ANNUAL REPORT 2023
PROFILE
Headquartered in Val-d’Or, Québec, 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 212 drill rigs and
approximately 1,300 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 Office
Field Operations
MARKET POSITION (BY PERCENTAGE OF REVENUE¹)
DRILLING ACTIVITY
CUSTOMERS
36%
64%
Surface
Underground
19%
81%
Majors &
Intermediates
Juniors
REGIONS
RESOURCE EXPOSURE
24%
76%
Canada
International
35%
Gold
65%
Base Metals / Other
1. For the year ended June 30, 2023
To our shareholders,
On behalf of Orbit Garant’s Board of Directors, management, and our team of approximately 1,300 people across
Canada and our international operations, we are pleased to present our fiscal 2023 annual report.
We had improved financial performance in fiscal 2023, as strong customer demand in Canada drove increased
specialized drilling activity and improved pricing on contracts relative to the prior year. We generated a record
$201.0 million in revenue in fiscal 2023, despite a temporary, but significant, reduction in drilling activity in Canada
during our fourth quarter, attributable to the extensive forest fires and the decisions of certain customers to
temporarily suspend or reduce drilling activity on other projects.
Fortunately, we began ramping up the projects that were suspended due to forest fires in early July. We expect
to resume operations on all our projects in which drilling activity was suspended or reduced due to customer
decisions by January 2024. One of these projects, which is with a major customer, already resumed in the middle
of August.
Our fourth quarter results were also impacted by a one-time, non-cash restructuring charge of $4.2 million related
to our decision to wind down drilling activities in Burkina Faso and exit the country. The restructuring charge reflects
a write-down of inventory to net realizable value. Our decision to exit Burkina Faso is based on our assessment of
the significant additional investment required to generate an acceptable return on our investment in this market,
combined with the risks associated with the ongoing security concerns within the country. We expect to complete
our drilling program in Burkina Faso during the second quarter of this fiscal year.
Despite the impact of the revenue loss in the fourth quarter, our Adjusted EBITDA, excluding the one-time
$4.2 million write-down of inventories from restructuring, increased significantly to $19.1 million in fiscal 2023,
compared to EBITDA of $10.0 million in fiscal 2022.
Our net loss for fiscal 2023 was $0.7 million, or $0.02 per share, compared to a net loss of $6.6 million, or
$0.18 per share, in fiscal 2022. Our improvement this year was primarily attributable to a higher proportion
of specialized drilling activity, improved pricing and cost controls in Canada, and a foreign exchange gain of
$1.9 million, partially offset by the $4.2 million write-down of inventories from restructuring, a $1.1 million increase
in interest expense and the reduction of drilling activities in Canada during the fourth quarter.
At fiscal year-end, our working capital position was $50.4 million, compared to $53.4 million at fiscal 2022
year-end. While our working capital was down year-over-year, we strengthened our balance sheet by repaying a
net amount of $4.4 million of our long-term debt and lease liabilities during the year.
We are pleased with our overall performance for fiscal 2023. Unfortunately, our strong momentum throughout
the year was negatively impacted late in our fourth quarter by the temporary suspension of drilling activities in
Canada. Despite these challenges, we remain positive about our longer-term business outlook. Customer demand
in Canada remains strong, particularly from well financed major and intermediate mining companies. We are also
experiencing growth in our drilling activities in Chile.
The underlying fundamentals driving our business are solid. Gold prices remain at historically strong levels, which
enables gold producers to generate strong margins, and many established producers are focused on exploration
and development spending to replace their reserves. In addition, when credit conditions improve, we expect junior
exploration companies to be more active with their drilling programs. As a result, we are confident that strong
levels of mineral exploration and development spending will be maintained in the gold industry for the foreseeable
future. We generate approximately two thirds of our revenue from gold-related projects, so we have high exposure
to this sector.
1
Copper prices have also remained at elevated levels over the past 12 months, despite rising interest rates and
economic uncertainty. Copper is needed for the ongoing electrification of the global economy, which is expected
to drive strong demand for many years to come. A healthy copper market is positive for our Chilean operations.
Looking ahead, we remain focused on our Five-Point Plan, which consists of:
1. Primarily focusing on Canadian gold drilling operations;
2. Prioritizing longer-term, specialized drilling contracts with major and intermediate customers;
3. Pursuing international contracts in stable jurisdictions that offer attractive returns;
4. Continued investment in our driller training and computerized drilling technology; and
5. Building a team-oriented leadership structure that fosters collaboration and personal accountability.
By continuing to execute our plan, we believe we can drive profitable growth and build long-term value for our
shareholders.
In closing, we extend our appreciation to all our personnel, our management team, and our board for their ongoing
commitment to the success of Orbit Garant. And to our fellow shareholders, we thank you for your continued
support.
Sincerely,
Jean-Yves Laliberté
Chair
Pierre Alexandre
President & Chief Executive Officer
2
MD&A and
Consolidated Financial
Statements
YEAR END AND FOURTH QUARTER FISCAL 2023
SEPTEMBER 19, 2023
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YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
2
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, 2023 (“Fiscal 2023”) and June 30, 2022 (“Fiscal 2022”) and the notes thereto which are available on the
SEDAR+ website at www.sedarplus.ca.
The Company’s Fiscal 2023 audited consolidated financial statements and the accompanying notes ("Financial
Statements") 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 19, 2023. 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.sedarplus.ca.
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 world economic climate as it relates
to the mining industry, the Canadian economic environment, the Company’s ability to attract and retain customers and
manage its assets and operating costs; the political situation in certain jurisdiction, and the operating environment in
which the Company operates.
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
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
3
Company’s actual results to materially differ from its current expectations, please refer to the Company’s Annual
Information Form dated September 19, 2023, accessible via www.sedarplus.ca.
FISCAL 2023 SUMMARY
• Revenue totalled $201.0 million, an increase of 2.8% compared to $195.5 million in Fiscal 2022
• Gross margin increased to 9.1% from 7.0% in Fiscal 2022
• Adjusted gross margin (1) increased to 16.2% from 12.2% in Fiscal 2022
• A one-time, non-cash write-down of inventories of $4.2 million from restructuring in Burkina Faso
• Adjusted EBITDA (2) increased to $19.1 million from $10.0 million in Fiscal 2022
• Net loss was $0.7 million compared to net loss of $6.6 million in Fiscal 2022
(1) Reflects gross margin, excluding depreciation expenses and write-down of inventories from restructuring in Burkina Faso. See “Reconciliation of
non-IFRS financial measures.”
(2) Adjusted earnings before interest, taxes, depreciation, amortization, and write-down of inventories from restructuring in Burkina Faso. See
“Reconciliation of non-IFRS financial measures.”
CORPORATE OVERVIEW
Orbit Garant (TSX: OGD) is one of the largest Canadian-based mineral drilling companies, with 212 drill rigs and
approximately 1,300 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 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 Guinea. The Company has established international operating subsidiaries in:
Winnemucca (Nevada), U.S.A.; Santiago, Chile; Georgetown, Guyana; and in Ouagadougou, Burkina Faso, to support
its international operations.
Orbit Garant has a comprehensive infrastructure with vertically integrated manufacturing capabilities. The Company
manufactures custom drill rigs and ancillary equipment for its own use and manufactures conventional drill rigs for
third-party customers from its facilities in Val-d’Or, Québec. 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 (including surface drilling and underground drilling).
For Fiscal 2023:
• Specialized drilling services, which typically generate a higher gross margin than conventional drilling
services, accounted for approximately 41% of the Company’s total revenue, compared to 33% in Fiscal 2022.
• Approximately 65% of the Company’s revenues were generated by gold related operations, and
approximately 35% were generated by base metal related and other operations.
• Surface and underground drilling services accounted for approximately 64% and 36%, respectively, of the
Company’s revenue.
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
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MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
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• Approximately 81% of Orbit Garant’s revenue was generated from major and intermediate mining company
projects, compared to 70% in Fiscal 2022. Orbit Garant’s drilling contracts with major and intermediate
customers are typically from one to five years in length.
• Approximately 76% of Orbit Garant’s revenue was generated from domestic drilling projects, and
approximately 24% was generated from international drilling contracts, compared to 74% and 26%
respectively in Fiscal 2022.
BUSINESS STRATEGY
Orbit Garant’s goal is to be the leading Canadian-based mineral drilling company, 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
Canada and other 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;
• Maintain a sound balance sheet and a judicious deployment of capital; and
• Evaluate strategic acquisition opportunities to enhance value for the Company’s stakeholders.
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.
At the time of this report, the spot price of gold was approximately US$1,930 per ounce, representing an increase of
approximately 15% compared to a year ago and an increase of approximately 62% from its trailing five-year price low
in September 2018. During August 2020, the spot price of gold traded at a record high of approximately US$2,075 per
ounce.
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
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Base Metals
Aluminum, copper, lead, nickel and zinc are the primary 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.
The spot prices of copper and lead are currently higher compared to 12 months ago, while the spot prices of aluminium,
nickel and zinc are lower. The spot price for copper, the metal widely considered to be the most sensitive to
macroeconomic activity, was approximately US$3.52 per pound a year ago and at the time of this report was
approximately US$3.75 per pound, an increase of approximately 7%. The spot price of copper, which reached a low
of approximately US$2.10 per pound in March 2020, is currently above the mid-point of its trailing five-year price range.
The spot price of lead is also above the mid-point of its trailing five-year price range, while the spot prices of aluminum,
nickel and zinc are 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$125 per tonne, compared to approximately US$100 per tonne one year ago. In May 2021, the
spot price of iron ore reached a record high of approximately US$233 per tonne.
Market Participants
Over the last 12 months, gold and base metals prices have been relatively favourable for mining companies seeking
to raise capital to fund exploration and/or development activities. Mining financing activity in the first eight months of
2023 was above the comparable levels in 2022, but below the comparable levels in 2021.
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
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TSX / TSX-V Mining Sector Financings (2008 to August 31, 2023)
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD
2023
Financings - TSXV
Financings - TSX
Equity Capital Raised - TSXV
Equity Capital Raised - TSX
Mining companies listed on the Toronto Stock Exchange (“TSX”) and the TSX-Venture Exchange (“TSX-V”) completed
818 financings and raised $5.1 billion of equity capital during the first eight months of 2023, according to TMX Group.
By comparison, they completed 753 financings and raised $4.8 billion of equity capital during the first eight months of
2022. In the comparable period in 2021, they completed 1,018 financings and raised $7.3 billion of equity capital.
According to reports from S&P Capital IQ Metals and Mining Research, drilling results were reported from 256 projects
in June 2023, compared to 332 projects in May 2023 and 285 projects in April 2023. The total number of drill holes in
June 2023 was 3,821, compared to 4,637 in May and 3,691 in April. While global drilling activity slowed in June 2023,
there were significant month-over-month increases in the prior two months.
According to a report from S&P Global Market Intelligence (March 2023), global exploration budgets for nonferrous
metals increased by an estimated 16% to US$13.0 billion in 2022, from US$11.2 billion in 2021, reflecting the industry’s
continued recovery from the negative impact of the COVID-19 pandemic. S&P noted that strong metal prices supported
continued investment in exploration and/or development programs by mining companies in 2022, though activity
slowed in the second half of the year, reflecting slightly weaker metal prices and lower financing activity. For 2023,
S&P forecasts that global exploration budgets for nonferrous metals will decline by 10% to 20% from 2022 levels,
reflecting global economic uncertainty.
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
7
OVERALL PERFORMANCE
Results of operations for the year ended June 30, 2023
FISCAL YEARS ENDED JUNE 30
* ($millions)
Fiscal 2023
Fiscal 2022
2023 vs. 2022
Variance
Revenue *
Gross profit *
Gross margin (%)
Adjusted gross margin (%) (1)
Net earnings (loss) *
Net earnings (loss) per common share - Basic ($)
- Diluted ($)
Adjusted EBITDA * (2)
201.0
18.3
9.1
16.2
(0.7)
(0.02)
(0.02)
19.1
195.5
13.7
7.0
12.2
(6.6)
(0.18)
(0.18)
10.0
5.5
4.6
2.1
4.0
5.9
0.16
0.16
9.1
(1) Reflects gross margin, excluding depreciation expenses and write-down of inventories from restructuring in Burkina Faso. See “Reconciliation of non-IFRS
financial measures.”
(2) Adjusted EBITDA = Earnings before interest, taxes, depreciation, amortization, and write-down of inventories from restructuring in Burkina Faso. See
“Reconciliation of non-IFRS financial measures.”
Orbit Garant had 212 drill rigs as at June 30, 2023, compared to 217 drill rigs at the end of Fiscal 2022. During Fiscal
2023, the Company manufactured five new drill rigs, while five conventional drill rigs were dismantled and five were
sold in Burkina Faso. Orbit Garant currently has 44 drill rigs outfitted with computerized monitoring control technology.
During the year, the Company made the decision to exit Burkina Faso due to the significant additional investment
required to generate an acceptable return on investment, as well as the increased security concerns within the country.
therefore, the Company expects to complete its drilling program in Burkina Faso during the second quarter of Fiscal
2024. As a result of this restructuring initiative, Orbit Garant recognized a write-down of inventories based on the fair
value less cost of disposal for a portion of inventories and estimated sales less cost to complete for inventory expected
to be consumed until the end of the contract. Fair value was determined using industry knowledge. The restructuring
charges consist of a one-time, non-cash write-down of $4.2 million to reduce inventory to net realizable value.
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
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SELECTED ANNUAL FINANCIAL INFORMATION
For the years ended June 30 *($millions)
Fiscal 2023
Fiscal 2022
Fiscal 2021
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*
Adjusted EBITDA * (2)
Adjusted EBITDA margin (%) (2)
Total metres drilled (million)
152.1
48.9
201.0
18.3
9.1
16.2
(0.7)
(0.02)
(0.02)
127.6
34.3
1.2
19.1
9.5
1.6
145.2
50.3
195.5
13.7
7.0
12.2
(6.6)
(0.18)
(0.18)
137.1
36.9
2.1
10.0
5.1
1.8
130.0
33.3
163.3
20.3
12.4
17.9
2.3
0.06
0.06
138.1
32.4
2.0
17.6
10.9
1.7
(1) Reflects gross margin, excluding depreciation expenses and write-down of inventories from restructuring in Burkina Faso. See “Reconciliation of non-IFRS
financial measures.”
(2) Adjusted EBITDA = Earnings before interest, taxes, depreciation, amortization, and write-down of inventories from restructuring in Burkina Faso. See
“Reconciliation of non-IFRS financial measures”.
RESULTS OF OPERATIONS
FISCAL 2023 COMPARED TO FISCAL 2022
Contract Revenue
Revenue in Fiscal 2023 totalled $201.0 million, an increase of 2.8%, compared to $195.5 million in Fiscal 2022. The
increase was primarily attributable to increased specialized drilling activity and improved pricing in Canada, partially
offset by a decline in international drilling activity.
Canada revenue totalled $ 152.1 million in Fiscal 2023, an increase of 4.8% compared to $145.2 million in Fiscal 2022,
reflecting increased specialized drilling activity and improved pricing, partially offset by a reduction of drilling activity in
the fourth quarter of 2023 (“Q4 2023”) due to forest fires in Québec as well as customer decisions to temporarily
suspend or reduce drilling activity on certain other projects, as described further below in the discussion of Q4 2023
results.
International revenue totalled $48.9 million in Fiscal 2023, a decrease of 2.8%, compared to $50.3 million in
Fiscal 2022. The decline was primarily due to a reduction of drilling activity in Burkina Faso, partially offset by
increased drilling activity in Chile and Guinea.
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
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Write-down of inventories from restructuring in Burkina Faso
The Company recorded a restructuring charge in Q4 2023 relating to its decision to exit Burkina Faso and to complete
its drilling program in the country during the second quarter of Fiscal 2024. The restructuring charges consist of a one-
time, non-cash write-down of $4.2 million to reduce inventory to net realizable value.
Gross Profit and Margins (see Reconciliation of non-IFRS Financial measures)
Gross profit for Fiscal 2023 was $18.3 million, compared to $13.7 million in Fiscal 2022. Gross margin was 9.1%
compared to 7.0% in Fiscal 2022. Depreciation expenses and the write-down of inventories from restructuring totalling
$10.1 million and $4.2 million, respectively, are included in cost of contract revenue for Fiscal 2023, compared to
depreciation expenses of $10.1 million in Fiscal 2022. Adjusted gross margin, excluding depreciation expenses and
write-down of inventories from restructuring, was 16.2% in Fiscal 2023, compared to 12.2% in Fiscal 2022.
The increases in gross profit and gross margin were primarily attributable to increased specialized drilling activity,
improved pricing and cost controls in Canada, partially offset by the $4.2 million write-down of inventories from
restructuring and a reduction of drilling activities in Canada in Q4 2023, as discussed further below in the discussion
of Q4 2023 results. Prior year margins were impacted by project ramp-up costs in Canada, mobilization costs for new,
long-term projects in Guinea and Chile, and Omicron-related work interruptions starting in November 2021.
General and Administrative Expenses
General and administrative (G&A) expenses were $16.4 million, or 8.2% of revenue in Fiscal 2023, compared to
$14.5 million or 7.4% of revenue in Fiscal 2022.
Operating Results
Earnings from operations for Fiscal 2023 were $5.7 million, compared to $2.4 million in Fiscal 2022.
Drilling Canada’s operating earnings totalled $16.2 million in Fiscal 2023, compared to operating earnings of
$12.2 million in Fiscal 2022. The increase is primarily attributable to increased specialized drilling activity, improved
pricing, cost controls, and decreased project ramp-up costs, partially offset by a reduction of drilling activities in Canada
in Q4 2023, as discussed further below. Drilling Canada’s operating earnings in Fiscal 2022 also reflect Omicron-
related work interruptions starting in November 2021.
Drilling International’s operating loss was $10.5 million in Fiscal 2023, compared to an operating loss of $9.8 million in
Fiscal 2022. The increased operating loss was attributable to the $4.2 million write-down of inventories from
restructuring, partially offset by increased drilling activity in Chile and Guinea, reduced mobilization costs related to the
Company’s projects in Chile and Guinea, and the absence of Omicron-related work interruptions in Chile.
Foreign Exchange (Gain) Loss
Foreign exchange gain was $1.9 million in Fiscal 2023, compared to a foreign exchange loss of $0.4 million in
Fiscal 2022.
Adjusted EBITDA and EBITDA (see Reconciliation of non-IFRS financial measures)
Adjusted EBITDA was $19.1 million for Fiscal 2023, an increase of $9.1 million compared to EBITDA of $10.0 million
in Fiscal 2022. The increase was primarily attributable to increased specialized drilling activity, improved pricing and
cost controls in Canada and a $1.9 million foreign exchange gain, partially offset by a reduction of drilling activities in
Canada in Q4 2023, as discussed below. Prior year EBITDA reflects higher project ramp-up costs in Canada, higher
mobilization costs for new long-term projects in Guinea and Chile, and Omicron-related work interruptions beginning
in November 2021.
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Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
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MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
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Financial Expenses
Interest costs related to long-term debt, lease liabilities and bank charges were $3.4 million in Fiscal 2023, compared
to $2.2 million during Fiscal 2022, reflecting general interest rate increases.
Income Tax
Income tax expense was $1.1 million in Fiscal 2023, compared to an income tax expense of 3.2 million in Fiscal 2022.
The effective tax rate for Fiscal 2023 results from no deferred tax assets being recognized for international operations,
offset by the recognition of previously unrecognized deductible temporary differences and tax losses of prior periods
in Chile.
Net Loss
Net loss for Fiscal 2023 was $0.7 million, or $0.02 per share, compared to a net loss of $6.6 million, or $0.18 per share,
in Fiscal 2022. The positive variance in Fiscal 2023 is primarily attributable to a higher proportion of specialized drilling
activity, improved pricing and cost controls in Canada, and a $1.9 million foreign exchange gain, partially offset by the
$4.2 million non-cash write-down of inventories from restructuring, the reduction of drilling activities in Canada in
Q4 2023, and a $1.1 million increase in interest expense. The reduced net loss for Fiscal 2023 also reflects decreased
project ramp-up costs in Canada, a reduction in mobilization costs for drilling projects in Guinea and Chile, and the
absence of Omicron-related work interruptions.
SUMMARY OF QUARTERLY RESULTS
* ($millions)
Contract revenue *
Gross profit (1)*
Gross margin %
Net earnings (loss) *
Net earnings
(loss) per
common share ($)
- Basic
- Diluted
Fiscal 2023
Fiscal 2022
June 30
Mar. 31
Dec. 31
Sept. 30
June 30
Mar. 31
Dec. 31
Sept. 30
46.8
49.3
0.7
1.4
(4.1)
(0.11)
(0.11)
4.6
9.4
0.2
0.01
0.01
51.6
6.8
13.1
2.1
0.05
0.05
53.3
6.2
11.7
1.1
0.03
0.03
53.8
6.9
12.8
0.5
0.01
0.01
45.2
45.9
0.3
0.7
(4.1)
(0.10)
(0.10)
2.7
6.0
(1.7)
(0.05)
(0.05)
50.6
3.8
7.4
(1.3)
(0.04)
(0.04)
(1) Includes amortization and depreciation expenses related to operations and write-down of inventories from restructuring in Burkina Faso.
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.
12
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
11
ANALYSIS OF THE FOURTH QUARTER OF FISCAL 2023 (“Q4 2023”), COMPARED TO THE FOURTH
QUARTER OF FISCAL 2022 (“Q4 2022”)
Contract Revenue
Revenue for Q4 2023 totalled $46.8 million, a decrease of 13.1% compared to $53.8 million for Q4 2022, reflecting a
decrease in drilling activity in Canada, partially offset by increased international drilling activity.
Canada revenue totalled $32.6 million in Q4 2023, a decrease of 22.6% compared to $42.0 million in Q4 2022. The
decline is primarily attributable to a reduction of drilling activity in the quarter due to forest fires in Québec as well as
customer decisions to temporarily suspend or reduce drilling activity on certain other projects. All of the Company’s
surface and underground drilling projects in Québec and one surface drilling project in Ontario were suspended for
various periods from May 29 into July 2023 due to forest fires. These drilling project suspensions resulted in a revenue
reduction of approximately $3.0 million in Q4 2023. The Company started ramping these projects back up in early July
and by July 26, operations on all previously suspended surface and underground drilling projects had fully resumed.
The Company expects to resume operations on its other drilling projects that were temporarily suspended or reduced
due to customer decisions by January 2024. One of these projects resumed in mid-August 2023.
International revenue increased to $14.2 million in Q4 2023 from $11.8 million in Q4 2022. The increase was primarily
attributable to increased drilling activity in Chile.
Write-down of inventories from restructuring in Burkina Faso
The Company recorded a one-time, non-cash $4.2 million restructuring charge in Q4 2023 relating to its decision to
exit Burkina Faso and complete its drilling program in the country during the second quarter of Fiscal 2024. The
restructuring charge reflects a write-down of inventory to its net realizable value.
Gross Profit and Margins (see Reconciliation of non-IFRS financial measures)
Gross profit for Q4 2023 was $0.7 million compared to $6.9 million in Q4 2022. Gross margin for Q4 2023 was 1.4%
compared to 12.8% in Q4 2022. The decrease in gross profit and gross margin was primarily attributable to the
$4.2 million write-down of inventories from restructuring and a reduction of drilling activity in Canada during the quarter,
as discussed above. Depreciation expenses and the write-down of inventories from restructuring totalling $2.6 million
and $4.2 million, respectively, are included in the cost of contract revenue for Q4 2023, compared to depreciation
expenses of $2.3 million in Q4 2022. Adjusted gross margin, excluding depreciation expenses and the write-down of
inventories from restructuring, was 15.9% in Q4 2023, compared to adjusted gross margin of 17.2% in Q4 2022. The
decline in adjusted gross margin was primarily attributable to the Company’s reduction of drilling activity in Canada
during the quarter.
General and Administrative Expenses
G&A expenses were $5.1 million, or 10.9% of revenue, in Q4 2023, compared to $3.8 million, or 7.0% of revenue, in
Q4 2022.
Operating Results (Loss)
Loss from operations for Q4 2023 was $3.5 million compared to earnings from operations of $4.0 million in Q4 2022.
Drilling Canada’s operating earnings totalled $1.3 million in Q4 2023, compared to $6.0 million in Q4 2022. The decline
was primarily attributable to the Company’s reduction of drilling activity, as discussed above.
13
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
12
Drilling International’s operating loss totalled $4.8 million in Q4 2023, compared to an operating loss of $2.0 million in
Q4 2022. The increased loss from operations was primarily attributable to the $4.2 million write-down of inventories
from restructuring, partially offset by the increased drilling activity in Chile.
Foreign Exchange Loss (Gain)
Foreign exchange loss was $0.8 million in Q4 2023, compared to a foreign exchange loss of $0.1 million in Q4 2022.
Adjusted EBITDA and EBITDA (see Reconciliation of non-IFRS financial measures)
Adjusted EBITDA totalled $1.8 million in Q4 2023, compared to EBITDA of $5.7 million in Q4 2022. The decrease was
primarily attributable to the reduction of drilling activity in Canada, as discussed above.
Financial Expenses
Interest costs related to long-term debt and bank charges were $0.9 million in Q4 2023, compared to $0.7 million in
Q4 2022.
Income Tax (Recovery)
Income tax recovery was $2.1 in Q4 2023, compared to a tax expense of $1.9 million in Q4 2022.
Net Earnings (Loss)
Net loss for Q4 2023 was $4.1 million, or $0.11 per share, compared to net earnings of $0.5 million, or $0.01 per share,
in Q4 2022. The net loss in Q4 2023 was primarily attributable to the $4.2 million write-down of inventories from
restructuring and a reduction of drilling activity in Canada, as discussed above.
EFFECT OF EXCHANGE RATE
The Company realizes portions of its business activities in the following foreign currencies: US dollars (“US $”), Chilean
Pesos (“CLP”), Ghanaian cedi (“GHS”), West African Francs (“XOF”), and Guinean Francs (“GNF”), and is thus
exposed to foreign exchange fluctuations. Orbit Garant does not actively manage this risk.
As at June 30, 2023, and 2022, the Company had the following amounts of cash and accounts receivable in foreign
currencies and has provided the respective impact on earnings before income taxes ("EBIT") in Canadian dollars, if
the corresponding foreign exchange rates were to change by plus or minus 10%:
As at June 30, 2023 (millions)
Cash
Accounts receivable
EBIT impact +/- 10% CAD$
As at June 30, 2022 (millions)
Cash
Accounts receivable
EBIT impact +/- 10% CAD$
US $
0.2
0.4
(0.1)
US $
0.1
0.5
(0.1)
GHS
-
-
-
GHS
-
5.9
0.1
XOF
565.7
182.7
0.1
XOF
332.2
609.4
-
GNF
2,566.9
7,036.2
-
GNF
1,321.6
3,656.4
CLP
177.6
2,797.3
0.2
CLP
42.3
1,381.8
-
14
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
13
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 $18.8 million in Fiscal 2023, compared to $9.3 million in Fiscal 2022.
The change in non-cash operating working capital items was an outflow of $0.7 million, compared to an outflow of
$1.1 million in Fiscal 2022.The change in non-cash operating working capital in Fiscal 2023 was primarily attributable
to:
•
•
•
$9.7 million related to a decrease in accounts receivable and prepaid expenses, partially offset by
$8.8 million related to a decrease in accounts payable, and
$1.6 million related to an increase in inventory.
Investing Activities
Cash used in investing activities totalled $8.4 million in Fiscal 2023, compared to $10.8 million in Fiscal 2022. During
Fiscal 2023, $9.4 million was used for the acquisition of property, plant and equipment and intangible assets, partially
offset by a cash inflow of $1.0 million on disposal of investments, property plant and equipment. During Fiscal 2022,
$12.0 million was used for the acquisition of property, plant and equipment, intangible assets and for deposits on
purchased equipment, partially offset by a cash inflow of $1.2 million on disposal of investments, property, plant and
equipment.
Financing Activities
During Fiscal 2023, the Company repaid a net amount of $4.4 million of its long-term debt and lease liabilities. In
Fiscal 2022, cash flow of $2.7 million was generated from financing activities.
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., in its capacity as agent (“National Bank”). On March 8, 2021, the
Company and National Bank entered into a fourth amended and restated credit agreement in respect of the Credit
Facility which was subsequently amended by a first amending agreement dated as of November 22, 2021, and a
second amending agreement dated as of May 10, 2022, and a third amending agreement dated September 9, 2022
(collectively, the “Credit Agreement”). This Credit Facility, as at June 30, 2023, consisted of a $30.0 million revolving
credit facility and a US$5.0 million revolving credit facility guaranteed by Export Development Canada (“EDC”). The
Credit Agreement expires on November 2, 2024.
On September 9, 2022, the Company entered into an additional loan agreement with the Business Development Bank
of Canada (the “BDC Loan Agreement”) which provides for a term loan in the principal amount of $8.47 million. The
loan bears interest at a fixed rate of 6.70% per year, has a 20-year term and is repayable by way of 240 consecutive
monthly payments from November 2022 until October 2042. The fixed interest rate may be reduced by 0.20% from
November 2023, if certain financial covenants are met by the Company. Orbit Garant’s obligations under the BDC
Loan Agreement are secured: (a) by a first ranking immovable hypothec on the building serving as the Company's
head office located in Val-d'Or, Quebec (the “Property”); and (b) guaranteed on a solidary (joint and several) basis by
certain of the Company’s subsidiaries.
As a result of Orbit Garant entering into the BDC Loan Agreement and in order to extract the Property from the
borrowing base under the Credit Agreement, the Company entered into a third amending agreement to the Credit
Agreement with National Bank on September 9, 2022 (the “Third Amending Agreement”), pursuant to which the amount
available for borrowing under the revolving facility contemplated under the Credit Agreement was reduced, as of that
date, from $35.0 to $30.0 million. Other noteworthy amendments made pursuant to the Third Amending Agreement
include consents by National Bank to authorize the first ranking immovable hypothec on the Property pursuant to the
BDC Loan Agreement and modifications to certain financial covenants of the Company applicable to its first fiscal
15
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
14
quarter of 2023 and future quarters.
Orbit Garant repaid a net amount of $9.3 million in Fiscal 2023 on its Credit Facility, compared to a withdrawal of
$7.3 million in Fiscal 2022. The Company’s long-term debt, under the Credit Facility, including US$2.0 million
($2.6 million) drawn from the US$5.0 million revolving credit facility and the current portion, was $22.2 as at
June 30, 2023, compared to $31.5 million as at June 30, 2022. The reduction primarily reflects the utilization of a
substantial portion of the $8.47 million borrowed under the BDC Loan Agreement to repay amounts draw on Credit
Facility.
As at June 30, 2023, the Company’s working capital totalled $50.4 million, compared to $53.4 million as at
June 30, 2022. Orbit Garant’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. Orbit Garant principal capital expenditures are related to the
acquisition of drill rigs and related drilling equipment.
Sources of Financing
As at June 30, 2023, Orbit Garant complied with all covenants in the Credit Agreement, in the EDC Loan and the BDC
Loan Agreements. The Company expects that availability under the Credit Facility will continue to provide it with
sufficient liquidity to fund its working capital and capital asset acquisition requirements.
Orbit Garant’s primary sources of liquidity are cash flows from operations and borrowings under its Credit Facility. The
Credit Facility matures November 2, 2024. As at June 30, 2022, the Company had drawn $22.2 million ($31.5 million
as at June 30, 2022) under the Credit Facility.
Availability 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. Except as noted above, 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 Agreement contains covenants that limit Orbit Garant’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 Agreement also contains a number of financial covenants that the Company
must comply with.
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 Projet Production
International BF S.A. 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 July 2024. The Company’s
obligations under the EDC Loan, are secured by a junior hypothec over all of Orbit Garant’s assets. Orbit Garant’s
long-term debt under the EDC Loan including the current portion, amounted to $1.5 million as at June 30, 2023
($3.0 million as at June 30, 2022).
In February 2021, OG Chile, entered into a financing agreement with Banco Scotiabank for a total of approximately
$2.6 million in order to purchase the office building it had rented for several years. This agreement bears interest at a
rate of 3.3% per annum, has a term of 84 months and is guaranteed by OG Chile’s real estate assets. Orbit Garant’s
long-term debt under this financing agreement, including current portion, amounted to $2.5 million as at June 30, 2023,
($2.1 million as at June 30, 2022).
16
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
15
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, 2023, the Company had future contractual obligations as follows:
($000s)
Long-term debt
Lease liabilities
Short-term leases
Total
Total
34,638
1,219
6
35,863
Less than 1 year
1,994
528
6
2,528
1-3 years
23,250
530
-
23,780
4-5 years
2,422
161
-
2,583
Subsequent years
6,972
-
-
6,972
OUTSTANDING SECURITIES AS AT SEPTEMBER 19, 2023
Number of common shares
Number of options
Fully diluted
37,372,756
1,960,000
39,332,756
During Fiscal 2023, the Company issued 550,000 options and cancelled 1,833,500 options.
RELATED PARTY TRANSACTIONS
The Company is related to Dynamitage Castonguay Ltd., a company in which a director of the Company has an
interest.
During Fiscal 2023, and Fiscal 2022, the Company entered into the following transactions with its related company
and with persons related to directors:
($000s)
Revenue
Expenses
Fiscal 2023
Fiscal 2022
35
96
31
172
As at June 30, 2023, a negligible amount was a receivable resulting from these transactions (a negligible amount as
at June 30, 2022)
All these related party transactions are made in the normal course of business and 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.
17
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
16
Compensation paid to key management personnel and directors is as follows:
($000s)
Salaries and fees
Share-based compensation
Total
Fiscal 2023
Fiscal 2022
1,195
62
1,257
1,054
84
1,138
CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS
The significant accounting policies are described in note 3 of the Fiscal 2023 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
Part of the inventory was estimated based on the number of drills on mining site. In estimating the cost of this inventory,
management considers the estimated amount of inventory per drill, based on the most reliable evidence available at
the time the estimate was made.
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. As at June 30,2023, the Company concluded that there were impairment indicators
for assets located in Burkina Faso, and it performed an impairment test was performed on property, plant and
equipment, right of use assets and intangible assets located in Burkina Faso. No impairment was recognized as a
result of this test. In applying its judgment, the Company relies primarily on its knowledge of its business and the
economic environment. 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
are used by management to determine the projected revenue, operating expenses, utilization, discount rates and
market pricing. Consequently, the impact on the Consolidated Financial Statements of future periods could be material.
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.
18
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
17
Income taxes
The Company is subject to income taxes in various jurisdictions. Judgment is required in determining the worldwide
provision for income taxes. The Company’s income tax provision is based on tax rules and regulations that are subject
to interpretation and may be challenged by tax authorities. 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.
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 if a 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.
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, adjusted EBITDA and
adjusted EBITDA margin:
Adjusted gross profit and
adjusted gross margin:
EBITDA is defined as net earnings (loss) before interest, taxes, depreciation and
amortization. Adjusted EBITDA is defined as EBITDA excluding the impact of the
write-down of inventories from restructuring in Burkina Faso. Adjusted EBITDA
margin is defined as the percentage of adjusted EBITDA to contract revenue.
Adjusted gross profit is defined as gross profit excluding depreciation and write-
down of inventories from restructuring in Burkina Faso. Adjusted gross margin is
defined as the percentage of adjusted gross profit to contract revenue.
19
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
18
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
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, income taxes and restructuring costs. 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, Adjusted EBITDA and Adjusted EBITDA Margin
(unaudited)
(in millions of dollars)
Net earnings (loss) for
the period
Add:
Finance costs
Income tax expense
Depreciation and
amortization
EBITDA
Write-down of
inventories from
restructuring in
Burkina Faso
Adjusted EBITDA
Contract revenue
Adjusted EBITDA
margin (%) (1)
Q4 2023
Q4 2022
Fiscal 2023
Fiscal 2022
Fiscal 2021
(4.1)
0.9
(2.1)
2.9
(2.4)
4.2
1.8
46.8
3.8
0.5
0.7
1.9
2.6
5.7
-
5.7
53.8
10.6
(0.7)
(6.6)
3.4
1.1
11.1
14.9
4.2
19.1
201.0
9.5
2.2
3.2
11.2
10.0
-
10.0
195.5
5.1
2.3
2.3
2.5
10.5
17.6
-
17.6
163.3
10.9
(1) Adjusted EBITDA, divided by contract revenue X 100
Adjusted Gross Profit and Adjusted Gross Margin
Although adjusted gross profit and adjusted gross 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.
20
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
19
Reconciliation of Adjusted Gross Profit and Adjusted Gross Margin
Q4 2023
Q4 2022
Fiscal 2023
Fiscal 2022
Fiscal 2021
(unaudited)
(in millions of dollars)
Contract revenue
Cost of contract revenue
Less:
depreciation
write-down of inventories from
restructuring in Burkina Faso
Direct costs
Adjusted gross profit
46.8
46.2
(2.6)
(4.2)
39.4
7.4
Adjusted gross margin (%) (1)
(1) Adjusted gross profit, divided by contract revenue X 100
15.9
RISK FACTORS
53.8
46.8
(2.3)
-
44.5
9.3
17.2
201.0
182.7
(10.1)
(4.2)
168.4
32.6
16.2
195.5
181.7
(10.0)
-
171.7
23.8
12.2
163.3
143.1
(8.9)
-
134.2
29.1
17.9
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 19, 2023. 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
immaterial, may also impair the operations of the Company. If any such risks occur, the business, financial condition,
liquidity and results of operations of the Company could be affected materially and adversely.
Pandemics, Force Majeure, and Natural Disasters
The Company may be affected by pandemics such as the COVID-19 coronavirus, force majeure events and natural
disasters. The likelihood and magnitude of such events are inherently difficult to predict, and their significance is highly
uncertain and may depend on factors beyond the Company and its control. A prolonged economic disruption, following
such an event or disaster, including the COVID-19 outbreak, may have a material and adverse impact on revenues,
cash flow and profitability of the Company, including, without limitation, by compromising employee health and
productivity in the workplace, disruption of supply chains and the business of the Company's customers.
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
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have a material adverse effect on the financial performance and condition, cash flows and growth prospects of the
Company.
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
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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
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, 2024. 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.
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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 several 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 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 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
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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, GHS, XOF and GNF and is thus exposed to foreign exchange
fluctuations. As at June 30, 2023, the Company had the following currency risk exposure related to financial assets
and liabilities in US $, CLP, GHS, XOF, and GNF of approximately: $(1.0), $2.7, $0.2, $1.2 and $0.6 million,
respectively in Canadian dollars ($(1.1), $(0.5), $1.3, $(0.4) and $0.1 respectively in Canadian dollars as at
June 30, 2022). 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 because 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
including forest fires. 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.
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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 including
forest fires, 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 always 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.
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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 19, 2023, Pierre Alexandre, President and CEO, holds or controls, directly or indirectly, approximately
24% 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
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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.
In order to reduce the credit risk, the Company is using insurance coverage from 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, 2023, the amount of the insurance coverage from EDC represents
4% of the accounts receivable (4% as at June 30, 2022).
As at June 30, 2023, 72% (73% as at June 30, 2022) of the trade accounts receivable are aged as current and 3% are
impaired (1% as at June 30, 2022).
Three major customers represent 41% of the trade accounts receivable as at June 30, 2023 (one major customer
represented 12% as at June 30, 2022).
One major customer represents 18% of the contract revenue for the year ended June 30, 2023 (for the year ended
June 30, 2022, one major customer represented 13% 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 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, 2023, the Company estimates 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 ($0.3 million as at June 30, 2022).
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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 factoring liability is
approximately equal to their carrying values due to their short-term maturity.
The fair value of the long-term debt is determined using an evaluation of the estimated market value using a discount
rate, adjusted for the Company’s own credit risk, that reflects current market conditions.
OUTLOOK
Customer demand for mineral drilling services in Canada remains strong. However, this high level of demand has
resulted in an industry shortage of experienced drillers, which has impeded Orbit Garant’s productivity levels in the
near term. Further, the shortage has resulted in increased wage costs for experienced drillers. Orbit Garant is
addressing the shortage of experienced drillers in Canada through its driller training program, increased wages and its
computerized drilling technology. The Company is not experiencing a shortage of experienced drillers in its
international operations. The recent global inflation in costs for supplies and materials has also impacted the mineral
drilling industry. To offset the increased wage costs in Canada and the higher costs of supplies and materials globally,
the Company has been able to implement price increases on its drilling contracts over the past year. Orbit Garant
expects to gradually increase its drilling personnel capacity utilization, and driller productivity to drive growth in margins.
The recent forest fires in the Abitibi-Témiscamingue region of Québec that forced Orbit Garant to suspend all its surface
and underground drilling projects in Québec and one project in Ontario for various periods from May 29 into July 2023,
have abated. The Company started ramping these drilling projects back up in early July and by July 26, operations on
all previously suspended surface and underground drilling projects had fully resumed. There have been no further
wildfire-related project interruptions. Orbit Garant’s drilling activity in Canada was also reduced during Q4 2023 due to
customer decisions to temporarily suspend or reduce drilling activity on certain other projects. The Company expects
to fully resume operations on these projects by January 2024. One of these projects resumed in mid-August 2023.
Management believes that the long-term outlook for drilling in the gold industry is positive, as many mining companies
are facing declining reserves. Accordingly, increased spending on exploration and mine development will be required
for the industry to remain viable. The current strong price of gold supports exploration and development spending on
gold projects. Orbit Garant is well positioned to benefit from increased drilling services demand in the gold sector as it
derived approximately 65% of its revenue from gold related projects during Fiscal 2023.
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 through 2024. Orbit Garant generated approximately 76% of its revenue
from its Canadian operations in Fiscal 2023 and 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
$0.74 US dollars.
Copper prices are higher compared to 12 months ago, and long-term market sentiment for the metal is positive due to
tight supply-demand fundamentals and its important role in the electrification of the global economy. Many industry
analysts expect that declining global copper reserves may necessitate increased exploration and development
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spending for copper over the near to long term. Orbit Garant is well positioned for increased spending on copper
exploration and development projects due to its presence in Chile, which is the global leader in copper production.
Orbit Garant’s international operations provide enhanced market, customer and commodity diversification, as well as
increased access to higher margin specialized drilling activity. In South America, Orbit Garant is currently working on
projects in Chile and Guyana. In West Africa, the Company is currently working on projects in Guinea and Burkina
Faso. Due to the ongoing political instability and security concerns in Burkina Faso, the Company intends to fulfill its
remaining drilling contract in the country by the end of the second quarter of Fiscal 2024 and then exit this market
altogether.
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
training and productivity rates, and improving safety. Orbit Garant currently has 44 drill rigs featuring its computerized
monitoring and control technology, all of which are currently deployed on customer projects. These next generation
drill rigs have demonstrated a significant increase in productivity rates compared to conventional drill rigs. Orbit
Garant’s customers have responded positively to this improved performance, which has led to new or renewed
underground drilling contracts for longer terms.
Looking ahead, Orbit Garant intends to primarily focus on its Canadian gold drilling operations, prioritizing longer-term,
specialized drilling contracts with major and intermediate customers. The Company will selectively pursue international
drilling opportunities in South America and West Africa when there is a high degree of cost and margin certainty. Orbit
Garant will continue to focus on disciplined management of its variable cost structure and cash, optimizing its drill rig
utilization, increasing productivity rates, continuing to focus on technology innovation, driller training, retaining key
personnel, and maintaining strong health and safety standards. The Company’s primary objective is to maximize
profitability on a sustainable basis.
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, 2023, 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, 2023.
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.
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.
30
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
YEAR END AND FOURTH QUARTER 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS Orbit Garant Drilling Inc.
29
During Fiscal 2023, 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, 2023, 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.
31
Year End and Fourth Quarter 2023Management’s Discussion and AnalysisOrbit Garant Drilling Inc.
33
34
35
36
ORBIT GARANT DRILLING INC.
Consolidated Statements of Loss
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share)
Contract revenue
Cost of contract revenue
Write-down of inventories from restructuring in Burkina Faso
Other cost of contract revenue
Gross profit
Expenses
General and administrative expenses
Foreign exchange (gain) loss
Finance costs
Earnings (loss) before income taxes
Income tax expense
Current
Deferred
Net loss
Net loss per share
Basic
Diluted
Notes
23
6, 7
5
5
5
5
16
15
June 30
2023
$
June 30
2022
$
200,976
195,473
4,187
178,459
182,646
18,330
16,444
(1,892)
3,349
17,901
429
475
623
1,098
-
181,732
181,732
13,741
14,523
392
2,235
17,150
(3,409)
598
2,640
3,238
(669)
(6,647)
(0.02)
(0.02)
(0.18)
(0.18)
See accompanying notes to consolidated financial statements.
Page 7
37
ORBIT GARANT DRILLING INC.
Consolidated Statements of Comprehensive Loss
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars)
Net loss
Other comprehensive loss
Cumulative translation adjustments, net of income tax of $62 (June 30, 2022 : $119)
Other comprehensive loss
Comprehensive loss
June 30
June 30
2023
$
(669)
(275)
(275)
(944)
2022
$
(6,647)
(1,402)
(1,402)
(8,049)
See accompanying notes to consolidated financial statements.
Page 8
38
ORBIT GARANT DRILLING INC.
Consolidated Statements of Comprehensive Loss
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars)
Net loss
Other comprehensive loss
Other comprehensive loss
Comprehensive loss
Cumulative translation adjustments, net of income tax of $62 (June 30, 2022 : $119)
June 30
June 30
2023
$
(669)
(275)
(275)
(944)
2022
$
(6,647)
(1,402)
(1,402)
(8,049)
ORBIT GARANT DRILLING INC.
Consolidated Statements of Changes in Equity
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars)
Year ended June 30, 2023
Balance as at July 1, 2022
Total comprehensive loss
Net loss
Other comprehensive loss
Cumulative translation adjustments
Other comprehensive loss
Transactions with shareholders, recorded directly in equity
(Note 15)
Share-based compensation
Stock options cancelled
Total transactions with shareholders
Balance as at June 30, 2023
Year ended June 30, 2022
Balance as at July 1, 2021
Total comprehensive loss
Net loss
Other comprehensive loss
Cumulative translation adjustments
Other comprehensive loss
Transactions with shareholders, recorded directly in equity
(Note 15)
Share-based compensation
Stock options cancelled
Total transactions with shareholders
Balance as at June 30, 2022
Share capital
$
(Note 15)
59,204
-
-
-
-
-
-
59,204
Share capital
$
(Note 15)
59,204
-
-
-
-
-
-
59,204
Equity-settled
reserve
$
Retained
earnings
$
Accumulated
other
comprehensive
loss
$
Total
Shareholders'
equity
$
1,624
5,729
(4,052)
62,505
-
-
-
83
(726)
(643)
981
(669)
-
-
-
-
726
726
5,786
(275)
(275)
-
-
-
(4,327)
(669)
(275)
(275)
83
-
83
61,644
Total
Equity-settled
reserve
$
Retained
earnings
$
Accumulated
other
comprehensive
loss
$
Shareholders'
equity
$
1,452
12,342
(2,650)
70,348
-
-
-
206
(34)
172
1,624
(6,647)
-
-
-
34
34
5,729
(1,402)
(1,402)
-
-
-
(4,052)
(6,647)
(1,402)
(1,402)
206
-
206
62,505
See accompanying notes to consolidated financial statements.
Page 8
See accompanying notes to consolidated financial statements.
Page 9
39
ORBIT GARANT DRILLING INC.
Consolidated Statements of Financial Position
As at June 30, 2023 and June 30, 2022
(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
Income taxes payable
Factoring liability
Current portion of long-term debt
Current portion of lease liabilities
Non-current liabilities
Deferred tax 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 18 and 19)
APPROVED BY THE BOARD
(signed) Pierre Alexandre
Pierre Alexandre, Director
Notes
7
8
9
10
11
16
22
12
13
16
12
13
15
June 30
2023
$
2,181
30,538
47,674
580
1,017
81,990
320
41,156
1,925
296
1,876
127,563
27,621
1
1,449
1,994
528
31,593
1,291
32,344
691
65,919
59,204
981
5,786
(4,327)
61,644
127,563
June 30
2022
$
1,018
39,401
49,006
664
1,077
91,166
146
41,403
2,388
320
1,636
137,059
33,578
12
1,317
2,222
675
37,804
657
34,702
1,391
74,554
59,204
1,624
5,729
(4,052)
62,505
137,059
(signed) Nicole Veilleux
Nicole Veilleux, Director
See accompanying notes to consolidated financial statements.
Page 10
40
ORBIT GARANT DRILLING INC.
Consolidated Statements of Financial Position
As at June 30, 2023 and June 30, 2022
(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
Income taxes payable
Factoring liability
Current portion of long-term debt
Current portion of lease liabilities
Non-current liabilities
Deferred tax 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 18 and 19)
APPROVED BY THE BOARD
(signed) Pierre Alexandre
Pierre Alexandre, Director
Notes
7
8
9
10
11
16
22
12
13
16
12
13
15
June 30
2023
$
2,181
30,538
47,674
580
1,017
81,990
320
41,156
1,925
296
1,876
127,563
27,621
1
1,449
1,994
528
31,593
1,291
32,344
691
65,919
59,204
981
5,786
(4,327)
61,644
127,563
June 30
2022
$
1,018
39,401
49,006
664
1,077
91,166
146
41,403
2,388
320
1,636
137,059
33,578
12
1,317
2,222
675
37,804
657
34,702
1,391
74,554
59,204
1,624
5,729
(4,052)
62,505
137,059
(signed) Nicole Veilleux
Nicole Veilleux, Director
ORBIT GARANT DRILLING INC.
Consolidated Statements of Cash Flows
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars)
OPERATING ACTIVITIES
Earnings (loss) before income taxes
Items not affecting cash
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortization of intangible assets
Gain on disposal of property, plant and equipment
Gain on disposal of right-of-use assets
Derecognition of right-of-use assets and lease liabilities
Share-based compensation
Write-down of inventories from restructuring in Burkina Faso
Finance costs
Net change in fair value of investments
Changes in non-cash operating working capital items
Income taxes paid
Finance costs paid
INVESTING ACTIVITIES
Proceeds from disposal of investments
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
FINANCING ACTIVITIES
Proceeds from factoring
Repayment on factoring
Proceeds from long-term debt
Repayment of long-term debt
Repayment of lease liabilities
Effect of exchange rate changes on cash and cash equivalent
Increase (decrease) in cash and cash equivalent
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Notes
9
10
11
9
10
10
15
6, 7
5
8
17
8
9
11
June 30
2023
$
429
10,372
516
207
(484)
-
(132)
83
4,187
3,349
311
18,838
(700)
(433)
(3,352)
14,353
-
(9,257)
996
(179)
(8,440)
16,633
(16,798)
113,260
(116,627)
(900)
(4,432)
(318)
1,163
1,018
2,181
June 30
2022
$
(3,409)
10,307
515
321
(908)
(7)
-
206
-
2,235
85
9,345
(1,087)
(187)
(2,215)
5,856
28
(11,899)
1,192
(99)
(10,778)
11,613
(12,829)
102,094
(97,425)
(742)
2,711
(27)
(2,238)
3,256
1,018
See accompanying notes to consolidated financial statements.
Page 10
See accompanying notes to consolidated financial statements.
Page 11
41
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
1. DESCRIPTION OF BUSINESS
Orbit Garant Drilling Inc. (the "Company"), incorporated 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.
Forage Orbit Garant Guinée SARLU
Sarliaq-Orbit Garant Inc.
Tumiit Orbit Garant Inc. (dissolved on June 27, 2023)
2.
BASIS OF PREPARATION
Basis of presentation
% of voting rights
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
49%
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 4.
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 is 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 19, 2023.
42
Page 12
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(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, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
1. DESCRIPTION OF BUSINESS
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Orbit Garant Drilling Inc. (the "Company"), incorporated under the Canada Business Corporations Act , mainly operates a surface and underground
Principles of consolidation
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:
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.
% of voting rights
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 loss of control of 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 instruments
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.
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.
Forage Orbit Garant Guinée SARLU
Sarliaq-Orbit Garant Inc.
Tumiit Orbit Garant Inc. (dissolved on June 27, 2023)
2.
BASIS OF PREPARATION
Basis of presentation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
49%
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 4.
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 is 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 19, 2023.
Page 12
Page 13
43
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments (continued)
Asset/Liability
Cash and equivalents
Trade and other receivables
Investments
Trade and other payables
Factoring liability
Long-term debt
Classification
Amortized cost
Amortized cost
Fair value through profit or loss
Amortized cost
Amortized cost
Amortized cost
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
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.
Financial liabilities measured at 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.
44
Page 14
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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 on mining sites and warehouses. 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 adjusted to reflect consumption and the level of refurbishment. The
amount of any write-down of inventories can be reversed when the circumstances that led to the write-down 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.
The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.
Property, plant and equipment
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments (continued)
Asset/Liability
Cash and equivalents
Trade and other receivables
Investments
Trade and other payables
Factoring liability
Long-term debt
Fair value through profit or loss
Classification
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
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
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.
Financial liabilities measured at 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.
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.
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%
-
-
Page 14
Page 15
45
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,
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, plant and equipment (continued)
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.
Intangible assets
Intangible assets are accounted for at cost. Amortization is based on their estimated useful life using the straight-line method and the following periods:
Software
Patents
3 to 5 years
10 years
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.
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) earnings 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.
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.
46
Page 16
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, plant and equipment (continued)
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes (continued)
Intangible assets
Software
Patents
Government assistance
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.
Intangible assets are accounted for at cost. Amortization is based on their estimated useful life using the straight-line method and the following periods:
3 to 5 years
10 years
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 loss or directly in equity in the same or a different period.
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.
Amortization methods, residual values and the useful
lives of significant intangible assets are reviewed at each financial year-end. Any change is
Financing fees
accounted for prospectively as a change in accounting estimate.
Financing fees related to long-term debt are capitalized in reduction of long-term debt and amortized using the effective interest rate.
Leases
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.
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.
Impairment of non-financial assets
Right-of-use assets on leases
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) earnings 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.
Income taxes
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 2 to 11 years for land and buildings
and from 1 to 4 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.
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
Revenue recognition
substantively enacted at the reporting date.
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.
Page 16
Page 17
47
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Share options
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.
4.
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
Part of the inventory was estimated based on the number of drills on minings sites. In estimating the cost of this inventory, management takes into account
the estimated amount of inventory per drill, based on the most reliable evidence available at the time the estimate was made.
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.
As at June 30, 2023, the company concluded that there were impairment indicators for assets located in Burkina Faso, and it performed an impairment
test on property, plant and equipment, right of use assets and intangible assets located in Burkina Faso. No impairment was recognized as a result of this
test. In applying its judgment, the Company relies primarily on its knowledge of its business and the economic environment. 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 are
used by management to determine the projected revenue, operating expenses, utilization, discount rates and market pricing. Consequently, the impact on
the Consolidated Financial Statements of future periods could be material.
48
Page 18
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(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, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4.
CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS (continued)
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.
Earnings per share
Share options
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.
4.
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
Impairment of non-financial assets
Part of the inventory was estimated based on the number of drills on minings sites. In estimating the cost of this inventory, management takes into account
the estimated amount of inventory per drill, based on the most reliable evidence available at the time the estimate was made.
The Company also uses its judgment to determine whether an impairment test must be performed due to the presence of potential impairment indicators.
As at June 30, 2023, the company concluded that there were impairment indicators for assets located in Burkina Faso, and it performed an impairment
test on property, plant and equipment, right of use assets and intangible assets located in Burkina Faso. No impairment was recognized as a result of this
test. In applying its judgment, the Company relies primarily on its knowledge of its business and the economic environment. 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 are
used by management to determine the projected revenue, operating expenses, utilization, discount rates and market pricing. Consequently, the impact on
the Consolidated Financial Statements of future periods could be material.
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.
Income taxes
The Company is subject to income taxes in various jurisdictions. Judgment is required in determining the worldwide provision for income taxes. The
Company's income tax provision is based on tax rules and regulations that are subject to interpretation and may be challenged by tax autorities. 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.
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 if a significant event or change in circumstances that is within its control and affects its
ability to exercise (or not exercise) the option to renew has occurred.
Page 18
Page 19
49
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
5. EXPENSES BY NATURE
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) earnings as follows:
Cost of contract revenue
General and administrative expenses
Total depreciation and amortization
Principal expenses by nature
June 30
2023
$
10,069
1,026
11,095
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
Write-down of inventories from restructuring in Burkina Faso
Interest on long-term debt
Interest on lease liabilities
Factoring charges and other interest
Other expenses
Total cost of contract revenue, general and administrative
expenses, foreign exchange (gain) losss and finance costs
Cost of contract revenue
General and administrative expenses, foreign exchange
(gain) loss and finance costs
Total cost of contract revenue, general and administrative
expenses, foreign exchange (gain) loss and finance costs
June 30
2023
$
11,095
102,494
44,305
4,187
2,908
92
349
35,117
200,547
182,646
17,901
200,547
June 30
2022
$
10,046
1,097
11,143
June 30
2022
$
11,143
99,610
44,438
-
1,918
139
178
41,456
198,882
181,732
17,150
198,882
6. WRITE-DOWN OF INVENTORIES FROM RESTRUCTURING IN BURKINA FASO
During the year, the Company made the decision to exit Burkina Faso due to the significant additional investment required to generate an acceptable
return on investment, as well as the increased security concerns within that country therefore, the Company expects to complete its drilling program in
Burkina Faso during the second quarter of Fiscal 2024.
These restructuring initiatives generated write-down of inventories calculated based on the determination of the fair value of assets less cost of disposal
for a portion of inventory and net sales, less estimated cost to complete, for inventory expected to be consummed until the end of the contract. Fair value
less cost of disposal was determined through the use of industry knowledge.
The recognized amount consists of a write-down of $4,187 to reduce inventory to net realizable value.
50
Page 20
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
5. EXPENSES BY NATURE
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) earnings as follows:
Cost of contract revenue, general and administrative expenses, foreign exchange (gain) loss and finance costs by nature are as follows:
Cost of contract revenue
General and administrative expenses
Total depreciation and amortization
Principal expenses by nature
Write-down of inventories from restructuring in Burkina Faso
Depreciation and amortization
Employee benefits expense
Cost of inventories
Interest on long-term debt
Interest on lease liabilities
Factoring charges and other interest
Other expenses
Total cost of contract revenue, general and administrative
expenses, foreign exchange (gain) losss and finance costs
Cost of contract revenue
General and administrative expenses, foreign exchange
(gain) loss and finance costs
Total cost of contract revenue, general and administrative
expenses, foreign exchange (gain) loss and finance costs
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
7.
INVENTORIES
Spare parts
Consumables
Other
June 30
2023
$
17,019
30,132
523
47,674
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
2023
$
44,305
June 30
2022
$
18,007
29,951
1,048
49,006
June 30
2022
$
44,438
During the year, an amount of $4,187 (2022: $0) has been accounted for as a write-down of inventories in Burkina Faso as a result of net realizable value
being lower than cost. As at June 30, 2023 and 2022, 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.
8.
INVESTMENTS
Investments in public companies, beginning of the year
Conversion of trade receivables
Proceeds from 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
2023
$
146
485
-
(311)
320
June 30
2022
$
259
-
(28)
(85)
146
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 change in fair value of investments is included in general and administrative expenses.
The original cost is $940 ($455 as at June 30, 2022).
June 30
2023
$
10,069
1,026
11,095
June 30
2023
$
11,095
102,494
44,305
4,187
2,908
92
349
35,117
200,547
182,646
17,901
200,547
June 30
2022
$
10,046
1,097
11,143
June 30
2022
$
11,143
99,610
44,438
-
1,918
139
178
41,456
198,882
181,732
17,150
198,882
6. WRITE-DOWN OF INVENTORIES FROM RESTRUCTURING IN BURKINA FASO
During the year, the Company made the decision to exit Burkina Faso due to the significant additional investment required to generate an acceptable
return on investment, as well as the increased security concerns within that country therefore, the Company expects to complete its drilling program in
Burkina Faso during the second quarter of Fiscal 2024.
These restructuring initiatives generated write-down of inventories calculated based on the determination of the fair value of assets less cost of disposal
for a portion of inventory and net sales, less estimated cost to complete, for inventory expected to be consummed until the end of the contract. Fair value
less cost of disposal was determined through the use of industry knowledge.
The recognized amount consists of a write-down of $4,187 to reduce inventory to net realizable value.
Page 20
Page 21
51
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
9.
PROPERTY, PLANT AND EQUIPMENT
Cost
Balance as at July 1, 2022
Additions
Transfer from right-of-use assets (note 10)
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2023
Accumulated Depreciation
Balance as at July 1, 2022
Depreciation
Transfer from right-of-use assets (note 10)
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2023
Cost
Balance as at July 1, 2021
Additions
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2022
Accumulated Depreciation
Balance as at July 1, 2021
Depreciation
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2022
June 30, 2022:
Net book value
June 30, 2023:
Net book value
Land
$
2,206
-
-
-
260
2,466
-
-
-
-
-
-
Land
$
2,515
-
-
(309)
2,206
-
-
-
-
-
2,206
2,466
Buildings and
components
$
Drilling
equipment
$
11,433
224
-
(92)
126
11,691
6,182
422
-
(83)
42
6,563
91,093
4,031
170
(2,664)
3,247
95,877
63,257
6,976
41
(2,280)
2,312
70,306
Buildings and
components
$
Drilling
equipment
$
11,540
52
(10)
(149)
11,433
5,825
399
-
(42)
6,182
5,251
5,128
86,943
10,348
(3,586)
(2,612)
91,093
61,795
7,216
(3,320)
(2,434)
63,257
27,836
25,571
Vehicles
$
22,094
4,961
29
(2,034)
98
25,148
16,305
2,875
29
(1,915)
138
17,432
Vehicles
$
20,945
3,377
(2,062)
(166)
22,094
15,920
2,564
(2,053)
(126)
16,305
5,789
7,716
Other
$
2,063
41
-
(90)
69
2,083
1,742
99
-
(90)
57
1,808
Other
$
2,114
31
(2)
(80)
2,063
1,679
128
(2)
(63)
1,742
321
275
Total
$
128,889
9,257
199
(4,880)
3,800
137,265
87,486
10,372
70
(4,368)
2,549
96,109
Total
$
124,057
13,808
(5,660)
(3,316)
128,889
85,219
10,307
(5,375)
(2,665)
87,486
41,403
41,156
A gain on disposal of property, plant and equipment totalling $484 for the year ended June 30, 2023 (a gain of $908 for the year ended June 30, 2022)
is included in cost of contract revenue.
Drilling equipment includes construction work in progress for an amount of $225 ($816 as at June 30, 2022).
52
Page 22
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(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, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
9.
PROPERTY, PLANT AND EQUIPMENT
10. RIGHT-OF-USE ASSETS
Buildings and
components
Drilling
equipment
Land
$
2,206
Cost
Additions
Balance as at July 1, 2022
Transfer from right-of-use assets (note 10)
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2023
260
2,466
Accumulated Depreciation
Balance as at July 1, 2022
Depreciation
Transfer from right-of-use assets (note 10)
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2023
Cost
Balance as at July 1, 2021
Additions
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2022
(309)
2,206
Accumulated Depreciation
Balance as at July 1, 2021
Depreciation
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2022
June 30, 2022:
Net book value
June 30, 2023:
Net book value
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,206
2,466
11,433
$
224
-
(92)
126
11,691
6,182
422
-
(83)
42
6,563
52
(10)
(149)
11,433
5,825
399
-
(42)
6,182
5,251
5,128
$
91,093
4,031
170
(2,664)
3,247
95,877
63,257
6,976
41
(2,280)
2,312
70,306
$
86,943
10,348
(3,586)
(2,612)
91,093
61,795
7,216
(3,320)
(2,434)
63,257
27,836
25,571
Buildings and
Drilling
Land
components
equipment
$
$
2,515
11,540
Vehicles
$
22,094
4,961
(2,034)
29
98
25,148
16,305
2,875
29
(1,915)
138
17,432
Vehicles
$
20,945
3,377
(2,062)
(166)
22,094
15,920
2,564
(2,053)
(126)
16,305
5,789
7,716
Other
$
2,063
41
-
(90)
69
2,083
1,742
99
-
(90)
57
1,808
Other
$
2,114
31
(2)
(80)
2,063
1,679
128
(2)
(63)
1,742
321
275
Total
$
128,889
9,257
199
(4,880)
3,800
137,265
87,486
10,372
70
(4,368)
2,549
96,109
Total
$
124,057
13,808
(5,660)
(3,316)
128,889
85,219
10,307
(5,375)
(2,665)
87,486
41,403
41,156
A gain on disposal of property, plant and equipment totalling $484 for the year ended June 30, 2023 (a gain of $908 for the year ended June 30, 2022)
is included in cost of contract revenue.
Drilling equipment includes construction work in progress for an amount of $225 ($816 as at June 30, 2022).
Cost
Balance as at July 1, 2022
Additions
Disposals and write-offs
Variable lease payment adjustment
Reassessment of the lease term
Transferred to property, plant and equipment
Effect of movements in exchange rates
Balance as at June 30, 2023
(Note 9)
Accumulated Depreciation
Balance as at July 1, 2022
Depreciation
Disposals and write-offs
Reassessment of the lease term
Transferred to property, plant and equipment
Effect of movements in exchange rates
Balance as at June 30, 2023
(Note 9)
Cost
Balance as at July 1, 2021
Additions
Disposals and write-offs
Variable lease payment adjustment
Effect of movements in exchange rates
Balance as at June 30, 2022
Accumulated Depreciation
Balance as at July 1, 2021
Depreciation
Disposals and write-offs
Effect of movements in exchange rates
Balance as at June 30, 2022
June 30, 2022:
Net book value
June 30, 2023:
Net book value
Buildings and
components
$
1,671
-
-
-
(634)
-
-
1,037
592
270
-
55
-
-
917
Buildings and
components
$
1,668
104
(101)
-
-
1,671
430
263
(101)
-
592
1,079
120
Vehicles
$
1,625
852
(62)
6
(199)
27
2,249
316
246
(62)
-
(70)
14
444
Vehicles
$
1,215
731
(285)
8
(44)
1,625
347
252
(252)
(31)
316
1,309
1,805
Total
$
3,296
852
(62)
6
(634)
(199)
27
3,286
908
516
(62)
55
(70)
14
1,361
Total
$
2,883
835
(386)
8
(44)
3,296
777
515
(353)
(31)
908
2,388
1,925
A gain on disposal of right-of-use-assets totalling $0 for the year ended June 30, 2023 ($7 for the year ended June 30, 2022) is included in cost of
contract revenue.
Page 22
Page 23
53
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
11.
INTANGIBLE ASSETS
Cost
Balance as at July 1, 2022
Additions
Effect of movements in exchange rates
Balance as at June 30, 2023
Accumulated Depreciation
Balance as at July 1, 2022
Depreciation
Effect of movements in exchange rates
Balance as at June 30, 2023
Cost
Balance as at July 1, 2021
Additions
Effect of movements in exchange rates
Balance as at June 30, 2022
Accumulated Depreciation
Balance as at July 1, 2021
Depreciation
Effect of movements in exchange rates
Balance as at June 30, 2022
June 30, 2022:
Net book value
June 30, 2023:
Net book value
54
Software
$
Patents
$
2,254
179
16
2,449
1,974
201
12
2,187
Software
$
2,203
70
(19)
2,254
1,799
186
(11)
1,974
280
262
-
-
-
48
48
8
6
14
Patents
$
19
29
48
-
3
5
8
-
40
34
Total
$
2,302
179
16
2,497
1,982
207
12
2,201
Total
$
2,222
99
(19)
2,302
1,802
191
(11)
1,982
320
296
Page 24
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
11.
INTANGIBLE ASSETS
Cost
Balance as at July 1, 2022
Additions
Effect of movements in exchange rates
Balance as at June 30, 2023
Accumulated Depreciation
Balance as at July 1, 2022
Depreciation
Effect of movements in exchange rates
Balance as at June 30, 2023
Cost
Balance as at July 1, 2021
Additions
Effect of movements in exchange rates
Balance as at June 30, 2022
Accumulated Depreciation
Balance as at July 1, 2021
Depreciation
Effect of movements in exchange rates
Balance as at June 30, 2022
June 30, 2022:
Net book value
June 30, 2023:
Net book value
Software
$
Patents
2,254
179
16
2,449
1,974
201
12
2,187
Software
$
2,203
70
(19)
2,254
1,799
186
(11)
1,974
280
262
Patents
$
$
48
-
-
-
48
8
6
14
19
29
48
-
3
5
8
-
40
34
Total
$
2,302
179
16
2,497
1,982
207
12
2,201
Total
$
2,222
99
(19)
2,302
1,802
191
(11)
1,982
320
296
Page 24
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
12.
LONG-TERM DEBT
Revolving credit facility of US$2,000 (June 30, 2022: US$1,000) authorized for a
maximum amount of $6,620 (US$5,000), bearing interest at base rate plus 0.25%,
effective rate as at June 30, 2023 of 9.00% (June 30, 2022: interest at base rate
plus 0.25%, effective rate of 5.50%), maturing in November 2024, secured by a first
rank hypothec on the universality of all present and future assets, except for those
noted below (d)
Revolving credit facility authorized for a maximum amount of $30,000, bearing
interest at prime rate plus 1.50%, effective rate as at June 30, 2023 of 8.45% (June
30, 2022: interest at prime rate plus 3.75%, effective rate of 7.45%), maturing in
November 2024, secured by a first rank hypothec on the universality of all present
and future assets, except for those noted below (a) (b) (d)
Loan, bearing interest at 6.70%, payable in monthly instalments of $64, maturing in
October 2042, secured by a first rank hypothec on a land and building (c) (e)
Loan of US$1,160 (June 30, 2022: US$2,320), bearing interest at prime rate plus
2.75%, effective rate as at June 30, 2023 of 11.00% (June 30, 2022: bearing
interest at prime rate plus 2.75%, effective rate of 7.50%), payable in monthly
instalments of $128 (US$97) (June 30, 2022 : $125 (US$97)), maturing in July
2024, secured by a third rank hypothec on the universality of all present and
future assets
Loans of CLP$400,925 at June 30, 2022, bearing interest at rates of 3.50%
Loan of CLF 42 (June 30, 2022: CLF 46), bearing interest at rates of 3.30%,
payable in monthly instalments of $22 (CLF 0.43), maturing in February 2028,
secured by land and building. (f)
Current portion
June 30
2023
$
June 30
2022
$
2,648
1,289
19,454
30,003
8,212
-
1,536
-
2,488
34,338
(1,994)
32,344
2,990
558
2,084
36,924
(2,222)
34,702
(a)
(b)
(c)
(d)
The Revolving credit facility bears interest at either (a) the bank's prime rate plus an applicable margin based on a financial covenant or (b) the
banker's acceptance rate plus an applicable margin based on a financial covenant. In addition, the Corporation incurs commitment fees, varying
between 0.35% to 1.07%. The rate is variable based on the quarterly calculation of a financial ratio and can vary from (a) prime rate plus 0.50% to
3.75% or (b) banker’s acceptance rate plus 1.50% to 4.75%.
As at June 30,2023, an unamortized amount of $146 ($254 as at June 30, 2022), 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.
As at June 30,2023, an unamortized amount of $121 ($0 as at June 30, 2022), 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 May 10, 2022, the Company signed an amendment to the Fourth 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, that will expire
November 2, 2024. On September 9, 2022, as a consequence of securing a new term loan with Business Development Bank of Canada, the
amended and restated Credit Agreement has been reduced from $35,000 to $30,000. As at June 30, 2023, the US Credit facility used was US$0
(US$200 as at June 30, 2022).
Page 25
55
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
12.
LONG-TERM DEBT (continued)
(e)
(f)
On September 9, 2022, the Company entered into a additional loan agreement with the Business Development Bank of Canada (the “BDC Loan
Agreement”) for a term loan in the principal amount of $8,470. The loan bears interest at a fixed rate of 6.70% per year, has a duration of 240
consecutive monthly payments from November 2022 until October 2042. The fixed rate may be reduced by 0.20% from November 2023, if certain
covenants of a financial nature are met. The Company's obligations under the BDC Loan Agreement are secured by a first ranking hypothec on the
land and building serving as the Company's head office located in Val-d'Or.
As at June 30,2023, an unamortized amount of $34 ($35 as at June 30, 2022), 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.
Under the terms of the long-term debt agreements, the Company must satisfy certain restrictive covenants as to minimum financial ratios (Note 14). As at
June 30, 2023, the Company was compliant with its financial covenants (June 30, 2022: the Company was compliant with its financial covenants).
As at June 30, 2023, the prime rate in Canada was 6.95% for Canadian loans (3.70% as at June 30, 2022) and the prime rate in United States was 8.25%
and the base rate in the United States was 8.75% for US loans (4.75% and 5.25% respectively as at June 30, 2022).
As at June 30, 2023, principal payments required in the next years are as follows:
Within one year
Later than one year and no later than five years
More than five years
Long-term debt before unamortized financing costs by currency and by term are as follows:
As at June 30, 2023
$000s
CAN
US (US$3,160)
Chilean UF (CLF 42)
Total
$
27,932
4,184
2,522
34,638
Within
one year
$
233
1,536
225
1,994
Later than one
but no later than
five years
$
20,727
2,648
2,297
25,672
Reconciliation of movements of long-term debt to cash flows arising from financing activities:
Balance, beginning of year
Net change in the revolving credit facility
Increase in other long-term debts
Repayment of other long-term debts
Transaction costs related to loans
Amortization of transaction costs related to loans
Impact of the change in foreign exchange rates on the foreign currency debts
Balance, end of year
2023
$
36,924
(9,318)
8,470
(2,519)
(163)
160
784
34,338
56
$
1,994
25,672
6,972
34,638
Later than
five years
$
6,972
-
-
6,972
2022
$
32,425
7,186
-
(2,517)
(226)
206
(150)
36,924
Page 26
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(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, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
12.
LONG-TERM DEBT (continued)
13.
LEASE LIABILITIES
The summary of of the activity related to the lease liabilities for the years ended June 30, 2023 and 2022 is as follows:
Lease liabilities recognized, beginning of year
Additions
Disposals
Finance costs
Payment of lease liabilities, including related finance costs
Variable lease payment adjustment
Reassessment of lease term
Foreign exchange differences
Current portion
Balance, end of year
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
2023
$
2,066
852
-
92
(992)
6
(821)
16
1,219
528
691
2022
$
1,996
837
(40)
139
(881)
8
6
1
2,066
675
1,391
June 30
2023
$
587
751
-
1,338
(119)
1,219
(e)
On September 9, 2022, the Company entered into a additional loan agreement with the Business Development Bank of Canada (the “BDC Loan
Agreement”) for a term loan in the principal amount of $8,470. The loan bears interest at a fixed rate of 6.70% per year, has a duration of 240
consecutive monthly payments from November 2022 until October 2042. The fixed rate may be reduced by 0.20% from November 2023, if certain
covenants of a financial nature are met. The Company's obligations under the BDC Loan Agreement are secured by a first ranking hypothec on the
land and building serving as the Company's head office located in Val-d'Or.
(f)
As at June 30,2023, an unamortized amount of $34 ($35 as at June 30, 2022), 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.
Under the terms of the long-term debt agreements, the Company must satisfy certain restrictive covenants as to minimum financial ratios (Note 14). As at
June 30, 2023, the Company was compliant with its financial covenants (June 30, 2022: the Company was compliant with its financial covenants).
As at June 30, 2023, the prime rate in Canada was 6.95% for Canadian loans (3.70% as at June 30, 2022) and the prime rate in United States was 8.25%
and the base rate in the United States was 8.75% for US loans (4.75% and 5.25% respectively as at June 30, 2022).
As at June 30, 2023, principal payments required in the next years are as follows:
Within one year
More than five years
Later than one year and no later than five years
Long-term debt before unamortized financing costs by currency and by term are as follows:
As at June 30, 2023
$000s
CAN
US (US$3,160)
Chilean UF (CLF 42)
Total
$
27,932
4,184
2,522
34,638
Within
one year
$
233
1,536
225
1,994
Reconciliation of movements of long-term debt to cash flows arising from financing activities:
Balance, beginning of year
Net change in the revolving credit facility
Increase in other long-term debts
Repayment of other long-term debts
Transaction costs related to loans
Amortization of transaction costs related to loans
Impact of the change in foreign exchange rates on the foreign currency debts
Balance, end of year
$
1,994
25,672
6,972
34,638
Later than
five years
$
6,972
-
-
6,972
2022
$
32,425
7,186
-
(2,517)
(226)
206
(150)
36,924
Later than one
but no later than
five years
$
20,727
2,648
2,297
25,672
2023
$
36,924
(9,318)
8,470
(2,519)
(163)
160
784
34,338
Page 26
Page 27
57
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
14.
CAPITAL MANAGEMENT
The Company includes long-term debt, lease liabilities, factoring liability, share capital, equity-settled reserve, retained earnings, accumulated other
comprehensive loss and cash and cash equivalents in its definition of capital.
The Company's capital structure is as follows:
Long-term debt
Lease liabilities
Factoring liability
Share capital
Equity-settled reserve
Retained earnings
Accumulated other comprehensive loss
Cash and cash equivalents
June 30
2023
$
34,338
1,219
1,449
59,204
981
5,786
(4,327)
(2,181)
96,469
June 30
2022
$
36,924
2,066
1,317
59,204
1,624
5,729
(4,052)
(1,018)
101,794
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, 2023, as mentioned in Note 12, the Company complied with its financial covenants (June 30, 2022: 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.
The Company's objectives with regards to capital management remain unchanged from the prior year.
58
Page 28
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
comprehensive loss and cash and cash equivalents in its definition of capital.
The Company's capital structure is as follows:
Long-term debt
Lease liabilities
Factoring liability
Share capital
Equity-settled reserve
Retained earnings
Accumulated other comprehensive loss
Cash and cash equivalents
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, 2023, as mentioned in Note 12, the Company complied with its financial covenants (June 30, 2022: the Company was
compliant with its financial covenants).
various factors.
In order to facilitate the management of its capital requirements, the Company prepares annual budgets that are updated as necessary, dependent on
The Company's objectives with regards to capital management remain unchanged from the prior year.
14.
CAPITAL MANAGEMENT
15. SHARE CAPITAL
The Company includes long-term debt, lease liabilities, factoring liability, share capital, equity-settled reserve, retained earnings, accumulated other
Authorized, an unlimited number of common and preferred shares:
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
June 30
2023
$
34,338
1,219
1,449
59,204
981
5,786
(4,327)
(2,181)
96,469
June 30
2022
$
36,924
2,066
1,317
59,204
1,624
5,729
(4,052)
(1,018)
101,794
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:
Balance, end of the year
June 30, 2023
June 30, 2022
Number of
shares
37,372,756
-
37,372,756
$
59,204
-
59,204
Number of
shares
37,372,756
-
37,372,756
$
59,204
-
59,204
Net loss per share
Diluted net loss per common share was calculated based on net earnings divided by the average number of common shares outstanding using the
treasury stock method. For 2022 and 2023, stock 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
Net loss attributable to common
shareholders
Weighted average basic number of
common shares outstanding
Net loss per share - basic
Net loss per share - diluted
Net loss attributable to common
shareholders
Weighted average basic number of
common shares outstanding
Adjustment to average number of common
share - stock options
Weighted average diluted number of
common shares outstanding
Net loss per share - diluted
June 30
2023
June 30
2022
$
(669)
$
(6,647)
37,372,756
(0.02)
$
37,372,756
(0.18)
$
June 30
2023
June 30
2022
$
(669)
$
(6,647)
37,372,756
37,372,756
-
-
37,372,756
(0.02)
$
37,372,756
(0.18)
$
Page 28
Page 29
59
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
15. SHARE CAPITAL (continued)
Stock option plan
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 Stock 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 Stock 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 Stock 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.
All stock options outstanding are granted to directors, officers and employees. Details regarding the stock options outstanding are as follows:
Outstanding at the beginning of the year
Granted during the year
Cancelled during the year
Outstanding at end of the year
Exercisable at end of the year
Number
of options
3,243,500
550,000
(1,833,500)
1,960,000
1,202,005
June 30, 2023
Weighted average
exercise price
$
1.24
0.53
1.34
0.95
1.13
Number
of options
3,342,500
-
(99,000)
3,243,500
2,256,502
June 30, 2022
Weighted average
exercise price
$
1.24
-
1.11
1.24
1.40
60
Page 30
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
15. SHARE CAPITAL (continued)
Stock option plan
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 Stock 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 Stock 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 Stock 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.
All stock options outstanding are granted to directors, officers and employees. Details regarding the stock options outstanding are as follows:
Outstanding at the beginning of the year
Granted during the year
Cancelled during the year
Outstanding at end of the year
Exercisable at end of the year
Number
of options
June 30, 2023
Weighted average
exercise price
June 30, 2022
Weighted average
exercise price
Number
of options
3,342,500
-
(99,000)
3,243,500
2,256,502
$
1.24
0.53
1.34
0.95
1.13
$
1.24
-
1.11
1.24
1.40
3,243,500
550,000
(1,833,500)
1,960,000
1,202,005
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
15. SHARE CAPITAL (continued)
The following table summarizes information on share options outstanding as at June 30, 2023:
Range of
exercise price
$
0.50 - 1.49
1.50 - 2.49
Outstanding at
June 30, 2023
Weighted average
remaining life
(years)
Weighted average
exercise price
$
Exercisable at
June 30, 2023
Weighted average
exercise price
$
1,600,000
360,000
1,960,000
2.15
0.43
0.77
1.74
842,005
360,000
1,202,005
0.87
1.74
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 2023
2.99% to 3.52%
3
61.89% to 72.29%
0%
$0.25 to $0.30
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
June 30
2023
$
83
June 30
2022
$
206
Page 30
Page 31
61
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
16.
INCOME TAXES
Income tax expense (recovery) comprises the following:
Current tax
Current year
Prior years adjustments
Deferred tax
Current year
Prior years adjustements
Earnings (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
Recognition of previously unrecognized deductible temporary
differences and tax losses of prior periods
Non-taxable portion of capital gain
Prior years adjustments
Other
Total income tax expense
June 30
2023
$
419
56
475
646
(23)
623
1,098
June 30
2023
$
429
26.50%
114
71
22
39
355
1,107
(643)
(6)
33
6
1,098
June 30
2022
$
367
231
598
2,760
(120)
2,640
3,238
June 30
2022
$
(3,409)
26.50%
(903)
92
54
137
251
3,547
-
(49)
111
(2)
3,238
62
Page 32
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
16.
INCOME TAXES
Income tax expense (recovery) comprises the following:
Current tax
Current year
Prior years adjustments
Deferred tax
Current year
Prior years adjustements
Earnings (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
Recognition of previously unrecognized deductible temporary
differences and tax losses of prior periods
Non-taxable portion of capital gain
Prior years adjustments
Other
Total income tax expense
June 30
2023
$
419
56
475
646
(23)
623
1,098
June 30
2023
$
429
26.50%
114
71
22
39
355
1,107
(643)
(6)
33
6
1,098
June 30
2022
$
367
231
598
2,760
(120)
2,640
3,238
June 30
2022
$
(3,409)
26.50%
(903)
92
54
137
251
3,547
-
(49)
111
(2)
3,238
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
16.
INCOME TAXES (continued)
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:
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
Investments
Total deferred income tax assets
Deferred income tax liabilities:
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
Net deferred tax assets
July 1
2022
$
29
639
1,519
41
2,228
1,249
1,249
979
July 1
2021
$
22
4,410
1,374
27
5,833
1,936
1,936
3,897
Recognized in
statements of
loss
$
Exchange
rate change
$
(6)
(270)
(78)
42
(312)
311
311
(623)
-
-
264
-
264
35
35
229
Recognized in
statements of
loss
$
Exchange
rate change
$
7
(3,771)
480
14
(3,270)
(630)
(630)
(2,640)
-
-
(335)
-
(335)
(57)
(57)
(278)
June 30
2023
$
1,876
(1,291)
585
June 30
2023
$
23
369
1,705
83
2,180
1,595
1,595
585
June 30
2022
$
29
639
1,519
41
2,228
1,249
1,249
979
June 30
2022
$
1,636
(657)
979
The Company recognized a deferred income tax asset on certain non-capital losses because it is probable that sufficient taxable profit will be available
from future oprations.
Page 32
Page 33
63
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
16.
INCOME TAXES (continued)
Tax losses, for which no deferred tax assets were recognized, expire as follows:
June 30, 2024
June 30, 2025
June 30, 2026
June 30, 2027
June 30, 2028
No expiry date
Chile
-
-
-
-
-
3,822
17. 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
Ghana
Guinea
-
-
-
-
-
83
748
2,590
-
-
-
-
June 30
2023
$
9,565
(1,583)
88
(8,770)
(700)
Burkina Faso
$
206
5,854
-
8,606
3,972
-
June 30
2022
$
(130)
(6,074)
(328)
5,445
(1,087)
During fiscal year 2023, the Company received common shares from a publicly traded company as settlement for its trade and other receivables account
in the amount of $485. This information is presented as a non-monetary transaction in the consolidated statements of cash flows.
18. 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.
19. COMMITMENTS AND GUARANTEES
Commitments
The Company has entered into short-term and low asset value lease agreements expiring in 2024 which call for total lease payments of $6 for the rental of
offices. None of the lease agreements contain renewal or purchase options or escalation clauses or any restrictions.
Lease payments recognized as an expense during the year amount to $9,469 (year ended June 30, 2022: $13,858). 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.
Guarantees
As at June 30, 2023, the Company issued some bank guarantees in favor of customers for a total amount of $762 (year ended June 30, 2022: $1,644),
maturing in December 2023. For the years ended June 30, 2022 and 2023, the Company has not made any payments in connection with these
guarantees.
64
Page 34
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(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, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
16.
INCOME TAXES (continued)
20. RELATED AND ASSOCIATE PARTY TRANSACTIONS
Tax losses, for which no deferred tax assets were recognized, expire as follows:
Transactions with related parties
Chile
Ghana
Guinea
Burkina Faso
June 30, 2024
June 30, 2025
June 30, 2026
June 30, 2027
June 30, 2028
No expiry date
-
-
-
-
-
3,822
-
-
-
-
-
83
17. 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
18. CONTINGENCIES
19. COMMITMENTS AND GUARANTEES
Commitments
During fiscal year 2023, the Company received common shares from a publicly traded company as settlement for its trade and other receivables account
in the amount of $485. This information is presented as a non-monetary transaction in the consolidated statements of cash flows.
748
2,590
-
-
-
-
June 30
2023
$
9,565
(1,583)
88
(8,770)
(700)
$
206
5,854
8,606
3,972
-
-
June 30
2022
$
(130)
(6,074)
(328)
5,445
(1,087)
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
June 30
2023
$
35
96
June 30
2022
$
31
172
As at June 30, 2023, an amount of $0 was receivable resulting from these transactions (June 30, 2022: $0).
In addition, for the twelve-month period ended June 30, 2023, repayments of a lease liability totalling $84 were made to Dynamitage Castonguay Ltd.
(June 30, 2022 : $84).
Transactions with associate parties
The Company entered into the following transactions with its associate parties:
trade and other
receivables included an amount
receivable of $3,612 from one of
the Company's associates
June 30
2023
$
35,845
June 30
2022
$
26,256
Revenues
As at June 30, 2023,
(June 30, 2022: $4,322).
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.
As at June 30, 2023, investment in an associate totalling $0 in financial statement (June 30, 2022: $0).
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.
21. KEY MANAGEMENT COMPENSATION
The compensation recognized for key management remuneration and director's fees is as follows:
The Company has entered into short-term and low asset value lease agreements expiring in 2024 which call for total lease payments of $6 for the rental of
offices. None of the lease agreements contain renewal or purchase options or escalation clauses or any restrictions.
Lease payments recognized as an expense during the year amount to $9,469 (year ended June 30, 2022: $13,858). 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
Salaries and fees
Share-based compensation
lease agreements are used exclusively by the Company.
June 30
2023
$
1,195
62
1,257
June 30
2022
$
1,054
84
1,138
Guarantees
guarantees.
As at June 30, 2023, the Company issued some bank guarantees in favor of customers for a total amount of $762 (year ended June 30, 2022: $1,644),
maturing in December 2023. For the years ended June 30, 2022 and 2023, the Company has not made any payments in connection with these
22. 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.
Page 34
Page 35
65
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
22. 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, unless otherwise stated in this note.
Currency risk
The Company realizes a part of its activities in US dollars (US $), in Chiliean Pesos (CLP), in Ghanaian cedi (GHS cedi), in West African Francs (XOF)
and in Guinean Francs (GNF). The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2023:
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
209
405
2
(203)
(1,181)
(768)
(1,017)
CLP
$000s
GHS cedi
000s
XOF
000s
GNF
000s
177,555
2,797,346
538
(1,207,881)
(160,996)
1,606,562
2,651 0
35
-
2,095
(18)
-
2,112
243
565,705
182,741
150,259
(354,793)
-
543,912
1,196
2,566,859
7,036,228
-
(5,865,745)
-
3,737,342
568
The Company has estimated that a 10% increase or decrease in the foreign exchange rates would have caused a corresponding annual change in net
earnings (loss) and comprehensive loss of:
Change in net earnings (loss)
Change in other comprehensive income (loss)
Net exposure in Canadian dollars
US $
(75)
-
(75)
CLP
GHS cedi
-
195
195
-
18
18
XOF
-
88
88
GNF
-
42
42
The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2022:
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
111
476
(2)
(278)
(1,193)
(886)
(1,142)
CLP
$000s
GHS cedi
000s
XOF
000s
GNF
000s
42,374
1,381,790
(6,854)
(1,250,245)
(560,400)
(393,335)
(548)
7
5,881
2,102
(42)
-
7,948
1,272
332,228
609,384
154,662
(1,269,751)
-
(173,477)
(356)
1,321,553
3,656,404
-
(4,047,341)
-
930,616
136
The Company has estimated that a 10% increase or decrease in the above foreign exchange rates would have caused a corresponding annual change
in net earnings (loss) and comprehensive earnings (loss) of:
Change in net earnings (loss)
Change in other comprehensive income (loss)
Net exposure in Canadian dollars
US $
(84)
-
(84)
CLP
-
(40)
(40)
GHS cedi
-
94
94
XOF
-
(26)
(26)
GNF
-
10
10
Page 36
66
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(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, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
22. FINANCIAL INSTRUMENTS (continued)
22. 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
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.
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, 2023, the amount of the insurance coverage from EDC represents 4% of the accounts receivable (4% as at June 30, 2022).
The carrying amounts for accounts receivable are net of allowances for doubtful accounts, which are estimated based on aging analysis of receivables,
past experience, current conditions and forecasts of future economic conditions as well as 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.
The Company has estimated that a 10% increase or decrease in the foreign exchange rates would have caused a corresponding annual change in net
The aging of trade receivable balances and the allowance for doubtful accounts as at June 30, 2023 and June 30, 2022 were as follows:
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:
Balance at beginning of year
Change in allowance, other than write-offs and recoveries
Write-offs of accounts receivable
Recoveries
Foreign exchange translation differences
Balance at end of year
June 30
2023
$
21,989
2,955
3,913
28,857
905
27,952
June 30
2023
$
281
930
(273)
(26)
(7)
905
June 30
2022
$
32,247
2,155
3,020
37,422
281
37,141
June 30
2022
$
407
7
-
(121)
(12)
281
The Company has estimated that a 10% increase or decrease in the above foreign exchange rates would have caused a corresponding annual change
in net earnings (loss) and comprehensive earnings (loss) of:
As at June 30, 2023, 72% (June 30, 2022: 73%) of the trade and other receivables are aged as current and 3% are impaired (June 30, 2022: 1%). Given
that expected credit losses are minimal, the expected credit losses by trade accounts receivable aging have not been presented.
Three major customers represent 41% of the trade accounts receivable as at June 30, 2023 (June 30, 2022, One major customer represented 12% of
trade accounts receivable).
67
Page 37
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 (CLP), in Ghanaian cedi (GHS cedi), in West African Francs (XOF)
and in Guinean Francs (GNF). The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2023:
The Company's exposure to currency risk on its consolidated financial statements was as follows as at June 30, 2022:
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
earnings (loss) and comprehensive loss of:
Change in net earnings (loss)
Change in other comprehensive income (loss)
Net exposure in Canadian dollars
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
Change in net earnings (loss)
Change in other comprehensive income (loss)
Net exposure in Canadian dollars
US $
$000s
209
405
2
(203)
(1,181)
(768)
(1,017)
US $
(75)
-
(75)
US $
$000s
111
476
(2)
(278)
(1,193)
(886)
(1,142)
US $
(84)
-
(84)
CLP
$000s
GHS cedi
000s
XOF
000s
GNF
000s
177,555
2,797,346
538
(1,207,881)
(160,996)
1,606,562
2,651 0
35
-
-
2,095
(18)
2,112
243
(354,793)
(5,865,745)
565,705
182,741
150,259
-
543,912
1,196
2,566,859
7,036,228
3,737,342
568
CLP
GHS cedi
-
195
195
-
18
18
XOF
-
88
88
GNF
-
42
42
CLP
$000s
GHS cedi
000s
XOF
000s
GNF
000s
42,374
1,381,790
(6,854)
(1,250,245)
(560,400)
(393,335)
(548)
7
5,881
2,102
-
7,948
1,272
(42)
(1,269,751)
(4,047,341)
1,321,553
3,656,404
332,228
609,384
154,662
-
(173,477)
930,616
(356)
136
-
-
-
-
CLP
-
(40)
(40)
GHS cedi
-
94
94
XOF
-
(26)
(26)
GNF
-
10
10
Page 36
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
22. FINANCIAL INSTRUMENTS (continued)
Credit risk (continued)
One major customer represents 18% of the contract revenue for the year ended June 30, 2023 (year ended June 30, 2022, one major customer
represented 13%).
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, 2023, 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 (loss) earnings and comprehensive (loss) earnings of $175 (June 30, 2022, $254).
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 cash equivalents, trade and other receivables, trade and other payables and factoring liability is approximately equal to their
carrying values due to their short-term maturity.
The fair value of the long-term debt is determined using an evaluation of the estimated market value using a discount rate, adjusted for the Company’s
own credit risk, that reflects current market conditions.
68
Page 38
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
22. FINANCIAL INSTRUMENTS (continued)
Credit risk (continued)
represented 13%).
Canadian banks with high credit ratings.
The Company does not enter into derivatives to manage credit risk.
Interest rate risk
Equity market risk
Fair value
determines the appropriate course of actions to be taken by the Company.
The fair value of cash and cash equivalents, trade and other receivables, trade and other payables and factoring liability is approximately equal to their
carrying values due to their short-term maturity.
The fair value of the long-term debt is determined using an evaluation of the estimated market value using a discount rate, adjusted for the Company’s
own credit risk, that reflects current market conditions.
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
22.
FINANCIAL INSTRUMENTS (continued)
Fair value hierarchy
One major customer represents 18% of the contract revenue for the year ended June 30, 2023 (year ended June 30, 2022, one major customer
The methodology used to measure the Company's financial instruments accounted for at fair value is determined based on the following hierarchy:
Credit risk also arises from cash and cash equivalents with banks and financial institutions. This risk is limited because the counterparties are mainly
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, 2023, 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 (loss) earnings and comprehensive (loss) earnings of $175 (June 30, 2022, $254).
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, 2023, 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.
Equity market risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general
As at June 30, 2023
movements in the level of the stock market. The Company closely monitors the general trends in the markets and individual equity movements, and
Carrying value
Fair value
$
$
Level 1
$
Level 2
$
Level 3
$
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
Factoring liability
Long-term debt
As at June 30, 2022
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
Factoring liability
Long-term debt
2,181
30,538
2,181
30,538
320
320
320
-
27,621
1,449
34,338
27,621
1,449
33,494
Carrying value
Fair value
$
$
1,018
39,401
1,018
39,401
-
Level 1
$
33,494
Level 2
$
-
-
Level 3
$
146
146
146
-
-
33,578
1,317
36,924
33,578
1,317
36,924
There were no transfers of amounts between Level 1, Level 2 and Level 3 financial instruments for the year ended June 30, 2023.
Page 38
Page 39
69
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
22. 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 12 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 0.86% and 1.24%. As at
June 30, 2023, trade receivables include $1,449 related to factored accounts ($1,317 as at June 30, 2022 ).
The following tables present the contractual cash flows for the financial liabilities based on their remaining contractual maturities:
Total
$
27,621
1,449
34,638
1,219
64,927
Total
33,578
1,317
37,213
2,066
74,174
0 - 1 year
$
27,621
1,449
1,994
528
31,592
0 - 1 year
$
33,578
1,317
2,222
675
37,792
2 - 3 years
$
-
-
23,250
530
23,780
2 - 3 years
$
-
-
33,396
709
34,105
4 - 5 years
$
As at June 30, 2023
More than 5 years
$
-
-
2,422
161
2,583
-
-
6,972
-
6,972
4 - 5 years
$
As at June 30, 2022
More than 5 years
$
-
-
1,595
292
1,887
-
-
-
390
390
Trade and other payables
Factoring liability
Long-term debt
Lease liabilities
Trade and other payables
Factoring liability
Long-term debt
Lease liabilities
23. SEGMENTED INFORMATION
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.
70
Page 40
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
23. SEGMENTED INFORMATION (continued)
Data relating to each of the Company's reportable operating segments are presented as follows:
Contract revenue
Canada
International (1)
Earnings (loss) from operations
Canada
International (including write-down of inventory from restructuring
in Burkina Faso of $4,187 in 2023 ($0 in 2022))
General and corporate expenses related to head office(2)
Finance costs
Income tax expense
Net loss
(1)
The International operating segment included
Chilean revenue
West African revenue
June 30
2023
$
152,134
48,842
200,976
16,235
(10,570)
5,665
1,887
3,349
1,098
6,334
(669)
30,091
15,229
June 30
2022
$
145,201
50,272
195,473
12,188
(9,799)
2,389
3,563
2,235
3,238
9,036
(6,647)
27,135
18,111
Total
0 - 1 year
2 - 3 years
4 - 5 years
More than 5 years
As at June 30, 2022
(2)
General and corporate expenses include expenses for corporate offices, share options, foreign exchange (gain) loss and certain unallocated costs.
Depreciation and amortization
Canada
International
Total depreciation and amortization included in earnings
(loss) from operations
Unallocated and corporate assets
Total depreciation and amortization
6,743
3,326
10,069
1,026
11,095
6,349
3,697
10,046
1,097
11,143
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
22. 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 12 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 0.86% and 1.24%. As at
June 30, 2023, trade receivables include $1,449 related to factored accounts ($1,317 as at June 30, 2022 ).
The following tables present the contractual cash flows for the financial liabilities based on their remaining contractual maturities:
0 - 1 year
2 - 3 years
4 - 5 years
More than 5 years
As at June 30, 2023
Trade and other payables
Factoring liability
Long-term debt
Lease liabilities
Trade and other payables
Factoring liability
Long-term debt
Lease liabilities
23. SEGMENTED INFORMATION
Total
$
27,621
1,449
34,638
1,219
64,927
33,578
1,317
37,213
2,066
74,174
$
27,621
1,449
1,994
528
31,592
$
33,578
1,317
2,222
675
37,792
23,250
530
23,780
$
$
-
-
-
-
33,396
709
34,105
2,422
161
2,583
$
$
-
-
-
-
1,595
292
1,887
6,972
6,972
$
$
-
-
-
-
-
-
390
390
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 40
Page 41
71
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
23. SEGMENTED INFORMATION (continued)
Identifiable assets
Canada
Chile
West Africa
International - Other
Property, plant and equipment
Canada
Chile
West Africa
International - Other
Right-of-use assets
Canada
Chile
West Africa
International - Other
Intangible assets
Canada
Chile
West Africa
Non-current assets acquisitions
Canada
International
Unallocated and corporate assets
As at
June 30, 2023
$
As at
June 30, 2022
$
89,456
20,476
14,461
3,170
127,563
27,386
6,297
7,308
165
41,156
1,850
41
11
23
1,925
256
30
10
296
June 30
2023
$
8,779
1,065
444
10,288
92,099
15,906
26,090
2,964
137,059
26,168
5,296
9,785
154
41,403
1,424
83
819
62
2,388
219
85
16
320
June 30
2022
$
7,564
5,220
49
12,833
72
Page 42
ORBIT GARANT DRILLING INC.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(in thousands of Canadian dollars, except for data per share and option data)
23. SEGMENTED INFORMATION (continued)
Identifiable assets
Canada
Chile
West Africa
International - Other
Property, plant and equipment
Canada
Chile
West Africa
International - Other
Right-of-use assets
Canada
Chile
West Africa
International - Other
Intangible assets
Canada
Chile
West Africa
Non-current assets acquisitions
Canada
International
Unallocated and corporate assets
Shareholder Information
Orbit Garant Drilling Inc.
Directors
Jean-Yves Laliberté 1, 2
Corporate Director and Consultant
Chair of the Board of Directors
Mario Jacob 1, 2
Corporate Director and Consultant
Pierre Rougeau 1, 2*
Corporate Director and Consultant
Nicole Veilleux 1*, 2
Corporate Director and Consultant
Pierre 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.
Officers
Pierre Alexandre
President and Chief Executive Officer
Sylvain Laroche
Chief Operating Officer
Daniel Maheu
Chief Financial Officer and Corporate Secretary
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
37,372,756 (as at June 30, 2023)
Investor Relations
Daniel Maheu
Tel: 819-824-2707
Email: investors@orbitgarant.com
Bruce Wigle
Tel: 647-496-7856
Email: investors@orbitgarant.com
Transfer Agent and Registrar
TSX Trust Company
1700-1190 Avenue des Canadiens-de-Montréal
Montreal, QC
H3B 0G7
Tel: 1-800-387-0825
www.tsxtrust.com
General Counsel
Gowling WLG (Canada) LLP
Auditors
KPMG LLP
Annual Meeting
Thursday, November 30, 2023
Orbit Garant Head Office
3200 Jean-Jacques Cossette Blvd.
Val-d’Or, Quebec
The meeting will commence at 10:00 a.m. (ET)
June 30, 2023
June 30, 2022
As at
$
89,456
20,476
14,461
3,170
127,563
27,386
6,297
7,308
165
41,156
1,850
41
11
23
1,925
256
30
10
296
June 30
2023
$
8,779
1,065
444
10,288
As at
$
92,099
15,906
26,090
2,964
137,059
26,168
5,296
9,785
154
41,403
1,424
83
819
62
2,388
219
85
16
320
June 30
2022
$
7,564
5,220
49
12,833
Page 42
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
do not hesitate to contact us at one of our offices listed below. It will be our pleasure
prendre contact avec nous à nos bureaux dont les coordonnées figurent ci-dessous. Nous
to assist you and we look forward to working with you to address your specific needs.
nous ferons un plaisir de vous aider et nous nous réjouissons à l’idée de travailler avec vous
pour répondre à vos besoins spécifiques.
HEAD OFFICE
NEW BRUNSWICK
WEST AFRICA
Orbit Garant Drilling Services Inc.
TORONTO
398 Dover Road
Dieppe (New Brunswick)
Services de Forage Orbit Garant inc.
E1A 7L6
130, rue King, bureau 3680
Canada
C.P. 99
T: 506 853-9131
Toronto (Ontario)
M5X 1B1
UNITED STATES
Canada
NEVADA
Tél. : 416 889-7429
Drift Exploration Drilling Inc.
T Canada: +1 866 824-2707
SUDBURY
Services de Forage Orbit Garant inc.
SOUTH AMERICA
90 Red Deer Lake Road North
CHILE
Wahnapitae (Ontario)
Orbit Garant Chile S.A.
P0M 3C0
Avda. Los Cerrillos 998
Tél. : 705 694-5959
Cerrillos (Santiago)
Téléc. : 705 694-4784
Chile
T: +56 2 2411 5900
C: +56 9 9624 0421
VAL-D’OR
GUYANA
.cni tnaraG tibrO egaroF ed secivreS
3200, boul. Jean-Jacques Cossette
Val-d’Or (Québec)
OGD Drilling (Guyana) Inc.
J9P 6Y6
31 Belair Spring
Canada
East Coast Demerara
Tél. : 866 824-2707
Georgetown
Téléc. : 819 824-1595
Guyana
C Guyana: +592 629 6133
VAL-D’OR
Soudure Royale Concept
3200, boul. Jean-Jacques Cossette
Val-d’Or (Québec)
J9P 6Y6
Canada
Tél. : 819 825-5399
Téléc. : 819 825-7088
BURKINA FASO
GUYANA
Forage Orbit Garant BF S.A.S.
OGD Drilling (Guyana) Inc.
737, boulevard Tansoba-KOSSODO
157 C Waterloo Street,
12 B.P. 197 Ouagadougou 12
North Cummingsburg,
Ouagadougou
Georgetown,
Burkina Faso
Guyana
T Burkina Faso: +226 54 69 02 80
Tél. au Canada : 819 824-2707
C Burkina Faso: +226 77 98 00 00
Téléc. au Canada : 819 824-2195
GUINEA
CHILI
Forage Orbit Garant Guinee SARLU
Cite chemin de fer
Orbit Garant Chile S.A.
Immeuble Mamou C2A
Avda. Los Cerrillos 998,
Conakry
Cerrillos, Santiago,
Guinea
Chile
C Guinea: +224 625 815 545
T Chile: 562 2411-5900
GHANA
Orbit Garant Drilling Ghana Ltd.
Plot. 35 Funko Beach
Takoradi
WQ 104 Takoradi, Ghana
Tél. au Ghana : +233 (0) 303 960 889
Cellulaire au Canada : 506 863-9503
Cellulaire au Ghana : +233 (0) 270-334-162
BURKINA FASO
Forage Orbit Garant BF SAS
737, boulevard Tansoba-KOSSODO
12 B.P. 197 Ouagadougou 12
Ouagadougou, Burkina Faso
Téléphone +226 54 69 02 80
PÉROU
Perforacion Orbit Garant Peru S.A.C.
Av. De La Floresta 497
San Borja, Lima
Pérou
Tél. au Canada: 819 824-2707
Téléc. au Canada: 819-824-2195
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
info@orbitgarant.com
info@orbitgarant.com
CANADA
ALBERTA
QUEBEC
Drift Exploration Drilling Inc.
Orbit Garant Drilling Services Inc.
PO Box 5184, 803, 9 Ave. S.E.
3200 Jean-Jacques Cossette Blvd.
High River (Alberta)
Val-d’Or (Québec)
T1V 1K5
J9P 6Y6
Canada
Canada
Tél. : 403-652-3046
T : 819 824-2707
Téléc. : 403-652-3238
T: 866 824-2707
ONTARIO
NÉVADA
Orbit Garant Drilling Services Inc.
Drift Exploration Drilling Inc.
640 Garson Coniston Road
6120 Pedroli Lane
Sudbury (Ontario)
Winnemucca (Névada)
P3L 1R3
89446
Canada
États-Unis
T: 705 694-5959
Tél. : 403 601-4374
Orbit Garant Drilling Services Inc.
NOUVEAU-BRUNSWICK
3661 Mount Albert Road
R.R. #1, Sharon (Ontario)
.cni tnaraG tibrO egaroF ed secivreS
L0G 1V0
398, chemin Dover
Canada
Dieppe (Nouveau-Brunswick)
T: 905 478-2243
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