40 Orbit G arant 2012 annual rep O rt N OTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended June 30, 2012 and 2011 (in thousands of Canadian dollars, except for earnings per share and option data) 1. DESCRIPTION OF b USINESS Orbit Garant Drilling Inc. (the ‘’Company’’), amalgamated under the Canada Business Company Act, mainly operates a surface and underground diamond drilling business. The Company has operations in Canada, United States, Central and South America and West Africa. The Company’s head offce located at 3200, boul. Jean-Jacques Cossette, Val-d’Or (Quebec), Canada. The Company holds interests i n several entities, including the percentage of voting rights in its princip al subsidiaries as follows: % of voting rights Services de forage Orbit Garant Inc. 100% 9116-9300 Quebec inc. 100% Orbit Garant Ontario Inc. 100% Drift Exploration Drilling Inc. 100% Drift de Mexico SA de CV 100% Forage Orbit Inc. (dissolved September 6, 2012) 100% 9129-5642 Quebec inc. (dissolved December 30, 2011) 100% Lantech Drilling Services Inc. (since December 16, 2011) 100% 2. b USINESS ACQUISITIONS Acquisition of Lantech Drilling Services Inc.: On December 16, 2011, the Company acquired all issued and outstanding shares of Lantech Drilling Services Inc., which provides an expertise in iron ore drilling and geotechnical services, strengthened the team wi th highly skilled management personnel, drillers and feld technicians in Eastern Canada and also provides a strategic entry point to drilling market in West Africa. The purchas e price for the transaction was for a total net consideration of $6,614 payable for a cash consideration of $3,506 (calculated using the gross cash consideration of $8,380 less bank overdraft and long term-debt of an amount of $ 4,874) and $989 through the issuance of 217,082 common shares of the company and a contingent consideration of $2,119. Furthermore, the Company paid a cash consideration of $3,109 as compensation of the net working capital of the company on the acquisition date. The account payable as compensation of the net working capital does not bear interest and was paid fve days after the deliverance of the fnancial statements of Lantec h Drilling Services Inc. An amount of $1,050 has been accounted for as intangible assets and $4,056 as goodwill. The amount of goodwill will not be deductible for income tax purposes. The purchase price of Lantech Drilling Services Inc. is subject to an adjustment of an amount up to $2,400 calculated on the achievement of specifed earnings levels over the years ending December 15, 2012, 2013 and 2014. This contingent consideration has been evaluated at fair value at the acquisition date. Acquisition of 1085820 Ontario Limited (Advantage Control Technologies): On November 8, 2010, the Company acquired all issued and outstanding shares of 1085820 Ontario Limited, which specialized in technologies and equipment for the development of new technologies for mineral drilling in Canada. This addition of thes e advanced technologies is expected to increase signifcantly the productivity, improve heal th and safety and optimize labour effciency. The purchase price for the transaction was for a total net consideration of $3,585 payable for a cash consideration of $2,935 and $650 through the issuance of 132,743 common shares of the company and a contingent consideration of $2,014. Furthermore, the Company paid a cash consideration of $521 as compensation of the net working capital of the company on the acquisition date. The account payable as compensation of the net working capital does not bear interest and was paid ten days after the deliverance of the fnancial s tatements of 1085820 Ontario Limited. An amount of $4,322 has been accounted for as intangible assets and $1,846 as goodwill. The amount of goodwill will not be deductible for income tax purposes. Further to this transaction, the Company has also acquired some equipment related to this business for an amount of $375 payable in cash. The purchase price of 1085820 Ontario Limited is subject to an adjustment of an amount up to $2,400 calculated on the achievement of specifed earnings levels over the years ended November 8, 2012, 2013 and 2014 (initially November 8, 2011, 2012 and 2013). This contingent consideration has been evaluated at fair value at the acquisition date. During the year, the management modi fed the applicable dates for the calculation of the specifc earnings levels from November 8, 2011, 2012 and 2013 to November 8, 2012, 2013 and 2014.