Geodrill Limited (GEO) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Geodrill Limited year-end financial results conference call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, March 6, 2023, at 10:00 a.m. Eastern Standard Time and is being broadcast live via the Internet. During today's call, management will make statements regarding management's expectations for the company's future financial and operational performance. These statements are considered forward-looking statements. Each forward-looking statement speaks only as of the date of this call, and actual results may differ materially from management's expectations for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in the company's SEDAR filings. I would now like to turn the call over to the President and CEO of Geodrill Limited, Mr. Dave Harper. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Geodrill's Quarter 4 and 2022 Fiscal Year-End Results Call. I will begin with an overview of our operational performance for the year. Our CFO, Greg Borsk, will then give us a more detailed review of our financial results. After which, I'll be happy to discuss our outlook for quarter 1 2023 and beyond. We achieved a number of financial and operational milestones this year. Operationally, not only have we been able to expand our drill rig fleet count to 76, we have also expanded well beyond West Africa to Egypt and to South America. The strategic decision to diversify geographically has been critical to Geodrill's growth trajectory. Recall that we were awarded 3 significant long-term contracts with major exploration partners, which provides future cash flow and recurring revenues and visibility. And while some of these contracts were renewals, the new one, in Egypt, added USD 10 million to our 2022 revenue. And collectively, these, among other contracts, drove another record year and the best metrics in the industry. And Greg will speak to this in more detail a little later. But high level, we increased our revenue year-over-year by 20%, net income by 34%. EBITDA was up 30% year-over-year. We also achieved a return on capital employed of 25% and a return on equity of 18%. Included in all of this, we also delivered throughout the year $0.06 in dividends to our investors. Now this was up from $0.02 the previous year. And I am pleased to announce that we will be taking this up again. As mentioned, we continued to develop our diversified geographical and commodity strategy drilling for copper, zinc, lithium. And we expanded into Egypt and into Chile. We also ended the year with net cash at USD 9.8 million. We recorded our best-in-class debt-to-equity ratio of 4%. And finally, we completed listing on the OTCQX, with the goal of increasing shareholder visibility. Our sharp focus on executing on our growth strategy has put us in a strong position to continue to benefit from the strong demand of our services as we also remain focused on the operational excellence, which continues to drive profitability. At this point, I'll hand the call -- I'll discuss our quarter 1 2023 after Greg reviews our financial performance. So I'll hand over to Greg. Thank you.

Thank you, Dave. As a reminder, all figures are reported in U.S. dollars. Geodrill achieved record key financial metrics in 2022, record revenue, record EBITDA and record net income on the back of continued strong demand in all geographical locations for our drilling services. The company generated revenue of $138.6 million for 2022, an increase of $23.4 million or 20% when compared to $115.2 million for 2021. The increase in revenue was a result of the increase in demand for the company's drilling services. With the gold price averaging approximately $1,800 per ounce during 2022, global gold exploration spending continues to be strong. The company has invested a significant amount of capital into its drill rig fleet and has advantages in the form of experience, accuracy, reliability and safety, all which have been key factors in the awarding of contracts and form the basis for the increase in the company's revenue. The company has also been successful in expanding its client base to include a mix of majors, intermediates and juniors, which has contributed to the increase in overall drilling activity and a well-balanced mix of drilling clients and services. The gross profit for 2022 was $40.6 million, being 29% of revenue, compared to a gross profit of $30.1 million, being 26% of revenue for 2021. EBITDA for 2022 was $38.4 million, being 28% of revenue, compared to 29.5% -- $29.5 million, being 26% of revenue for 2021. The net income for 2022 was $18.9 million or $0.41 per share compared to $14.1 million or $0.31 per share for 2021. Lastly, on the back of the record financial results and the outlook for 2023, the company has announced that it increased its semiannual dividend to CAD 0.04 per share. At this point, I will turn the call back to Dave.

Thank you, Greg. In short, the outlook for 2023 remains very strong. The significant growth in our financial metrics does not truly reflect the real and growing momentum that we are currently -- that we are continuing to experience on the ground. With 2023 already under way, our financial outperformance remains very robust. Our pipeline for new business is exciting, and we look forward to sharing updates with the market as they transpire. This is not only as the outlook for gold exploration remains strong but also the potential for new metals such as lithium exploration and development in West Africa, which is really only just starting to be understood. Little exploration for lithium has been done in this region, a district, which is really renowned for its gold. And therefore, the blue-sky potential remains completely untapped. With significant global demand for lithium to our [ EV ] car battery forecast and current mine supply well short of its ability to meet it. West Africa could play a significant role in decarbonization of the planet through lithium supply. Geodrill is present, ready and able to work with not only gold producers but those also seeking these metals critical for a greater future. Also, our expansion into new geographical regions as part of our growth strategy is pivotal to both revenue and profit growth going forward. And we expect to see this momentum continue into 2023 and beyond. We believe that juniors will continue to be able to secure financing for exploration projects. And as mentioned, we have also expanded our presence into South America, where we were recently awarded our first-ever contract in Chile, which began in quarter 4 2022. The company now operates in 2 countries in South America, where base metals, copper, zinc exploration is prevalent. And we continue to develop a diversified geographical and commodity strategy while maintaining our strong balance sheet. The company still expects the robust mining and exploration cycle will continue into 2023 and beyond. And with an established business model, an impressive financial record and discounted stock valuation, we believe Geodrill is strategically positioned to create more value than other industry players. At this point, I'd like to thank everybody for participating in today's call. Now I'd be happy to hand the call over to the operator, at this point, to -- if anybody should wish to ask a question. Thank you.

[Operator Instructions] Your first question will come from Gordon Lawson at Paradigm Capital.

Congratulations on another great quarter. Your margins continued to improve in 2022 from last year. Could you provide any more color on your cost structure to give us a sense of guidance for 2023?

Sure. Okay. If you look at the margin, I think we went over this. It went from 26% up to 29%. There's really a few factors in there. One is economies of scale. Gordon, if you look, the revenue went up 20%, 2022 over 2021. Also, in 2021, kind of a tail end there, we had some investments, kind of some start-up costs, et cetera, in some of the newer regions. So you're starting to see like a full year of operations in Egypt for us. You're seeing, as Dave mentioned, the expansion in the 2 countries in South America. So some of our kind of upfront costs that were there in 2021 and impacted the margins are being smoothed a bit in 2022. And I think, lastly, you're starting to see just some pricing with utilization across the industry picking up. We do have some increased costs, but you're also able to offset that and see better pricing. So really, there's a few things. Just in summary, the margin increase is really economies of scale. Full -- kind of full smoothing for 2022, and then you're also seeing a pricing impact here.

Okay. That's great. And one more, if I may. In terms of shareholder returns, I mean, it's nice to see another dividend increase. But how would you prioritize debt repayment versus share buybacks?

Well, the debt repayment we have, so there's really a few different types of facilities. One, we have a credit line, which is revolving. And we use that -- that's more just for cash flow purposes. When we need it, we'll take it and then we repay that. So if you look at the company's credit line, throughout the year, we use that. And usually by -- when we come to Q4 at the end of the year, we don't need that. So at the end of the year 2022, there was nothing withdrawn on the credit line. The other component of debt are medium-term loans, and those are more back versus equipment purchases. So if we're going to buy -- and these were, I think in 2020, maybe 2021, we -- if we're going to buy a significant amount of rigs, we're able to finance those over a 3-year term. So it allows us to kind of match the debt payment with the cash flow from those new rigs. So there's no -- what we do, we repay our credit line when it's available because that's revolving. And then the 2 medium-term loans, at the end of the year, we only had $4.6 million on those. But again, they're just termed out over a period of time.

Your next question comes from Daryl Young at TD Securities.

First question is just around -- I mean, great quarter and better than I had anticipated. And I think I was looking for more weakness around the rainy season. So just curious if you were able to make that up in the back half of the quarter or where some of the strength came from in the quarter.

Yes, it was a funny sort of a quarter. The rainy season that normally occurs in quarter 3 was very late, and so it actually extended into quarter 4. So we had a strong -- probably stronger than expected quarter 3. At the beginning of quarter 4, we thought it was actually going to be a weak quarter. As it turned out, it was actually quite a robust quarter. It did get off to a slow start. So October was quiet. No member was a record. And December -- first half of December, very strong. And then, of course, it just tapered off for Christmas as it normally does. And that augurs very well for 2023 because we've just talked up very strong results for January, February. Now -- sorry, does that answer your question? I think really what happened is the wet season eventually arrived. It just arrived late. So we just kind of just somewhat skewed what would have normally been a Q3, Q4 result. What effectively got shifted from one bucket that got shifted into the next. The overall result for the year, I thought, was great. And the wet season came and left just in a -- probably a month later than it normal does.

Yes. No, that's good context. And I guess the second part of my question was going to parlay into what you just alluded to is the results are -- were very, very strong, obviously, in November, December then. And that continued into '23. So just trying to get a sense of what you think top line could look like in 2023 and what kind of growth is on the horizon, just given some of these monthly results seem like they're quite strong at the end of last year started this year.

It's actually a really good question. I just -- I think I spoke to it a little bit in the -- on the call. I think it's important to note that on the 20% growth that we saw through 2022, a lot of that was renewed business. But one particular contract, one new contract added, call it, USD 10-ish million to that top line growth. Now as that rolls forward, that will not be a new contract in 2023, it is an existing contract. And therefore, I would just caution to hasten to add that, that will not be new business in 2023. So if you're looking for 20% year-over-year improvement this year, I think you're going to be disappointed. The number would probably be -- probably closer to half of that, I'm guessing.

Got you. Okay. That's great.

It's not a reflection of the business doing poorly, not at all. What -- in fact, the business is doing very well. It's just that, that was new business, and that new business is a renewal in this current year that we're in as we speak. So if you look at it and say, well, we had winding the clock back a little further, 2021 was a 40% year-over-year [ improvement ], a stonking result by any standards. And to turn around and do a 20% in 2022 is, by definition, the stonking result in itself. If we can close out 2023 and see single digits to, say, 10% improvement on the back of increased utilization across the fleet and a slightly enlarging fleet and some pricing leverage, then I think that, in itself, considering that we're seeing an environment a backdrop of increased pricing increased costs as well, I think if we can achieve that, I think that's going to be a great result.

[Operator Instructions] Your next question will come from Ahmad Shaath at Beacon Securities.

Dave, congrats on a good quarter. But maybe on the quarter itself, on gross margin, maybe [indiscernible] level on a surprise at least to my number, I expected a better gross margin performance. Anything we should be aware of on the margin performance? Or is it just with the new nature of business with some exposure to the production drilling and all that, that's what we should anticipate in Q4 margins going forward?

No, Ahmad, if you look at the gross margin for Q4, it was the same as prior year. It dips down to about 24%. But I mean that it's just -- it's the nature of our business. The seasonality in December, it would happen. So I would get some comfort in the fact that gross margin, Q4 over Q4, is consistent. We know why. It relates to December and shutdown, clients shutting down for the holidays. But I mean, overall, I would focus on the annual gross margin at 29%. Because if you look through the quarters, our gross margin in Q1 and Q2 are extremely high, and then we move through wet season in Q4, it comes down. So I would look at the annual margin.

I'm looking at EBITDA 24% for quarter 4. It's not [indiscernible], it's like -- that's a pretty good result.

No. Fair enough. Just trying to understand the year-over-year revenue growth is there. Just the gross margin expansion wasn't there, just given the operational leverage maybe expect a little bit more, but that's helpful overall. And I guess on an EBITDA level of expanding margins, good to see. And Dave, maybe a follow-up on new contracts. Look, you started a new one in Chile. Maybe give us an idea of the size of that if you're able to and the potential expansion into that market. What are your thoughts there?

We are really liking Chile at the moment. Here's the thing. It's a large copper-producing nation, and we were -- would to put a couple of rigs there on a copper project, which had a lot of potential we thought. And so we mobilized 2 rigs, which happened to be sitting idle in Peru at the time because of the political situation there. And I understand that the customer has made a major discovery. And I am encouraged by the fact that, that customer has increased their requirement for drilling two- or threefold. And so we've visited just figuring out how we're going to get some rigs over there at the moment and get them down there and get them spinning. So all good. Only positive things to report in South America. It has had a few problems in Peru with the, what was it, the impeachment and so on and so forth. And so we have basically went from a situation where we had 0 utilization at the midpoint of the year to well effectively took 2 of the rigs -- of the 4 that were sitting in Peru and move them down to Chile, and now it looks like the other 2 will go down and we'll actually add some additional rigs on top of that. But this is all happening at a time when Peru seems to be sorting out its problems, and now we're starting to get a lot of inquiries there as well. So all was a bumpy start through to the midpoint of the year in South America. Very strong finish and very, very encouraging that one of our customers has made a major copper discovery there. Based on -- and also from an operational point of view, this is a project that other drilling companies that had problems being able to succeed operationally. And we were able to get some holes down beyond a challenging zone and through the drilling zone and draw some directional drilling underneath that. So without getting too technical, it's really been a -- it's been a technical and operational success for us, and I think that that's going to transcend into a financial performance -- financial success here.

So did I hear that right? So the contract now utilizing the 2 rigs that you had previously locked up in Peru, and you're looking for more and essentially up that -- up to 5 or 6 rigs? Things are according to plan this year?

That would be the case. That is actually the case. That is actually the case. The 4 rigs will be fully spoken for, and we're just looking at trying to add another couple of rigs.

That's great color. That's -- I appreciate that, Dave. That's all for my questions. I'll jump back into the...

Having said we're going to do that, it won't happen overnight. These things are not -- nothing happens overnight. It's all good, but it's going to take time to put the plan in place. But in the meantime, we've got the 2 rigs spinning. The third rig is actually just arrived. It's coming through customs at the moment. And I believe we're just figuring out, we're going to give the fourth and fifth and sixth rigs. The other interesting thing that's happened actually as a result of that being able to sort out that, call it, technical or operational issue is we've actually had a flood of inquiries as a result of that. So I think it's all looking good in South America for us at the moment. Yes.

And Ahmad, it's key to point out, I mean entering into that second country, this is the success of Geodrill in West Africa, and Africa is having multiple countries. And it's an investment on our behalf. It takes time, resources, capital, money. But having 2 operations in 2 countries now, having the base in Peru and in Chile just gives us more flexibility. And as Dave said, we had idle rigs sitting there. We're able to get them operational in Chile, and things are really looking good for both in Chile, and hopefully, something will happen with Peru also going forward. So it's really multiple countries on a continent really helps us. And so that's kind of the push we have on for South America.

Loving Egypt at the moment. That's the other thing that we probably didn't speak enough about on the call. We secured late last year or early this year, a very large contract, underground contract, one of the oldest, most established mines there. From the time of signing the contract to actually boots on the ground and drilling, we were drilling at the end of quarter 1. Like signing a contract to actually drilling first hole, boots on the ground, people trained up workforce was weak. And the transition from signing of contract, drilling first [ hole ], adding $10 million to the P&L, I've never seen this happen so quickly. It's a real credit to the team and the guys out there in Egypt. The other thing that's happened as a result of being in Egypt, which we're also starting to experience just here now in Chile, is whenever there's a new driller in town, there's always -- it's a bit like there's a new restaurant in town. Everybody wants to give you a go. And so we're seeing -- we've got really, really positive things to say about Egypt at the moment. And just generally, in general, around that Nubian Shield area, we think it's completely under-explored, completely under-drilled. All the very -- all the same themes that sort of attracted us to West Africa many years ago. And I think that just in these 2 new markets, there's enormous growth potential. And this is on the back of what is already a robust operating and financial environment with 25 years. This is now on 25th year, by the way, of building a brand in West Africa. So stepping up, stepping out and doing it in a very substantial and quantitative and profitable ways.

Your next question comes from Brad Virbitsky at Equinox Partners.

Congrats on the great results. I wanted to get a sense of how hot or how -- if you could sort of give any sort of color around the market for drilling rigs in West Africa. So like if a customer wanted a rig today, would it take 6 months or a year to get it? Or do you still have rigs available? And how are you thinking about pricing? Are you able to push 10% plus pricing on your customers? Or it's more like a smaller number than that? And then for your margins, do you expect to be able to hold your margins this year or expand them? Or do you think you'll see margin pressure given the inflationary environment?

Good questions. So first of all, if you want a rig today, you won't get one. You'll have to -- there's a backlog of -- and I think it's the same across the industry. Most drillers are probably busy at the moment. Geodrill's current utilization as of this morning was 77%. It was 70% average through the average of the 12 months of 2022. In quarter 4, I think it was about 70%. So it's indicative of a very strong start to the year. Now most folks that would be drilling, let's say, in April would have been talking to us about drills in probably January and trying to get deals signed in February, and then they'd -- this is where it is currently is they'd probably be a month, maybe 6 weeks. And that kind of works out okay because most of our customers have had their operational issues to deal with as well. All those is out there and clear tracks and so on and so we get their teams in place. So it kind of works out. As the industry continues to gather momentum, and other drilling companies start to increase their utilization the industry as a whole, the industry utilization increases. It just becomes more increasingly difficult, and customers who are looking for rigs tend to get in there and order them a little sooner. And they do actually expect to pay a little more because it's a supply/demand sort of situation. This is on the back of rising costs as well. So it's -- generally, what happens is drilling prices go up. And you would hope to keep pace with the -- also increasing cost base. And probably such that you could probably get a little bit ahead of the game. So what happens with -- I think your other question there was about pricing. What happens with drilling prices? Well, historically, as the global utilization of the drilling fleet across the world reaches, say, an inflection point of 50%. We start to see pricing move north, and that's just a normal supply/demand-driven thing. We're kind of there now. I would say that the industry is not at 50%. We will be at 50% sometime this year. That's the global average industry average utilization, I'm talking about there. Sorry, what was your third question again?

Margins for your company. Do you expect to be able to hold or increase from next year or release the margin pressure?

I'm going to hand that one over to Greg because he's more involved in the costs and so on and so forth. But my short answer would be yes.

Yes. No, exactly. I think the pricing pressure that we experienced, the biggest cost of our COGS is consumables and labor. And I think everyone across the industry is seeing an increase in that. So we're able to pass that increase in through pricing. So what you saw in 2022 the increase in margin was, as I mentioned earlier, economies of scale. Also, just some of the investments we made in terms of expanding geographically and putting people in place and moving kit around. You only had a small revenue component of that. And in 2022, you're seeing almost a full year. So yes, we don't expect margins to come under pressure. And I think just one thing to add on the rigs, your question on rig, what you have to remember with Geodrill, probably our biggest competitive advantage is our workshops and our bases. And these are the investments that we've made in the country. So if you look at Ghana, our workshop in Anwiankwanta, we have a 2-pronged strategy with rigs. One is we're always ordering new rigs. Those are kind of more customer focused. So if we have a customer that needs a special type of rig or an additional rig, et cetera, we can order that and get it through the system. And as Dave said, that takes a period of time. But the other advantage Geodrill has is we have rigs coming out of our own workshop. And we have our -- out of the 76 rigs we have, we always have those consistently going in, getting tuned up, et cetera. So they're ready to get back out. So we're a bit -- we're fortunate in that we have the relationship with the manufacturers to get new rigs, but we also have our own skill set and our own basis and own team to make sure rigs are continually getting upgraded and are available to us. So I just wanted to remind you about that, Brad.

If I could just follow up on that. I'm curious sort of what your -- how you're thinking about adding to your rig fleet, how many rigs you plan to add this year and how -- whether there's a long lead time for you to get new rigs. And then also, I guess I'm surprised that the industry isn't slowing down a little bit given the sort of the poor equity markets for gold mining stocks in the last year or so. So if you could just comment on those 2 things, I'd appreciate it.

No, I was just going to say it's customer-focused and it's also geographic. So if you look at the areas where we're operating, there are certain geographical areas where we would like to add additional rigs. Just again, it's economies of scale, doing -- expanding our footprint in those countries. And there's other countries where we may not be looking to add rigs but deploy those rigs into other jurisdictions. So the way Dave's grown this business from over 25 years, it's really customer focused. So we listen to the customer. If they need additional rigs, we'll figure out how to [ boost ] that with either our existing fleet or with getting more rigs out of our workshop, rigs from suppliers, but we always manage. And I think you're right, you're seeing even our competitors with high utilization. But if you look, everyone is continuing to add rigs. It's -- some are retiring rigs and adding rigs, so they're kind of flat. But with Geodrill, we add net rigs. We continue to increase the number. And without repeating myself, it's really customer-focused and geographically focused.

Brad, if you -- if I can just jump in there. If you just look at our -- I'm just looking at our 5-year CAGR rig growth, and it's 6%. If you're looking for like a number to crunch or to put something against, you could safely say that we'll probably end this year -- probably going to end this year with other, call it, 80 rigs. And next year, I'll probably just keep growing the rig fleet. Historically, that's what we've done. And I'm not expecting too much it's going to change that. So yes. It was another half to your question actually, and I didn't quite remember what that was. Could you just...

Just the last thing for me is -- so the equity markets for gold companies have been poor for a year or so now.

Yes, yes, yes. You spoke about -- sorry. Yes, you mentioned equity markets. Look, what happens in the equity markets is one thing, but you got to remember that most of our customers are miners. And they're producing gold, and all producing whatever they're producing. But for every year, they take a year's gold production, and they put it -- they take that ore and turn it into gold and sell it and then effectively, they've depleted whatever it is, 100,000, 200,000 ounces off their balance sheet. They need to replace it. So what's actually driving a large part of our business at the moment is just that. It's depletion. As mining companies deplete. Typically, what happens is a mining company will go to market with 1 million or 1.5 million ounces. 100,000 ounces a year, 10, 15 years mine life. Well, as they deplete their first year, the thing is they're 1 year closer to someone standing at the podium and saying now we're going to talk about a mine closure. Well, that number really happens in reality. What actually happens is they then take some of the cash that's generated from operations and put it straight back into drilling to do what, to grow the resource that they've just depleted. And so by example, some mines that I was just doing some presentation work down in the U.S. a little while ago, pitching to oil and gas audiences. It's a very different audience. I went to great lengths to explain. How some of the mines that we were working on 25 years ago, this is now Geodrill's 25th year of business. The projects that we were drilling that had 1 million ounces of gold and 15 years of mine life, we are still drilling today, having never left those projects. And they have been producing gold at the targeted rate that they stated they were going to produce way back when. And what they've done is increase their resources and they still have 15 years of mining life ahead of them. And this is the thing that I think a lot of folks overlook when they look at drilling. They think it's something that stops every time there's a boom or a bust. Can't be the case. As long as mining companies continue to mine, they need to drill. They have to drill. They have no choice. And so that's what's -- this is a big part of the story why it's so attractive, is the recurring revenues and the cash that's generated from those recurring revenues if the particular driller that you invest in is a profitable driller. I hope that answers your question. Now when the -- sorry, back to the capital markets, the only pushback we have seen recently is I think juniors were having a tough time through 2022 in the back half. I think that seems to be changing at the moment. I'm seeing a lot of financings going through. So we actually stated in our in -- on our call today that we believe the junior market is improving and will continue to improve. At least that's what we're seeing at the moment anyway.

Your next question comes from [ Ray Gibbons ], a private investor.

It's amazing to view your results, credible business. By far, the best business I've ever owned a share of. When I think of the things you guys have tackled over the last years and then I see the valuation, it just blows my mind. I mean this 2x, 2.5x EBITDA valuation and people like you missed margins by a shade there. What's the story blows my mind. But I guess, like when I think about what makes up the valuation, I think, over 20% return on equity, you grew top line. Your customer mix, like you just explained, is much more of a miner than a junior. I mean you're totally different business, not to mention like through the last cycle, if people are going to point to you and say, you're such a cyclical business, you doubled the size of your rig fleet through the last cycle. And so I just don't know what you have to prove to people. On the ESG side, you take these local guys from the grease brush all the way to drilling. You make them masters of the highest-end machinery they could be masters of, incredible skills. Like, what else could you do for the area than what you're doing? And I guess, my last -- I guess my question is, what is the inflection point on the dividend that will make people wake up and understand the business that you have built different from all of your competitors? Like the true business that you have built, is there a level at which people just have to pay attention and they can no longer assign a 6 PE and to have 2.5x EBITDA? Like is there -- are your bankers telling you that there's a point in which you can blow people away? Because EBITDA or operating cash flow minus CapEx is USD 8 million. So you have the money to make people really question what they're doing, like when they look at your business.

Yes, I don't have the answer to that question. I really don't, [ Ray ]. I think all we can do is do what we do best, and that's just -- and thank you for all those comments. That's very kind of you. Look, we're just going to keep on growing this business the way that we always have. We're just going to keep on keeping on. We're just going to keep drilling holes. That's what we're very good at. I get asked this question a lot, why the valuation? I've got to put it down to the fact that we're liquid. We're small. And so we don't attract the big funds, right? But the value, I mean, is there. And if you look at investing, what happens is -- what usually happens is best investments are usually found by smart retail that then basically eventually in the next rotation ends up with institutional, and then institutional sell it to big retail. That's usually how the cycle works. And I think that this is a very overlooked story. I'm just looking at the numbers. Some of the numbers that you've quoted there are absolutely correct. So you've obviously done your analysis. Mine comes out this morning, that we're trading at basically 2.4x EBIT -- EBITDA. And if you want to look at value to which we're trading under book value, we are trading below our replacement value for all of those assets. And those assets actually in today's market are even themselves. You can actually sell it. If you should put a for sale sign on, let's just say there was a -- it was the end of the gold rush, and it was -- goes down a tumbleweed sort of blown through and the saloon doors, you can hear them creak, and there's a little rattlesnake there running under the -- sneaking under the rig there. You imagine all these rigs are just completely [ tucked ] up and doing nothing, but nothing could be further from the truth. This is 24/7, 365 days a year, churning out $140 million a year in revenue and increasing and growing at whatever rate we're growing at. So I think -- look, eventually, what will happen is something will happen, either we'll get taken out or whatever. I just don't know. What I do know is this, in the last upcycle, which is call it 2012, 2013, we traded at 4.5x EBITDA. That was our average. We're currently trading at 2.5. And now people say -- the other thing is that people say, I just own too much of the story because I own 40% of it. That is an asset, okay? It's an asset because when we do eventually get to a stage where we're talking to something about -- someone about doing something, it certainly won't be a 2.5 or 3x EBITDA. It'd be more like where we were in the last upcycle. And then there will be a premium because owning 40% of the stock, no one can take this unless it has my blessing. And do you think I'm going to give that away. That's just not going to be the case. But that -- all of that said, certainly, I think most would agree, we are currently in an upcycle. I would tell you at this point in time, based on my industry experience, which goes back 35 years, I believe we're 2 years into an upcycle. And I think the upcycle is going to be good for 7 or 8 years. I'd say that with some confidence because the downcycle is 7 years. And what happens is the upside tends to mirror the downside, either side of the parabolic, and it tends to add a year each time it goes, and that's why it's northward moving. Now I believe we're 2 years in. I think we've probably got 6 or 7 to run. And look, somewhere in the next few years, I'm sure that phone call is going to come, and something will happen. And I think there's the value for the patient, people that want to get on the story, and just continue to enjoy what is based on today's release that Greg announced before the $0.04 semiannual. That's a 2% -- 2.6% yield. So you've got the yield. You've got the growth. And until this finite situation develops, and it hasn't yet, but I'm sure it will at some point in time, until then, we're just going to keep on keeping on and keep rewarding our shareholders with dividends, consistent with something that they would have been earning at the bank, probably not as competitive as we could be right now. But we've just got to keep some money in the tin for growth as well. And so the other side of it is the growth. The stock has moved in the last year. We've had a nice 50% bump or something or other. But we still have not kept pace with our operational and financial performance. That side is still lacking. So the value is still there -- still equally there.

Is there a chance for a follow-up question?

On the value to, [ Ray ], the C-level, if you look at Dave's holdings; Terry Burling, our CEO (sic) [ COO ]; myself, the -- none of us have ever sold a share. So we agree. We believe in this business. We believe in the value -- actually, in 2022, we all wrote some pretty large checks and reinvested in the business. So yes, we're with you on value, but there's -- as Dave said, you just -- what we do is drill holes. And we keep our clients happy and we just have to keep doing that, just keep our nose to the grind, drill holes and manage. It's about balance, balancing the shareholders wants with the dividend. We just put the dividend in 2021. We started at $0.01 semi-annual. 2022, we took it up to $0.03. 2024, we're going to take it to $0.04. But you have to balance that with adding new rigs. And so it is a balance, and we believe in the business. We're with you.

Did you have a follow-up there, [ Ray ]?

Is there a chance to follow up there?

Yes. Sure.

Can you guys still hear me?

Yes, sure.

Yes, as long as you guys aren't fatiguing, I'm happy to just stick it out with the best deployer of capital, land and labor that I've been a part of. And when it comes to like West Africa, like the things you guys have dealt with like, obviously, COVID, and then not to mention the terrorist attack and then you have Ebola. You need to be in and out of some of these tough jurisdictions. I mean you really have done everything you could in a place where people have to go now to find their 3 million-ounce deposits, like they have to go where you are. So you're not -- you're actually in the place to be. So -- and -- but anyways, thank you all for your efforts.

I'll just throw -- thank you. Thank you very much. I'll just throw in actually. Just -- that's a good point that you just raised. I don't know a lot of folks who get this, but where is all the gold coming from at the moment? Like you think China is the largest producer in the world. You'd be absolutely correct. And the next is Australia, and then there's Russia. The average between them, they produce 330,000 metric ton each of them per annum. Well, there's 456 metric tons coming from West Africa at the moment. That's the official numbers from 7 of the 12 countries. And so if you wind the clock back 25 years ago to when I started, that was a fraction of that number. So identified this when I was getting started as a region that had been completely under-drilled, and it needed a lot of exploration. And the result of that exploration is the mines have been basically sprung to life. And those mines that are now producing are depleting. They're depleting all of them on average at a rate of probably 120,000 ounces per year. That's on average. Some are doing a lot better, of course. But guess what? Those -- all the depletion has to be drilled. It's all going to be drilled. So the point is if you want elephants, you've got to come down to Africa. That's [indiscernible].

At this time, there are no further questions on the phone lines. I will turn the conference back to Mr. Harper for any closing remarks.

Now at this point, there are none. And thank you, everybody, for being on today's call, and we wish everybody a successful PDAC and enjoy the rest of your day. Thank you.

Thank you.

Ladies and gentlemen, this does indeed conclude your conference call for this morning. We thank you all for your participation and ask you to please disconnect your lines.