FORACO : REPORTS 2016 Q2 FINANCIAL RESULTS

FORACO INTERNATIONAL REPORTS Q2 2016

Revenue still low but increased tendering activity

NEWS RELEASE

Toronto, Ontario / Marseille, France - Tuesday, August 2, 2016. Foraco International SA (TSX:FAR) (the "Company" or "Foraco"), a leading global provider of mineral drilling services, today reported unaudited financial results for its second quarter 2016. All figures are reported in US Dollars (US$), unless otherwise indicated.

"In Q2, the subdued market conditions have continued to impact our activity together with continuing strong pressure on prices and the postponement of certain ongoing contracts. Despite this, we were able to gain new significant clients in the period, which give us the opportunity to add growth sources for the next cycle upturn" said Daniel Simoncini, Chairman and co-CEO of Foraco. "Notwithstanding the significant increase in gold price, some metal prices have started to recover during the first six months of the year, although it is yet too early to consider this as a firm indication that we reached the cycle upturn point. The commercial activity has recently shown some new signs of life in the junior space, which is a good marker, even if prices are still depressed by ailing small to midsize drilling contractors desperate to get cash. Meanwhile, we are working to further enrich the Company services offering to increase significantly its resilience going forward and take advantage of the market turnaround when it will occur."

"The Company has proved its ability to limit the negative financial impact of the severe adverse conditions in the mining industry. The EBITDA for the quarter and the first six months of 2016 is positive. We were able to finance the peak in working capital requirements mainly due to increasing trade receivables and inventory as a result of the late start of certain projects at the beginning of the year. Our capex plan remains under control. Our general and administrative expenses continue to be strictly monitored" commented Jean-Pierre Charmensat, co-CEO and Chief Financial Officer. "Based on the contracts at hand, we expect activity and margins to favorably evolve in the next quarters so as to generate a positive annual cash flow. As previously agreed with our French banks the Company resumed discussions regarding the future of our French credit facilities. We believe that the actions taken and results seen place us in a favorable position to comfort our financial situation for the future following these negotiations".

Three months Q2 2016 Highlights

Revenue

• Q2 2016 revenue amounted to US$ 32.3 million compared to US$ 43.8 million in Q2 2015, a decrease of 26%. Using Q2 2015 exchanges rates, Q2 2016 revenue decreased by 20%, mainly as a consequence of the late start of contracts recorded during the first months of the year.

• The utilization rate was 36% in Q2 2016 (unchanged compared to Q2 2015).

Profitability

• The Q2 2016 gross margin including depreciation within cost of sales was US$ 2.1 million compared to US$ 5.4 million in Q2 2015, this reduction can mainly be explained by the decrease of activity, continued pressure on prices and mobilization costs related to the first phase of contracts awaiting formal confirmation of extension.

• SG&A costs reduced by US$ 0.6 million (or 13%) between Q2 2016 and Q2 2015, as a result of certain additional savings.

• EBIT amounted to US$ (2.5) million in Q2 2016 compared to US$ 0.4 million in Q2 2015.

• During the quarter, EBITDA amounted to US$ 2.6 million compared to US$ 6.9 million for the same quarter last year.

  Cash flow and net debt

• Free cash flow was US$ (1.6) million in Q2 2016 compared to US$ (2.3) million in Q2 2015, due to the reduction of the activity and the working capital requirements on new projects.

• The net debt was US$ 103.7 million as at June 30, 2016 compared to US$ 89.3 million as at December 31, 2015. This increase is due to the negative free cash flows (US$ - 9.3 million) and the adverse effect of foreign exchange rates (mainly Euro) US$ 3.6 million.

  H2 2016 Highlights

  Revenue

• H1 2016 revenue amounted to US$ 56.4 million compared to US$ 77.1 million in H1 2015, a decrease of 27% (or 19% excluding the impact of exchange rates). This decrease is mainly linked to the late start of contracts.

  Profitability

• H1 2016 gross margin including depreciation within cost of sales was US$ (0.7) million compared to US$ 2.2 million in H1 2015, this increase can mainly be explained by the decrease in activity, continued pressure on prices and mobilization costs related to the first phase of contracts awaiting formal confirmation of extension.

• SG&A costs reduced by US$ 1.0 million between H1 2015 and H1 2016 as a result of certain additional savings which more than compensated the reversal of an unused provision for doubtful debt (US$0.4 million) recorded during the first quarter 2016.

• Capital expenditure was US$ 2.8 million in H1 2016 compared to US$ 4.1 million in H1 2015.

  Selected financial data

  (In thousands of US$)

  (unaudited)

  Three-month period ended June 30,

  Six-month period ended June 30,

  2016

  2015

  2016 2015

  Revenue	32,297	43,825	56,425	77,105
  Gross profit / (loss) (1)	2,128	5,399	(664)	2,199
  As a percentage of sales	6.6%	12.3%	-1.2%	2.9%
  EBITDA (2)	2,625	6,913	1,005	5,661
  As a percentage of sales	8.1%	15.8%	1.8%	7.3%
  Operating profit / (loss)	(2,510)	361	(10,520)	(7,761)
  As a percentage of sales	-7.8%	0.8%	-18.6%	-10.1%
  Profit / (loss) for the period	(3,305)	(720)	(11,619)	(8,611)
  Attributable to: Equity holders of the Company	(3,828)	(1,145)	(11,905)	(8,166)
  Non-controlling interests	623	425	286	(445)
  EPS (in US cents) Basic	(4.28)	(1.30)	(13.31)	(11.25)
  Diluted	(4.28)	(1.30)	(13.31)	(11.25)

• This line item includes amortization and depreciation expenses related to operations

• The six-month periods presented have been normalized in order to exclude in 2016, an amount of US$ 900 thousand corresponding to the final settlement of an earn-out clause related to the 2012 acquisition in Australia.

Financial results

Revenue

Q2 2016

Q2 2016 revenue amounted to US$ 32.3 million compared to US$ 43.8 million in Q2 2015, a decrease of 26%. Using Q2 2016 exchanges rates, Q2 2016 revenue decreased by 20%.

In EMEA, revenue decreased by 14% (6% excluding the foreign exchange impact), from US$ 15.0 million in Q2 2015 to US$ 12.9 million in Q2 2016. The reduction in activity in Russia and the late starts of certain contracts in Africa were partially compensated by a higher level of activity in France.

Revenue in South America amounted to US$ 7.8 million in Q2 2016 (US$ 10.1 million in Q2 2015), a decrease of 23% or 12% excluding the foreign exchange impact. This can mainly be explained by the reduced activity in Brazil and lack of activity in Argentina.

Revenue in North America decreased by 31% or 29% excluding the impact of exchange rates, mainly due to the postponement of new contracts and the reduction of volume on some ongoing contracts.

In Asia Pacific, Q2 2016 revenue amounted to US$ 5.2 million, a decrease of 45% mainly due to the reduction of drilling programs and to some delays in the start of new contracts in Australia. In New Caledonia, activity only started in June.

H1 2016

H1 2016 revenue amounted to US$ 56.4 million compared to US$ 77.1 million in H1 2015, a decrease of 27% or 19% excluding the impact of exchange rates.

In EMEA, revenue decreased by 12% (from US$ 25.4 million in H1 2015 to US$ 22.3 million in H1 2016). Excluding the foreign exchange impact mainly linked to the Russian Ruble variance, revenue decreased by 5% compared to the same period last year.

Revenue in South America amounted to US$ 12.4 million in H1 2016 (US$ 19.0 million in H1 2015), a decrease of 35% (or 22% excluding the foreign exchange variance). This can mainly be explained by the reduced activity in Chile and Brazil and lack of activity in Argentina.

Revenue in North America was US$ 12.9 million compared to US$ 17.0 million, a decrease of 24% mainly due to the postponement of new contracts and the reduction of volumes on certain ongoing contracts.

In Asia Pacific, H1 2016 revenue amounted to US$ 8.8 million, a decrease of 44% mainly due to the reduction of drilling programs and to some delays in the start of new contracts in Australia. In New Caledonia, activity only started in June.

Gross profit

Q2 2016

Q2 2016 gross margin including depreciation within cost of sales was US$ 2.1 million compared to US$

5.4 million in Q2 2015, this increase can mainly be explained by the decrease in activity, continued pressure on prices and mobilization costs.

H1 2016

H1 2016 gross margin including depreciation within cost of sales was US$ (0.7) million compared to US$

2.1 million in H1 2015, this increase can mainly be explained by the decrease in activity, continued pressure on prices and mobilization costs.