Energold Drilling : Announces First Quarter 2017 Financial Results

In the mineral drilling market, there are substantial signs of improvement. The Company's drill rigs in select geographical markets are fully committed. The energy drilling market has started to improve as oil prices are stabilizing, leading to greater cost certainty among the Company's key customers in Western Canada. Meanwhile, the Company has increased its capacity utilization levels in the infrastructure, geothermal and geotechnical markets worldwide as it sought to make use of excess rig capacity in the energy sector.

In Q1-2017, the Company's overall gross margin improved to 24% from 11% in Q1-2016, mostly due to increased revenues and better cost control in both the mineral and energy division. Efforts to reduce costs, reflected in a significantly improved EBITDA in Q1-2017.

Energold had cash of $8.5 million and $46.1 million in working capital at March 31, 2017.

2017 Quarterly Results Comparison ($CAD '000s except per-share amounts and meters drilled)

MINERAL DRILLING DIVISION

Revenues increased to $9.6 million in Q1-2017 from $8.5 million in Q1-2016 as a result of a 38% increase in meters drilled. The average revenue per meter in Q1-2017 was $152 compared to $185 in Q1-2016. As rig capacity utilization increases, pricing and margins are expected to improve as the mineral division strives to maintain low operating costs. Due to improved productivity and monitoring costs, the margin for the first quarter of 2017 was $1.5 million or 16%, an improvement over the comparable period of $0.7 million or 8%. Management continues to try and improve its margin by evaluating a number of ways to increase productivity.

Meters Drilled

Revenues for the first quarter of 2017 were $7.8 million compared to $6.1 million in the comparable quarter of 2016. The stabilization of oil prices helped improve the Company's performance. Gross margin was $2.9 million or 37% in Q1-2017 compared to $1.2 million or 20% in Q1-2016. The Company continues to lower its costs associated with the ongoing functioning of the business.

Cros-Man which does infrastructure drilling and included in the Energy division had revenues of $1.2 million in Q1-2017 compared to $0.5 million in the comparable quarter.

Meters Drilled

Revenues for Dando for the first quarter of 2017 were $1.7 million with a margin of 5% compared to revenues of $2.0 million with a margin of (6)% in the comparable period in 2016. The combination of depressed minerals and oil and gas industry in addition to the inability for some of Dando's clients to finance their projects impacted Dando's revenues. However, we have taken a number of initiatives to deal with this situation including reorganizing engineering, sales and plant activities to improve operational efficiencies. Dando will continue to explore further changes to increase profitability.

INDUSTRY OUTLOOK

Management expects the recovery in the mineral drilling segment to continue through 2017 and into 2018. As exploration budgets expand from multi-year lows, customers in this division are planning larger programs which should continue to take on excess industry capacity. Profit margins in certain markets are expected to expand as larger programs combined with higher rates will improve economies of scale.

It is expected that the recovery in the oil and gas market will take time. However, spending has started to occur as oil prices continue to stabilize, providing some cost certainty for producers. Spring and summer drilling levels are expected to improve in 2017. The infrastructure division continues to grow across its key markets in Central and Western Canada and management is in the process of expanding this division as it wins greater market share.

UPDATE ON FINANCING

The debt refinancing transaction, under a binding term sheet with Extract Advisors LLC ('Extract'), first announced by the Company on February 14, 2017, (the 'Financing') remains in process despite being delayed to accommodate the completion of the formal financing documentation. Pursuant to the Financing, Energold expects to issue $20.0 million in Secured Convertible Debentures (the 'CDs'). Of the $20.0 million, Extract has agreed to take up $15.0 million worth of the CDs. The Company expects that the balance will be filled by existing debenture holders and new investors; insiders of the Company are expected to invest $2.25 million. Closing of the financing is expected by June 15, 2017.

A conference call is planned for May 25, 2017 at 4:30 pm Eastern. Dial-in numbers are 416-640-5946 or 866-233-4585.

Energold Drilling Corp. is a leading global specialty drilling company that services the mining, energy, water, infrastructure and manufacturing sectors in approximately 25 countries. Specializing in a socially and environmentally sensitive approach to drilling, Energold provides a comprehensive range of drilling services from early stage exploration to mine site operations for all commodity sectors and has an established drill rig manufacturer, Dando Drilling International, based in the United Kingdom.

On behalf of the Directors of Energold Drilling Corp.,

'Frederick W. Davidson'
President, CEO

For further information, please contact:

Steven Gold -- Chief Financial Officer
(416) 275-4070 or via email at sgold@energold.com

or

Jerry Huang - Director, Corporate Development & Investor Relations
(604) 681-9501 or via email at jhuang@energold.com

1100 - 543 Granville St.
Vancouver, BC V6C 1X8
www.energold.com

Telephone 604 681 9501
Facsimile 604 681 6813
info@energold.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements: Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to proposed activities, work programs and future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others, the effects of general economic conditions, a reduction in the demand for the Company's drilling services, the price of commodities, changing foreign exchange rates, actions by government authorities, the failure to find economically viable acquisition targets, title matters, environmental matters, reliance on key personnel, the ability for operational and other reasons to complete proposed activities and work programs, the need for additional financing and the timing and amount of expenditures. Energold Drilling Corp. does not assume the obligation to update any forward-looking statement.