Innovation stems from taking a unique approach to a challenge and exacting a solution that benefits all involved in the process. So when Frederick W. Davidson, President and CEO of Energold Drilling Corporation, and President of Impact Silver, recognized that the type of highly portable drilling services he was looking for was not available to his team, he decided to design and utilize a highly portable rig that would suit not only his needs, but the needs of those who required access to remote locations in socially and environmentally sensitive areas. MetalsNews.com sat down with Davidson recently to get the inside story on his two lucrative enterprises.

Originally a professor of finance and economics at the University of British Columbia, Davidson got swept up in the mining business 35 years ago upon the startup of a small mine in northern British Columbia. “I literally fell in love with the business,” says Davidson, who was involved exclusively in exploration until about 10 years ago when he had a revelation to design a rig that would be applicable in remote locations with a lack of infrastructure, while at the same time minimizing the environmental foot print.

Davidson followed through and modified existing equipment to be modular, portable and retrofitted with equally powerful drills. The rigs can be dissembled and transported since the heaviest piece weighs no more than 400 pounds, and can be reassembled on-site, four-meters by four-meters in about an hour. “And yet that same drill rig can now get down to almost 800 meters,” adds Davidson. “They’re very, very powerful rigs, they’re proprietary and we have 71 of them out of our fleet of 76. This allows us to work virtually anywhere.”

Now, with the ability to work virtually anywhere, Davidson’s next consideration was the impact he and his team would have on the locals which immediately became available to them. Taking a conscientious approach to Energold’s new application, Davidson understood the significance of this highly portable rig.

“The initial objective of the company was to have rigs that dealt with some of the social issues, because we involve locals to become part of the drilling programs. We literally leave no environmental footprint when we work. These initiatives have created very strong relationships with our clients and the local community, because people could see in the exploration program an immediate impact socially and environmentally. Young men and women in the community received a wage, where in many cases they hadn’t received a salary or wage in their entire life. Plus we were able to provide and teach them various skills. All in all, we were able to leave, if you will, on a positive note for all parties involved which is just important to us”

For the past four years, Davidson and Energold have been advancing the concept and philosophy, that the community was just as important as the industry in reaping the benefits of mutual exchange. It was at that point Davidson had his epiphany to become primarily a driller and less and less an exploration entity.

“We’re not the biggest, but we are the biggest in what we do,” he exclaims. “And the thing that has happened in the last few years, which has really made it exciting for us, is that as the big companies have been unable to replace their reserves, they’ve had to go farther afield, into places where traditionally they couldn’t explore, where there are social issues, environmental issues or a lack of infrastructure. Our rigs and our approach are uniquely designed for those sites.”

Davidson calls this situation “frontier drilling,” whether it be in the Sierra Madre, Mexico, or the middle of the Democratic Republic of Congo. No matter where, it seems the same scenario presents itself: remoteness, lack of infrastructure, and indigent population. Despite the recent decline in overall mining sector, Davidson says his segment remains a strong, dramatic grower.

It’s at this point Impact Silver comes into play, not only as “a bit of a fallout from what we’re doing,” according to Davidson, but also as an example of taking initiative and vision and transforming a unique opportunity into a reality.

“We wanted to focus on drilling, so we took some of our portfolio in Mexico, when silver was at $4.00, and passed it over to IMPACT Silver Corp. The very first project IMPACT focused on was the Zacualpan Silver District, a mining project with a history of almost 500 years, although it was probably mined before by the Indians, and certainly after the Conquest, by the Spanish and Cortez.”

Impact initially acquired an area about 125-square kilometers, which has now been staked out to around 600-square kilometers. Located in the Taxco Silver Region, 100 kilometers southwest of Mexico City, the area has produced almost 17 million ounces since 1975.

Davidson and company have already located more than 1,000 old mine workings there, a lot of which ceased operation after falling below several-kilo grade material or experienced water shortages. “Of course, with modern mining techniques water problems are not an issue, and everybody would kill for several kilo grades,” Davidson notes. “So we’ve found that it’s been a very successful mine, and naturally, we’re expanding its potential very professionally. I’d be very surprised if we’re not doing almost double the production by next year as we bring our second mill into operation.”

Currently, IMPACT has one mill operating at about two-thirds capacity with construction of a second mill in the southwest corner of the project slated in the near future. A third mill with about 16 concessions in Zacatecas is “number three on our priority list at IMPACT,” and according to Davidson, “both companies are extremely well-funded.” For the nine months ended 2009, Energold had around $21 million in the bank with $44 million in working capital and no debt. Impact has $7 million in the bank with $2.4 million positive operating cash flow and positive net earnings.

Despite the bright horizons for Davidson and his two enterprises, he’s just as cautious about the current business climate.

“This is a tough business; it’s cyclical. You have to be prepared for the downturns, and we’re well prepared. Our rigs are well placed to pick up business as we go forward, and I think from Energold’s point of view, a downturn like this is an opportunity.

“People always say that you make your money in a bull market. You don’t. You really make your money becoming prepared in a bear market for the bull market, and we’re uniquely positioned to do that.”

“I believe we’ve got the advantage that we already know our clients, seeing my board has been in the business as long as I have, there is a lot of experience to draw from” Davidson says.

Impact has an extensive exploration program taking shape this year that will expand its production, and has a few silver targets to acquire due to the cost-effectiveness of their operation. Davidson mentions, “We’re probably the lowest-cost operator in Mexico right now.”

Besides both being well-funded considering the market, with positive working capital, a real potential to develop along with excellent management, Davidson and his companies wouldn’t be where they are without willingness to defy the norm.

“Despite that I’m a chartered accountant as well, you really have to get your hands dirty in this business; if not, you stand to lose from it, and we’re too small an industry to do that. The theoretical background is important, but the willingness to roll up your sleeves is just as crucial.”

For more information, visit www.energold.com and www.impactsilver.com

Energold Drilling Corp.: 

Address:	1100-543 Granville Street
Vancouver, BC
Canada V6C 1X8
Telephone:	(604) 681-9501
Fax:	(604) 605-3816
Website:	www.energold.com
Email:	info@energold.com