Mr. Pierre Alexandre reports

ORBIT GARANT DRILLING REPORTS RECORD THIRD QUARTER REVENUE

Orbit Garant Drilling Inc. today released its financial results for the three-month (Q3 2023) and nine-month periods ended March 31, 2023. All dollar amounts are in Canadian dollars unless otherwise stated.

"We generated record third quarter revenue and our adjusted gross margin, EBITDA and net earnings all improved significantly compared to the third quarter last year. While the fiscal third quarter is typically our weakest period of the year from a seasonal standpoint, we continue to benefit from strong customer demand and increased specialized drilling activity in Canada," said Pierre Alexandre, president and chief executive officer of Orbit Garant. "Looking ahead, we intend to primarily focus on our Canadian gold drilling operations, prioritizing longer-term, specialized drilling contracts with major and intermediate customers. We will selectively pursue international drilling opportunities in South America and West Africa when we have a high degree of cost and margin certainty. Our primary objective is to maximize profitability on a sustainable basis."

Third quarter results

Revenue for Q3 2023 totalled $49.3-million, an increase of 9.2 per cent compared with $45.2-million for the three-month period ended March 31, 2022 (Q3 2022). Canada revenue totalled $38.5-million in Q3 2023, an increase of 18.5 per cent compared with $32.5 million in Q3 2022, reflecting increased specialized drilling activity and improved pricing. International revenue declined to $10.8-million in Q3 2023 from $12.7-million in Q3 2022, reflecting a reduction of drilling activity in Burkina Faso, partially offset by increased drilling activity in Chile and Guinea.

Gross profit for Q3 2023 was $4.6-million, or 9.4 per cent of revenue, compared with $300,000, or 0.7 per cent of revenue, in Q3 2022. Depreciation expenses totalling $2.5-million are included in the cost of contract revenue for Q3 2023, compared with $2.7-million in Q3 2022. Adjusted gross margin, excluding depreciation expenses, was 14.4 per cent in Q3 2023, compared with adjusted gross margin of 6.7 per cent in Q3 2022. The increases in gross profit, gross margin, adjusted gross profit and adjusted gross margin were primarily attributable to increased specialized drilling activity, improved pricing and cost controls. Prior-year margins were impacted by project ramp-up costs in Canada, mobilization costs for new, long-term projects in Guinea and Chile, and temporary work disruptions in Canada and Chile related to the outbreak of the Omicron variant.

General and administrative expenses were $3.6-million, or 7.2 per cent of revenue, in Q3 2023, compared with $3.8-million, or 8.5 per cent of revenue, in Q3 2022.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $4.5-million in Q3 2023 from negative $(500,000) in Q3 2022. Net earnings for Q3 2023 were $200,000, or one cent per share, compared with a net loss of $4.1-million, or 11 cents per share, in Q3 2022. The positive variances were primarily attributable to increased specialized drilling activity, improved pricing, cost controls and a $700,000 foreign exchange gain. The company's increased EBITDA and net earnings in Q3 2023 also reflect 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.

Liquidity and capital resources

The company withdrew a net amount of $2.6-million on its credit facility in Q3 2023, compared with a withdrawal of $2.1-million in Q3 2022. The company's long-term debt under the credit facility, including $1.0-million (U.S.) ($1.4-million) drawn from the $5.0-million (U.S.) revolving credit facility and the current portion, was $24.3-million as at March 31, 2023, compared with $31.5-million as at June 30, 2022. This reduction primarily reflects the utilization of a substantial portion of the $8.47-million loan from the Business Development Bank of Canada that was secured in the first quarter of fiscal 2023.

As at March 31, 2023, the company's working capital totalled $55.9-million, compared with $53.4-million as at June 30, 2022, and 37,372,756 common shares were issued and outstanding. The company's working capital requirements are primarily related to the funding of inventory and the financing of accounts receivable.

Orbit Garant's unaudited interim consolidated financial statements and management's discussion and analysis for Q3 2023 are available via the company's website or SEDAR.

Conference call

Pierre Alexandre, president and chief executive officer, and Daniel Maheu, chief financial officer, will host a conference call for analysts and investors on Thursday, May 11, 2023, at 10 a.m. ET. To join the conference call without operator assistance, you can register and enter your phone number on-line to receive an instant automated callback. Alternatively, you can dial 416-764-8688 or 1-888-390-0546 to reach a live operator that will join you into the call.

A live webcast of the call will be available on Orbit Garant's website. The webcast will be archived following conclusion of the call.

To access a replay of the conference call dial 416-764-8677 or 1-888-390-0541, passcode: 160218 followed by the pound key. The replay will be available until May 18, 2023.

About Orbit Garant Drilling Inc.

Headquartered in Val d'Or, Que., Orbit Garant 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.

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