Aeroquest International Limited (AQL-TSXV)
Interview with:
Roland Horst, CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
advanced airborne geophysical instrumentation for use primarily in mineral exploration and their search for non-mineral natural resources, environmental studies and for geological mapping.


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Aeroquest International’s superior technology for finding minerals using airborne geophysical instrumentation is giving them an edge on the competition

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Geophysical Surveys

Aeroquest International Limited

345 Main St. E. Unit 4
Milton, Ontario L9T 3Z3
Phone: 905-693-9129

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Roland Horst
Chief Executive Officer

Interview conducted by:
Lynn Fosse, Senior Editor
September 8, 2005

Roland Horst
- Mr. Horst has extensive experience managing and financing geophysical instrumentation and mining companies. Mr. Horst began his career as an exploration geologist with Inco Limited, followed by experience as an investment and corporate banker with Bank of Montreal, Nesbitt Thomson Inc. and Richardson Greenshields. Mr. Horst then became CEO of several publicly traded gold exploration and mining companies and was most recently CEO of Scintrex Limited and La Coste & Romberg - Scintrex, Inc., geophysical instrumentation firms. Mr. Horst holds degrees in geology from McGill (B.Sc.) and Laurentian (M.Sc.) Universities and an LLB and MBA from the University of Western Ontario.

Company Profile:
, the 100% owned subsidiary of public company Aeroquest International Limited, is a commercial airborne geophysical survey company dedicated to the development of advanced airborne geophysical instrumentation for use primarily in mineral exploration. Aeroquest technology is also being applied in the search for non-mineral natural resources, environmental studies and for geological mapping.

Aeroquest was incorporated in 1988 by Wally Boyko, a seasoned veteran in both the geophysical surveying and mineral exploration communities. Prior to this, Wally founded Aerodat Limited in 1969, building the company into one of the world's recognized leaders in airborne geophysical surveying services and innovator of new geophysical survey technology. In 1987 he sold Aerodat in order to pursue his life-long passion of exploring for new mineral resources.

During the NWT Diamond Rush of the early 1990's, Aeroquest outfitted and operated a Piper Navajo fixed-wing aircraft with high sensitivity magnetics and VLF-EM, and flew over 300,000 lkm of geophysical survey in the search for new kimberlite targets. Subsequently, Aeroquest completed the development of the Impulse frequency-domain helicopter-borne electromagnetic (HEM) system in 1997 and initiated the development of the very innovative AeroTEM time-domain EM system. In April 1999, AeroTEM was introduced to the commercial survey market.

Aeroquest's continuing advancement of helicopter-borne EM technology resulted in the introduction of AeroTEM II in 2003, providing the addition of on-time measurements for enhanced conductor detection and discrimination. To date, over 200,000 line-km of AeroTEM II data have been collected, resulting in over ten significant discoveries in the last three years.

Aeroquest currently offers both the unique and highly successful AeroTEM II time-domain EM and the innovative Impulse frequency-domain HEM systems directly to the international natural resource exploration community on a commercial geophysical survey basis.

CEOCFO: Mr. Horst, what was your vision when you started with the company and how has that developed?
Mr. Horst: “I am a recent addition to Aeroquest; I joined about a year-and-a-half ago, and at that point, the company was private. The reason I joined was to take the company public. The goal of the founders of the company, Mr. Wally Boyko and Mr. Steve Balch, was providing airborne geophysical EM Systems to look for nickel and copper deposits as well as other commodities.”

CEOCFO: How has going public changed the company?
Mr. Horst: “It has given us the financial resources to expand. We raised $4 million last fall and we also had about $2 million from a convertible debenture, so with that money we have developed more systems, better technology and we were able to expand the market. We also have been able to hire excellent staff. We now have about thirty permanent employees and that has substantially improved the company.”

CEOCFO: Will you tell us about the main services you offer?
Mr. Horst: “Our main services are helicopter-borne electromagnetic systems.  We fly the system below the helicopter and the system is about 100 ft. above the ground. We use GPS to fly lines that are about 150 ft. to 300 ft. apart. An electrical signal is sent into the ground and then a secondary signal will come back if there is a conductor. We identify conductors, which typically could have nickel or copper with them and with these airborne results, our clients can drill the conductors on the ground.  Our clients have been quite successful and we have contributed to about ten mineral discoveries using this technology.”

CEOCFO: Is this a technology specific to your company or have you tweaked the general technology?
Mr. Horst: “The general technology has been around for probably about fifty years and primarily it was flown on a fixed-wing aircraft. It was not that diagnostic a technology however. We have improved the systems through a combination of tweaking the existing technology and also creating a proprietary helicopter-borne technology that no one else in the business has. This has been much more diagnostic and helps our clients go directly from airborne results to drilling and save money by not having to do as much ground follow-up.”

CEOCFO: Are the mineral companies flocking to your door?
Mr. Horst: “Yes, we are very much in demand. The year before last, we had about $4 million in sales and a year later we doubled the sales to $8 million. Our intention is to double the sales again this fiscal year to $16 million. A year ago we only had one system and now we are operating five systems. We now have the resources to meet that demand.”

CEOCFO: Is the technical expertise all in the system or does it need to be interpreted and does the pilot need to have special skills?
Mr. Horst: “We lease the helicopters and we look for skilled pilots to fly the systems. One of our most important features is the proprietary software to interpret the results and Steve Balch brought a lot of that expertise. We do interpret the results and often recommend where our clients could drill.  Our services are unique in that we not only fly the surveys, but also interpret the data and recommend drill targets.”

CEOCFO: How do you attract qualified people?
Mr. Horst: “We have been able to offer stock options to most of the people that have joined us and people like to work in an environment where you are growing rapidly and focused on technology as opposed to working in a large bureaucratic organization. We have been able to attract very good people. Our pay scale is competitive, but our people are also attracted to advancing our technology.”

CEOCFO: Will you tell us about the competitive landscape?
Mr. Horst: “The major competitor for us is a company called Fugro; they are a service company out of the Netherlands focused mainly on the oil and gas sector; a large public company with sales of probably a billion-and-a-half. About seven years ago, they started to consolidate the airborne geophysical industry and purchased five or six companies. They now probably control about 70% of the market, which has raised prices for everyone, but they do not have our particular diagnostic technology, so they are a competitor, but not directly. There is also a small private company called Geotech, and they have similar technology but it is not a rigid system like ours. Our view is that our technology is superior to theirs. They have roughly the same market share as we do but since they are private they have a more difficult time expanding the business and attracting the quality of people that we have.”

CEOCFO: How do you reach potential customers?
Mr. Horst: “Primarily it is knowing people in the mining sector. We have a marketing group, and we are expanding that group. We also get a lot of leads from investment brokers who are financing a lot of these junior companies and want them to use the best technology to find mineral deposits. We also go to tradeshows and advertise in the trade publications, but primarily it is word-of-mouth.”

CEOCFO: Are you primarily in Canada?
Mr. Horst: “We are doing probably 90% of our work in Canada currently.   We have a lot of potential international business. Within a year, we expect to have about a third of our business international and about two-thirds domestic.”

CEOCFO: Will you need to increase the five systems you have currently?
Mr. Horst: “We have five systems that are five meters diameter. We just developed a system twice as large as that. We are expanding using that larger equipment and we will have a second system like that in the fall. We are also going even larger with two twelve-meter systems developed in the Ukraine, which will also be ready for survey by the fall. With our two frequency domain systems, we will have over ten systems by year end.”

CEOCFO: What do you see two or three years down the line for Aeroquest?
Mr. Horst: “Our plan is to have about twenty to twenty-five million in sales from the mining sector. We also are going to expand into the oil and gas sector by doing airborne gravity surveys.  For uranium exploration, we have just purchased an airborne spectrometer, which measures radioactivity and we expect to have a fair share of the uranium exploration market too.  Our technology can also be used to detect unexploded bombs (UXO) and we plan to enter that market also. Our objective within three years would be to be about $30 million in sales and within five years about $50 million in sales.”

CEOCFO: What do you need to do to get into the oil and gas area?
Mr. Horst: “You need good technology.  We are using a gravity meter that was developed by the Russian military and it is now available for commercial applications. There are only four meters like this available in the world, including the one we are renting this fall, and we have an option to purchase one next spring. Airborne gravity is becoming more of a preferred technology for the oil and gas exploration industry. Currently the focus is mainly on seismic work but that is quite expensive and has to be done on the ground, whereas airborne gravity surveys can be done much more economically and faster.”

CEOCFO: Why should potential investors be interested and what should they know that they might not realize at first glance?
Mr. Horst: “The main reason to invest in Aeroquest is that we are a service provider to two booming sectors, the mineral sector; where demand is enormous for copper and nickel, and the energy sector for oil and uranium. As a service provider we have very good technology that is in demand. We have an excellent team and combination of these features makes Aeroquest a very attractive investment.”

CEOCFO: What are your challenges going forward?
Mr. Horst: “The biggest challenge is technology to keep ahead of the competitors that are out there. We put up to 10% of our revenue back into technology. You cannot do that technology without good people so it is a matter of attracting the best people and having the best technology.”

CEOCFO: In closing, what would you like readers to remember about Aeroquest?
Mr. Horst: “I would like to emphasis the quality of the people that we have here at Aeroquest. Wally Boyko, our Chairman just turned 75. When he first started out as a geologist, he felt that the best way to find mineral deposits was to conduct airborne geophysical surveys using the best technology available. That is what he has been doing for over forty years. It is his vision that we continue to be focused on and by taking Aeroquest public and attracting the team we now have in place, he has created a very attractive company for investors.”


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“The general technology has been around for probably about fifty years and primarily it was flown on a fixed-wing aircraft. It was not that diagnostic a technology however. We have improved the systems through a combination of tweaking the existing technology and also creating a proprietary helicopter-borne technology that no one else in the business has. This has been much more diagnostic and helps our clients go directly from airborne results to drilling and save money by not having to do as much ground follow-up.” - Roland Horst


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