Can you provide a brief overview of Griffith Drilling and the capabilities that the company brings to the Chilean market?

Griffith Drilling was established in 2011 and is a private diamond drilling company based in La Serena, Chile, with a branch in Mendoza, Argentina. Boyd Griffith, my co-founder, has worked in diamond drilling since the early 1980s – first in Canada and then Chile since 1991. He came to Chile with a company called Connors Drilling. I come from the investment and financial side and have been involved in many junior mining companies and exploration operations. The best company I hired for drilling services while in Chile was Connors Drilling, and that is how I met Boyd.  When the opportunity presented itself, it was a no brainer for me to invest in forming Griffith Drilling.

Griffith has reproduced the Connors business model, which encompasses very high quality diamond drilling services. We are able to provide drilling services in places where other companies cannot, such as at high altitudes, complicated ground and depths of up to 2300 meters.

How does Griffith Drilling help companies increase the efficiency and productivity of their operations?

The focus of the mining market since 2013 has been for majors to move toward improving efficiency and productivity and away from increasing reserves. Furthermore, there has been little to no capital for greenfield exploration, nor any appetite for it from a timeline and permitting perspective.  The current trend is for companies to do expansions of their existing projects. One of the ways in which the industry is confronting the problem of permitting and not being able to develop new projects is by drilling deeper at their existing operations. Griffith Drilling is particularly good at assisting clients with hole completion and core recovery, and we drill to depths that clients require in order to expand their operations or justify an operation that is being developed. By being able to reach lower depths of exploration, we expand the life of a project and help to create a better return on investment.

How is the current regulatory environment in Chile affecting project development?

From a cost efficiency perspective, we have to comply with a significant number of standards, which has increased our operational costs over time – particularly the labor requirements. The same amount of work that we used to perform with three crews now requires four to meet current labor regulations. As a result, operational costs in the industry are relatively more expensive in Chile.

Does Griffith Drilling see opportunity in other markets?

There is a magic size for us in any one market, and once we get beyond that, the marginal benefit of adding more work and people starts to decline. Our sweet spot is between 20 and 25 rigs, and we have a plan to expand into other markets such as Peru, but only if there is a demand for the specialized drilling services we offer. We also like the North American region and feel that mining activity has significantly picked up there. Permitting has been streamlined, which has opened up opportunity.

Given the current market conditions, how has demand evolved for diamond drilling in Chile?

In 2012, there were approximately 650 rigs in Chile, but this number has greatly decreased today. There was a small uptick and then a substantial drop in capital investment in 2018, and the demand for drilling has fallen significantly as a result. In 2019, we estimate that approximately 20% of the total rigs available in Chile were operating. Some of the projects we were supposed to be working on have been postponed due to a variety of issues both community and market related. We see a lot of requests for bidding jobs, but it has yet to take off in 2019.

What differentiates Griffith drilling from competitors in the market?

Griffith Drilling believes that we are the number one drilling services provider for core recovery, hole completion, minimum hole deviation, production and minimum downtime. We also provide various forms of drilling that not all companies offer – surface core drilling, underground core drilling, geotechnical drilling and directional drilling. Our team has an industry reputation for service excellence and professionalism and maintaining a high standard of safety and respect for our people and the environment. We are very successful in difficult, challenging projects that have deep hole requirements, difficult ground conditions and operations at high altitudes. When companies need careful and successful drilling, Griffith excels. We perform in complex environments, and there aren’t many companies who can execute in these conditions. Also there is a competitive advantage in being a local operator and specialist in the market. Global operators have a dilution in efficiency because of their global operations.

Is Griffith Drilling positive about the future and what is the company’s vision moving forward in Chile?

On the macroeconomic side, I am very optimistic for the future. Electrification of cars and energy renewable growth is an unstoppable wave and the transition will require a lot of metals. On the microeconomic side, there are some regulatory, labor and social challenges that make operating in Chile more difficult; there is also the trade war and all of this has contributed to a weak sector in the short term. A project that used to take 10 years from start to finish for a new mine is now taking 20 years, so we hope to see movement towards a streamlining of the process.

Looking toward the future, Griffith Drilling would like to grow to be a 25-rig company that provides both surface and underground drilling. We aim to continue delivering very high quality service to our clients, and we want to be the drilling company of choice within the market.