for Q4 FY2020 were $0.1 million, compared to operating earnings of $1.4 million in
Q4 FY2019.

Drilling Canada’s operating earnings totalled $2.5 million in Q4 FY2020, compared to an operating loss of $0.6 million
in Q4 FY2019. The positive variance reflects the $3.2 million in financial support that Orbit Garant recorded from the
CEWS program and the Company’s initiatives to reduce costs following the onset of the COVID-19 pandemic.

Drilling International’s operating loss totalled $2.4 million in Q4 FY2020, compared to operating earnings of $2.0 million
in Q4 FY2019. The negative variance was primarily attributable to the impact of the pandemic, as discussed above,
and to a decline in specialized drilling activity.

Foreign Exchange Gain (Loss)

Foreign exchange gain was negligible in Q4 FY2020, compared to a loss of $0.4 million in Q4 FY2019.

Provision for litigation

EBITDA (see Reconciliation of non-IFRS financial measures)

EBITDA totalled $0.3 million in Q4 FY2020, compared to $2.6 million in Q4 FY2019. The impact of the pandemic and
the $2.0 million provision for litigation, as discussed above, contributed to the decline in EBITDA in Q4 FY2020.
EBITDA in Q4 FY2020 includes $3.6 million in financial support that the Company recorded from the CEWS program.

Financial Expenses

Interest costs related to long-term debt and bank charges were $0.6 million in Q4 FY2020, in line with Q4 FY2019.

Income Tax (Recovery)

Income tax recovery was $0.4 million in Q4 FY2020, compared to $0.2 million in Q4 FY2020.

Net Loss

Net loss for Q4 FY2020 was $2.7 million, or $0.08 per share, compared to a net loss of $0.8 million, or $0.02 per share,
in Q4 FY2019. The impact of the pandemic and the $2.03 million provision for litigation, as discussed above, were the

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

principal reasons for the increased net loss in the quarter. These factors were partially offset by the $3.6 million
recorded from the CEWS program in Q4 FY2020.

EFFECT OF EXCHANGE RATE

The Company realizes portions of its business activities in the following foreign currencies: US dollars (“$US”), Chilean
Pesos (“CLP”), Argentine Pesos (“ARS”) Ghanaian cedi (“GHS”) and West African Francs (“XOF”), and is thus exposed
to foreign exchange fluctuations. Orbit Garant does not actively manage this risk.

As at June 30, 2020, the Company had the following amounts of cash and accounts receivable in foreign currencies
and has provided the respective impact on earnings before income taxes ("EBIT"), if the corresponding foreign
exchange rates were to change by plus or minus 10%:

As at June 30, 2020 *($millions)
Cash*
Accounts receivable*
EBIT impact +/- 10%*

As at June 30, 2019 *($millions)
Cash*
Accounts receivable*
EBIT impact +/- 10%*

$US
0.6
0.2
0

$US
0.9
1.8
0.2

CLP
168.6
529.4
0.1

CLP
197.3
2,961.0
0.4

ARS
4.1
18.9
0.1

ARS
0
0
0

GHS
0.2
2.6
0.1

GHS
0.1
8.4
0.2

XOF
158.4
1,137.6
(0.2)

XOF
223.6
2,180.9
0.1

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Cash flow from operations (before changes in non-cash operating working capital items, finance costs and income
taxes paid), was $9.0 million in Fiscal 2020, compared to $8.5 million in Fiscal 2019.

The change in non-cash operating working capital items was an inflow of $4.6 million, compared to an outflow of
$5.9 million in Fiscal 2019.The change in non-cash operating working capital in Fiscal 2020 was primarily attributable
to:

•
•
•

$15.8 million related to a decrease in accounts receivable and prepaid expenses, partially offset by
$5.1 million related to an increase in inventory to support the level of operations, and
$6.1 million related to a decrease in accounts payable.

Investing Activities

Cash used in investing activities totalled $10.1 million in Fiscal 2020, compared to $11.2 million in Fiscal 2019. During
Fiscal 2020, $10.5 million was used for the acquisition of property, plant and equipment, partially offset by a cash
inflow of $0.2 million on disposal of investments, plant and equipment. During 2019, $3.4 million was used for the
acquisition of the drilling business of PPI and $8.3 million was used for the acquisition of property, plant and equipment,
partially offset by a cash inflow of $0.4 million on disposal of investments, property, plant and equipment.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Financing Activities

During Fiscal 2020, the Company generated $3.7 million from financing activities, compared to $10.3 million in
Fiscal 2019.

Orbit Garant’s primary sources of liquidity are cash flow from operations and borrowings under a credit facility (the
“Credit Facility”) with National Bank of Canada Inc. (“National Bank”). On December 12, 2018, the Company and
National Bank entered into a Third Amended and Restated Credit Agreement in respect of the Credit Facility and on
June 28, 2019, the Company and National Bank entered into an amendment to the Third Amended and Restated
Credit Agreement. Pursuant to the Third Amended and Restated Credit Agreement, as amended, the Credit Facility
consists of a $35.0 million revolving credit facility and a US$5.0 million revolving credit facility guaranteed by EDC.
The current term of the Credit Facility expires on November 2, 2021. Further amendments to the Third Amended and
Restated Credit Agreement were executed in March and June of 2020 to modify certain of the financial covenants
applicable to Q4 FY2020 and future quarters.

The Company withdrew a net amount of $3.2 million during Fiscal 2020 on its Credit Facility, compared to a withdrawal
of $7.2 million in Fiscal 2019. The Company’s long-term debt, under the Credit Facility, including US$1.0 million
($1.4 million) drawn from the US$5.0 million revolving credit facility and the current portion, was $28.7 million as at
June 30, 2020, compared to $25.3 million as at June 30, 2019. The increase was incurred to support working capital
requirements and the acquisition of capital assets, property, plant and equipment.

As at June 30, 2020, the Company’s working capital totalled $52.1 million, compared to $55.1 million as at
June 30, 2019. The Company’s working capital requirements are primarily related to the funding of inventory and the
financing of accounts receivable.

The Company believes that it will be able to generate sufficient cash flow to meet its current and future working capital
expenditures and repayment of its debt obligations. The Company’s principal capital expenditures are related to the
acquisition of drill rigs and property, plant and equipment.

Sources of Financing

As at June 30, 2020, the Company complied with all covenants in the Credit Facility and in the EDC Loan Agreement.

Orbit Garant’s primary sources of liquidity are cash flow from operations and borrowings under its Credit Facility. As
at June 30, 2020, the Company had drawn $28.7 million ($25.3 million as at June 30, 2019) under the Credit Facility.

Availability under the main revolving facility under the Credit Facility is subject to a borrowing base that is determined
by the value of the Company’s inventory, accounts receivable and real estate. All of Orbit Garant’s assets are pledged
as security for the Company’s obligations under the Credit Facility. In addition, the Company’s obligations under the
US$5.0 million revolving credit facility are guaranteed by EDC.

The Credit Facility contains covenants that limit the Company’s ability to undertake certain actions without prior
approval of the Lender, including: i) mergers, liquidations, dissolutions and changes of ownership; ii) the incurrence of
additional indebtedness; iii) encumbering the Company’s assets; iv) guarantees, loans, investments and acquisitions
that may be made by the Company; v) investing in or entering into derivative instruments, paying dividends and/or
making other capital distributions to related parties; vi) capital expenditures exceeding mutually agreed upon limits;
and vii) certain asset sales. The Credit Facility also contains a number of financial covenants that the Company must
comply with. In addition, the Credit Facility will mature on November 2, 2021.

On December 20, 2018, Orbit Garant entered into an additional loan agreement with EDC for a term loan in the principal
amount of up to US$5.15 million for the purposes of financing the acquisition of certain assets of PPI that was
completed on October 11, 2018 (the “EDC Loan”). Orbit Garant is required to repay this loan in 57 consecutive monthly
installments commencing May 2019, and maturing January 2024. The Company’s obligations under the EDC Loan,

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

are secured by a third ranking hypothec over all of Orbit Garant’s assets. On January 21, 2019, an initial drawdown
of US$2.575 million was used to reduce the amount drawn from the Company’s Credit Facility. Orbit Garant’s long-
term debt under the EDC Loan, including the current portion, amounted to $5.9 million as at June 30, 2020 ($3.2 million
as at June 30, 2019). On October 9, 2019, Orbit Garant withdrew an amount of $3.4 million (US$2.575 million) to fund
the final payment in connection with the acquisition of certain assets of PPI.

On April 23, 2020, the Company and EDC made arrangements whereby, among other things, all payments of principal
and interest under the EDC Loan were deferred until October 16, 2020 and therefore the terms of these loans were
extended by six months.

In May 2020, Orbit Garant Chile S.A., a wholly-owned subsidiary of the Company, obtained two loans totalling
CLP$1,000 million (approximately $1.7 million) from Banco Scotiabank. The loans bear interest at a rate of 3.5% per
annum, have a term of 36 months and are 70% guaranteed by the Chilean government as part of a government
program in response to COVID-19. The loans have no capital repayments for the first six months and the interest over
such period will be payable on the first instalment.

Orbit Garant believes that it will continue to meet its payment terms under its credit facilities and have sufficient
resources to carry on its business operations.

As at June 30, 2020, the Company had future contractual obligations as follows:

*($000s)
Long-term debt *
Lease liabilities
Operating leases *
Total *

Total
37,621
3,985
198
41,804

Less than 1 year
2,174
2,759
159
5,092

2-3 years
33,833
334
39
34,206

4-5 years
1,614
238
-
1,852

Subsequent years

-
654
-

654

OUTSTANDING SECURITIES AS AT SEPTEMBER 28, 2020

Number of common shares
Number of options

Fully diluted

37,021,756
3,149,000

40,170,756

On December 4, 2019, the Company issued 696,000 options at an exercise price of $0.90 per share. On June 18,
2020, the Company issued 75,000 options at an exercise price of $0.50 per share. During FY2020, 576,500 options
were cancelled.

RELATED PARTY TRANSACTIONS

Transactions with related parties

The Company is related to Dynamitage Castonguay Ltd., a company in which a director has an interest.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

During the twelve-month periods ended June 30, 2020 and June 30, 2019, the Company entered into the following
transactions with its related company and with persons related to directors:

*($000s)

Revenue*
Expenses*

12 months ended
June 30, 2020
54
148

12 months ended
June 30, 2019
266
151

As at June 30, 2020, a negligible amount was a receivable resulting from these transactions ($0.1 million as at June
30, 2019).

All of these related party transactions made in the normal course of business measured at the exchange amount,
which is the amount established and agreed to by the parties.

Key management personnel and directors’ transactions

The definition of key management includes the close members of the family of key personnel and any entity over which
key management exercises control. The key management personnel have been identified as directors of the Company
and key management staff. Close members of the family are those family members who may be expected to influence,
or be influenced by that individual in their dealings with the Company.

Compensation paid to key management personnel and directors is as follows:

*($000s)
Salaries and fees *
Share-based compensation*
Total*

12 months ended
June 30, 2020
1,504
113
1,617

12 months ended
June 30, 2019
1,877
200
2,077

CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS

The significant accounting policies are described in note 5 of the Fiscal 2020 audited consolidated financial statements.
The preparation of financial statements in accordance with IFRS requires the Company's Management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets
and contingent liabilities on the reporting date, and amounts of revenues and expenses for the relevant period.
Although Management regularly reviews its estimates, actual results may differ. The impact of changes to accounting
estimates is recognized in the period during which the change occurs, and in the affected future periods, when
applicable. Areas in which the estimates and assumptions are significant, or which are complex, are presented as
follows:

A- CRITICAL ACCOUNTING ESTIMATES

Inventories

Inventory is measured at the lower of cost and net realizable value. In estimating net realizable values, Management
takes into account the most reliable evidence available at the time the estimates are made. Net realizable value is
determined using the estimated selling price less estimated costs to complete the sale. Used and revised inventories
are valued at 50% and 75% of cost respectively. The amount of the write-down of inventories can be reversed when
the circumstances that led to the write-down charge in the past no longer exist.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Business combinations

On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of
financial position of the Company at their fair values. In measuring fair value, Management uses estimates about future
cash flows and discount rates, however, the actual results may vary.

Impairment of non-financial assets

The Company also uses its judgment to determine whether an impairment test must be performed due to the presence
of potential impairment indicators. In applying its judgment, the Company relies primarily on its knowledge of its
business and the economic environment. As at June 30, 2020, the Company concluded that there were impairment
indicators, and it performed an impairment test. No impairment was recognized as a result of this test. Significant
management estimates are required to determine the recoverable amount of the cash-generating unit ("CGU")
including estimates of future cash flows. Differences in estimates could affect whether tangible and intangible assets
are in fact impaired and the dollar amount of that impairment. Significant assumptions were used by management to
determine the projected revenue, operating expenses, utilization, discount rates and market pricing. Notably, these
estimates were made in the context of COVID-19, an unprecedented global pandemic, resulting in a higher degree of
uncertainty. Consequently, the impact on the Consolidated Financial Statements of future periods could be material.

Income taxes

The Company is subject to income taxes in various jurisdictions. Judgment is required in determining the worldwide
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional
taxes will be due in the future. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in
which such determination is made. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate,
on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax assets

The assessment of the probability in which deferred tax assets can be utilized is based on the Company’s latest
approved budget forecast, which is adjusted for significant non-taxable income (and expenses) and specific limits to
the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Company operates
are also carefully taken into consideration. If a forecast of taxable income indicates the probable use of a deferred tax
asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full. The
recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed
individually by Management based on specific facts and circumstances.

Leases

In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to estimate the
incremental borrowing rate specific to each leased asset if the interest rate implicit in the lease is not readily
determined. Management determines the incremental borrowing rate of each leased asset by incorporating the
Company's creditworthiness, the security, term and value of the underlying leased asset, and the economic
environment in which the leased asset operates in. The incremental borrowing rates are subject to change mainly due
to macroeconomic changes in the environment.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

B- JUDGMENTS

Functional currency

In determining the functional currency of its foreign subsidiaries, the Company needs to evaluate different factors such
as the currency that mainly influences sales prices and costs, the economic environment and the degree of autonomy
of the subsidiary. Following the evaluation of the different factors, when the functional currency is not obvious, the
Company uses its judgment to determine the functional currency that most faithfully represents the economic effects
of the underlying transactions, events and conditions.

Significant judgment in determining the lease term of contracts with renewal options

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered
by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to
terminate the lease, if it is reasonably certain not to be exercised. After the commencement date, the Company
reassesses the lease term for whether significant event of change in circumstances that is within its control and affects
its ability to exercise (or not exercise) the option to renew has occurred.

STANDARDS AND INTERPRETATIONS ADOPTED AND NOT YET ADOPTED

The following standards and amendments to existing standards have been adopted and not yet adopted by the
Company on July 1, 2019:

A) ADOPTED
•
•
•

IFRS 16 – Leases
IFRIC 23 – Uncertainty over Income Tax Treatments
IAS 29 – Financial Reporting in Hyperinflationary Economies

B) NOT YET ADOPTED
• Amendments to IFRS 3 – Business Combinations

Further information on these new accounting standards can be found in note 7 of the audited consolidated financial
statements for Fiscal 2020.

RECONCILIATION OF NON - IFRS FINANCIAL MEASURES

Financial data has been prepared in conformity with IFRS. However, certain measures used in this discussion and
analysis do not have any standardized meaning under IFRS and could be calculated differently by other companies.
The Company believes that certain non-IFRS financial measures, when presented in conjunction with comparable
IFRS financial measures, are useful to investors and other readers because the information is an appropriate measure
to evaluate the Company’s operating performance. Internally, the Company uses this non-IFRS financial information
as an indicator of business performance. These measures are provided for information purposes, in addition to, and
not as a substitute for, measures of financial performance prepared in accordance with IFRS.

EBITDA:

Net earnings (loss) before interest, taxes, depreciation and amortization.

Adjusted gross profit and margin: Contract revenue less operating costs. Operating expenses comprise material and
service expenses, personnel expenses, other operating expenses, excluding
depreciation.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

EBITDA

Management believes that EBITDA is an important measure when analyzing its operating profitability, as it removes
the impact of financing costs, certain non-cash items and income taxes. As a result, Management considers it a useful
and comparable benchmark for evaluating the Company’s performance, as companies rarely have the same capital
and financing structure.

Reconciliation of EBITDA

(unaudited)
(in millions of dollars)
Net earnings (loss) for
the period
Add:

Finance costs
Income tax expense
(recovery)
Depreciation and
amortization

EBITDA

3 months ended
June 30, 2020

3 months ended
June 30, 2019

12 months ended
June 30, 2020

12 months ended
June 30, 2019

12 months ended
June 30, 2018

(2.7)

(0.8)

(7.4)

0.6

(0.4)

2.8

0.3

0.6

0.2

2.6

2.7

0.2

11.3

6.8

(3.5)

2.1

(0.3)

10.0

8.3

4.5

1.7

(0.3)

8.8

14.7

Adjusted Gross Profit and Margin

Although adjusted gross profit and margin are not recognized financial measures defined by IFRS, Management
considers them to be important measures as they represent the Company’s core profitability, without the impact of
depreciation expense. As a result, Management believes they provide a useful and comparable benchmark for
evaluating the Company’s performance.

Reconciliation of Adjusted Gross Profit and Margin

(unaudited)
(in millions of dollars)

Contract revenue
Cost of contract revenue
(including depreciation)
Less depreciation

Direct costs

Adjusted gross profit

Adjusted gross margin (%) (1)

3 months
ended
June 30, 2020
20.2

3 months
ended
June 30, 2019
44.4

12 months
ended
June 30, 2020
137.8

12 months
ended
June 30, 2019
152.8

12 months
ended
June 30, 2018
173.1

17.9

(2.4)

15.5

4.7

23.3

39.7

(2.3)

37.4

7.0

15.8

124.9

(9.5)

115.4

22.4

16.3

136.5

(8.8)

127.7

25.1

16.4

151.6

(7.9)

143.7

29.4

17.0

(1) Adjusted gross profit, divided by contract revenue X 100

RISK FACTORS

The following are certain factors relating to the Company’s business and the industry within which it operates. The
following information is a summary only of certain risk factors and is qualified in its entirety by reference to, and should
be read in conjunction with, the detailed information appearing elsewhere in this report and in the Company’s Annual
Information Form dated September 28, 2020. These risks and uncertainties are not the only ones relevant to the
Company. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

immaterial, may also impair the operations of the Company. If any such risks actually occur, the business, financial
condition, liquidity and results of operations of the Company could be affected materially and adversely.

COVID-19

The Company’s business, operations and financial condition could be materially adversely affected by the outbreak of
epidemics, pandemics or other health crises, including COVID-19.

COVID-19 negatively affected the Company and its customers in the second half of Fiscal 2020, and further spreading
of the infection could continue to impact customers, vendors, suppliers and other counterparties and materially impact
the Company’s business, operations and financial condition. The extent to which COVID-19 impacts the Company’s
business, including its operations and the market for its securities, will depend on future developments, which are
highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and
the actions taken to contain or resolve the COVID-19 outbreak. In particular, the continued spread of COVID-19 or a
resurgence of infections in jurisdictions that have previously controlled the pandemic could result in a slowdown or
temporary suspension in operations or a re-imposition of restrictions on the operation of non-essential services.

The risks to the Company’s business include, without limitation, the risk of breach of material contracts and customer
agreements, employee health, workforce productivity, increased insurance premiums, limitations on travel, the
availability of industry experts and personnel, prolonged restrictive measures put in place in order to control an
outbreak of contagious disease or other adverse public health developments in Canada or any of the markets in which
Orbit Garant operates and other factors that will depend on future developments beyond the Company’s control, which
may have a material and adverse effect on the Company’s business, financial condition and results of operations.

There can be no assurance that Orbit Garant will not ultimately see its workforce productivity reduced or that the
Company will not incur increased medical costs / insurance premiums as a result of these health risks. Under the
circumstances, the Company or its customers, suppliers and other counterparties may be forced to declare force
majeure on certain contracts. In addition, the coronavirus pandemic could adversely affect global economies and
financial markets resulting in an economic downturn that could have an adverse effect on the demand for drilling
services, the Company’s prospects and its ability to achieve its objectives. Orbit Garant continues to monitor the
situation and the impact COVID-19 may have on its business.

Risk Related to Structure to the Business and Industry

Cyclical Downturns

Demand for drilling services and products depends significantly on the level of mineral exploration and development
activities conducted by mining companies, which in turn, are driven significantly by commodity prices. There is a
continued risk that low commodity prices could substantially reduce future exploration and drilling expenditures by
mining companies, which in turn, could result in a decline in the demand for the drilling services offered by the Company
and would materially impact the Company’s revenue, financial condition, cash flows and growth prospects.

Sensitivity to General Economic Conditions

The operating and financial performance of Orbit Garant is influenced by a variety of international and country-specific
general economic and business conditions (including inflation, interest rates and exchange rates), access to debt and
capital markets, as well as, monetary and regulatory policies. Deterioration in domestic or international general
economic conditions, including an increase in interest rates or a decrease in consumer and business demand, could
have a material adverse effect on the financial performance and condition, cash flows and growth prospects of the
Company.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Reliance on and Retention of Employees

In addition to the availability of capital for equipment, a key limiting factor in the growth of drilling services companies
is the supply of qualified drillers, on whom the Company relies upon to operate its drills. As such, the ability to attract,
train and retain high quality drillers is a high priority for all drilling services providers. A failure by the Company to retain
qualified drillers or attract and train new qualified drillers could have a material adverse effect on the Company’s
financial performance, financial condition, cash flows and growth prospects. In addition, rising rates paid to drillers and
helpers will exert pressure on the Company’s profit margins if it is unable to pass on such higher costs to its customers
through price increases.

Increased Cost of Sourcing Consumables

When bidding on an underground drilling contract, the cost of sourcing consumables is a key consideration in deciding
upon the pricing. Underground drilling contracts are typically for one to two years and expose the Company to an
increase in the cost of consumables and labor during that period. A material increase in the cost of labor or
consumables during that period could result in materially higher costs and could materially reduce the Company’s
financial performance, financial condition, cash flows and growth prospects.

Country Risks

The Company does business internationally in numerous regions of different countries and with this comes the risk of
dealing with business and political systems in a variety of jurisdictions. Unanticipated events in a country (precipitated
by developments within or external to the country), such as economic, political, legal, tax related, regulatory or legal
changes (or changes in interpretation), could, directly or indirectly, have a material negative impact on operations and
assets. The risks include, but are not limited to, military repression, extreme fluctuations in currency exchange rates,
high rates of inflation, changes in mining or investment policies, nationalization/expropriation of projects or assets,
corruption, delays in obtaining or inability to obtain necessary permits, nullification of existing mining claims or interests
therein, hostage takings, labour unrest, opposition to mining from environmental or other non-governmental
organisations or shifts in political attitude that may adversely affect the business. There has been an emergence of a
trend by governments to increase their participation in the industry and thereby their revenues through increased
taxation, expropriation, or otherwise. This could negatively impact the level of foreign investment in mining and
exploration activities and thus drilling demand in these regions. Such events could result in reductions in revenue and
additional transition costs as equipment is shifted to other locations. Nationalization/expropriation of mining projects
has a direct impact on suppliers (such as the Company) to the mining industry.

While the Company works to mitigate its exposure to potential country risk events, the impact of any such event is
mostly not under the Company’s control, is highly uncertain and unpredictable and will be based on specific facts and
circumstances. As a result, the Company can give no assurance that it will not be subject to any country risk event,
directly or indirectly, in the jurisdictions in which it operates.

Tax Risks

Orbit Garant operates in many countries and is therefore subject to many different forms of taxation in various
jurisdictions throughout the world, including but not limited to, property tax, income tax, withholding tax, commodity
tax, social security and other payroll related taxes, foreign currency and capital repatriation laws. An unfavorable
interpretation of the current tax legislation could have a material adverse effect on the profitability of the Company or
may lead to disagreements with tax authorities regarding the interpretation of tax law.

Tax law and its administration are extremely complex and often require the Company to make subjective
determinations. The Company must make assumptions about, but not limited to, the tax rates in various jurisdictions,
the effect of tax treaties between jurisdictions and taxable income projections due to tax law and its administration
which are extremely complex. To the extent that such assumptions differ from actual results, or if such jurisdictions
were to change or modify such laws or the current interpretation thereof, the Company may have to record additional
tax expenses and liabilities, including interest and penalties. Moreover, there is a risk in which the countries where the

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Company operates may change their current tax regime with little prior notice or that the tax authorities in these
jurisdictions may attempt to claim tax on the global revenues of the Company.

Leverage and Restrictive Covenants

Orbit Garant entered into the Credit Agreement in order to provide it with credit facilities to fund, among other things,
working capital and acquisitions. The degree to which Orbit Garant is leveraged could have important consequences,
including: i) Orbit Garant’s ability to obtain additional financing for working capital, capital expenditures or acquisitions
in the future may be limited; ii) a significant portion of Orbit Garant’s cash flow from operations may be dedicated to
the payment of the principal of and interest on its indebtedness, thereby reducing funds available for future operations;
and iii) certain of Orbit Garant’s borrowings (including borrowings under the Credit Agreement) will be at variable rates
of interests, which exposes Orbit Garant to the risk of increased interest rates which may have an adverse effect on
Orbit Garant’s financial condition.

The Credit Agreement contains numerous restrictive covenants that limit the discretion of Orbit Garant’s Management
with respect to certain business matters. These covenants place significant restrictions on, among other things,
changes in ownership and the ability of Orbit Garant to create liens or other encumbrances, to pay dividends or make
certain other payments, investments, acquisitions, capital expenditures, loans and guarantees and to sell or otherwise
dispose of assets and merge with another entity. In addition, the Credit Agreement contains financial covenants that
require Orbit Garant to meet certain financial ratios and financial condition tests. A failure to comply with the obligations
in the Credit Agreement could result in a default that, if not cured or waived, could permit acceleration of the relevant
indebtedness. If the indebtedness under the Credit Agreement were to be accelerated, there can be no assurance that
the assets of Orbit Garant would be sufficient to repay in full that indebtedness. In addition, the Credit Agreement will
mature no later than November 2, 2021. There can be no assurance that future borrowings or equity financing will be
available to Orbit Garant or available on acceptable terms, in an amount sufficient to repay the Credit Agreement at
maturity or to fund Orbit Garant’s needs thereafter. This could have a material adverse effect on the business, financial
condition and results of operations of Orbit Garant.

Access of Customers to Equity Markets

Economic factors may make it more difficult for mining companies, particularly junior mining companies, to raise money
to fund exploration activity. This difficulty would have an adverse impact on the demand for drilling services and could
have a material adverse effect on the financial performance, financial condition, cash flows and growth prospects of
the Company.

Acquisitions

Orbit Garant is continuously seeking business acquisitions. It may be exposed to business risks or liabilities for which
it may not be fully indemnified or insured. The ongoing integration of existing and new computer systems, equipment
and personnel may impact the success of the acquisitions. Any issues arising from the integration of the acquired
businesses, including the integration of the accounting software, may require significant management, financial or
personnel resources that would otherwise be available for ongoing development and expansion of the Company’s
existing operations. If this happens, it may have a material adverse effect on the financial performance, financial
condition, cash flows and growth prospects of the Company.

Supply of Consumables

If the Company should grow, it could put pressure on its ability to manufacture or otherwise obtain new drills and
consumables required to conduct the Company’s drilling operations. This could constrain Orbit Garant’s ability to
increase its capacity and increase or maintain revenue and profitability.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Competition

The Company faces competition from several large drilling services companies and many smaller, regional
competitors. Some of the Company’s competitors have been in the drilling services industry for a longer period and
have substantially greater financial and other resources than the Company has. Increased competition in the drilling
services market may adversely affect the Company’s current market share, profitability and growth opportunities. The
capital cost to acquire drilling rigs is relatively low, enabling competitors to finance expansion and providing opportunity
for new competitors to enter the market. This dynamic exposes the Company to the risk of reduced market share and
scope for geographic growth, as well as lower revenue and margin for its existing business.

A significant portion of the drilling services business is a result of being awarded contracts through a competitive tender
process. It is possible that the Company will lose potential new contracts to competitors if it is unable to demonstrate
reliable performance, technical competence and competitive pricing as part of the tender process or if mining
companies elect not to undertake a competitive tender process.

Ability to Sustain and Manage Growth

Orbit Garant’s ability to grow will depend on a number of factors, many of which are beyond the Company’s control,
including, but not limited to, commodity prices, the ability of mining companies to raise financing and the demand for
raw materials from large, emerging economies such as the Brazil, Russia, India and China (“BRIC’’) economies. In
addition, the Company is subject to a variety of business risks generally associated with growing companies. Future
growth and expansion could place significant strain on the Company’s Management personnel and likely will require
the Company to recruit additional management personnel.

There can be no assurance that the Company will be able to: i) manage its expanding operations (including any
acquisitions) effectively; ii) sustain or accelerate its growth or that such growth, if achieved, will result in profitable
operations; iii) attract and retain sufficient management personnel necessary for continued growth; or, iv) successfully
make strategic investments or acquisitions. The failure to accomplish any of the foregoing could have a material
adverse effect on the Company’s financial performance, financial condition, cash flows and growth prospects.

Future Acquisition Strategy

Orbit Garant intends to grow through acquisitions in addition to organic growth. There is considerable competition
within the drilling services industry for attractive acquisition targets. It is not possible to ensure that future acquisition
opportunities will exist on acceptable terms, or that newly acquired or developed entities will be successfully integrated
into the Company’s operations. Additionally, the Company cannot give assurances that it will be able to secure the
adequate financing on acceptable terms to pursue this strategy.

Customer Contracts

The Company’s surface drilling customer contracts are typically for a term of six (6) to twelve (12) months and its
underground drilling customer contracts are typically for a term of one to two years and can be cancelled by the
customer on short notice in prescribed circumstances with limited or no amounts payable to the Company. There is a
risk that existing contracts may not be renewed or replaced. The failure to renew or replace some or all of these existing
contracts and cancellation of existing contracts could have a material adverse effect on the Company’s financial
performance, financial condition, cash flows and growth prospects. In addition, consolidation by the Company’s
customers could materially and adversely affect the Company’s results of operations and financial condition.

International Expansion and Instability

Expansion internationally entails additional political and economic risk. Some of the countries and areas targeted by
the Company for expansion are undergoing industrialization and urbanization and do not have the economic, political
or social stability that many developed nations now possess. Other countries have experienced political or economic

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

instability in the past and may be subject to risks beyond the Company’s control, such as war or civil disturbances,
political, social and economic instability, corruption, nationalization, terrorism, expropriation without fair compensation
or cancellation of contract rights, significant changes in government policies, breakdown of the rule of law and
regulations and new tariffs, taxes and other barriers. There is a risk that the Company’s operations, assets, employees
or repatriation of revenue could be impaired or adversely affected by factors related to the Company’s international
expansion and have a material adverse effect on the financial performance, financial condition, cash flow and growth
prospects of the Company.

Operational Risks and Liability

Risks associated with drilling include, in the case of employees, personal injury and loss of life and, in the case of the
Company, damage and destruction to property, equipment, release of hazardous substances to the environment and
interruption or suspension of drill site operation due to unsafe drill operations. The occurrence of any of these events
may have an adverse effect on the Company, including financial loss, key personnel loss, legal proceedings and
damage to the Company’s reputation.

In addition, poor or failed internal processes, people or systems, along with external events could negatively impact
the Company’s operational and financial performance. The risk of this loss, known as operational risk, is present in all
aspects of the business of the Company, including, but not limited to, business disruptions, technology failures, theft
and fraud, damage to assets, employee safety, regulatory compliance issues or business integration issues. The
number and significance of the changes and the possibility that the Company may not be able to successfully
implement the changes made, may adversely affect the performance of the business and its financial condition, cash
flows and growth prospects of the Company.

Currency Exposure

Orbit Garant conducts some of its activities in US$, CLP, ARS, GHS and in XOF and is thus exposed to foreign
exchange fluctuations. As at June 30, 2020, we had the following currency risk exposure related to financial assets
and liabilities in US$, CLP, ARS, GHS and in XOF of approximately: $0.0, $0.6, $0.6, $1.4 and $(3.2) million
respectively in Canadian dollars ($2.7, $5.3, $0.0, $2.4 and $1.7 respectively in Canadian dollars as at June 30, 2019).
This exposure could change in the future and a significant portion of our revenue could potentially be denominated in
currencies other than the Canadian dollar, fluctuations of which could cause a negative impact on our financial
performance.

Business Interruptions

Business interruptions can occur as a result of a variety of factors, including; regulatory intervention, delays in
necessary approvals and permits, health and safety issues or product input supply bottlenecks. In addition, the
Company operates in a variety of geographic locations, some of which are prone to inclement weather conditions,
natural or other disasters. The occurrence of such conditions or any business interruption could have a material
adverse effect on the Company’s financial performance, financial condition, cash flows and growth prospects.

Risk to the Company’s Reputation

Risks to the Company’s reputation could include any negative publicity, whether true or not, and could cause a decline
in the Company’s customer base and have a material adverse impact on the Company’s financial performance,
financial condition, cash flows and growth prospects. All risks have an impact on reputation, and as such, reputational
risk cannot be managed in isolation from other types of risk. Every employee and representative of the Company is
charged with upholding its strong reputation by complying with all applicable policies, legislation and regulations as
well as creating positive experiences with the Company’s customers, stakeholders and the public.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Corruption, Bribery and Fraud

Orbit Garant is required to comply with the Canadian Corruption of Foreign Public Officials Act (“CFPOA”) as well as
similar applicable laws in other jurisdictions, which prohibit companies from engaging in bribery or other prohibited
payments or gifts to foreign public officials for the purpose of retaining or obtaining business. The Company’s policies
mandate compliance with these laws. However, there can be no assurance that the policies and procedures and other
safeguards that the Company has implemented in relation to its compliance with these laws will be effective or that
Company employees, agents, suppliers or other industry partners have not engaged or will not engage in such illegal
conduct for which the Company may be held responsible. Violations of these laws could disrupt the Company’s
business and result in a material adverse effect on its business and operations.

Environment, Health and Safety Requirements and Related Considerations

The Company’s operations are subject to a broad range of federal, provincial, state and local laws and regulations as
well as permits and other approvals, including those relating to the protection of the environment and workers’ health
and safety governing, among other things, air emissions, water discharges, non-hazardous and hazardous waste
(including waste water), storage, handling, disposal and clean-up of dangerous goods and hazardous materials such
as chemicals, remediation of releases and workers’ health and safety in Canada and elsewhere (the ‘‘Environment,
Health and Safety Requirements’’). As a result of the Company’s operations, it may be involved from time to time in
administrative and judicial proceedings and inquiries relating to Environment, Health and Safety Requirements. Future
proceedings or inquiries could have a material adverse effect on the Company’s business, financial condition and
results of operations.

The activities at clients’ worksites may involve operating hazards that can result in personal injury and loss of life.
There can be no assurance that the Company’s insurance will be sufficient or effective under all circumstances or
against all claims or hazards to which it may be subject or that it will be able to continue to obtain adequate insurance
protection. A successful claim or damage resulting from a hazard for which it is not fully insured could adversely affect
the Company’s results of operations. In addition, if the Company is seen not to adequately implement health and safety
and environmental policies, its relationships with its customers may deteriorate, which may result in the loss of
contracts and restrict its ability to obtain new contracts.

Climate Change Risk

Orbit Garant operates in various regions and jurisdictions where environmental laws are evolving and may be different
according to each jurisdiction. Several governments or governmental bodies have introduced or are contemplating
regulatory changes in response to the potential impact of climate change, such as regulation relating to emission
levels. If the current regulatory trend continues, this may result in increased cost in some of the Company’s operations.
In addition, the physical effect of climate change, such as extreme weather conditions, natural disasters, resource
shortages and changing sea levels, could have an adverse financial impact on operations located in the regions where
these conditions occur.

Insurance Limits

The Company maintains property, general liability and business interruption insurance. However, there can be no
assurance that such insurance will continue to be offered on an economically feasible basis, that all events that could
give rise to a loss or liability are insurable, or that the amounts of insurance will at all times be sufficient to cover each
and every loss or claim that may occur involving the assets or operations of the Company.

Legislative and Regulatory Changes

Changes to any of the laws, rules, regulations or policies affecting the business of the Company would have an impact
on the Company’s business and may significantly and adversely affect the operations and financial performance of the
Company.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Legal and Regulatory Risk

The mining and drilling industries are highly regulated by legal, environmental and health and safety regulations.
Failure to comply with such regulations could lead to penalties, including fines or suspension of operations which could
have a significant impact on the financial strength and future earnings potential of the Company. Furthermore, the
Company’s mineral exploration customers are also subject to similar legal, regulatory, health and safety regulations
which could materially affect their decision to go ahead with mineral exploration or mine development and thereby
indirectly negatively impact the Company.

Cyber-Security Risk

While information systems are integral to supporting the Company’s business, due to the nature of the Company’s
services, it is not considered to be subject to the same level of cyber security risks as companies operating in sectors
where sensitive information is at the core of their business. Nevertheless, the Company is potentially exposed to risks
ranging from internal human error to uncoordinated individual attempts to gain unauthorised access to its information
technology systems, to sophisticated and targeted measures directed at the Company and its systems, clients or
service providers. Any such disruptions in the Company’s systems or the failure of the systems to operate as expected
could, depending on the magnitude of the problem, result in the loss of client information, a loss of current or future
business, reputational harm and/or potential claims against the Company, all of which could have an adverse effect
on the Company’s business, financial condition and operating results. The Company continues to enhance its efforts
to mitigate these risks. It invests in technology security initiatives to better identify and address any vulnerability
including periodic third-party vulnerability assessments, testing user knowledge of cyber security best practices, and
audits of security processes and procedures. In addition, the Company continues to increase the employees’
awareness of security policies through ongoing communications.

Risk Related to Structure and Common Shares

Equity Market Risks

There is a risk associated with any investment in shares. The market price of securities such as the Common Shares
of the Company are affected by numerous factors including, but not limited to, general market conditions, actual or
anticipated fluctuations in the Company’s results of operations, changes in estimates of future results of operations by
the Company or securities analysts, risks identified in this section and other factors. In addition, the financial markets
have experienced significant price and volume fluctuations that have sometimes been unrelated to the operating
performance of the issuers or the industries in which they operate. Consequently, the trading price of the Common
Shares may fluctuate.

Influence of Existing Shareholders

As of September 28, 2020, Pierre Alexandre, Vice Chairman and Vice President of Corporate Development of the
Company, holds or controls, directly or indirectly, approximately 25% of Orbit Garant’s outstanding Common Shares.
As a result, this shareholder has the ability to influence Orbit Garant’s strategic direction and policies, including any
merger, consolidation or sale of all or substantially all of its assets, and the election and composition of Orbit Garant’s
Board of Directors. The foregoing ability to affect the control and direction of Orbit Garant could reduce its
attractiveness as a target for potential takeover bids and business combinations, and correspondingly affect its share
price.

Future Sales of Common Shares by the Company’s Existing Shareholders

Certain shareholders, including Pierre Alexandre, hold or control significant blocks of shares of the Company. The
decision of any of these shareholders to sell a substantial number of Common Shares in the public market could result
in a material imbalance in demand for the Company’s shares and therefore a decline in the market price of the Common

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

Shares. In addition, the perception among the public that such sales may occur could also result in a reduction in the
market price of the Common Shares.

Dilution

Orbit Garant may raise additional funds in the future by issuing equity securities. Holders of Common Shares will have
no pre-emptive rights in connection with such further issuances. Additional Common Shares may be issued by Orbit
Garant in connection with the exercise of options granted. Such additional equity issuances could, depending on the
price at which such securities are issued, substantially dilute the interests of the holders of Common Shares.

Dividend Payments

Orbit Garant does not expect to pay dividends as it intends to use cash for future growth or debt repayment. In addition,
the Credit Agreement places restrictions on the ability of Orbit Garant to declare or pay dividends.

Credit Risk

The Company provides credit to its customers in the normal course of its operations. The Company has adopted a
policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means
of mitigating the risk of financial loss from defaults. It carries out, on a continuing basis, credit checks on its customers
and maintains provisions for contingent credit losses. Demand for the Company’s drilling services depends upon the
level of mineral exploration and development activities conducted by mining companies, particularly with respect to
gold, nickel and copper.

During these unprecedented market challenges, COVID-19 may adversely affect the Company's customers and their
solvency. Our customers' financial difficulties can negatively impact the Company's results of operations and financial
condition, especially if those customers were to delay or default in payment owed to the Company. Collection of trade
and other receivables from third parties remains a priority for the Company under the current situation.

In order to reduce the credit risk, the Company is using insurance coverage from Export Development Canada («EDC»)
on certain accounts receivable from its customers. The insurance program provides under certain terms and conditions
an insurance coverage amount of up to 90% of unpaid accounts. As at June 30, 2020, the amount of the insurance
coverage from EDC represents 6% of the accounts receivable (7% as at June 30, 2019).

As at June 30, 2020, 66% (79% as at June 30, 2019) of the trade accounts receivable are aged as current and 4% are
impaired (2% as at June 30, 2019).

Two major customers represent 14% of the trade accounts receivable as at June 30, 2020 (one major customer
represented 15% as at June 30, 2019).

One major customer represents 20% of the contract revenue for the year ended June 30, 2020 (for the year ended
June 30, 2019, two major customers represented 31% of the contract revenue).

Credit risk also arises from cash and cash equivalents with banks and financial institutions. This risk is limited because
the counterparties are mainly Canadian banks with high credit ratings. The Company does not enter into derivatives
to manage credit risk.

Interest Rate Risk

The Company is subject to interest rate risk since a significant part of the long-term debt bears interest at variable
rates.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

As at June 30, 2020, the Company has estimated that a 100 basis point increase or decrease in interest rates would
have caused a corresponding annual increase or decrease in net earnings (loss) and comprehensive earnings (loss)
of $0.2 million ($0.2 million as at June 30, 2019).

Equity Market Risk

Equity market risk is defined as the potential adverse impact on the Company's earnings due to movements in
individual equity prices or general movements in the level of the stock market. The Company closely monitors the
general trends in the stock markets and individual equity movements, and determines the appropriate course of actions
to be taken by the Company.

Fair Value

The fair value of cash and equivalents, trade and other receivables, trade and other payables and balance payable
related to business combination is approximately equal to their carrying values due to their short-term maturity.

The fair value of long-term debt approximates its carrying value as it bears interest at a variable rate and has financing
conditions similar to those currently available to the Company.

OUTLOOK

Orbit Garant continues to monitor market conditions in the mining sector and the impact of the COVID-19 pandemic
on its business. The pandemic is expected to have a continuing negative impact on the Company’s business in the
near term. While Orbit Garant is ramping up its operations in Canada, the Company’s operations continue to be
restricted in its international markets. It is currently unclear if or when Orbit Garant’s drilling activity will reach pre-
pandemic levels.

While market conditions may fluctuate in the near term, Management believes that the longer-term outlook for drilling
in the gold industry is positive, as many mining companies are facing declining reserves. Accordingly, increased
spending on exploration and new mine development will be required for the industry to remain viable in the long term
as the reserves at existing mines are being depleted. S&P Global Market Intelligence forecasts lower global gold
production beyond 2022 due to declining reserves and expect that by 2024 more than 15% of global gold production
will come from mines that are not yet in production. Given that the price of gold is currently at or near an all-time high,
while declining reserves remain a major challenge across the industry, many mining companies will be incentivized to
increase exploration and development spending on gold projects. Orbit Garant is well positioned for increased drilling
services demand in the gold sector as it derives approximately 66% of its revenue from gold related projects.

Orbit Garant generated 79% of its revenue from its Canadian operations in fiscal 2020. S&P Global Market Intelligence
forecasts that Canada is the only major gold-producing country in the world in which output is expected to increase
significantly over the next five years. As such, Orbit Garant is well positioned to benefit from the positive outlook for
the gold mining sector in Canada. An additional positive factor for mining companies operating in Canada is the current
lower value of the Canadian dollar relative to the US dollar, as their expenses are typically in Canadian dollars and
their revenues are denominated in US dollars. At the time of this report, the value of the Canadian dollar was
approximately $0.75 US dollars.

Management believes the current global economic downturn caused by COVID-19 could have a further negative
impact on demand for base metals, including copper. However, Management is encouraged by the recent rebound in
the copper price, which has increased by approximately 42% from its low of US$2.10 per pound in March 2020. Many
industry analysts expect that declining copper reserves may necessitate increased exploration activity for copper in
the coming years.

Orbit Garant has operating subsidiaries in active international mining markets, including Argentina, Burkina Faso,
Chile, Ghana, Guyana and Peru. These international operations provide enhanced market, customer and commodity

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

diversification and have provided the Company with increased access to higher margin specialized drilling activity. In
South America, Orbit Garant is currently working on projects in Chile, Guyana and Argentina. In West Africa, the
Company is currently working on projects in Burkina Faso and Ghana.

While Management remains positive about the long-term outlook for its international markets, the recent political
volatility and civil unrest in Chile and regional security concerns in Burkina Faso have resulted in the delay or
interruption of certain mineral drilling projects in these countries during the Company’s 2020 fiscal year. This was prior
to the COVID-19 pandemic, which disrupted most of the Company’s remaining mineral drilling projects in these
countries. While the political situation in Chile remains uncertain, the Company believes that the impact of the situation
on mineral drilling projects has now diminished. While Orbit Garant’s drilling projects in Burkina Faso are in areas of
the country that have historically experienced less incidents of violence, Management believes that mineral drilling
activity across the country is now impacted by security concerns. The Company continues to monitor the situation in
Burkina Faso and is actively seeking drilling projects in other jurisdictions in West Africa. Orbit Garant’s policy is to
only work in areas where the security of its employees can be appropriately maintained. Management continues to
closely monitor developments in both Burkina Faso and Chile.

Management believes the Company’s proprietary computerized monitoring and control drilling technology will
increasingly be an important contributor in reducing both labour and consumable drilling costs, enhancing driller
productivity rates and improving safety. Orbit Garant currently has 43 drill rigs featuring its computerized monitoring
and control technology, all of which are currently deployed on customer projects. These next generation drill rigs have
achieved a significant increase in productivity compared to that achieved using conventional drill rigs. Orbit Garant’s
customers have responded positively to the improved performance and potential of the new drill rigs, which has led to
renewals of underground drilling contracts for longer terms.

Management will remain focused on maximizing stakeholder value by: managing its variable cost structure and cash,
optimizing its drill rig utilization, increasing productivity rates, continuing to focus on technology innovation, retaining
key personnel, and maintaining strong health and safety standards, as it gradually ramps up its operations in the
jurisdictions that have lifted COVID-19 related restrictions. Orbit Garant will also continue to evaluate opportunities to
further expand its market presence both in Canada and abroad. As COVID-19 related restrictions are lifted, customer
drilling projects are resumed and general economic conditions improve, the Company believes that it is positioned for
long-term success.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

The CEO and the CFO of the Company are responsible for establishing and maintaining disclosure controls and
procedures (DC&P) for the Company as defined under Multilateral Instrument 52-109 issued by the Canadian
Securities Administrators. The CEO and the CFO have designed such DC&P, or caused them to be designed under
their supervision, to provide reasonable assurance that information required to be disclosed by the Company in its
annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed,
summarized and reported within the time periods specified in the securities legislation and includes controls and
procedures designed to ensure that information required to be disclosed by an issuer in its annual filings, interim filings
or other reports filed or submitted under securities legislation is accumulated and communicated to the Company’s
management, including its certifying officers, as appropriate to allow timely decisions regarding required disclosure.

As at June 30, 2020, the CEO and CFO evaluated the design and operation of the Company’s DC&P. Based on that
evaluation, the CEO and CFO concluded that the Company’s DC&P was effective as at June 30, 2020.

The CEO and the CFO are responsible for designing internal controls over financial reporting (“ICFR”) or causing them
to be designed under their supervision. The Company’s ICFR are designed to provide reasonable assurance regarding
the reliability of the Company’s financial reporting and its preparation of financial statements for external purposes in
accordance with IFRS.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

YEAR END AND FOURTH QUARTER 2020
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.

As discussed above, the inherent limitations in all control systems are such that they can provide only reasonable, not
absolute, assurance that all control issues and instances of fraud or error, if any, within the Company, have been
detected. Therefore, no matter how well designed, ICFR have inherent limitations and can provide only reasonable
assurance with respect to financial statement preparation and may not prevent and detect all misstatements.

During Fiscal 2020, Management, including its CEO and CFO, evaluated the existence and design of the Company's
ICFR and confirmed there were no changes to the ICFR that have occurred during the year which materially affected,
or are reasonably likely to materially affect, the Company's ICFR. The Company continues to review and document its
disclosure controls and its ICFR, and may, from time to time make changes aimed at enhancing their effectiveness
and to ensure that its systems evolve with the business. As of June 30, 2020, an evaluation was carried out, under the
supervision of the CEO and CFO, of the effectiveness of the Company's ICFR as defined in NI 52-109. Based on this
evaluation the CEO and the CFO concluded that the design and operation of these ICFR were effective.

The evaluations were conducted in accordance with the framework and criteria established in Internal Control –
Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO"), a recognized control model, and the requirements of NI 52-109.

Year End and Fourth Quarter 2020Management’s Discussion and AnalysisOrbit Garant Drilling Inc.

KPMG LLP
600 de Maisonneuve Blvd. West
Suite 1500, Tour KPMG
Montréal (Québec) H3A 0A3
Canada

Telephone
Fax
Internet

(514) 840-2100
(514) 840-2187
www.kpmg.ca

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Orbit Garant Drilling Inc.

Opinion

We have audited the consolidated financial statements of Orbit Garant Drilling Inc. (the "Entity"), which
comprise:

•

the consolidated statements of financial position as at June 30, 2020 and June 30, 2019

the consolidated statements of loss and comprehensive loss for the years then ended

the consolidated statements of changes in equity for the years then ended

the consolidated statements of cash flows for the years then ended

and notes to the consolidated financial statements, including a summary of significant accounting
policies

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated financial position of the Entity as at June 30, 2020 and June 30, 2019, and its consolidated
financial performance and its consolidated cash flows for the years then ended in accordance with
International Financial Reporting Standards ("IFRS").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the "Auditors’ Responsibilities for the
Audit of the Financial Statements" section of our auditors’ report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our
audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in
accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
("KPMG International"), a Swiss entity.
KPMG Canada provides services to KPMG LLP.

Page 2

Other Information

Management is responsible for the other information. Other information comprises:

•

the information included in Management’s Discussion and Analysis filed with the relevant Canadian
Securities Commissions.

the information, other than the financial statements and the auditors’ report thereon, included in a
document likely to be entitled "Annual Report".

Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit and remain alert for indications that the
other information appears to be materially misstated.

We obtained the information included in Management’s Discussion and Analysis filed with the relevant
Canadian Securities Commissions as at the date of this auditors’ report. If, based on the work we have
performed on this other information, we conclude that there is a material misstatement of this other
information, we are required to report that fact in the auditors’ report.

We have nothing to report in this regard.

The information, other than the financial statements and the auditors’ report thereon, included in a
document likely to be entitled "Annual Report" is expected to be made available to us after the date of
this auditors’ report. If, based on the work we will perform on this other information, we conclude that
there is a material misstatement of this other information, we are required to report that fact to those
charged with governance.

Responsibilities of Management and Those Charged with Governance for the
Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Entity or to cease
operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Page 3

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit.

We also:

•

Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Entity's internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Entity's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’
report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditors’ report. However, future events or conditions may cause the Entity to cease to continue
as a going concern.

•

Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.

Page 4

• Communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.

•

Provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the group Entity to express an opinion on the financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.

The engagement partner on the audit resulting in this auditors’ report is Alain Bessette.

Montréal, Canada

September 28, 2020

*CPA auditor, CA, public accountancy permit No. A115894

ORBIT GARANT DRILLING INC.
Consolidated Statements of Loss
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share)

Contract revenue

Cost of contract revenue

Gross profit

Expenses

General and administrative expenses
Foreign exchange (gain) loss
Finance costs
Provision for litigation

Loss before income taxes

Income tax expense (recovery)

Current
Deferred

Net loss

Net loss per share

Basic
Diluted

Notes

June 30

2020
$

June 30

2019
$

137,810

152,814

124,866

12,944

136,527

16,287

15,388
(53)
2,692
2,035
20,062
(7,118)

451
(212)
239

17,279
707
2,117
-
20,103
(3,816)

1,558
(1,904)
(346)

(7,357)

(3,470)

(0.20)
(0.20)

(0.09)
(0.09)

See accompanying notes to consolidated financial statements.

Page 6

ORBIT GARANT DRILLING INC.
Consolidated Statements of Comprehensive Loss
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars)

Net loss

Other comprehensive loss

Cumulative translation adjustments

Other comprehensive loss, net of income tax

Comprehensive loss

June 30

2020

2019

(7,357)

(3,470)

(1,470)
(1,470)

(8,827)

(839)
(839)

(4,309)

See accompanying notes to consolidated financial statements.

Page 7

ORBIT GARANT DRILLING INC.

Consolidated Statements of Comprehensive Loss

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars)

Net loss

Other comprehensive loss

Cumulative translation adjustments

Other comprehensive loss, net of income tax

Comprehensive loss

June 30

2020

2019

(7,357)

(3,470)

(1,470)

(8,827)

(839)

(4,309)

ORBIT GARANT DRILLING INC.
Consolidated Statements of Changes in Equity
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars)

Year ended June 30, 2020

Share capital
$
(Note 19)
58,857

-
-

-
-
-
58,857

Balance as at July 1, 2019

Total comprehensive loss
Net loss

Other comprehensive loss

Cumulative translation adjustments

Other comprehensive loss

Transactions with shareholders, recorded directly in equity
(Note 19)

Share-based compensation
Share options cancelled

Total transactions with shareholders
Balance as at June 30, 2020

Year ended June 30, 2019

-
-

256
(433)
(177)
1,309

Balance as at July 1, 2018

Impact of adopting IFRS 9

Adjusted balance as at July 1, 2018

Total comprehensive loss
Issuance of shares related to
a business combination

Net loss

Other comprehensive loss

Cumulative translation adjustments

Other comprehensive loss

(Note 2)

Transactions with shareholders, recorded directly in equity

Issuance of shares related to
share-based compensation

Share-based compensation
Stock options cancelled

Total transactions with shareholders
Balance as at June 30, 2019

(Note 18)

See accompanying notes to consolidated financial statements.

Page 7

See accompanying notes to consolidated financial statements.

Share capital
$
(Note 19)
57,207
-
57,207

Equity-settled
reserve
$

1,208
-
1,208

-
-

(6)
305
(21)
278
1,486

1,632
-

-
-

18
58,857

Equity-settled
reserve
$

Retained
earnings
$

Accumulated
other
comprehensive
loss
$

Total

Shareholders'
equity
$

1,486

16,971

(738)

76,576

(7,357)

-
-

-
433
433
10,047

Retained
earnings
$

20,609
(189)
20,420

-
(3,470)

-
-

21
21
16,971

(1,470)
(1,470)

-
-
-
(2,208)

(7,357)

(1,470)
(1,470)

256
-
256
68,005

Total

Accumulated
other
comprehensive
earnings (loss)
$

Shareholders'
equity
$

(88)
189
101

-
-

(839)
(839)

-
-
-
-
(738)

78,936
-
78,936

1,632
(3,470)

(839)
(839)

12
305
-
317
76,576

Page 8

ORBIT GARANT DRILLING INC.
Consolidated Statements of Financial Position
As of June 30, 2020 and June 30, 2019
(in thousands of Canadian dollars)

ASSETS

Current assets

Cash and cash equivalents
Trade and other receivables
Inventories
Income taxes receivable
Prepaid expenses

Non-current assets
Investments
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets

Total assets

LIABILITIES

Current liabilities

Trade and other payables
Balance payable related to a business combination
Income taxes payable
Current portion of long-term debt
Current portion of lease liabilities
Provision for litigation

Non-current liabilities
Long-term debt
Lease liabilities

EQUITY

Share capital
Equity-settled reserve
Retained earnings
Accumulated other comprehensive loss
Equity attributable to shareholders

Total liabilities and equity

Contingencies and commitments (notes 22 and 23)

APPROVED BY THE BOARD
(signed) Éric Alexandre
Éric Alexandre, Director
(signed) Jean-Yves Laliberté
Jean-Yves Laliberté, Director
See accompanying notes to consolidated financial statements.

Notes

June 30
2020
$

June 30
2019
$

16
17
22

4,996
21,122
49,055
1,478
827
77,478

317
41,824
3,741
588
5,890
129,838

18,452
-

5
2,174
2,759
2,035
25,425

35,182
1,226
61,833

58,857
1,309
10,047
(2,208)
68,005
129,838

2,480
36,643
43,943
823
1,154
85,043

419
42,450
-
1,000
5,783
134,695

24,744
3,370
429
1,400
-
-
29,943

28,176
-
58,119

58,857
1,486
16,971
(738)
76,576
134,695

Page 9

ORBIT GARANT DRILLING INC.

Consolidated Statements of Financial Position

As of June 30, 2020 and June 30, 2019

(in thousands of Canadian dollars)

ASSETS

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Income taxes receivable

Prepaid expenses

Non-current assets

Investments

Property, plant and equipment

Right-of-use assets

Intangible assets

Deferred tax assets

Total assets

LIABILITIES

Current liabilities

Trade and other payables

Balance payable related to a business combination

Income taxes payable

Current portion of long-term debt

Current portion of lease liabilities

Provision for litigation

Non-current liabilities

Long-term debt

Lease liabilities

EQUITY

Share capital

Equity-settled reserve

Retained earnings

Accumulated other comprehensive loss

Equity attributable to shareholders

Total liabilities and equity

Contingencies and commitments (notes 22 and 23)

APPROVED BY THE BOARD

(signed) Éric Alexandre

Éric Alexandre, Director

(signed) Jean-Yves Laliberté

Jean-Yves Laliberté, Director

Notes

June 30

2020

June 30

2019

129,838

134,695

4,996

21,122

49,055

1,478

827

77,478

317

41,824

3,741

588

5,890

18,452

2,174

2,759

2,035

25,425

35,182

1,226

61,833

2,480

36,643

43,943

823

1,154

85,043

419

42,450

1,000

5,783

24,744

3,370

429

1,400

29,943

28,176

58,119

58,857

1,309

10,047

(2,208)

68,005

129,838

58,857

1,486

16,971

(738)

76,576

134,695

ORBIT GARANT DRILLING INC.
Consolidated Statements of Cash Flows
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars)

OPERATING ACTIVITIES

Loss before income taxes
Items not affecting cash

Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortization of intangible assets
Loss (gain) on disposal of property, plant and equipment
Gain on disposal of right-of-use assets
Gain on disposal of investments
Share-based compensation
Finance costs
Net change in fair value of investments
Provision for litigation

Changes in non-cash operating working capital items
Income taxes paid
Finance costs paid

INVESTING ACTIVITIES

Business combination of Projet Production

International BF S.A.
Acquisition of investments
Proceeds from disposal of investments
Acquisition of property, plant and equipment
Proceeds from disposal of right-of-use assets
Proceeds from disposal of property, plant and equipment

FINANCING ACTIVITIES

Repayment of loan receivable

Repayment of balance payable related to a business combination

Proceeds from issuance of shares

Proceeds from factoring

Repayment of factoring

Proceeds from long-term debt

Repayment of long-term debt

Repayment of lease liabilities

Effect of exchange rate changes

Increase (decrease) in cash

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Notes

12
13
14
12
13
11
19

11
22

2
11
11
12
13
12

June 30
2020

June 30
2019

(7,118)

(3,816)

10,271
530
439
18
(13)
(106)
256
2,692
12
2,035

9,016

4,577
(1,530)
(2,670)

9,393

-
(30)
226
(10,471)
4
171

(10,100)

(3,409)

86,667

(79,072)

(515)

3,671

(448)

2,516

2,480

4,996

9,698
-
290
(312)
-
-
305
2,117
184
-

8,466

(5,896)
(1,008)
(2,225)

(663)

(3,357)
-
-
(8,323)
-
430

(11,250)

675

143

(143)

93,497

(83,851)

10,333

(573)

(2,153)

4,633

2,480

See accompanying notes to consolidated financial statements.

Page 9

See accompanying notes to consolidated financial statements.

Page 10

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

1. DESCRIPTION OF BUSINESS

Orbit Garant Drilling Inc. (the "Company"), amalgamated under the Canada Business Corporations Act , mainly operates a surface and underground
diamond drilling business. The Company has operations in Canada, the United States, Central and South America and West Africa.

The Company's head office is located at 3200, boul. Jean-Jacques Cossette, Val-d'Or (Québec), Canada. The Company holds interests in several
entities. The percentage of voting rights in its subsidiaries and its associates is as follows:

Orbit Garant Drilling Services Inc.
9116-9300 Québec inc.
Drift Exploration Drilling Inc.
Drift de Mexico SA de CV
Orbit Garant Chile S.A.
Orbit Garant Drilling Ghana Limited
Perforación Orbit Garant Peru S.A.C.
OGD Drilling (Guyana) Inc.
Forage Orbit Garant BF S.A.S.
Orbit Garant Perforaciones Patagonia S.A.S. (since August 9, 2019)
Orbit Miyuu Kaa Drilling Inc. (dissolved on January 14, 2020)
Sarliaq-Orbit Garant Inc.
Tumiit Orbit Garant Inc.

BUSINESS COMBINATION

Acquisition of the drilling business of Projet Production International BF S.A.:

% of voting rights
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
49%
49%

On October 11, 2018, the Company acquired the drilling business of Projet Production International BF S.A., based in Burkina Faso for a total purchase
price of $8,316 (US$6,400). Through the acquisition, the Company has added 13 surface drills, related support equipment, and existing customer
contracts in Burkina Faso. The Company has also retained approximately 100 employees, including experienced drillers and support personnel, who will
now be based in Orbit Garant BF S.A.S’s offices in Ouagadougou. This acquisition significantly strengthened the presence of the Company in Burkina
Faso and the broader West African mineral drilling market, positioning the Company to pursue new growth opportunities.

The Company funded the $8,316 (US$6,400) purchase price through draws on its credit facility and the issuance of common shares of the Company. The
cash component of the transaction is $6,684 (US$5,150), with $3,357 (US$2,575) paid on closing, and $3,327 (US$2,575) to be paid 12 months after the
closing date. The remaining $1,632 (US$1,250) of the purchase price was satisfied through the issuance of 861,637 common shares at a price of $1.89
per share, from the Company’s treasury. The details of the assets acquired amounted approximatly to $2,573 (US$2,000) for inventories, $4,395
(US$3,400) for property, plant and equipment and $1,348 (US$1,000) for intangible assets.

The results of operations of Projet Production International BF S.A. are included in the consolidated financial statements from October 11, 2018.

The fair value of the net assets acquired was as follows:

Inventories
Property, plant and equipment
Intangible assets
Consideration transferred

2,573
4,395
1,348
8,316

Page 11

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

1. DESCRIPTION OF BUSINESS

2. BUSINESS COMBINATION (continued)

Orbit Garant Drilling Inc. (the "Company"), amalgamated under the Canada Business Corporations Act , mainly operates a surface and underground

diamond drilling business. The Company has operations in Canada, the United States, Central and South America and West Africa.

The Company's head office is located at 3200, boul. Jean-Jacques Cossette, Val-d'Or (Québec), Canada. The Company holds interests in several

entities. The percentage of voting rights in its subsidiaries and its associates is as follows:

Consideration transferred

Inssuance of common shares
Cash
Balance payable related to a business combination

% of voting rights

Business combination costs

1,632
3,357
3,327
8,316

For the year ended June 30, 2019, business combination costs of $1,108 related to the transaction described above were included in the general and
administrative expenses in the consolidated statement of loss.

Impact of business combination on results

It is impracticable to provide reliable financial information relating to actual and pro forma revenues and profit for the above acquisition since the Company
already had operating activities with the same clients and similar contracts as the acquired business. As a result splitting out information for the acquired
is impracticable.

BASIS OF PREPARATION

Basis of presentation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the
International Accounting Standards Board ("IASB"). The IFRS accounting policies set out below were consistently applied to all periods presented.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates, assumptions and
judgments. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions and estimates are significant, are disclosed in Note 6.

These consolidated financial statements have been prepared on a historical cost basis except for the investments, which are measured at fair value, and
share-based compensation which is measured in accordance with IFRS 2, Share-Based Payment . They are presented in Canadian dollars, which are the
currency of the primary economic environment in which the Company operates ("functional currency"). All values are rounded to the nearest thousand
dollars, except where otherwise indicated.

These consolidated financial statements were approved for issue by the Board of Directors of Orbit Garant Drilling Inc. on September 28, 2020.

(US$3,400) for property, plant and equipment and $1,348 (US$1,000) for intangible assets.

COVID-19

Since February 29, 2020, the outbreak of the novel strain of coronavirus, specifically identified as "COVID-19", has resulted in governments worldwide
enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, temporary restriction
on all non-essential business, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in
an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with
significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at
this time, as is the efficacy of the government and central bank interventions.

The Company’s priority is to ensure the health of its employees and business partners as well as ensure the continuity of its business operations and
support its customers in their mining operations. The impact of the pandemic has negatively affected the Company’s activities in 2020 as some projects
were put on hold or postponed.

Page 12

Orbit Garant Drilling Services Inc.

9116-9300 Québec inc.

Drift Exploration Drilling Inc.

Drift de Mexico SA de CV

Orbit Garant Chile S.A.

Orbit Garant Drilling Ghana Limited

Perforación Orbit Garant Peru S.A.C.

OGD Drilling (Guyana) Inc.

Forage Orbit Garant BF S.A.S.

Orbit Garant Perforaciones Patagonia S.A.S. (since August 9, 2019)

Orbit Miyuu Kaa Drilling Inc. (dissolved on January 14, 2020)

Sarliaq-Orbit Garant Inc.

Tumiit Orbit Garant Inc.

BUSINESS COMBINATION

Acquisition of the drilling business of Projet Production International BF S.A.:

On October 11, 2018, the Company acquired the drilling business of Projet Production International BF S.A., based in Burkina Faso for a total purchase

price of $8,316 (US$6,400). Through the acquisition, the Company has added 13 surface drills, related support equipment, and existing customer

contracts in Burkina Faso. The Company has also retained approximately 100 employees, including experienced drillers and support personnel, who will

now be based in Orbit Garant BF S.A.S’s offices in Ouagadougou. This acquisition significantly strengthened the presence of the Company in Burkina

Faso and the broader West African mineral drilling market, positioning the Company to pursue new growth opportunities.

The Company funded the $8,316 (US$6,400) purchase price through draws on its credit facility and the issuance of common shares of the Company. The

cash component of the transaction is $6,684 (US$5,150), with $3,357 (US$2,575) paid on closing, and $3,327 (US$2,575) to be paid 12 months after the

closing date. The remaining $1,632 (US$1,250) of the purchase price was satisfied through the issuance of 861,637 common shares at a price of $1.89

per share, from the Company’s treasury. The details of the assets acquired amounted approximatly to $2,573 (US$2,000) for inventories, $4,395

The results of operations of Projet Production International BF S.A. are included in the consolidated financial statements from October 11, 2018.

The fair value of the net assets acquired was as follows:

Inventories

Property, plant and equipment

Intangible assets

Consideration transferred

100%

49%

2,573

4,395

1,348

8,316

Page 11

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

4. COVID-19 (continued)

As at June 30, 2020, the Company complied with its financial covenants. Due to the current economic uncertainties, management has taken several
measures to secure the Company’s ability to meet its financial and contractual obligations including (i) applying for government grants and subsidies (ii)
reworking its cost structure and postponing non-essential expenses (iii) making arrangements with its lenders to temporarily suspend the debt payments
(see Note 16) and modify the covenants applicable. Based on this information, the Company believes it will have sufficient resources to continue its
business operations for at least the next twelve months.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. A subsidiary is an
entity controlled by the Company. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee, independently of its percentage of participation. The existence and
effect of potential voting rights are considered when the Company controls another entity.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statements of loss from the effective date of
acquisition to the effective date of disposal, as appropriate. Intercompany transactions and balances are eliminated on consolidation.

Foreign currency translation

Transactions denominated in a currency other than the functional currency of the Company or of a foreign subsidiary whose functional currency is the
Canadian dollar, are accounted for using the exchange rate prevailing on the transaction date. On each reporting date, monetary items denominated in a
foreign currency are translated using the exchange rate prevailing on that date, and non-monetary items that are measured at historical cost are not
adjusted. Exchange differences are recognized in net earnings in the period during which they occur.

The assets and liabilities of foreign subsidiaries whose functional currency is not the Canadian dollar are translated into Canadian dollars by applying the
exchange rate prevailing at the reporting date. Revenue and expense items are translated at the average exchange rate for the period. Exchange
differences are recognized in OCI under "Cumulative translation adjustments" and are accumulated in equity. The accumulated amount of exchange
differences is reclassified in net earnings upon disposal or partial disposal of an interest in a foreign operation. Additionally, foreign exchange gains and
losses related to certain intercompany loans that are permanent in nature are included in OCI under "Cumulative translation adjustments" and are
accumulated in equity.

Financial assets and financial liabilities are initially recognized at fair value and their subsequent measurement is dependent on their classification as
described below. Their classification depends on the purpose for which the financial instruments were acquired or issued, their characteristics and the
Company’s designation of such instruments. Financial instruments are recognized when the Company becomes a party to the contractual provisions of
the instrument.

Asset/Liability

Cash and equivalents
Trade and other receivables
Investments
Loan receivable
Trade and other payables
Balance payable related to a business combination
Factoring liabilities
Long-term debt

Classification

Amortized cost
Amortized cost
Fair value through profit or loss
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost

Page 13

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

4. COVID-19 (continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

As at June 30, 2020, the Company complied with its financial covenants. Due to the current economic uncertainties, management has taken several

measures to secure the Company’s ability to meet its financial and contractual obligations including (i) applying for government grants and subsidies (ii)

reworking its cost structure and postponing non-essential expenses (iii) making arrangements with its lenders to temporarily suspend the debt payments

(see Note 16) and modify the covenants applicable. Based on this information, the Company believes it will have sufficient resources to continue its

business operations for at least the next twelve months.

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)

Financial assets measured at amortized cost

A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment loss, if

(a) The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

(b) The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and/or interest.

Financial assets measured at fair value

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. A subsidiary is an

entity controlled by the Company. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the

investee and has the ability to affect those returns through its power over the investee, independently of its percentage of participation. The existence and

effect of potential voting rights are considered when the Company controls another entity.

These assets are measured at fair value and changes therein, including any interest or dividend income, are recognized in net income. However, for
investments in equity instruments that are not held for trading, the Company may elect at initial recognition to present gains and losses in other
comprehensive income. For such investments measured at fair value through other comprehensive income, gains and losses are never reclasified to net
income, and no impairment is recognized in net income.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statements of loss from the effective date of

acquisition to the effective date of disposal, as appropriate. Intercompany transactions and balances are eliminated on consolidation.

Financial liabilities measured at amortized cost

Foreign currency translation

Transactions denominated in a currency other than the functional currency of the Company or of a foreign subsidiary whose functional currency is the

Canadian dollar, are accounted for using the exchange rate prevailing on the transaction date. On each reporting date, monetary items denominated in a

foreign currency are translated using the exchange rate prevailing on that date, and non-monetary items that are measured at historical cost are not

adjusted. Exchange differences are recognized in net earnings in the period during which they occur.

The assets and liabilities of foreign subsidiaries whose functional currency is not the Canadian dollar are translated into Canadian dollars by applying the

exchange rate prevailing at the reporting date. Revenue and expense items are translated at the average exchange rate for the period. Exchange

differences are recognized in OCI under "Cumulative translation adjustments" and are accumulated in equity. The accumulated amount of exchange

differences is reclassified in net earnings upon disposal or partial disposal of an interest in a foreign operation. Additionally, foreign exchange gains and

losses related to certain intercompany loans that are permanent in nature are included in OCI under "Cumulative translation adjustments" and are

Financial assets and financial liabilities are initially recognized at fair value and their subsequent measurement is dependent on their classification as

described below. Their classification depends on the purpose for which the financial instruments were acquired or issued, their characteristics and the

Company’s designation of such instruments. Financial instruments are recognized when the Company becomes a party to the contractual provisions of

accumulated in equity.

the instrument.

Asset/Liability

Cash and equivalents

Trade and other receivables

Investments

Loan receivable

Trade and other payables

Factoring liabilities

Long-term debt

Balance payable related to a business combination

Classification

Amortized cost

A financial liability is subsequently measured at amortized cost, using the effective interest method.

Financial liabilities measured at fair value

Financial liabilities measured at fair value are initially recognized at fair value and are remeasured at each reporting date with any changes therein
recognized in net income. The Company has no financial liabilities measured at fair value.

The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

Financial assets and liabilities are offset and the net amount presented in the consolidated statements of financial position when and only when the
Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Amortized cost and effective interest method

The effective interest method is a method of calculating the amortized cost of a financial instrument and of allocating interest income over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash flows (including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or,
where appropriate, a shorter period, to the net carrying amount on initial recognition.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, bank overdraft and short-term deposits with original maturities of three months or less.

Fair value through profit or loss

Trade and other receivables

Trade and other receivables consist of amounts due from normal business activities. An allowance for expected credit losses is maintained to reflect an
impairment risk for trade and other receivables based on an expected credit loss model which factors in changes in credit quality since the initial
recognition of trade accounts receivable based on customer risk categories. Bad debts are also provided for based on collection history and specific risks
identified on a customer-by-customer basis.

Page 13

Page 14

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Employee benefits

Employee benefits are all forms of consideration given by an entity in exchange for services rendered by employees or for the termination of employment.
Wages, paid leaves, bonuses and non-monetary benefits are short-term employee benefits, and they are recorded in the annual reporting period in which
the employees of the Company render the related services.

Inventories

The Company maintains an inventory of operating supplies, motors, drill rods and drill bits. These inventories are valued at the lower of cost and net
realizable value. Net realizable value is determined using the estimated selling price less estimated costs to complete the sale. Cost is determined on the
first-in, first-out basis. Used and revised inventories are valued at 50% and 75% of original cost, respectively, to approximate net realizable value. The
amount of any write-down of inventories can be reversed when the circumstances that led to the write-down charge in the past no longer exist.

Investments

Investments in publicly traded securities are classified as fair value through profit or loss. Fair value through profit or loss investments are recorded at fair
value, with changes in fair value recognized in profit or loss.

Investment in an associate

An associate is an entity over which the Company has significant influence. The Company has significant influence when it has the power to participate in
the financial and operating policy decisions of the investee, but does not have control or joint control. The Company accounts for its investment in an
associate using the equity method. Under the equity method, the investment is initially recognized at cost. Subsequent to initial recognition, distributions
received from an associate reduce the carrying amount of the investment. The consolidated statements of comprehensive loss include the Company's
share of any amounts recognized by its associate in profit or loss and in other comprehensive loss, if any. Intercompany balances between the Company
and its associate are not eliminated.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost represents the acquisition
costs, net of government grants and investment
installation and testing costs. The
manufacturing costs for drilling equipment include the material, direct labour and indirect specific costs.

tax credits, or manufacturing costs,

including preparation,

Borrowing costs are also included in the cost of self-constructed property, plant and equipment. Future expenditures, such as maintenance and repairs,
are expensed as incurred.

Significant improvements are capitalized and amortized over the useful life of the asset.

Property, plant and equipment are recorded at cost and depreciation is calculated using the straight-line method based on their estimated useful life using
the following periods:

Buildings and components
Drilling equipment
Vehicles
Other

Useful life
5 to 40 years
5 to 10 years
5 years
3 to 10 years

Residual value

-
0 - 20%
-
-

The depreciation is calculated on the cost of an asset less its residual value and begins when the property, plant and equipment are ready for their
intended use. Land is not depreciated.

Depreciation methods, residual values and the useful lives of significant property, plant and equipment are reviewed at each financial year-end. Any
change is accounted for prospectively as a change in accounting estimate.

Page 15

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Employee benefits

Intangible assets

Employee benefits are all forms of consideration given by an entity in exchange for services rendered by employees or for the termination of employment.

Intangible assets are accounted for at cost. Amortization is based on their estimated useful life using the straight-line method and the following periods:

Wages, paid leaves, bonuses and non-monetary benefits are short-term employee benefits, and they are recorded in the annual reporting period in which

the employees of the Company render the related services.

Customer relationship

3 years

The Company maintains an inventory of operating supplies, motors, drill rods and drill bits. These inventories are valued at the lower of cost and net

realizable value. Net realizable value is determined using the estimated selling price less estimated costs to complete the sale. Cost is determined on the

first-in, first-out basis. Used and revised inventories are valued at 50% and 75% of original cost, respectively, to approximate net realizable value. The

amount of any write-down of inventories can be reversed when the circumstances that led to the write-down charge in the past no longer exist.

Inventories

Investments

Amortization methods, residual values and the useful
accounted for prospectively as a change in accounting estimate.

lives of significant intangible assets are reviewed at each financial year-end. Any change is

Government assistance

Government grants are recognized when there is reasonable assurance that the Company has complied with the conditions attached to the grant. When
the grant is related to an expensed item, it is recognized as a reduction of the related expense. When the grant is to property, plant and equipment, it is
recognized against the net book value of the asset and recognized over the expected useful life as a reduction of asset depreciation.

Investments in publicly traded securities are classified as fair value through profit or loss. Fair value through profit or loss investments are recorded at fair

Impairment of non-financial assets

For the purposes of assessing impairment, assets are grouped in cash-generating units ("CGU"), which represent the lowest levels for which there are
separately identifiable cash inflows generated by those assets. The Company reviews, at
the end of each reporting period, whether events or
circumstances have occurred to indicate that the carrying amounts of its non-financial assets with finite useful lives may be less than their recoverable
amounts.

Goodwill, other intangible assets having an indefinite useful life, and intangible assets not yet available for use are tested for impairment on June 30 of
each financial year or whenever there is an indication that the carrying amount of the asset, of the CGU to which an asset has been allocated, exceeds its
recoverable amount. The recoverable amount is the higher of the fair value, less costs of disposal, and the value in use of the asset or the CGU. Fair
value, less costs of disposal, represents the amount an entity could obtain at the valuation date from the asset’s disposal in an arm’s length transaction
between knowledgeable, willing parties, after deducting the costs of disposal. The value in use represents the present value of the future cash flows
expected to be derived from the asset or the CGU.

An impairment loss is recognized in the amount by which the carrying amount of an asset or a CGU exceeds its recoverable amount. When the
recoverable amount of a CGU to which goodwill has been allocated is lower than the CGU’s carrying amount, the related goodwill is first impaired. Any
excess amount of impairment is recognized and attributed to assets in the CGU, prorated to the carrying amount of each asset in the CGU.

An impairment loss recognized in prior periods for non-financial assets with finite useful lives and intangible assets having an indefinite useful life, other
than goodwill, can be reversed through the consolidated statements of loss to the extent that the carrying amount at the date that the impairment is
reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

Property, plant and equipment are recorded at cost and depreciation is calculated using the straight-line method based on their estimated useful life using

Income taxes

Current income taxes are recognized with respect to amounts expected to be paid or recovered under the tax rates and laws that have been enacted or
substantively enacted at the reporting date.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying
amounts of existing assets and liabilities in the consolidated financial statements and their respective tax bases. Deferred income tax assets and liabilities
are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or
settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in earnings in the period that includes the
substantive enactment date. A deferred tax asset is recognized initially when it is probable that future taxable income will be sufficient to use the related
tax benefits. A deferred tax expense or benefit is recognized in other comprehensive loss or otherwise directly in equity to the extent that it relates to items
that are recognized in other comprehensive earnings (loss) or directly in equity in the same or a different period.

Page 15

Page 16

value, with changes in fair value recognized in profit or loss.

Investment in an associate

An associate is an entity over which the Company has significant influence. The Company has significant influence when it has the power to participate in

the financial and operating policy decisions of the investee, but does not have control or joint control. The Company accounts for its investment in an

associate using the equity method. Under the equity method, the investment is initially recognized at cost. Subsequent to initial recognition, distributions

received from an associate reduce the carrying amount of the investment. The consolidated statements of comprehensive loss include the Company's

share of any amounts recognized by its associate in profit or loss and in other comprehensive loss, if any. Intercompany balances between the Company

and its associate are not eliminated.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost represents the acquisition

costs, net of government grants and investment

tax credits, or manufacturing costs,

including preparation,

installation and testing costs. The

manufacturing costs for drilling equipment include the material, direct labour and indirect specific costs.

Borrowing costs are also included in the cost of self-constructed property, plant and equipment. Future expenditures, such as maintenance and repairs,

are expensed as incurred.

Significant improvements are capitalized and amortized over the useful life of the asset.

the following periods:

Buildings and components

Drilling equipment

Vehicles

Other

intended use. Land is not depreciated.

Useful life

5 to 40 years

5 to 10 years

5 years

3 to 10 years

Residual value

0 - 20%

The depreciation is calculated on the cost of an asset less its residual value and begins when the property, plant and equipment are ready for their

Depreciation methods, residual values and the useful lives of significant property, plant and equipment are reviewed at each financial year-end. Any

change is accounted for prospectively as a change in accounting estimate.

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes (continued)

In the course of the Company’s operations, there are a number of uncertain tax positions due to the complexity of certain transactions and due to the fact
that related tax interpretations and legislation are continually changing. When a tax position is uncertain, the Company recognizes an income tax benefit
or reduces an income tax liability only when it is probable that the tax benefit will be realized in the future or that the income tax liability is no longer
probable.

Financing fees

Financing fees related to long-term debt are capitalized in reduction of long-term debt and amortized using the effective interest rate.

Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.

Right-of-use assets on leases

Right-of-use assets are initially measured at cost, comprised of the initial measurement of the corresponding lease liabilities, lease payments made on or
before the commencement date and any initial direct costs incurred, less any lease incentives received. They are subsequently depreciated on a straight-
line basis on the lease term and reduced by impairment losses, if any. If it is reasonably certain that the Company will exercise the purchase options, the
underlying asset is depreciated on the basis of its estimated useful life. Right-of-use assets may also be adjusted to reflect the re-measurement of related
lease liabilities.

The lease term includes the renewal option only if it is reasonably certain to be exercised. The lease terms range from 1 to 19 years for land and buildings
and from 1 to 3 years for vehicles.

The Company has elected not to recognize a right-of-use asset and liability for leases where the total lease term is less than or equal to twelve months
and for leases of low value assets. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease
term.

Lease liabilities

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index and the
exercise price of a purchase option reasonably certain to be exercised. Subsequently, the lease liability is measured at amortized cost using the effective
interest method and adjusted for interest and lease payments. In calculating the present value of lease payments, the Company uses the incremental
borrowing rate as at the lease commencement date if the interest rate implicit in the lease is not readily determinable. Subsequently, the carrying amount
of the lease liability is remeasured if there has been a modification, a change in the lease term, a change in the in-substance fixed lease payments or a
change in the assessment to exercise a purchase option for the underlying asset.

Revenue recognition

Revenue from drilling contracts and ancillary services is recognized on the basis of actual metres drilled for each contract, which corresponds to the
amount to which the entity has a right to invoice.

Earnings per share

Earnings per share are calculated using the weighted average number of shares outstanding during the year.

Diluted earnings per share are determined as net earnings (loss), divided by the weighted average number of diluted common shares outstanding for the
period. Diluted common shares reflect the potential dilutive effect of exercising the share options based on the treasury share method.

Page 17

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes (continued)

Share options

In the course of the Company’s operations, there are a number of uncertain tax positions due to the complexity of certain transactions and due to the fact

that related tax interpretations and legislation are continually changing. When a tax position is uncertain, the Company recognizes an income tax benefit

or reduces an income tax liability only when it is probable that the tax benefit will be realized in the future or that the income tax liability is no longer

The Company uses the fair value method under IFRS 2 to account for share options. In accordance with this method, compensation cost is measured at
the fair value of the option at the grant date using the Black-Scholes option pricing model and is amortized to earnings over the vesting period. The fair
value is recognized as an expense with a corresponding increase in equity-settled reserve. The amount recognized as an expense is adjusted to reflect
the number of share options expected to vest and is net of share options cancelled prior to being vested. When unexercised share options are forfeited or
expired, the amounts are transferred to retained earnings.

Financing fees related to long-term debt are capitalized in reduction of long-term debt and amortized using the effective interest rate.

CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS

The preparation of financial statements in accordance with IFRS requires the Company's management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and contingent liabilities on the reporting date, and amounts of revenues and
expenses for the relevant period. Although management regularly reviews its estimates, actual results may differ. The impact of changes to accounting
estimates is recognized in the period during which the change occurs, and in the affected future periods, when applicable. Areas in which the estimates
and assumptions are significant or which are complex, are presented as follows:

A) CRITICAL ACCOUTING ESTIMATES

Inventories

Inventory is measured at the lower of cost and net realizable value. In estimating net realizable values, management takes into account the most reliable
evidence available at the time the estimates are made. Net realizable value is determined using the estimated selling price less estimated costs to
complete the sale. Used and revised inventories are valued at 50% and 75% of cost, respectively. The amount of the write-down of inventories can be
reversed when the circumstances that led to the write-down charge in the past no longer exist.

The Company has elected not to recognize a right-of-use asset and liability for leases where the total lease term is less than or equal to twelve months

Business combinations

On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial position of the Company at
their fair values. In measuring fair value, management uses estimates about future cash flows and discount rates; however, the actual results may vary.

Impairment of non-financial assets

The Company also uses its judgment to determine whether an impairment test must be performed due to the presence of potential impairment indicators.
In applying its judgment, the Company relies primarily on its knowledge of its business and the economic environment. As at June 30, 2020, the Company
concluded that there were impairment indicators, and it performed an impairment test. No impairment was recognized as a result of this test. Significant
management estimates are required to determine the recoverable amount of the cash-generating unit ("CGU") including estimates of future cash flows.
Differences in estimates could affect whether tangible and intangible assets are in fact impaired and the dollar amount of that impairment. Significant
assumptions were used by management to determine the projected revenue, operating expenses, utilization, discount rates and market pricing. Notably,
these estimates were made in the context of COVID-19, an unprecedented global pandemic, resulting in a higher degree of uncertainty. Consequently,
the impact on the Consolidated Financial Statements of future periods could be material.

Revenue from drilling contracts and ancillary services is recognized on the basis of actual metres drilled for each contract, which corresponds to the

Income taxes

The Company is subject to income taxes in various jurisdictions. Judgment is required in determining the worldwide provision for income taxes. There are
many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due in the future. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination
is made. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.

Page 17

Page 18

probable.

Financing fees

Leases

Right-of-use assets on leases

lease liabilities.

and from 1 to 3 years for vehicles.

term.

Lease liabilities

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control

the use of an identified asset for a period of time in exchange for consideration.

Right-of-use assets are initially measured at cost, comprised of the initial measurement of the corresponding lease liabilities, lease payments made on or

before the commencement date and any initial direct costs incurred, less any lease incentives received. They are subsequently depreciated on a straight-

line basis on the lease term and reduced by impairment losses, if any. If it is reasonably certain that the Company will exercise the purchase options, the

underlying asset is depreciated on the basis of its estimated useful life. Right-of-use assets may also be adjusted to reflect the re-measurement of related

The lease term includes the renewal option only if it is reasonably certain to be exercised. The lease terms range from 1 to 19 years for land and buildings

and for leases of low value assets. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the

lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index and the

exercise price of a purchase option reasonably certain to be exercised. Subsequently, the lease liability is measured at amortized cost using the effective

interest method and adjusted for interest and lease payments. In calculating the present value of lease payments, the Company uses the incremental

borrowing rate as at the lease commencement date if the interest rate implicit in the lease is not readily determinable. Subsequently, the carrying amount

of the lease liability is remeasured if there has been a modification, a change in the lease term, a change in the in-substance fixed lease payments or a

change in the assessment to exercise a purchase option for the underlying asset.

Revenue recognition

amount to which the entity has a right to invoice.

Earnings per share

Earnings per share are calculated using the weighted average number of shares outstanding during the year.

Diluted earnings per share are determined as net earnings (loss), divided by the weighted average number of diluted common shares outstanding for the

period. Diluted common shares reflect the potential dilutive effect of exercising the share options based on the treasury share method.

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS (continued)

A) CRITICAL ACCOUTING ESTIMATES (continued)

Deferred income tax assets

The assessment of the probability in which deferred tax assets can be utilized is based on the Company’s latest approved budget forecast, which is
adjusted for significant non-taxable income (and expenses) and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous
jurisdictions in which the Company operates are also carefully taken into consideration. If a forecast of taxable income indicates the probable use of a
deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred
tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on specific facts and
circumstances.

Leases

In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to estimate the incremental borrowing rate specific
to each leased asset if the interest rate implicit in the lease is not readily determined. Management determines the incremental borrowing rate of each
leased asset by incorporating the Company's creditworthiness, the security, term and value of the underlying leased asset, and the economic environment
in which the leased asset operates in. The incremental borrowing rates are subject to change mainly due to macroeconomic changes in the environment.

B) JUDGMENTS

Functional currency

In determining the functional currency of its foreign subsidiaries, the Company needs to evaluate different factors such as the currency that mainly
influences sales prices and costs, the economic environment and the degree of autonomy of the subsidiary. Following the evaluation of the different
factors, when the functional currency is not obvious, the Company uses its judgment to determine the functional currency that most faithfully represents
the economic effects of the underlying transactions, events and conditions.

Significant judgment in determining the lease term of contracts with renewal options

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it
is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. After the
commencement date, the Company reassesses the lease term for whether significant event of change in circumstances that is within its control and
affects its ability to exercise (or not exercise) the option to renew has occurred.

STANDARDS AND INTERPRETATIONS ADOPTED AND NOT YET ADOPTED

A) ADOPTED

The following standards and amendments to existing standards have been adopted by the Company on July 1, 2019:

IFRS 16 – Leases

The Company adopted IFRS 16, which replaces IAS 17, for its annual period beginning July 1, 2019 using the modified retrospective approach whereby
no restatement of comparative periods is required. Under IAS 17, leases of property, plant and equipment were recognized as finance leases when
substantially all the risks and rewards of ownership of underlying assets were transferred. All other leases were classified as operating leases. IFRS 16
requires lessees to recognize right-of-use assets, representing its right to use the underlying asset, and lease liabilities, representing its obligation to make
payments.

Page 19

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

A) CRITICAL ACCOUTING ESTIMATES (continued)

Deferred income tax assets

The assessment of the probability in which deferred tax assets can be utilized is based on the Company’s latest approved budget forecast, which is

adjusted for significant non-taxable income (and expenses) and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous

jurisdictions in which the Company operates are also carefully taken into consideration. If a forecast of taxable income indicates the probable use of a

deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred

tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on specific facts and

In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to estimate the incremental borrowing rate specific

to each leased asset if the interest rate implicit in the lease is not readily determined. Management determines the incremental borrowing rate of each

leased asset by incorporating the Company's creditworthiness, the security, term and value of the underlying leased asset, and the economic environment

in which the leased asset operates in. The incremental borrowing rates are subject to change mainly due to macroeconomic changes in the environment.

In determining the functional currency of its foreign subsidiaries, the Company needs to evaluate different factors such as the currency that mainly

influences sales prices and costs, the economic environment and the degree of autonomy of the subsidiary. Following the evaluation of the different

factors, when the functional currency is not obvious, the Company uses its judgment to determine the functional currency that most faithfully represents

the economic effects of the underlying transactions, events and conditions.

Significant judgment in determining the lease term of contracts with renewal options

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it

is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. After the

commencement date, the Company reassesses the lease term for whether significant event of change in circumstances that is within its control and

affects its ability to exercise (or not exercise) the option to renew has occurred.

STANDARDS AND INTERPRETATIONS ADOPTED AND NOT YET ADOPTED

The following standards and amendments to existing standards have been adopted by the Company on July 1, 2019:

The Company adopted IFRS 16, which replaces IAS 17, for its annual period beginning July 1, 2019 using the modified retrospective approach whereby

no restatement of comparative periods is required. Under IAS 17, leases of property, plant and equipment were recognized as finance leases when

substantially all the risks and rewards of ownership of underlying assets were transferred. All other leases were classified as operating leases. IFRS 16

requires lessees to recognize right-of-use assets, representing its right to use the underlying asset, and lease liabilities, representing its obligation to make

circumstances.

Leases

B) JUDGMENTS

Functional currency

A) ADOPTED

IFRS 16 – Leases

payments.

CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS (continued)

STANDARDS AND INTERPRETATIONS ADOPTED AND NOT YET ADOPTED (continued)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

A) ADOPTED (continued)

Impact on transition to IFRS 16 - Leases

Upon adoption of IFRS 16, assets under finance leases were reclassified from property, plant and equipement to right-of-use assets and related
obligations under finance leases were reclassified from long-term debt to lease liabilities, at the carrying amounts measured under IAS 17 as at
June 30, 2019. Right-of-use assets and lease liabilities for these assets previously classified as finance leases are recognized in accordance with the
requirements of IFRS 16 starting July 1, 2019.

On transition, the Company elected to measure the right-of-use asset at an amount equal to the lease liability (subject to certain ajustments) for leases
classified as operating leases under IAS 17. As a result, the Company recorded lease liabilities of $4,598 and right-of-use assets of $4,477, net of the
deferred lease inducements of $132, including leases previously recognized as finance leases under IAS 17. As permitted by IFRS 16, the Company
elected not to recognize lease liabilities and right-of-use assets for short-term leases (lease term of 12 months or less) and leases of low-value assets.
The Company also used hindsight to determine the lease term where the contract contains purchase, extension, or termination options and relied on the
assessment of the onerous lease provisions under IAS 37 Provisions, contingent liabilities and contingent assets , instead of performing an impairment
review.

The Company used its incremental borrowing rates as at July 1, 2019 to measure its lease liabilities previously classified as operating leases. The
weighted average incremental borrowing rate was 5.19% at date of adoption.

Operating lease commitments disclosed as at June 30, 2019
Commitments relating to short-term and low-value assets
Purchase option reasonably certain to be exercised
Variable lease payments that depend on an index or a rate,

initially measured using the index or rate as at the commencement date

Discounting impact
Obligations under finance leases reclassified as lease liabilities
Lease liabilities recognized as at July 1, 2019

July 1, 2019
$

2,437
(113)
2,679

261
5,264
(817)
151
4,598

Before the adoption of IFRS 16, expenses for lease liabilities were included with general and administrative expenses and with cost of contract revenue
on the Company's consolidated statements of loss.

IFRIC 23 – Uncertainty over Income Tax Treatments

This interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty
over income tax treatments. The interpretation is applicable for annual periods beginning on or after January 1, 2019. The interpretation requires an entity
to (i) contemplate whether uncertain tax treatments should be considered separately, or together as a group, based on which approach provides better
predictions of the resolution; (ii) reflect an uncertainty in the amount of income tax payable (recoverable) if it is probable that it will pay (or recover) an
amount for the uncertainty; and (iii) measure a tax uncertainty based on the most likely amount or expected value depending on whichever method better
predicts the amount payable (recoverable). The adoption of IFRIC 23 did not have an impact on the Company's consolidated financial statements.

Page 19

Page 20

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

STANDARDS AND INTERPRETATIONS ADOPTED AND NOT YET ADOPTED (continued)

A) ADOPTED (continued)

IAS 29 – Financial Reporting in Hyperinflationary Economies

Argentina was designated a hyperinflationary economy as of July 1, 2018 for accounting purposes as a result of various qualitative factors with respect to
the economic environment. Entities reporting under IFRS are required to apply the inflation adjustment since the applicable conditions for such application
have been satisfied. The Company’s subsidiary in Argentina uses the Argentine peso as its functional currency and therefore IAS 29 has been applied to
these consolidated financial statements.

IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on
an appropriate general price index to express the effects of inflation and shall be stated in terms of the measuring unit current at the end of the reporting
period. All non-monetary assets and liabilities must be adjusted for inflation to reflect their purchasing power at the reporting date. Likewise, the statement
of comprehensive income (income statement and other items of comprehensive income) must be restated to adjust for the inflation recorded over the
period. Monetary items do not need to be restated, since they already reflect their purchasing power at the reporting date.

The Argentine subsidiary has elected to use the combined index from the Wholesale Price Index (Indice de Precios Mayoristas or “IPIM”) and the National
Consumer Price Index (Indice de Precios al Consumidor Nacional or “IPIC”) as published by the National Institute of Statistics and Census of the Republic
to measure the impact of inflation on its financial position and results. The cumulative adjusting factor from September 1, 2019
of Argentina (INDEC)
through June 30, 2020 was 34.4%.

This adoption did not result in any material adjustments to consolidated financial statements.

B) NOT YET ADOPTED

Amendments to IFRS 3, Business Combinations

On October 22, 2018, the IASB issued Definition of a Business (Amendments to IFRS 3, Business Combinations ) aimed at resolving the difficulties that
arise when an entity determines whether it has acquired a business or a group of assets. The amendments are effective for business combinations for
which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020.

8. GOVERNMENT ASSISTANCE

In April 2020, the Government of Canada passed legislation creating the Canada Emergency Wage Subsidy (“CEWS”). Under the CEWS, eligible
employers are entitled to receive a 75% wage reimbursement for eligible employees up to a maximum amount of $0.847 per week commencing on
March 15, 2020 until July 4, 2020. The Company has a receivable amount of $1,848 as at June 30, 2020. For the year ended June 30, 2020, a total
income relating to CEWS from March 15 to June 30, 2020 of $3,151 was recognized as a reduction of cost of contract revenue and $472 as a reduction of
general and administrative expenses.

Page 21

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

A) ADOPTED (continued)

IAS 29 – Financial Reporting in Hyperinflationary Economies

Argentina was designated a hyperinflationary economy as of July 1, 2018 for accounting purposes as a result of various qualitative factors with respect to

the economic environment. Entities reporting under IFRS are required to apply the inflation adjustment since the applicable conditions for such application

have been satisfied. The Company’s subsidiary in Argentina uses the Argentine peso as its functional currency and therefore IAS 29 has been applied to

these consolidated financial statements.

IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on

an appropriate general price index to express the effects of inflation and shall be stated in terms of the measuring unit current at the end of the reporting

period. All non-monetary assets and liabilities must be adjusted for inflation to reflect their purchasing power at the reporting date. Likewise, the statement

of comprehensive income (income statement and other items of comprehensive income) must be restated to adjust for the inflation recorded over the

period. Monetary items do not need to be restated, since they already reflect their purchasing power at the reporting date.

The Argentine subsidiary has elected to use the combined index from the Wholesale Price Index (Indice de Precios Mayoristas or “IPIM”) and the National

Consumer Price Index (Indice de Precios al Consumidor Nacional or “IPIC”) as published by the National Institute of Statistics and Census of the Republic

of Argentina (INDEC)

to measure the impact of inflation on its financial position and results. The cumulative adjusting factor from September 1, 2019

through June 30, 2020 was 34.4%.

This adoption did not result in any material adjustments to consolidated financial statements.

B) NOT YET ADOPTED

Amendments to IFRS 3, Business Combinations

On October 22, 2018, the IASB issued Definition of a Business (Amendments to IFRS 3, Business Combinations ) aimed at resolving the difficulties that

arise when an entity determines whether it has acquired a business or a group of assets. The amendments are effective for business combinations for

which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020.

8. GOVERNMENT ASSISTANCE

In April 2020, the Government of Canada passed legislation creating the Canada Emergency Wage Subsidy (“CEWS”). Under the CEWS, eligible

employers are entitled to receive a 75% wage reimbursement for eligible employees up to a maximum amount of $0.847 per week commencing on

March 15, 2020 until July 4, 2020. The Company has a receivable amount of $1,848 as at June 30, 2020. For the year ended June 30, 2020, a total

income relating to CEWS from March 15 to June 30, 2020 of $3,151 was recognized as a reduction of cost of contract revenue and $472 as a reduction of

general and administrative expenses.

STANDARDS AND INTERPRETATIONS ADOPTED AND NOT YET ADOPTED (continued)

9. EXPENSES BY NATURE

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

Detail of the depreciation and amortization expenses

The depreciation expense of property, plant and equipment, the depreciation expense of right-of-use assets and the amortization expense of intangible
assets have been charged to the consolidated statements of loss as follows:

Cost of contract revenue
General and administrative expenses
Total depreciation and amortization

Principal expenses by nature

June 30
2020
$

9,474
1,766
11,240

Cost of contract revenue, general and administrative expenses, foreign exchange (gain) loss and finance costs by nature are as follows:

Depreciation and amortization
Employee benefits expense
Cost of inventories
Other expenses
Total cost of contract revenue, general and administrative

expenses, foreign exchange (gain) loss, finance costs and provision for litigation

Cost of contract revenue
General and administrative expenses, foreign exchange
(gain) loss, finance costs and provision for litigation
Total cost of contract revenue, general and administrative

expenses, foreign exchange (gain) loss, finance costs and provision for litigation

June 30
2020
$

11,240
72,007
30,874
30,807

144,928

124,866

20,062

144,928

June 30
2019
$

8,785
1,203
9,988

June 30
2019
$

9,988
83,397
32,395
30,850

156,630

136,527

20,103

156,630

Page 21

Page 22

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

10.

INVENTORIES

Spare parts
Consumables
Other

June 30
2020
$
15,038
33,375
642
49,055

Spare parts mainly include motors and machine parts. Consumables mainly include limited life tools, rods, hammers, wire lines and casings.

The cost of inventories recognized as an expense and included in cost of contract revenue has been recorded as follows:

June 30
2020
$

30,874

June 30
2019
$
14,718
27,334
1,891
43,943

June 30
2019
$

32,395

During the year, an amount of $175 (2019: $397) has been accounted for as a write-down of inventories as a result of net realizable value being lower
than cost. As at June 30, 2020 and 2019, no amount has been accounted as a reversal of a write-down of inventory.

The Company's credit facilities are in part secured by a general assignment of the Company's inventories.

11.

INVESTMENTS

Investments in public companies, beginning of the year
Acquisition of investments
Conversion of trade receivables
Proceeds from disposal of investments
Gain on disposal of investments
Change in fair value of investments measured at fair value through profit or loss
Investments in public companies, end of the year

June 30
2020
$
419
30

-
(226)
106
(12)
317

June 30
2019
$
542
-

-
-
(184)
419

The Company holds common shares in publicly traded companies. These shares are classified as fair value through profit or loss and are reported at fair
value, reflecting their quoted share price at the reporting date. The original cost is $397 ($486 as at June 30, 2019). The gain on disposal of investments
totalling $106 for the year ended June 30, 2020 is included in general and administrative expenses. There is no gain on disposal of investments for the
year ended June 30, 2019.

Page 23

10.

INVENTORIES

Spare parts

Consumables

Other

11.

INVESTMENTS

June 30

2020

15,038

33,375

642

49,055

June 30

2020

30,874

June 30

2020

419

(226)

106

(12)

317

June 30

2019

14,718

27,334

1,891

43,943

June 30

2019

32,395

June 30

2019

542

(184)

419

Spare parts mainly include motors and machine parts. Consumables mainly include limited life tools, rods, hammers, wire lines and casings.

The cost of inventories recognized as an expense and included in cost of contract revenue has been recorded as follows:

During the year, an amount of $175 (2019: $397) has been accounted for as a write-down of inventories as a result of net realizable value being lower

than cost. As at June 30, 2020 and 2019, no amount has been accounted as a reversal of a write-down of inventory.

The Company's credit facilities are in part secured by a general assignment of the Company's inventories.

Investments in public companies, beginning of the year

Acquisition of investments

Conversion of trade receivables

Proceeds from disposal of investments

Gain on disposal of investments

Change in fair value of investments measured at fair value through profit or loss

Investments in public companies, end of the year

The Company holds common shares in publicly traded companies. These shares are classified as fair value through profit or loss and are reported at fair

value, reflecting their quoted share price at the reporting date. The original cost is $397 ($486 as at June 30, 2019). The gain on disposal of investments

totalling $106 for the year ended June 30, 2020 is included in general and administrative expenses. There is no gain on disposal of investments for the

year ended June 30, 2019.

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

12.

PROPERTY, PLANT AND EQUIPMENT

Cost

Balance as at June 30, 2019
Transfer to right-of-use assets
Balance as at July 1, 2019
Additions
Transfer from right-of-use assets
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2020

Accumulated Depreciation

Balance as at June 30, 2019
Transfer to right-of-use assets
Balance as at July 1, 2019
Depreciation
Transfer from right-of-use assets
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2020

Cost

Balance as at July 1, 2018
Additions
Disposals and write-offs
Business combination
Effect of movements in exchange rates
Balance as at June 30, 2019

Accumulated Depreciation

Balance as at July 1, 2018
Depreciation
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2019

June 30, 2019:
Net book value
Portion related to finance leases
June 30, 2020:
Net book value

Buildings and
components
$

Drilling
equipment
$

10,685
-
10,685
71

-
(62)
(18)
10,676

4,520
-
4,520
653
-
(32)
(11)
5,130

85,456
(286)
85,170
6,659
289
(2,572)
(2,755)
86,791

57,713
(244)
57,469
6,577
260
(2,604)
(2,280)
59,422

Buildings and

components
$

Drilling

equipment
$

10,449
240
-
-

(4)
10,685

3,900
622
-

(2)
4,520

6,165
-

5,546

79,189
4,473
(1,374)
4,067
(899)
85,456

53,455
6,329
(1,353)
(718)
57,713

27,743
42

27,369

Land
$

804
-
804
-
-
-
-
804

-
-
-
-
-
-
-
-

Land
$

841
-
(37)
-
-
804

-
-
-
-
-

804
-

804

Vehicles
$

19,827
(254)
19,573
3,543
-
(1,486)
(141)
21,489

13,293
(135)
13,158
2,712
-
(1,295)
(137)
14,438

Vehicles
$

17,474
3,156
(884)
135
(54)
19,827

11,810
2,356
(824)
(49)
13,293

6,534
119

7,051

Other
$

4,058
-
4,058
198
-
-
(51)
4,205

2,854
-
2,854
329
-
-
(32)
3,151

Other
$

3,424
454
-
193
(13)
4,058

2,471
391
-

(8)
2,854

1,204
-

1,054

Total
$

120,830
(540)
120,290
10,471
289
(4,120)
(2,965)
123,965

78,380
(379)
78,001
10,271
260
(3,931)
(2,460)
82,141

Total
$

111,377
8,323
(2,295)
4,395
(970)
120,830

71,636
9,698
(2,177)
(777)
78,380

42,450
161

41,824

The loss on disposal of property, plant and equipment totalling $18 for the year ended June 30, 2020 (a gain of $312 for the year ended June 30, 2019)
is included in cost of contract revenue.

Drilling equipment includes construction work in progress for an amount of $528 ($0 as at June 30, 2019).

Page 23

Page 24

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

13. RIGHT-OF-USE ASSETS

Notes

Cost

Balance as at July 1, 2019
Additions
Disposals and write-offs
Transferred to property, plant and
equipment
Effect of movements in exchange rates
Balance as at June 30, 2020

Accumulated Depreciation

Balance as at July 1, 2019
Depreciation
Disposals and write-offs
Transferred to property, plant and
equipment
Effect of movements in exchange rates
Balance as at June 30, 2020
Net book value

Land
$

1,937
-
-

(265)
1,672

-
-
-

-
-
1,672

Buildings and
components
$

Drilling
equipment
$

Vehicles
$

2,379
-
-

(99)
2,280

-
387
-

(3)
384
1,896

300
-
-

(289)

(11)
-

258
8

(260)

(6)

-
-

254
245
(78)

(5)
416

135
135
(27)

-
243
173

Total
$

4,870
245
(78)

(289)

(380)
4,368

393
530
(27)

(260)

(9)
627
3,741

The gain on disposal of right-of-use-assets totalling $13 for the year ended June 30, 2020 ($0 for the year ended June 30, 2019) is included in cost of
contract revenue.

Page 25

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

13. RIGHT-OF-USE ASSETS

Cost

Balance as at July 1, 2019

Additions

Disposals and write-offs

Transferred to property, plant and

equipment

Effect of movements in exchange rates

Balance as at June 30, 2020

Accumulated Depreciation

Balance as at July 1, 2019

Depreciation

Disposals and write-offs

Transferred to property, plant and

equipment

Effect of movements in exchange rates

Balance as at June 30, 2020

Net book value

contract revenue.

Notes

Buildings and

components

Drilling

equipment

Vehicles

Land

1,937

2,379

(265)

1,672

(99)

2,280

387

(3)

384

1,896

1,672

300

(289)

(11)

258

(260)

(6)

254

245

(78)

(5)

416

135

(27)

243

173

Total

4,870

245

(78)

(289)

(380)

4,368

393

530

(27)

(260)

(9)

627

3,741

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

14.

INTANGIBLE ASSETS

Customer relationship

Balance as at July 1, 2019
Amortization
Effect of movements in exchange rates
Balance as at June 30, 2020

Balance as at July 1, 2018
Business combination
Amortization
Effect of movements in exchange rates
Balance as at June 30, 2019

15.

IMPAIRMENT OF NON-FINANCIAL ASSETS

Cost
$
1,290
-

27
1,317

-
1,348
-
(58)
1,290

Accumulated
amortization
$
(290)
(439)
-
(729)

-
-
(290)
-
(290)

Total
$
1,000
(439)
27
588

-
1,348
(290)
(58)
1,000

The gain on disposal of right-of-use-assets totalling $13 for the year ended June 30, 2020 ($0 for the year ended June 30, 2019) is included in cost of

Cash generating units

Due to the carrying amount of the net assets of the entity being more than its market capitalisation, the Company concluded that an impairment test
should be performed for all of these assets.

For the purposes of assessing impairment, assets were allocated to those cash generating units (“CGUs”) that are expected to receive benefits from their
use. For impairment testing purposes, the Company has identified 3 CGUs, based on geographical areas where interdependent cash inflows exist. The
CGUs are, the Canadian CGU, the Chile CGU and the International CGU.

Non-financial assets impairment assessments

The Company’s impairment test for each CGU was based on value-in-use calculations determined by using a discounted cash flow model.

The recoverable amount of each CGU was determined using a pre-tax discount rate based on the weighted average cost of capital ("WACC").
Management has calculated a WACC for the Canada CGU between 6.3% and 7.4% with a mid-point of 6.8%, for the International CGU between 13.8%
and 15.9% with a mid-point of 14.9%, and for the Chile CGU between 7.7% and 8.8% with a mid-point of 8.2%. The discount rate calculation is based on
the specific circumstances of the Company. The WACC considers both debt and equity. The cost of equity is derived from the expected return on
investment by the Company’s investors. The cost of debt is based on the interest-bearing borrowings the Company is obliged to service. CGU-specific
risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data.

The recoverable amount for each CGU was also determined using unobservable inputs such as cash flow projections from financial budgets approved by
the Board of Directors. Growth rates used over the budget period are based on management’s estimates of performance, which is established by
considering historical growth rates achieved as well as anticipated fluctuations including those resulting from the current economic environment. The
growth rates also depend on whether the CGU includes mature market operations versus start-up or evolving operations. Management assesses how the
CGU’s market position, relative to its competitors, might change over the budget period. Cash flows beyond the five-year period were extrapolated using
growth rates between 2.0% and 5.0%, depending on the CGU, which is based on the Company’s estimate of future performance. Management expects
the Company’s share of the market to be stable over the long-term budget period.

Page 25

Page 26

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

15.

IMPAIRMENT OF NON-FINANCIAL ASSETS (continued)

Non-financial assets impairment assessments (continued)

The assumptions used above for the estimated future cash flows are based on management’s best estimates as at June 30, 2020 and may change
significantly in the future, based on potential changes in the industry such as the market price of gold, currency fluctuations, interest rates and any other
event beyond management’s control that may affect the global economy. The estimated recoverable amounts may therefore differ significantly from actual
future recoverable amounts.

The recoverable values have been determined to be higher than their carrying values as at June 30, 2020. As a result, no impairment was recorded.

16.

LONG-TERM DEBT

Loan authorized for a maximum amount of $6,814 (US$5,000), bearing interest at
prime rate plus 0.25%, effective rate as at June 30, 2020 of 3.50%, maturing in
November 2021, secured by a first rank hypothec on the universality of all present
and future assets (c)

Loan authorized for a maximum amount of $35,000, bearing interest at prime rate
plus 3.00%, effective rate as at June 30, 2020 of 5.45% (June 30, 2019: interest at
prime rate plus 2.00%, effective rate of 5.95%), maturing in November 2021,
secured by a first
rank hypothec on the universality of all present and
future assets (a) (b) (c)

Loan authorized for an amount of $2,500, bearing interest at prime rate plus
4.50%, effective rate as at June 30, 2020 of 6.95% (June 30, 2019: bearing
interest at prime rate plus 4.50%, effective rate of 8.45%), payable in monthly
instalments of $52 as from June 2017, maturing in November 2021, secured by a
second rank hypothec on the universality of all present and future assets (b) (e)

Loan authorized for an amount of $7,018 (US$5,150), bearing interest at prime
rate plus 2.75%, effective rate as at June 30, 2020 of 5.20% (June 30, 2019:
bearing interest at prime rate plus 2.75%, effective rate of 8.25%), payable in
monthly instalments of $132 (US$97) (June 30, 2019 : $59 (US$45)) as from May
2019, maturing in July 2024, secured by a third rank hypothec on the universality
of all present and future assets (d) (e)

June 30
2020
$

June 30
2019
$

1,363

27,322

25,041

727

1,192

5,666

3,192

Page 27

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

15.

IMPAIRMENT OF NON-FINANCIAL ASSETS (continued)

Non-financial assets impairment assessments (continued)

The assumptions used above for the estimated future cash flows are based on management’s best estimates as at June 30, 2020 and may change

significantly in the future, based on potential changes in the industry such as the market price of gold, currency fluctuations, interest rates and any other

event beyond management’s control that may affect the global economy. The estimated recoverable amounts may therefore differ significantly from actual

future recoverable amounts.

The recoverable values have been determined to be higher than their carrying values as at June 30, 2020. As a result, no impairment was recorded.

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

16.

LONG-TERM DEBT (continued)

Loans, bearing interest at rates of 0%, payable in monthly instalments of $16,
maturing in August 2023

Loans, bearing interest at rates of 3.50%, payable in monthly instalments of $29
(CLP$17,756) as from December 2020, maturing in June 2023. (f)

Finance leases, bearing interest between 4.50% and 5.99% (June 30, 2019),
maturing in July 2021 (g)

June 30

2020

June 30

2019

Current portion

June 30
2020
$

618

1,660

-
37,356

(2,174)
35,182

June 30
2019
$

151
29,576

(1,400)
28,176

1,363

27,322

25,041

727

1,192

5,666

3,192

(a)

(b)

(c)

(d)

(e)

(f)

(g)

The rate is variable based on the quarterly calculation of a financial ratio and can vary from prime rate plus 1.50% to 3.50%.

An unamortized amount of $264 ($286 as at June 30, 2019), representing financing fees, has been netted against the long-term debt. This amount is
being amortized to earnings over the term of the debt, using the effective interest method.

On June 28, 2019, the Company signed an amendment to the Third Amended and Restated Credit Agreement with National Bank of Canada,
consisting of a revolving credit facility in the amount of $35,000 along with a revolving credit facility in the amount of US$5,000 as at June 30, 2020,
that will expire November 2, 2021.

On December 20, 2018, the Company entered into a loan agreement for a term loan in a principal amount of up to US$5,150. The initial drawdown of
US$2,575 received on January 21, 2019 was used to reduce the credit facility described above. The second drawdown of US$2,575 was received on
October 9, 2019 and was used to pay the balance payable related to a business combination on December 23, 2019.

On April 23, 2020, the Company entered into the First Amending Agreement with one of its lenders, Export Development Canada, to defer payments
of principal and interest on its long-term debt by six months and extend the term of the loans by the same period. Accrued interest over such period
will be payable at the next payable instalment.

In May 2020, Orbit Garant Chile S.A., a wholly-owned subsidiary of the Company, obtained two loans totaling CLP$1,000,000 ($1,740) from Banco
Scotiabank. The loans have no capital repayments for the first six months and the interest over such period will be payable on the first instalment.

On July 1, 2019, with the adoption of IFRS 16, the balance of the finance leases was reclassified in the lease liabilities.

Under the terms of the long-term debt agreements, the Company must satisfy certain restrictive covenants as to minimum financial ratios (Note 18). As at
June 30, 2020, the Company was compliant with its financial covenants (June 30, 2019: the Company was compliant with its financial covenants).

As at June 30, 2020, the prime rate in Canada was 2.45% for Canadian loans (3.95% as at June 30, 2019) and the prime rate in United States was 3.25%
for US loans (5.50% as at June 30, 2019).

Page 27

Page 28

16.

LONG-TERM DEBT

Loan authorized for a maximum amount of $6,814 (US$5,000), bearing interest at

prime rate plus 0.25%, effective rate as at June 30, 2020 of 3.50%, maturing in

November 2021, secured by a first rank hypothec on the universality of all present

and future assets (c)

Loan authorized for a maximum amount of $35,000, bearing interest at prime rate

plus 3.00%, effective rate as at June 30, 2020 of 5.45% (June 30, 2019: interest at

prime rate plus 2.00%, effective rate of 5.95%), maturing in November 2021,

secured by a first

rank hypothec on the universality of all present and

future assets (a) (b) (c)

Loan authorized for an amount of $2,500, bearing interest at prime rate plus

4.50%, effective rate as at June 30, 2020 of 6.95% (June 30, 2019: bearing

interest at prime rate plus 4.50%, effective rate of 8.45%), payable in monthly

instalments of $52 as from June 2017, maturing in November 2021, secured by a

second rank hypothec on the universality of all present and future assets (b) (e)

Loan authorized for an amount of $7,018 (US$5,150), bearing interest at prime

rate plus 2.75%, effective rate as at June 30, 2020 of 5.20% (June 30, 2019:

bearing interest at prime rate plus 2.75%, effective rate of 8.25%), payable in

monthly instalments of $132 (US$97) (June 30, 2019 : $59 (US$45)) as from May

2019, maturing in July 2024, secured by a third rank hypothec on the universality

of all present and future assets (d) (e)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

16.

LONG-TERM DEBT (continued)

As at June 30, 2020, principal payments required in the next years are as follows:

Within one year
Later than one year and no later than five years

Long-term debt by currency and by term are as follows:

As at June 30, 2020
$000s

CAN
US (US$5,350)
Pesos chiliens (CLP$1,000,000)

Reconciliation of movements of long-term debt to cash flows arising from financing activities:

Balance on July 1
Transfer of finance leases to lease liabilities
Net increase in the revolving credit facility
Increase in other long-term debts
Repayment of other long-term debts
Amortization of transaction costs related to loans
Transaction costs related to loans
Impact of the change in foreign exchange rates on the foreign currency debts
Balance on June 30

Total
$
28,404
7,292
1,660
37,356

Within
one year
$
664
1,186
324
2,174

2020
$
29,576
(151)
3,172
5,931
(1,508)
134
(112)
314
37,356

17.

LEASE LIABILITIES

The summary of of the activity related to the lease liabilities for the year ended June 30, 2020 is as follows:

Lease liabilities recognized as at July 1, 2019
Additions
Disposals
Finance costs
Payment of lease liabilities, including related finance costs
Foreign exchange differences

Current portion
Balance as at June 30, 2020

$
2,174
35,447
37,621

Later than one
but no later than
five years
$
27,740
6,106
1,336
35,182

2019
$
20,038
-
7,200
7,506
(5,051)
95
(203)
(9)
29,576

$
4,598
245
(60)
235
(750)
(283)
3,985
2,759
1,226

Page 29

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

16.

LONG-TERM DEBT (continued)

As at June 30, 2020, principal payments required in the next years are as follows:

Within one year

Later than one year and no later than five years

Long-term debt by currency and by term are as follows:

As at June 30, 2020

$000s

CAN

US (US$5,350)

Pesos chiliens (CLP$1,000,000)

Reconciliation of movements of long-term debt to cash flows arising from financing activities:

Balance on July 1

Transfer of finance leases to lease liabilities

Net increase in the revolving credit facility

Increase in other long-term debts

Repayment of other long-term debts

Amortization of transaction costs related to loans

Transaction costs related to loans

Balance on June 30

17.

LEASE LIABILITIES

Impact of the change in foreign exchange rates on the foreign currency debts

The summary of of the activity related to the lease liabilities for the year ended June 30, 2020 is as follows:

Lease liabilities recognized as at July 1, 2019

Additions

Disposals

Finance costs

Payment of lease liabilities, including related finance costs

Foreign exchange differences

Current portion

Balance as at June 30, 2020

Total

28,404

7,292

1,660

37,356

Within

one year

664

1,186

324

2,174

2020

29,576

(151)

3,172

5,931

(1,508)

134

(112)

314

37,356

2,174

35,447

37,621

27,740

6,106

1,336

35,182

2019

20,038

7,200

7,506

(5,051)

(203)

(9)

29,576

4,598

245

(60)

235

(750)

(283)

3,985

2,759

1,226

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

17.

LEASE LIABILITIES (continued)

Lease payments required in the next years are as follows:

Within one year
Later than one year and no later than five years
Later than five years

Less: discounting impact
Present value of lease payments

Later than one

but no later than

five years

Lease liabilities are included in the consolidated financial position as follows :

Current portion
Non-current portion

18.

CAPITAL MANAGEMENT

June 30
2020
$
2,902
841
765
4,508
(523)
3,985

$
2,759
1,226
3,985

The Company includes long-term debt, lease liabilities, balance payable related to a business combination, share capital, equity-settled reserve, retained
earnings, accumulated other comprehensive loss and cash and equivalents in its definition of capital.

The Company's capital structure is as follows:

Long-term debt
Lease liabilities
Balance payable related to a business combination
Share capital
Equity-settled reserve
Retained earnings
Accumulated other comprehensive loss
Cash and equivalents

June 30
2020
$
37,356
3,985
-
58,857
1,309
10,047
(2,208)
(4,996)
104,350

June 30
2019
$
29,576
-
3,370
58,857
1,486
16,971
(738)
(2,480)
107,042

The Company's objective when managing its capital structure is to maintain financial flexibility in order to i) preserve access to capital markets; ii) meet
financial obligations; and iii) finance internally generated growth and potential new acquisitions. To manage its capital structure, the Company may adjust
spending, issue new shares, issue new debt or repay existing debts.

Under the terms of certain of the Company's debt agreements, the Company must satisfy certain financial covenants, such as Senior debt to earnings
before income taxes, interest, depreciation and amortization ratio, Senior debt to capitalization ratio and fixed charge coverage ratio. Such agreements
also limit, among other things, the Company's ability to incur additional indebtedness, create liens, engage in mergers or acquisitions and make dividend
and other payments. As at June 30, 2020, as mentioned in Note 16, the Company complied with its covenants (June 30, 2019: the Company was
compliant with its financial covenants).

In order to facilitate the management of its capital requirements, the Company prepares annual budgets that are updated as necessary, dependent on
various factors.

Page 29

Page 30

The Company's objectives with regards to capital management remain unchanged from the prior year.

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

19. SHARE CAPITAL

Authorized, an unlimited number of common and preferred shares:

Common shares, participating and voting, without nominal or par value

Preferred shares rights privileges, restrictions and conditions must be adopted before their issuance by a resolution of the Board of Directors of the
Company.

Common shares

Balance, beginning of the year

Shares issued:

Business combination
For stock options exercised

Balance, end of the year

Net loss per share

June 30, 2020

June 30, 2019

Number of
shares

37,021,756

58,857

36,147,119

-
-

37,021,756

-
-
58,857

861,637
13,000
37,021,756

57,207

1,632
18
58,857

Diluted net loss per common share was calculated based on net loss divided by the average number of common shares outstanding using the treasury
shares method. For 2020 and 2019, share options are not included in the computation of diluted net loss per share as their inclusion would be anti-
dilutive.

Net loss per share - basic and diluted
Net loss attributable to common

shareholders

Weighted average basic number of
common shares outstanding
Net loss per share - basic and diluted

Stock option plan

June 30
2020

June 30
2019

(7,357)

(3,470)

37,021,756
(0.20)

36,768,700
(0.09)

On June 26, 2008, the Company established an equity-settled option plan (the Stock Option Plan), which is intended to aid in attracting, retaining and
motivating the Company’s officers, employees, directors and consultants. The option plan has been prepared in accordance with the TSX’s policies on
listed company security-based compensation arrangements. Persons eligible to be granted options under the option plan are: any director, officer or
employee of Orbit Garant or of any subsidiary company controlled by any such person or a family trust of which at least one trustee is any such person
and all of the beneficiaries of which are such person and his or her spouse or children.

The aggregate number of common shares which may be issued from treasury upon the exercise of options under the Stock Option Plan shall not exceed
10% of the issued and outstanding common shares. The number of common shares which may be reserved for issuance pursuant to options granted
under the option plan, together with common shares reserved for issuance from treasury under any other employee-related plan of the Company, or
options for services granted by the Company to any one person, shall not exceed 5% of the then aggregate issued and outstanding common shares.

The Board of Directors, through the recommendation of the Corporate Governance and Compensation Committee, manages the Stock Option Plan and
determines, among other things, optionees, vesting periods, exercise price and other attributes of the options, in each case pursuant to the 2008 Share
Option Plan, applicable securities legislation and the rules of the TSX. Options vest at a rate ranging from 20% to 33% per annum commencing
12 months after the date of grant and expire no later than 7 years after the grant date. Options are forfeited when the option holder ceases to be a
director, officer or employee of the Company. The exercise price for any option may not be less than the fair market value (the closing price of the
common shares on the TSX on the last trading day on which common shares traded prior to such day, or the average of the closing bid and ask prices
over the last five trading days, if no trades accrued over that period) of the common shares at the time of the grant of the option.

Page 31

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

19. SHARE CAPITAL

Authorized, an unlimited number of common and preferred shares:

Common shares, participating and voting, without nominal or par value

Company.

Common shares

Balance, beginning of the year

Shares issued:

Business combination

For stock options exercised

Balance, end of the year

Net loss per share

dilutive.

Net loss per share - basic and diluted

Net loss attributable to common

shareholders

Weighted average basic number of

common shares outstanding

Net loss per share - basic and diluted

Stock option plan

Number of

37,021,756

58,857

36,147,119

37,021,756

58,857

861,637

13,000

37,021,756

57,207

1,632

58,857

June 30

2020

June 30

2019

(7,357)

(3,470)

37,021,756

36,768,700

(0.20)

(0.09)

Diluted net loss per common share was calculated based on net loss divided by the average number of common shares outstanding using the treasury

shares method. For 2020 and 2019, share options are not included in the computation of diluted net loss per share as their inclusion would be anti-

On June 26, 2008, the Company established an equity-settled option plan (the Stock Option Plan), which is intended to aid in attracting, retaining and

motivating the Company’s officers, employees, directors and consultants. The option plan has been prepared in accordance with the TSX’s policies on

listed company security-based compensation arrangements. Persons eligible to be granted options under the option plan are: any director, officer or

employee of Orbit Garant or of any subsidiary company controlled by any such person or a family trust of which at least one trustee is any such person

and all of the beneficiaries of which are such person and his or her spouse or children.

The aggregate number of common shares which may be issued from treasury upon the exercise of options under the Stock Option Plan shall not exceed

10% of the issued and outstanding common shares. The number of common shares which may be reserved for issuance pursuant to options granted

under the option plan, together with common shares reserved for issuance from treasury under any other employee-related plan of the Company, or

options for services granted by the Company to any one person, shall not exceed 5% of the then aggregate issued and outstanding common shares.

The Board of Directors, through the recommendation of the Corporate Governance and Compensation Committee, manages the Stock Option Plan and

determines, among other things, optionees, vesting periods, exercise price and other attributes of the options, in each case pursuant to the 2008 Share

Option Plan, applicable securities legislation and the rules of the TSX. Options vest at a rate ranging from 20% to 33% per annum commencing

12 months after the date of grant and expire no later than 7 years after the grant date. Options are forfeited when the option holder ceases to be a

director, officer or employee of the Company. The exercise price for any option may not be less than the fair market value (the closing price of the

common shares on the TSX on the last trading day on which common shares traded prior to such day, or the average of the closing bid and ask prices

over the last five trading days, if no trades accrued over that period) of the common shares at the time of the grant of the option.

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

19. SHARE CAPITAL (continued)

All stock options outstanding are granted to directors, officers and employees. Details regarding the stock options outstanding are as follows:

Preferred shares rights privileges, restrictions and conditions must be adopted before their issuance by a resolution of the Board of Directors of the

June 30, 2020

June 30, 2019

Outstanding at the beginning of the period

Granted during the period

Exercised during the year (a)

Cancelled during the period
Outstanding at end of the period

Exercisable at end of the period

Number
of options

2,960,500

771,000

(576,500)
3,155,000

1,675,335

June 30, 2020
Weighted average
exercise price
$
1.52

0.86

2.26
1.28

1.30

Number
of options

2,496,500

500,000

(13,000)

(23,000)
2,960,500

1,610,768

June 30, 2019
Weighted average
exercise price
$
1.48

1.73

0.95

1.96
1.52

1.43

(a)

For the year ended June 30, 2019, the weighted average share price at the date of exercise was $1.30.

On December 4, 2019, 696,000 stock options have been granted to employees and directors giving the option to purchase a common share for an
exercice price of $0.90 per share which represents the fair value of a common share at the date of the grant. On June 18, 2020, 75,000 share options
have been granted to a director giving the option to purchase a common share for an exercice price of $0.50. These options have a life of 5 years and will
vest at a rate of 33% per annum commencing 12 months after the date of the grant.

The following table summarizes information on share options outstanding as at June 30, 2020:

Range of
exercise price
$

0.50 - 1.49
1.50 - 2.49

Outstanding at
June 30, 2020

Weighted average
remaining life
(years)

Weighted average
exercise price
$

Exercisable at
June 30, 2020

Weighted average
exercise price
$

1,831,000
1,324,000
3,155,000

2.75
3.10

0.85
1.86

975,000
700,335
1,675,335

0.86
1.90

The Company's calculations of the fair value of options granted were made using the Black-Scholes option-pricing model. The following table summarizes
the grant date fair value calculations with weighted average assumptions:

Risk-free interest rate
Expected life (years)
Expected volatility (based on historical volatility)
Expected dividend yield
Fair value of options granted

Granted
in June 2020

Granted
in December 2019

Granted
in December 2018

0.35%
3
39.80%
0%
$0.15

1.46%
3
36.11%
0%
$0.26

2.41%
3
39.77%
0%
$0.55

Page 31

Page 32

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

19. SHARE CAPITAL (continued)

During the years mentioned below, the total expense related to share-based compensation to employees and directors has been recorded and presented
in general and administrative expenses as follows:

Expense related to share-based compensation

20.

INCOME TAXES

Income tax expense recovery comprises the following:

Current tax
Current year
Prior years adjustments

Deferred tax
Current year
Prior years adjustements

The tax rates prescribed by the applicable laws were at 26.55% in 2020 and at 26.65% in 2019.

Loss before income taxes

Statutory rates

Income taxes based on statutory rates
Increase (decrease) of income taxes due

to the following:

Non-deductible expenses
Non-deductible share-based
compensation expense

Difference of income tax rates between territories
Withholding taxes
Income tax assets unrecognized
Non-taxable portion of capital gain
Prior years adjustments
Other

Total income tax expense (recovery)

June 30
2020
$
256

June 30
2020
$
315
136
451

179
(391)
(212)

239

June 30
2020
$
(7,118)

26.55%

(1,890)

68
7
571
1,639
(51)
(255)
89
239

June 30
2019
$
305

June 30
2019
$
1,623
(65)
1,558

(1,891)
(13)
(1,904)

(346)

June 30
2019
$
(3,816)

26.65%

(1,017)

81
29
352
250
-
(78)
(9)
(346)

Page 33

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

19. SHARE CAPITAL (continued)

20.

INCOME TAXES (continued)

During the years mentioned below, the total expense related to share-based compensation to employees and directors has been recorded and presented

in general and administrative expenses as follows:

Deferred income taxes are based on differences between the accounting and tax values of assets and liabilities and consist of the following at the dates
presented:

The tax rates prescribed by the applicable laws were at 26.55% in 2020 and at 26.65% in 2019.

Expense related to share-based compensation

20.

INCOME TAXES

Income tax expense recovery comprises the following:

Current tax

Current year

Prior years adjustments

Deferred tax

Current year

Prior years adjustements

Loss before income taxes

Statutory rates

Income taxes based on statutory rates

Increase (decrease) of income taxes due

to the following:

Non-deductible expenses

Non-deductible share-based

compensation expense

Withholding taxes

Income tax assets unrecognized

Non-taxable portion of capital gain

Prior years adjustments

Other

Total income tax expense (recovery)

Difference of income tax rates between territories

June 30

2020

256

June 30

2020

315

136

451

179

(391)

(212)

239

June 30

2020

(7,118)

26.55%

(1,890)

571

1,639

(51)

(255)

239

June 30

2019

305

June 30

2019

1,623

(65)

1,558

(1,891)

(13)

(1,904)

(346)

June 30

2019

(3,816)

26.65%

(1,017)

352

250

(78)

(9)

(346)

Deferred income tax assets:
Intangible assets
Loss carried forward
Non-deductible provisions
Investments
Total deferred income tax assets

Deferred income tax liabilities:
Property, plant and equipment
Total deferred income tax liabilities
Net deferred income tax assets

Deferred income tax assets:
Intangible assets
Loss carried forward
Non-deductible provisions
Total deferred income tax assets

Deferred income tax liabilities:
Investments
Property, plant and equipment
Total deferred income tax liabilities
Net deferred income tax assets

As presented in the consolidated statements of financial position:

Deferred tax assets
Deferred tax liabilities

Tax losses for which no deferred tax assets were recognized expire as follows:

June 30, 2024
June 30, 2025

Page 33

July 1
2019
$

39
6,301
941
-
7,281

1,498
1,498

5,783

July 1
2018
$

131
4,140
982
5,253

6
1,354
1,360

3,893

Recognized in
statements of
loss
$

(26)
(334)
881
10
531

424
424

107

Recognized in
statements of
loss
$

(92)
2,161
(41)
2,028

(6)
144
138

1,890

June 30
2020
$
5,890
-
5,890

June 30
2020
$

13
5,967
1,822
10
7,812

1,922
1,922

5,890

June 30
2019
$

39
6,301
941
7,281

-
1,498
1,498

5,783

June 30
2019
$
5,783
-
5,783

Burkina Faso
$
606
5,854

Page 34

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

21. ADDITIONAL INFORMATION RELATING TO THE STATEMENTS OF CASH FLOWS

Changes in non-cash operating working capital items:

Trade and other receivables
Inventories
Prepaid expenses
Trade and other payables

22. CONTINGENCIES

June 30
2020
$
15,521
(5,112)
327
(6,159)
4,577

June 30
2019
$
(4,214)
(1,951)
(270)
539
(5,896)

The Company is subject to various claims that arise in the normal course of business. Management believes that adequate provisions have been made in
the accounts where appropriate. Although it is not possible to estimate the extent of potential costs and losses, if any, management believes that the
ultimate resolution of such contingencies will not have a material adverse effect on the financial position of the Company.

In June 2020, a claim by a financial institution (the "Claimant") for damages against a subsidiary of the Company in the amount of XOF 843,660 ($1,970)
was confirmed by a court in Burkina Faso. This claim relates to an amount of XOF 8,610 ($20) owed by the Company’s subsidiary to a supplier, which
was indebted to the Claimant. The Company vigorously disputes this claim and has filed an appeal. Based on legal advice, management believes that the
claim is unfounded and that the appeal will be successful.

In August 2020, an amount of XOF 266,818 million ($632) was required to be deposited in a restricted cash account by the Company’s financial institution
in Burkina Faso at the request of the Claimant. The Claimant also threatened to seize certain business assets of the Company's subsidiary in order to
in its appeal, in September 2020, the Company drew from its Credit Facility and
satisfy its claim. Although management expects to be successful
deposited cash in the amount of XOF 576,842 ($1,347) with its financial institution in Burkina Faso, in order to prevent the seizure of some of its assets
and prevent any business disruption to the Company and its subsidiary, pending resolution of the Company’s appeal. Management expects to recover
these deposited amounts at the time the appeal is confirmed as successful, or earlier if certain conditions are met.

Nonetheless, given the original claim was confirmed by the court, the Company has recorded a provision of XOF 871,497 ($2,035) as at June 30, 2020
for this claim and additional legal fees. If and when the facts and circumstances change (including if the Company is successful in its appeal) the liability
recognized will be revised in the period in which the change occurs.

23. COMMITMENTS AND GUARANTEES

Commitments

The Company has entered into short-term and low asset value lease agreements expiring between 2021 and 2022 which call for total lease payments of
$197 for the rental of offices and $1 for the rental of vehicles. None of the operating lease agreements contain renewal or purchase options or escalation
clauses or any restrictions. The lease payments under these lease agreements for the next two years amount to $159 for 2021 and $39 for 2022.

Lease payments recognized as an expense during the year amount to $5,921 (year ended June 30, 2019: $6,490). This amount consists of minimum
lease payments. No sublease payments or contingent rent payments were made or received. No sublease income is expected as all assets held under
lease agreements are used exclusively by the Company.

Page 35

Trade and other receivables

Inventories

Prepaid expenses

Trade and other payables

22. CONTINGENCIES

June 30

2020

15,521

(5,112)

327

(6,159)

4,577

June 30

2019

(4,214)

(1,951)

(270)

539

(5,896)

The Company is subject to various claims that arise in the normal course of business. Management believes that adequate provisions have been made in

the accounts where appropriate. Although it is not possible to estimate the extent of potential costs and losses, if any, management believes that the

ultimate resolution of such contingencies will not have a material adverse effect on the financial position of the Company.

In June 2020, a claim by a financial institution (the "Claimant") for damages against a subsidiary of the Company in the amount of XOF 843,660 ($1,970)

was confirmed by a court in Burkina Faso. This claim relates to an amount of XOF 8,610 ($20) owed by the Company’s subsidiary to a supplier, which

was indebted to the Claimant. The Company vigorously disputes this claim and has filed an appeal. Based on legal advice, management believes that the

claim is unfounded and that the appeal will be successful.

In August 2020, an amount of XOF 266,818 million ($632) was required to be deposited in a restricted cash account by the Company’s financial institution

in Burkina Faso at the request of the Claimant. The Claimant also threatened to seize certain business assets of the Company's subsidiary in order to

satisfy its claim. Although management expects to be successful

in its appeal, in September 2020, the Company drew from its Credit Facility and

deposited cash in the amount of XOF 576,842 ($1,347) with its financial institution in Burkina Faso, in order to prevent the seizure of some of its assets

and prevent any business disruption to the Company and its subsidiary, pending resolution of the Company’s appeal. Management expects to recover

these deposited amounts at the time the appeal is confirmed as successful, or earlier if certain conditions are met.

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

21. ADDITIONAL INFORMATION RELATING TO THE STATEMENTS OF CASH FLOWS

23. COMMITMENTS AND GUARANTEES (continued)

Changes in non-cash operating working capital items:

Guarantees

As at June 30, 2020, the Company issued some bank guarantees in favor of customers for a total amount of $1,385 (year ended June 30, 2019: $1,734),
maturing between April 2020 and March 2021. For the years ended June 30, 2020 and 2019, the Company has not made any payments in connection
with these guarantees.

24. RELATED AND ASSOCIATE PARTY TRANSACTIONS

Transactions with related parties

The Company is related to Dynamitage Castonguay Ltd., a company in which a director has an interest.

The Company entered into the following transactions with its related companies and with persons related to directors:

Revenues

Expenses

As at June 30, 2020, an amount of $6 was receivable resulting from these transactions (June 30, 2019: $59).

Transactions with associate parties

The Company entered into the following transactions with its associate parties:

June 30
2020
$
54

148

June 30
2020
$
20,799

June 30
2019
$
266

151

June 30
2019
$
22,645

Nonetheless, given the original claim was confirmed by the court, the Company has recorded a provision of XOF 871,497 ($2,035) as at June 30, 2020

for this claim and additional legal fees. If and when the facts and circumstances change (including if the Company is successful in its appeal) the liability

recognized will be revised in the period in which the change occurs.

Revenues

As at June 30, 2020,
(June 30, 2019: $1,672).

trade and other

receivables included an amount

receivable of $1,533 from one of

the Company's associates

23. COMMITMENTS AND GUARANTEES

Commitments

All of these related and associate parties transactions made in the normal course of business were measured at the exchange amount, which is the
amount established and agreed to by the parties.

The Company has entered into short-term and low asset value lease agreements expiring between 2021 and 2022 which call for total lease payments of

$197 for the rental of offices and $1 for the rental of vehicles. None of the operating lease agreements contain renewal or purchase options or escalation

clauses or any restrictions. The lease payments under these lease agreements for the next two years amount to $159 for 2021 and $39 for 2022.

25. KEY MANAGEMENT COMPENSATION

The compensation recognized for key management remuneration and director's fees is as follows:

Lease payments recognized as an expense during the year amount to $5,921 (year ended June 30, 2019: $6,490). This amount consists of minimum

lease payments. No sublease payments or contingent rent payments were made or received. No sublease income is expected as all assets held under

lease agreements are used exclusively by the Company.

Salaries and fees
Share-based compensation

Page 35

June 30
2020
$
1,504
113
1,617

June 30
2019
$
1,877
200
2,077

Page 36

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

26. FINANCIAL INSTRUMENTS

The Company is exposed to various risks related to its financial assets and liabilities. There have been no substantive changes in the Company’s exposure
to financial instrument risks, its objectives, policies and processes for managing those risks, or the methods used to measure them, from previous years,
unless otherwise stated in this note.

Currency risk

The Company realizes a part of its activities in US dollars (US $), in Chiliean Pesos (CPL), in Argentine Pesos (ARS), in Ghanian cedi (GHS cedi) and in
West African Francs (XOF). The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2020:

Cash and equivalents
Trade receivables
Income tax receivable (payable)
Accounts payable and accrued liabilities
Current portion of long-term debt and lease liabilities
Net balance exposure

Equivalent in Canadian dollars

US $
$000s

645
195
80
(38)
(898)
(16)
(22)

CLP
$000s

168,611
529,386
163,150
(299,573)
(195,059)
366,515
608

ARS
$000s

4,061
18,860
12,834
(3,802)
-
31,953
619

GHS cedi
000s

XOF
000s

157
2,629
3,077
14

-
5,877
1,378

158,384
1,137,609
90,151
(2,766,701)

(1,380,557)
(3,224)

The Company has estimated that a 10% increase or decrease in the foreign exchange rates would have caused a corresponding annual increase or
decrease in net loss and comprehensive loss of:

XOF

(237)

XOF
000s

Increase (decrease) in net income in Canadian dollars

US $

(1)

CLP

ARS

GHS cedi

101

The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2019:

Cash and equivalents
Trade receivables
Income tax receivable (payable)
Accounts payable and accrued liabilities
Current portion of long-term debt and finance leases
Net balance exposure

Equivalent in Canadian dollars

US $
$000s

880
1,777
72
(106)
(542)
2,081
2,725

CLP
$000s

ARS
$000s

GHS cedi
000s

197,344
2,961,014
(107,842)
(299,847)
-

2,750,669
5,309

-
-
-
-
-
-
-

130
8,420
2,496
(946)
-
10,100
2,425

223,581
2,180,876
(95,252)
(1,572,268)

-
736,937
1,671

The Company has estimated that a 10% increase or decrease in the above foreign exchange rates would have caused a corresponding annual increase
or decrease in net earnings (loss) and comprehensive earnings (loss) of:

Increase in net income in Canadian dollars

US $

199

CLP

388

ARS

GHS cedi

177

XOF

122

Page 37

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

26. FINANCIAL INSTRUMENTS

26. FINANCIAL INSTRUMENTS (continued)

The Company is exposed to various risks related to its financial assets and liabilities. There have been no substantive changes in the Company’s exposure

to financial instrument risks, its objectives, policies and processes for managing those risks, or the methods used to measure them, from previous years,

Credit risk

The Company realizes a part of its activities in US dollars (US $), in Chiliean Pesos (CPL), in Argentine Pesos (ARS), in Ghanian cedi (GHS cedi) and in

West African Francs (XOF). The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2020:

unless otherwise stated in this note.

Currency risk

Cash and equivalents

Trade receivables

Income tax receivable (payable)

Accounts payable and accrued liabilities

Current portion of long-term debt and lease liabilities

Net balance exposure

Equivalent in Canadian dollars

The Company has estimated that a 10% increase or decrease in the foreign exchange rates would have caused a corresponding annual increase or

decrease in net loss and comprehensive loss of:

CLP

$000s

168,611

529,386

163,150

(299,573)

(195,059)

366,515

608

ARS

$000s

4,061

18,860

12,834

(3,802)

31,953

619

GHS cedi

000s

XOF

000s

157

2,629

3,077

5,877

1,378

158,384

1,137,609

90,151

(2,766,701)

(1,380,557)

(3,224)

CLP

ARS

GHS cedi

101

CLP

$000s

ARS

$000s

GHS cedi

000s

XOF

(237)

XOF

000s

US $

$000s

645

195

(38)

(898)

(16)

(22)

US $

(1)

US $

$000s

880

1,777

(106)

(542)

2,081

2,725

US $

199

The Company provides credit to its customers in the normal course of its operations. The Company has adopted a policy of only dealing with creditworthy
It carries out, on a
counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults.
continuing basis, credit checks on its customers and maintains provisions for contingent credit losses. Demand for the Company’s drilling services
depends upon the level of mineral exploration and development activities conducted by mining companies, particularly with respect to gold, nickel and
copper.

During these unprecedented market challenges, COVID-19 may adversely affect the Company's customers and their solvency. Our customers' financial
difficulties can negatively impact the Company's results of operations and financial condition, especially if those customers were to delay or default in
payment owed to the Company. Collection of trade and other receivables from third parties remains a priority for the Company under the current situation.

In order to reduce the credit risk, the Company is using insurance coverage from Export Development Canada ("EDC") on certain accounts receivable
from its customers. The insurance program provides under certain terms and conditions an insurance coverage amount of up to 90% of certain accounts
receivable. As at June 30, 2020, the amount of the insurance coverage from EDC represents 6% of the accounts receivable (7% as at June 30, 2019).

The carrying amounts for accounts receivable are net of allowances for doubtful accounts, which are estimated based on aging analysis of receivables,
past experience, specific risks associated with the customer and other relevant information. The maximum exposure to credit risk is the carrying value of
the financial assets.

The allowance for doubtful accounts is established based on the Company's best estimate on the recovery of balances for which collection may be
uncertain. Uncertainty of collection may become apparent from various indicators, such as a deterioration of the credit situation of a given client or delay
in collection when the aging of invoices exceeds the normal payment terms. Management regularly reviews accounts receivable and assesses the
appropriateness of the allowance for doubtful accounts.

Increase (decrease) in net income in Canadian dollars

The aging of trade receivable balances and the allowance for doubtful accounts as at June 30, 2020 and June 30, 2019 were as follows:

The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2019:

Cash and equivalents

Trade receivables

Income tax receivable (payable)

Accounts payable and accrued liabilities

Current portion of long-term debt and finance leases

Net balance exposure

Equivalent in Canadian dollars

197,344

2,961,014

(107,842)

(299,847)

2,750,669

5,309

130

8,420

2,496

(946)

10,100

2,425

223,581

2,180,876

(95,252)

(1,572,268)

736,937

1,671

Current
Past due 0-30 days
Past due more than 30 days
Total trade receivables
Less: allowance for doubtful accounts

The change in the allowance for doubtful accounts is detailed below:

The Company has estimated that a 10% increase or decrease in the above foreign exchange rates would have caused a corresponding annual increase

or decrease in net earnings (loss) and comprehensive earnings (loss) of:

Increase in net income in Canadian dollars

CLP

388

ARS

GHS cedi

177

XOF

122

Balance at beginning of year
Change in allowance, other than write-offs and recoveries
Write-offs of accounts receivable
Recoveries
Balance at end of year

June 30
2020
$

16,031
603
4,668
21,302
786
20,516

June 30
2020
$

899
(110)
-

(3)
786

June 30
2019
$

28,923
3,346
4,303
36,572
899
35,673

June 30
2019
$

727
269
(150)
53
899

As at June 30, 2020, 66% (June 30, 2019: 79%) of the trade and other receivables are aged as current and 4% are impaired (June 30, 2019: 2%).

Two major customers represents 14% of the trade accounts receivable as at June 30, 2020 (June 30, 2019, one major customer represents 15% of these
accounts).

Page 37

Page 38

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

26. FINANCIAL INSTRUMENTS (continued)

Credit risk (continued)

One major customer represents 20% of the contract revenue for the year ended June 30, 2020 (year ended June 30, 2019, two major customers
represent 31%).

Credit risk also arises from cash and cash equivalents with banks and financial institutions. This risk is limited because the counterparties are mainly
Canadian banks with high credit ratings.

The Company does not enter into derivatives to manage credit risk.

Interest rate risk

The Company is subject to interest rate risk since a significant part of the long-term debt bears interest at variable rates.

As at June 30, 2020, the Company has estimated that a 100 basis point increase or decrease in interest rates would have caused a corresponding annual
increase or decrease in net earnings (loss) and comprehensive earnings (loss) of $214 (June 30, 2019, $217).

Equity market risk

Equity market risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general
movements in the level of the stock market. The Company closely monitors the general trends in the markets and individual equity movements, and
determines the appropriate course of actions to be taken by the Company.

Fair value

The fair value of cash and equivalents, trade and other receivables, trade and other payables and balance payable related to a business combination is
approximately equal to their carrying values due to their short-term maturity.

Page 39

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

26. FINANCIAL INSTRUMENTS (continued)

Canadian banks with high credit ratings.

The Company does not enter into derivatives to manage credit risk.

Credit risk (continued)

represent 31%).

Interest rate risk

Equity market risk

Fair value

The Company is subject to interest rate risk since a significant part of the long-term debt bears interest at variable rates.

As at June 30, 2020, the Company has estimated that a 100 basis point increase or decrease in interest rates would have caused a corresponding annual

increase or decrease in net earnings (loss) and comprehensive earnings (loss) of $214 (June 30, 2019, $217).

Equity market risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general

movements in the level of the stock market. The Company closely monitors the general trends in the markets and individual equity movements, and

determines the appropriate course of actions to be taken by the Company.

The fair value of cash and equivalents, trade and other receivables, trade and other payables and balance payable related to a business combination is

approximately equal to their carrying values due to their short-term maturity.

One major customer represents 20% of the contract revenue for the year ended June 30, 2020 (year ended June 30, 2019, two major customers

The fair value of long-term debt approximates its carrying value as it bears interest at a variable rate and has financing conditions similar to those
currently available to the Company.

Credit risk also arises from cash and cash equivalents with banks and financial institutions. This risk is limited because the counterparties are mainly

Fair value hierarchy

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

26.

FINANCIAL INSTRUMENTS (continued)

Fair value (continued)

The methodology used to measure the Company's financial instruments accounted for at fair value is determined based on the following hierarchy:

Level
Level 1
Level 2

Level 3

Basis for determination of fair value
Quoted prices in active markets for identical assets or liabilities.
Inputs other than quoted prices included in Level 1 that are directly or indirectly observable for
the asset or liability.
Inputs for the asset or liability that are not based on observable market
data.

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level
of the hierarchy for which a significant input has been considered in measuring fair value.

As at June 30, 2020, the investments are measured at fair value and are classified as a Level 1 financial instrument as their fair value is determined
using quoted prices in the active markets.

As at June 30, 2020

Financial assets measured at amortized cost
Cash and cash equivalents
Trade and other receivables
Financial assets measured at fair value
Investments
Financial liabilities measured at amortized cost
Trade and other payables
Long-term debt

As at June 30, 2019

Carrying value

Fair value

Level 1

Level 2

Level 3

4,996
21,122

317

18,452
37,356

Carrying value

Fair value

Level 1

Level 2

Level 3

2,480
36,643

419

24,744
3,370
29,576

There were no transfers of amounts between Level 1, Level 2 and Level 3 financial instruments for the year ended June 30, 2020.

Page 39

Page 40

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

26. FINANCIAL INSTRUMENTS (continued)

Liquidity risk

Liquidity risk arises from the Company’s management of working capital, the finance costs and principal repayments on its debt instruments.
that the Company will not be able to meet its financial obligations as they fall due.

It is the risk

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
In Note 16 are details of undrawn facilities that the
Company has at its disposal to further reduce liquidity risk.

The Company enters into receivable purchase agreements (commonly referred to as "factoring agreements") with different banks as part of its normal
working capital financing. The Company receives 100% of the value of the specific sales invoice less a charge between 0.30% and 0.52%. As at
June 30, 2020 and 2019, there were no amounts included in the trade receivables related to factored accounts.

The following tables present the contractual cash flows for the financial liabilities based on their remaining contractual maturities:

Trade and other payables
Long-term debt

Trade and other payables
Balance payable related to a business combination
Long-term debt
Finance lease

27. SEGMENTED INFORMATION

Total
$
18,451
37,621
56,072

Total
$
24,744
3,370
29,711
151
57,976

0 - 1 year
$
18,451
2,174
20,625

0 - 1 year
$
24,744
3,370
1,347
53
29,514

2 - 3 years
$

-
33,833
33,833

2 - 3 years
$

-
-
27,340
98
27,438

As at June 30, 2020
4 - 5 years
$

-
1,614
1,614

As at June 30, 2019
4 - 5 years
$

-
-
1,024
-
1,024

The Company is separated into two geographical reportable segments: Canada and International (US, Central and South America and West Africa). The
elements of the results and the financial situation are divided between the segments, based on destination of contracts or profits. Data by geographical
areas follow the same accounting rules as those used for the consolidated accounts. Transfers between segments are carried out at market prices.

Operational sectors are presented using the same criteria as for the production of the internal report to the chief operating decision maker, who allocates
the resources and evaluates the performance of the operational sectors. The chief operating decision maker is considered to be the President and Chief
Executive Officer, who evaluates the performance of both segments by the revenues of ordinary activities from external clients and earnings (loss) from
operations.

Page 41

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

26. FINANCIAL INSTRUMENTS (continued)

Liquidity risk

Liquidity risk arises from the Company’s management of working capital, the finance costs and principal repayments on its debt instruments.

It is the risk

that the Company will not be able to meet its financial obligations as they fall due.

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring

forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

In Note 16 are details of undrawn facilities that the

Company has at its disposal to further reduce liquidity risk.

The Company enters into receivable purchase agreements (commonly referred to as "factoring agreements") with different banks as part of its normal

working capital financing. The Company receives 100% of the value of the specific sales invoice less a charge between 0.30% and 0.52%. As at

June 30, 2020 and 2019, there were no amounts included in the trade receivables related to factored accounts.

The following tables present the contractual cash flows for the financial liabilities based on their remaining contractual maturities:

Trade and other payables

Long-term debt

Trade and other payables

Balance payable related to a business combination

Long-term debt

Finance lease

27. SEGMENTED INFORMATION

Total

18,451

37,621

56,072

Total

24,744

3,370

29,711

151

57,976

0 - 1 year

2 - 3 years

4 - 5 years

As at June 30, 2020

0 - 1 year

2 - 3 years

4 - 5 years

As at June 30, 2019

18,451

2,174

20,625

24,744

3,370

1,347

29,514

33,833

27,340

27,438

1,614

1,024

The Company is separated into two geographical reportable segments: Canada and International (US, Central and South America and West Africa). The

elements of the results and the financial situation are divided between the segments, based on destination of contracts or profits. Data by geographical

areas follow the same accounting rules as those used for the consolidated accounts. Transfers between segments are carried out at market prices.

Operational sectors are presented using the same criteria as for the production of the internal report to the chief operating decision maker, who allocates

the resources and evaluates the performance of the operational sectors. The chief operating decision maker is considered to be the President and Chief

Executive Officer, who evaluates the performance of both segments by the revenues of ordinary activities from external clients and earnings (loss) from

operations.

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

27. SEGMENTED INFORMATION (continued)

Data relating to each of the Company's reportable operating segments are presented as follows:

Contract revenue
Canada
International (1)

(Loss) earnings from operations

Canada
International

General and corporate expenses (2)
Finance costs
Income tax expense (recovery)

Net loss

June 30
2020
$
109,010
28,800
137,810

6,691
(5,537)
1,154

5,580
2,692
239
8,511
(7,357)

June 30
2019
$
109,465
43,349
152,814

(2,914)
6,403
3,489

5,188
2,117
(346)
6,959
(3,470)

(1)

(2)

The International operating segment included

Chilean revenue as follows :

15,409

26,113

General and corporate expenses include expenses for corporate offices, share options, provision for litigation and certain unallocated costs.

Depreciation and amortization

Canada
International

Total depreciation and amortization included in (loss)

earnings from operations

Unallocated and corporate assets
Total depreciation and amortization

6,080
3,395

9,475
1,765
11,240

5,925
2,860

8,785
1,203
9,988

Page 41

Page 42

ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2020 and 2019
(in thousands of Canadian dollars, except for data per share and option data)

27. SEGMENTED INFORMATION (continued)

Identifiable assets
Canada
Chile
International - Other

Property, plant and equipment

Canada
Chile
International - Other

Right-of-use assets
Canada
Chile
International - Other

Intangible assets

International - Other

Non-current assets acquisitions

Canada
International
Unallocated and corporate assets

As at
June 30, 2020
$

As at
June 30, 2019
$

86,960
15,400
27,478
129,838

29,868
3,480
8,476
41,824

191
2,367
1,183
3,741

588

June 30
2020
$

8,630
1,673
168
10,471

92,307
15,486
26,902
134,695

29,567
4,286
8,597
42,450

-
-
-
-

1,000

June 30
2019
$

6,757
6,783
526
14,066

Page 43

ORBIT GARANT DRILLING INC.

Notes to Consolidated Financial Statements

For the years ended June 30, 2020 and 2019

(in thousands of Canadian dollars, except for data per share and option data)

27. SEGMENTED INFORMATION (continued)

Identifiable assets

Canada

Chile

International - Other

Property, plant and equipment

Canada

Chile

International - Other

Right-of-use assets

Canada

Chile

International - Other

Intangible assets

International - Other

Non-current assets acquisitions

Canada

International

Unallocated and corporate assets

Shareholder Information

Orbit Garant Drilling Inc.

June 30, 2020

June 30, 2019

As at

86,960

15,400

27,478

129,838

29,868

3,480

8,476

41,824

191

2,367

1,183

3,741

588

June 30

2020

8,630

1,673

168

10,471

As at

92,307

15,486

26,902

134,695

29,567

4,286

8,597

42,450

1,000

June 30

2019

6,757

6,783

526

14,066

Directors

Jean-Yves Laliberté 1, 2
Corporate Director and Consultant
Chair of the Board of Directors

William N. Gula 1, 2*, †
Senior Advisor, Morrison Park Advisors, and
Partner, Hansell LLP

Pierre Rougeau 1, 2
Corporate Director and Consultant

Nicole Veilleux 1*, 2
Corporate Director and Consultant

Pierre Alexandre
Vice Chair and Vice President of Corporate
Development, Orbit Garant Drilling Inc.

Eric Alexandre
President and Chief Executive Officer,
Orbit Garant Drilling Inc.

1 Member of Audit Committe.
2 Member of Corporate Governance and Compensation Committee.
* Denotes Committee Chair.
† Not standing for re-election

Officers

Eric Alexandre
President and Chief Executive Officer

Pierre Alexandre
Vice Chair and Vice President of
Corporate Development

Alain Laplante
Vice President and Chief Financial Officer

Head Office
3200 Jean-Jacques Cossette Blvd.
Val-d’Or, Quebec
J9P 6Y6
Tel: 866-824-2707
Fax: 801-824-2195

www.orbitgarant.com

Stock Exchange Listing
Toronto Stock Exchange
Trading Symbol: OGD

Common Shares Outstanding
37,021,756 (as at June 30, 2020)

Investor Relations
Alain Laplante
Tel: 819-824-2707
Email: investors@orbitgarant.com

Bruce Wigle
Tel: 647-496-7856
Email: investors@orbitgarant.com

Transfer Agent and Registrar
AST Trust Company (Canada)
2001 Robert-Bourassa Blvd., Suite 1600
Montreal, QC
H3A 2A6
Tel: 1-800-387-0825

General Counsel
Goodmans LLP
Gowling WLG (Canada) LLP

Auditors
KPMG LLP

Annual Meeting
Wednesday, December 2, 2020
Orbit Garant Head Office
3200 Jean-Jacques Cossette Blvd.
Val-d’Or, Quebec

The meeting will commence at 10:00 a.m. (ET)

Page 43

COORDONNÉES
CONTACT
Si vous avez des questions concernant Forage Orbit Garant et ses activités, n’hésitez pas à
Should you have any questions regarding Orbit Garant Drilling and its operations, please
prendre contact avec nous à nos bureaux dont les coordonnées ﬁgurent ci-dessous. Nous
do not hesitate to contact us at one of our ofﬁces listed below. It will be our pleasure
nous ferons un plaisir de vous aider et nous nous réjouissons à l’idée de travailler avec vous
to assist you and we look forward to working with you to address your speciﬁc needs.
pour répondre à vos besoins spécifiques.
HEAD OFFICE

SOUTH AMERICA

ONTARIO

VAL-D’OR

Orbit Garant Drilling Services Inc.
TORONTO
640 Garson Coniston Road
Sudbury (Ontario)
Services de Forage Orbit Garant inc.
P3L 1R3
130, rue King, bureau 3680
Canada
C.P. 99
T: 705 694-5959
Toronto (Ontario)
F: 705 694-4784
M5X 1B1
Canada
Orbit Garant Drilling Services Inc.
Tél. : 416 889-7429
3661 Mount Albert Road
R.R. #1, Sharon (Ontario)
SUDBURY
L0G 1V0
Services de Forage Orbit Garant inc.
Canada
90 Red Deer Lake Road North
T: 905 478-2243
Wahnapitae (Ontario)
F: 905 478-2249
P0M 3C0
NEW BRUNSWICK
Tél. : 705 694-5959
Téléc. : 705 694-4784
Orbit Garant Drilling Services Inc.
398 Dover Road
Dieppe (New Brunswick)
E1A 7L6
Canada
T: 506 853-9131
F: 506 856-4570

.cni tnaraG tibrO egaroF ed secivreS
3200, boul. Jean-Jacques Cossette
Val-d’Or (Québec)
J9P 6Y6
Canada
ALBERTA
Tél. : 866 824-2707
Drift Exploration Drilling Inc.
Téléc. : 819 824-1595
803 9 Ave SE
High River (Alberta)
T1V 1K5
Canada
T: 403 601-4374
F: 403 652-3238

Soudure Royale Concept
3200, boul. Jean-Jacques Cossette
Val-d’Or (Québec)
J9P 6Y6
Canada
Tél. : 819 825-5399
Téléc. : 819 825-7088
Drift Exploration Drilling Inc.
6120 Pedroli Lane
Winnemucca (Nevada)
89445
United States
T: 403 601-4374
F: 403 652-3238

UNITED STATES

VAL-D’OR

NEVADA

Orbit Garant Drilling Inc.
SIÈGE SOCIAL
3200 Jean-Jacques Cossette Blvd.
3200, boul. Jean-Jacques Cossette
Val-d’Or (Québec)
Val-d’Or (Quebec)
J9P 6Y6
J9P 6Y6
Canada
Canada
T: 819-824-2707
Tél : 866-824-2707
T: 866-824-2707
Téléc : 819-824-2195
F: 819-824-2195
info@orbitgarant.com
info@orbitgarant.com

ALBERTA
CANADA
Drift Exploration Drilling Inc.
QUEBEC
PO Box 5184, 803, 9 Ave. S.E.
Orbit Garant Drilling Services Inc.
High River (Alberta)
3200 Jean-Jacques Cossette Blvd.
T1V 1K5
Val-d’Or (Québec)
Canada
J9P 6Y6
Tél. : 403-652-3046
Canada
Téléc. : 403-652-3238
T : 819 824-2707
T: 866 824-2707
NÉVADA
F : 819 824-1595
Drift Exploration Drilling Inc.
Soudure Royale Concept
6120 Pedroli Lane
3200 Jean-Jacques Cossette Blvd.
Winnemucca (Névada)
Val-d’Or (Québec)
89446
J9P 6Y6
États-Unis
Canada
Tél. : 403 601-4374
T : 819 825-5399
F : 819 825-7088
NOUVEAU-BRUNSWICK

.cni tnaraG tibrO egaroF ed secivreS
398, chemin Dover
Dieppe (Nouveau-Brunswick)
E1A 7L6
Canada
Tél. : 506 853-9131

ROUYN-NORANDA

.cni tnaraG tibrO egaroF ed secivreS
1905, boul. Rideau, C.P. 5131
Rouyn-Noranda (Québec)
J0Z 1Y1 Canada
Tél. : 809 768-3690

ORBITGARANT.COM

CHILE
GUYANA
Orbit Garant Chile S.A.
OGD Drilling (Guyana) Inc.
Avda. Los Cerrillos 998
157 C Waterloo Street,
Cerrillos (Santiago)
North Cummingsburg,
Chile
Georgetown,
T: +56 2 2411 5900
Guyana
C: +56 9 9624 0421
Tél. au Canada : 819 824-2707
Téléc. au Canada : 819 824-2195
GUYANA

OGD Drilling (Guyana) Inc.
CHILI
31 Belair Spring
East Coast Demerara
Orbit Garant Chile S.A.
Georgetown
Avda. Los Cerrillos 998,
Guyana
Cerrillos, Santiago,
C Guyana: +592 629 6133
Chile
T Canada : 1 819 824-2707
T Chile: 562 2411-5900
F Canada : 1 819 824-1595

GHANA
WEST AFRICA
Orbit Garant Drilling Ghana Ltd.
GHANA
Plot. 35 Funko Beach
Orbit Garant Drilling Ghana Limited
Takoradi
Plot 35 Funko Beach
WQ 104 Takoradi, Ghana
P.O. Box WQ 104
Tél. au Ghana : +233 (0) 303 960 889
Takoradi
Cellulaire au Canada : 506 863-9503
Ghana
Cellulaire au Ghana : +233 (0) 270-334-162
T Ghana: +233 303 960 889
C Ghana: +233 270 334 162
BURKINA FASO
C Canada : 506 863-9503
Forage Orbit Garant BF SAS
BURKINA FASO
737, boulevard Tansoba-KOSSODO
12 B.P. 197 Ouagadougou 12
Forage Orbit Garant BF S.A.S.
Ouagadougou, Burkina Faso
737, boulevard Tansoba-KOSSODO
Téléphone +226 54 69 02 80
12 B.P. 197 Ouagadougou 12
Ouagadougou
Burkina Faso
PÉROU
T Burkina Faso : +226 54 69 02 80
Perforacion Orbit Garant Peru S.A.C.
T Burkina Faso : +226 76 35 88 11
Av. De La Floresta 497
San Borja, Lima
Pérou
Tél. au Canada: 819 824-2707
Téléc. au Canada: 819-824-2195