surface drilling operations in Canada and internationally approximately 56 in fiscal 2007 and its manufacturing operations in Canada approximately 5 in fiscal 2007 Garant was founded by two brothers in 1984 They were experienced and well respected underground drillers who had been employed by a subsidiary of Boart L ongyear Limited before branching out on their own The Garant brothers had a total of 15 drills two customer contracts and 1 million of revenue when Garant was acquired by Mr Michel Mathieu in 1995 Since acquiring Garant Mr Mathieu grew Garant from a small regional drilling company into one of the largest underground drilling companies in Canada Orbit was cofounded by P ierre Alexandre and his brother Bernard Alexandre in 1986 While the cofounders were trained surface drillers they formed Orbit to take advantage of the opportunities in the expanding underground drilling market Orbit grew from three electric drills and one contract with L ouvicourt Gold Mines Ltd in 1986 to approximately 200 employees and 50 drilling rigs prior to being combined with Garant in early 2007 P ierre Alexandre eventually acquired his brothers shares in Orbit and Bernard Alexandre continues to work for the Company In January 2007 Garant acquired the shares of Orbit from the shareholders of Orbit in exchange for a combination of cash and shares of Garant for consideration of approximately 240 million consisting of approximately 125 million cash excluding deferred contingent cash consideration of 225 million and approximately 115 million shares of the Company in an arms length transaction In the early 1990s having built a solid reputation as an underground driller Orbit began international surface drilling and later its domestic surface drilling business Orbit Garant now has surface drilling operations domestically in Qu ebec and Ontario and surface drills operating internationally in the United States Guyana Suriname and Mexico On April 16 2007 the Company acquired i all of the issued and outstanding shares of Drift US A and Drift Mexico and ii those assets drills inventory and equipment associated with the reverse circulation drilling business carried on by Drift in consideration for approximately 16 million cash in an arms length transaction Drift continues to provide reverse circulation drilling services as a subsidiary of Orbit Garant and operates primarily in the United States and Mexico The acquisition of Drift provided the Company with an opportunity to provide its clients with reverse circulation drilling services and a chance to leverage its overhead infrastructure Investment Highlights Management believes that the Company has a number of attributes that make its performance sustainable and provide a solid base for continued growth including the following V ertically Integrated Operations Through Soudure R oyale the Company is able to benefit from a continuous uninterrupted supply of drills on a priority basis at a cost that it is approximately half the amount charged to third parties Management believes that many of its competitors are currently experiencing waiting periods of up to six months for the delivery of drills from third party manufacturers because of the current imbalance between supply and demand as compared to the approximately two to four weeks it takes for Soudure R oyale to manufacture drills for the Company The ability to add drills on an expedited basis has meant that the Company has been able to quickly increase its capacity to respond to customer demand for additional services In addition through Soudure R oyale the Company is able to offer continuous employment to its highly skilled labour force by selling excess drill capacity internationally through an established agency relationship which also eliminates the need for a sales staff and overhead Strong Market P osition throughout Industry The Company has earned its position as one of Canadas largest drilling companies based on number of drills in operation by becoming the dominant drilling service provider in Qu ebec and Ontario which accounted for 36 of all mining exploration expenditures in Canada in 2007 The Company has also established its strong market position by maintaining a lean management structure and lowcost operation and focusing on complex specialized drilling projects where its valueadded services provide it with longerterm engagements and more stable revenue Management believes that the Companys overhead structure enables it to offer customers the same services as other specialized drilling companies at a competitive price and achieve a higher gross margins than many of its competitors The Company has strengthened its market position in recent years by exploiting its leading position to take advantage of favourable market conditions most notably the growth in mineral exploration expenditures in order to expand its operations and strengthen customer relationships 30