Savvy Trades and Investments

[gilead23]

Been buying some GDLLF

This is a drilling services company for minerals primarily servicing west Africa, but they started an expansion into Peru in Q4.

They earned .05 usd last quarter against what is right now a 1.60 share price. They also just instituted a small dividend. The play here is on earnings expansion at the front of a mining cycle. Q4 is a weaker quarter with Q1/Q2 being the strongest. If you listen to their conference call and start about 15 minutes in it’s one of the most wildly bullish calls I have heard in awhile.

They mentioned that utilization was up to 70%+ in q4 after being more like 50% the rest of the year. They also mentioned that they are now more like 100% and buying new equipment. February was the best month in the history of the company with bookings filled for q2 and starting into Q3. Balance sheet is excellent. Insiders own about 40%.

There are concerns and caveats as with most things. Operating in west Africa has political risk for example, and I’m trying to figure out what a proper tax rate going forward is because at times it’s been astronomical. Also they have an ongoing 9 million dollar dispute with the Burkina Faso version of the IRS. Still I like the idea here. These guys built the company from a single rig. They have just about the best operating metrics in the business and have been profitable even during this past down cycle. It reminds me a bit of TGCI in the early days of the oil cycle for those who remember that one.