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Analysis

Increased Rig Productivity Key to Energold’s Growth

Mon, 10/21/2013 - 22:23

As exploration activities have increased in Mexico over the last decade, and many international companies have seized the resulting opportunities. Energold operates over 230 drilling rigs in 22 countries worldwide, and the company received significant demand from junior Canadian companies, as well as big operators, for projects in Mexico. “At the end of 2005 we only had two rigs in Mexico, one in the State of Mexico and another in Chiapas,” says Jesús Herrera, Country Manager of Energold Mexico. These served as a platform from which to expand throughout the region, and the company is now well-established not just in Mexico, but also in the Dominican Republic, Haiti, Peru, Chile, Argentina, and Nicaragua. Energold’s work in the Latin American region is complemented by its presence in Africa, Asia, the Middle East, and North America.

The success of a drilling company such as Energold relies on the stream of business coming from junior companies and mining companies carrying out exploration programs. “The advantage of the Mexican market compared to other markets in Latin America such as Haiti and the Dominican Republic, is that Mexico offers more security and legal certainty for investment,” says Herrera. The added value that Energold has brought to the Mexican market has been the technological advancement of its drilling equipment. “We do not need to construct roads or cut down trees, all we need is a 5x5 meter space in which to install our machinery and begin drilling,” he adds. This is a particular advantage given that many other drilling technologies use larger machinery, requiring a larger space in which to operate and thus having a bigger impact on the environment. Given its size, our machinery can also be transported via even the most challenging roads and terrain. “Energold has strived to improve its technology and be innovative. This is why we have a specialized facility in Vancouver that works exclusively on improving our equipment,” explains Herrera. As a result of the research it has done Energold has increased 

the versatility of its machinery, meaning that no significant changes are needed for different drilling processes.

One of Energold’s main priorities is to create a skilled team that has the training and experience to approach drilling projects efficiently, though finding the right people for the job has not always been easy. “The challenge is to find the perfectly trained people for the job. One cannot commit to a job without having good drillers, because this can lead to lost time and money. Behind our drillers we have a team of engineers that are waiting for the samples in order to begin the process of analysis. We must have qualified drillers we can rely on, because otherwise it can affect the whole production chain. This is why it is so crucial for us to have a capable team that is able to create value both for our company and for our clients,” explains Herrera. “For this reason we have created a training center in Mexico, where we send all of our workers for training.”

Energold’s approach to building its team in Mexico has clearly paid off, as the company now has 32 rigs in the country and its operations here represent 30% of its total global operations. It has also developed strategies to overcome other challenges associated with beginning operations in a new country, in areas such as transport, logistical, and administrative matters. “In order to be able to operate we require gas or diesel powered generators to light up the camp during the night shift. Last year an engineer from the Tecnológico de Durango joined our ranks, helping us to design solar plants, which provide us with a constant source of pollution-free energy for these sorts of purposes,” says Herrera. “While working we take environmental regulations very much into account, whether we are working with a junior, medium or large company. It is not because our clients require us to do so, but rather it is something that we impose on ourselves.”

Another key priority for Energold has been the improvement of its processes. The company is continuously measuring the productivity of its rigs, with the aim of reducing operational costs and thus the costs for its clients. “The mining industry changes depending on the price of minerals. We overcome the challenge posed by fluctuations in metal prices by increasing our productivity, enabling us to reduce our prices,” says Herrera. “By earning the trust of companies that have projects at the production stage and working together with them we can guarantee a constant flow of work for ourselves. Despite suffering a blow as a result of global metal prices these companies never cancel their exploration programs; they may be exploring less but they never stop completely,” he concludes.