Africa’s number one drilling company leverages a potential commodities supercycle



In 2021, predominantly West Africa-focused mining services outfit Geodrill increased its year-on-year revenue by 40% to US$115.2 million. The TSX company also increased net income to $14.1 million, or $0.31 per share, which was 88% higher than net income in fiscal 2020. The multi-purpose drill services provider also generated EBITDA of $29.5 million in 2021 – a 55% rise. Put simply, increasing demand for commodities was the primary driver of these highly encouraging financial results, according to Geodrill’s founder, president and CEO Dave Harper. “Strong demand for our drill rigs drives strong revenues, margins, everything. It’s a numbers game, that much is simple,” he tells RGN. “But I think what’s driving that demand is the bigger story. Mineral drilling is a cyclical business. The industry recently came off a multi-year downcycle and this new upcycle is well underway. But what is peculiar to previous cycles is we are seeing demand across multiple commodities, all at once. Gold is at historical highs, and at the same time EV [electric vehicle] metals demand is driving exploration for copper, lithium, zinc, nickel, iron ore. You name it, someone’s drilling for it.” 


While Harper’s assessment hints at the prospect of an imminent commodities supercycle rising the tide for all players in the mining business, it would be a disservice not to discuss Geodrill’s broader achievements throughout the last year-and-a-quarter.  


Indeed, the financial results reflect only one aspect of a hugely positive period which has seen Geodrill build its rig count to a record high, announce a raft of new contracts with Tier 1 mining companies operating in Africa, grow and diversify into new markets and continue to display corporate leadership in areas that really matter to its people, such as healthcare and the environment. 


Africa’s biggest driller 


Starting with drill rigs, Geodrill’s fleet now consists of 71 surface and underground rigs that can be deployed from the company’s mechanical hub in Ghana to provide reverse circulation (RC), diamond core, deep directional navi drilling, air core (AC), grade control, geo-tech and water borehole drilling to customers across West and North Africa. 


The sheer breadth of Geodrill’s current fleet is remarkable given that the company started 25 years ago with one rig and one contract in Ghana. “We have grown to become the largest mineral driller in Africa and the 7th largest in the world. We didn’t fluke that,” Harper remarks. 


“We believe that keeping the customer satisfied is key. We do this by providing a total drilling solution. That is servicing junior explorers, intermediates and senior miners with the full gamut of exploration drilling services, executed to the highest international HSEQ and ESG standards with a modern, well-maintained fleet of high-performance drills, operated by highly trained technicians.” 


This unwavering commitment to customer satisfaction has ultimately been the deciding factor in Geodrill attracting three major African mining players to sign multi-rig, long-term drilling contracts in the first two months of the year. 


First, Australian mid-tier gold player Perseus Mining selected Geodrill as its partner of choice for a campaign of exploration drilling in Ghana and Côte d’Ivoire. Made public in January, the agreement provides Perseus access to a maximum of 15 rigs from Geodrill’s fleet up to August 2023. The deal is expected to generate Geodrill over $45 million in revenue over the course of the contract. 


Then at the start of February, Geodrill announced a symbolic multi-rig contract with Centamin at its renowned Sukari gold mine in Egypt. The five-year contract – valued at $54 million in revenues – resembles the largest win in the company’s history, and will see Geodrill undertake 90,000 metres of underground drilling a year at the Tier 1 mine. 


Regional diversification 


In addition to securing a top tier customer with a world-class gold mine, the deal reflects Geodrill’s growth into a new geography which promises to deliver a strong platform for future business. A few weeks prior to the announcement, Egypt’s natural resources minister Tarek El Molla called for the mining industry to increase its contribution to the national GDP 10-fold by 2026, in a bid to kickstart a sector which is still populated only by the Sukari mine. 


“We expanded into Egypt last year. This is a country keen on increasing its gold mining production, so we like Egypt. If the contact with Centamin at Sukari is anything to go by, Egypt is going to be a great place to do business.” 


Despite operating exclusively in West Africa for nearly a quarter of a century, Geodrill has shown it is not shy of diversification with its move into Egypt. In an even bolder move, the company has also recently set up shop in a new continent – South America – with a subsidiary in Peru.  


“We did this with the view of diversifying our commodity spread to include EV metals. It’s early days but it’s going quite well. We like Egypt. And we like Peru. We like diversification, period.”  


Geodrill then announced another lucrative two-year contract with West Africa’s largest gold producer – Endeavour Mining – to complete a hattrick of major contract wins in early 2022. Back in its traditional West African homeland, the company has committed up to 10 drill rigs for 350,000 metres of exploration and mine reserve drilling, which will guarantee $31 million in revenues over the term of the contract. 


“These deals are very significant because they are some of the biggest contracts we’ve ever signed,” Harper comments. “Again, this comes back to demand. So much so that companies are prudently locking in their exploration programmes by securing rigs.  


“These contracts auger well for Geodrill because we can look forward with greater predictability to strong utilisation, and this is what ultimately drives our KPIs and financial performance.” 


Leading with ESG 


In recent years, Geodrill has built a reputation for itself as an industry leading proponent of ESG values. This is demonstrated by the fact that the company was shortlisted for Mines and Money’s 2021 Outstanding Achievements ESG award for explorers and developers, despite being a mining services outfit. 


Prior to that, the company was honoured to receive the Australia-Africa Minerals & Energy Group (AAMEG) ESG award for the best workforce and industry development in 2020. And perhaps most remarkably, Geodrill won the prestigious Millennium Excellence – AKA the King’s award – which is the highest recognition that can be bestowed on a foreign company in Ghana. 


High profile recognition aside, Geodrill’s commitment to upholding good ESG principles runs deep. “At the very core of our vision and values, there has always been a very strong commitment to the communities and the environment in which we operate,” Harper recounts. 


“As a company, we recognise that the environment, and perhaps more specifically climate change is one of the greatest threats facing the world today, and we take our protection of the environment seriously, which is embodied in our ESG targets and framework. But we rather let our actions speak louder than our words. We believe in in doing what it right – not what is just required.” 


To give some recent examples of Geodrill’s efforts to reduce its carbon footprint, the Ghana head office is now entirely powered by clean energy after the installation of off-grid solar panels in February. The company also helped with the installation of an eco-friendly bus shelter in central Accra made completely from recycled and upcycled plastic waste, which is a first for Africa – and possibly the world. 


Social licence 


In terms of social licence, Geodrill has always given generously to sports, education and healthcare organisations, including Ghana Children’s Heart Foundation, Orthopaedic Training Centre and the Pearl Safe Haven for women and child survivors of domestic abuse. 


Despite taking incredible pride in the company’s ongoing philanthropic work, Harper maintains that the greatest value Geodrill brings to its stakeholders is career opportunities. Geodrill currently employs 1,200 personnel across its operations, with each and every person given the chance to progress up the skills ladder from the moment they walk through the door.  


“And we care deeply for our employees,” Harper stresses. “A recent example; we sent an employee and his wife abroad for a kidney transplant, she was the donor. A brave woman and a real hero. But that Geodrill funded this level of medical attention is testament to the fact we do care.” 


When asked how Geodrill can take its inspiring ESG work to the next level, Harper responds: “More of the same basically. There’s no finish line when it comes to ESG and community engagement, but I believe we’re doing well with our ESG efforts and interestingly we are now partnering with our customers on some projects.” It will be interesting to see how the company will collaborate with its partners to drive ESG goals in the not too distant future. 


Leveraging the upcycle 


After a hugely successful 2021 and a strong start to 2022, buoyed by a high commodity price environment, Geodrill is in a strong position to leverage what feels like the first innings of an upcycle, according to Harper. 


“As an industry, we’ve just come off a seven year downcycle. So all things being equal, we’re at the precipice of a long upcycle, maybe six or seven years, and it’s only just begun. We added three rigs last year, and we’re adding seven rigs this year. That’s how confident we are. This upsizing of our fleet, adding to already strong utilisation, will continue to drive our top line, but the biggest challenge will be maintaining efficiencies such that all KPIs keep in lockstep with revenues.  


“More importantly, as a purpose-led company, we should not allow our growth aspirations to interfere with our purpose. That purpose is to continue meeting customers’ needs, safely and cost-effectively and as always to the highest international standards, no exceptions,” he concludes.