competition for drillers is intense As such the ability to attract train and retain high quality drillers is a high priority for all drilling services providers A failure by the Company to retain qualified drillers or attract and train new qualified drillers could have a material adverse effect on the Companys financial performance financial condition cash flows and growth prospects In addition rising rates paid to drillers and helpers will exert pressure on the Companys profit margins if it is unable to pass on such higher costs to its customers through price increases Increased Cost of Sourcing Consumables When bidding on an underground drilling contract the cost of sourcing consumables is a key consideration in deciding upon the pricing Underground drilling contracts are typically for one to two years and expose the Company to an increase in the cost of consumables and labour during that period of time A material increase in the cost of the labour or consumables during that period could result in materially higher costs and could materially reduce the Companys financial performance financial condition cash flows and growth prospects Leverage and R estrictive Covenants Orbit Garant will enter into the New Credit Agreement on Closing in order to provide it with credit facilities to fund among other things working capital and acquisitions The degree to which Orbit Garant is leveraged could have important consequences including Orbit Garants ability to obtain additional financing for working capital capital expenditures or acquisitions in the future may be limited a significant portion of Orbit Garants cash flow from operations may be dedicated to the payment of the principal of and interest on its indebtedness thereby reducing funds available for future operations and certain of Orbit Garants borrowings including borrowings under the New Credit Agreement will be at variable rates of interests which exposes Orbit Garant to the risk of increased interest rates which may have an adverse effect on Orbit Garants financial condition The New Credit Agreement will contain numerous restrictive covenants that limit the discretion of Orbit Garants management with respect to certain business matters These covenants are anticipated to place significant restrictions on among other things changes in ownership and the ability of Orbit Garant to create liens or other encumbrances to pay dividends or make certain other payments investments acquisitions capital expenditures loans and guarantees and to sell or otherwise dispose of assets and merge with another entity In addition the New Credit Agreement will contain financial covenants that require Orbit Garant to meet certain financial ratios and financial condition tests A failure to comply with the obligations in the New Credit Agreement could result in a default which if not cured or waived could permit acceleration of the relevant indebtedness If the indebtedness under the New Credit Agreement were to be accelerated there can be no assurance that the assets of Orbit Garant would be sufficient to repay in full that indebtedness In addition the New Credit Agreement will mature no later than the fourth anniversary thereof There can be no assurance that future borrowings or equity financing will be available to Orbit Garant or available on acceptable terms in an amount sufficient to fund Orbit Garants needs This could in turn have a material adverse effect on the business financial condition and results of operations of Orbit Garant See Description of Debt Access of Customers to Equity Markets Economic factors may make it more difficult for mining companies particularly junior mining companies to raise money to fund exploration activity This difficulty would have an adverse impact on the demand for drilling services and could have a material adverse effect on the financial performance financial condition cash flows and growth prospects of the Company Ongoing Integration of Business Systems The Company has recently installed new accounting inventory and operating information and technology systems These systems are designed to improve the business operations and management oversight However there may be a level of disruption to the business with incorrect information produced and relied upon while implementation and training is being completed and managements attention may be diverted to ensuring the successful integration of the new technology during this process The Companys financial performance 71