Leadership

Selling a Breakthrough Product to a Conservative Target

How Energold got wary mining firms to take a chance on its unconventional new drilling rigs

Written by Jim.McElgunn

FREDERICK DAVIDSON

President and CEO, Energold Drilling Corp.

Drilling for minerals in developing countries can create environmental and social problems. Often you have to spend a significant part of the exploration budget on roads so that large Caterpillar tractors and rigs can pull big drilling rigs in through farmers’ fields and villages. You pay compensation to the local people, of course, but often it’s not just the money that matters when the fields that have been in their families for generations are ruined.

Over beers one evening, we got the idea of using portable underground rigs that are modular and lighter so they can be moved down narrow mining shafts. This meant they could be carried to the drill site in pieces and assembled there. We started paying local people to carry the pieces in by hand, so rather than watching the process they became part of it. We totally minimized the environmental impact by moving rigs by foot and by using local tracks instead of plowing down farmers’ fields. We simplified the rigs, so we could quickly train local people to use them. And the rigs’ modular nature ensured that, even in the middle of nowhere, you could easily replace parts because you didn’t need a mechanic.

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At first, our biggest challenge was educating exploration companies that this rig, which is smaller and sprawled out across different modules, can do what a conventional large rig can. When geologists or engineers recommend a drilling program, 99% of the time it will be a failure in terms of exploration. The last thing they want to do is take on the additional risk of a new technology. To overcome this, we aggressively marketed our rigs face-to-face to field managers and senior managers. For instance, we spent a week travelling around Peru demonstrating the rigs in the field to show that they work and are extremely safe and efficient.

Even though this is a fairly technical business, it’s amazing how hidebound most people in it are. We had to identify those who are more broad-minded and encourage them to try our rigs, and then they’d bring along their teams. Our success at this was one of the keys to our expansion into 22 countries and to revenue growth from $1.7 million in 2002 to $133 million last year.

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Originally appeared on PROFITguide.com
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