Energold Eyes Southeast Asia Mining Industry for Expansion -Executive

   By Clementine Wallop 
 

SINGAPORE--Toronto-listed Energold Drilling Corp. (EGD.V), which provides speciality drilling services to the mining industry, is looking to expand its business in Southeast Asia to capitalize on rapid growth in the region's mining industry, a company executive said Tuesday.

Energold's expansion comes at a time of increasing interest in Indonesia, the Philippines and Vietnam's substantial resources, which include coal, gold, silver, copper, nickel and tin. Growth in mining activity in the countries means higher demand for mining services such as drilling, Jerry Huang, investor relations manager, said on the sidelines of an industry conference in Singapore.

"What we say to investors is that they're not investing in the mining project...they're investing in the guys with the picks and shovels," he said. "We're definitely expanding in this region."

Energold has around 250 drill rigs in 22 countries around the world. Its customers include BHP Billiton Ltd. (BHP), Vale SA (VALE) and Rio Tinto (RIO). The company is particularly active in Mexico, and its dominant market is South America.

Within Southeast Asia, Energold is interested in increasing its activities in Vietnam, the Philippines and Indonesia, where it's already active in the coal sector.

The company is also interested in Myanmar, Mr. Huang said, although its mining industry remains at a very early stage due to a lack of investment in recent years during the country's military dictatorship.

"It's an interesting area that we're looking at...we're assessing opportunities there," he said.

Energold provides a niche service to the mining industry because it specializes in taking drilling equipment into challenging terrain, Mr. Huang said.

This skill should increase demand for Energold's services in a country such as Indonesia, where many coal mines are located on remote islands with difficult terrain, he said.

Across the globe, mining companies are increasingly seeking deposits in challenging geographies that are tougher to mine because easily exploited resources are dwindling, he said.

"There are less and less gold mines just sitting by the side of the highways these days," he said.

Demand for Energold's services remains steady, Mr. Huang said, despite recent spending cuts and layoffs at some major mining companies, which have been caused by a slowing Chinese economy and lower commodities prices.

The company is expecting its revenue to grow in 2012, but growth may slow compared with last year due to macroeconomic headwinds, he said.

Energold's revenue in the year to date is 85.9 million Canadian dollars ($85.96 million). This compares with 133.5 million Canadian dollars in full-year 2011 and 54.6 million Canadian dollars in full-year 2010.

Write to Clementine Wallop at [e-mail]

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