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Internationals superior technology for finding minerals using airborne geophysical
instrumentation is giving them an edge on the competition
Aeroquest International Limited
345 Main St. E. Unit 4
Milton, Ontario L9T 3Z3
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
AEROQUEST LIMITED, 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
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
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
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
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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