eResearch | On August 31, GoldSpot Discoveries Inc. (TSXV: SPOT), released its Q2/2020 results with revenues $0.94 million, up from $0.40 from the same period a year ago.
Headquartered in Toronto, GoldSpot is a technology company that leverages artificial intelligence to assist companies in resource exploration with the goal of reducing capital risk by increasing exploration efficiencies and success rates. GoldSpot offers a service solution comprised of proprietary technology and traditional domain expertise, also making select investments in exploration companies.
The Company boasts of some high-profile investors including Palisade Global, Eric Sprott, US Global & Frank Holmes, Hochschild, and Rob McEwen.
GoldSpot has two main monetization strategies:
- Consultancy Services: The Company engages producers and advanced stage companies in business contracts. GoldSpot states that consultancy revenue covers all R&D and overhead costs.
- Investments and Royalties: GoldSpot invests in junior exploration companies. Thus, the Company applies AI to generate targets and can receive royalties. Moreover, the Company is building a portfolio of equities and royalties.
Q2/2020 Financial Results
GoldSpot announced revenues of $0.94 million in the second quarter of 2020 versus $0.40 million reported in the same quarter of 2019, representing a 135% increase.
According to booked contracts, GoldSpot expects to record revenue of $3 million in 2020.
Gross margins showed signs of improvement as it increased to 15.2% in Q2/2020 compared with the negative 7.2% from Q2/2019. However, SG&A increased to $0.42 million from $0.15 million in the same period but the Company explained the increase in SG&A was mainly due to non-recurring professional fees.
Adjusting operating income for the one-off expense, the resulting number was slightly positive at $38,340 in Q2/2020 compared with a loss of $0.75 million in Q2/2019.
Moreover, GoldSpot reported net income growth to $2.8 million in Q2/2020 compared with the $0.07 million loss in Q2/2019. In the quarter, Net Income was aided by a $3.2 million gain on the write-up of investments.
Cash and short-term investments grew by $3 million reaching $12.9 million in Q2/2020.
CHART 1: GoldSpot Consulting Revenue and Cash & Short-term Investments
Key Contracts in Q2/2020:
- Yamana Gold (TSE: YRI): The focus is on the Cerro Moro gold and silver mine in Argentina. Yamana expects to reduce exploration risk, exploration and drilling costs and make new discoveries.
- NV Gold Corp (CVE: NVX): NV Gold expects to use GoldSpot’s technologies to generate new exploration targets.
- Monarch Gold Corp. (TSX: MQR): Monarch will continue with developments at the Beaufor mine located on the Abitibi greenstone belt in Quebec.
- Manitou Gold Inc. (CVE: MTU): Although Manitou Gold was already a client, recent drilling data provided early confirmation of the prospectivity mapping area using GoldSpot’s artificial intelligence.
COVID-19
Since March 2020, the Company implemented procedures and actions such as social distancing as well as other measures to cut costs. GoldSpot laid off a minimal number of employees and maintained enough staff to continue with normal operations and sales. Due to additional sales and the sales in the Company’s pipeline, GoldSpot recalled most of the staff who were temporarily laid off.
Denis Laviolette, Executive Chairman and President of GoldSpot, said,
“This quarter is testament to our resilient business model and our ability to work with quality explorers and geological teams. Despite the ongoing COVID-19 pandemic, we have emerged from this quarter with our greatest total cash and cash equivalents and investments balance yet of $13 million and net income of $2.8 million. Our team of geoscientists and data scientists has the drive to change the mineral exploration sector, and the capacity to make it happen. Our work and R&D pipeline remain strong, and we are confident that we will continue to unlock the economic potential of geology, data science and resource development.”
GoldSpot closed the trading day at $0.19, up $0.005.
DIAGRAM 1: Big Data Solutions for Mineral Exploration
