Foraco International S A : REPORTS 2018 Q3 FINANCIAL REPORTS

NEWS RELEASE

FORACO INTERNATIONAL REPORTS Q3 2018

Increased revenue by 37% and EBITDA by 88% YoY

Toronto, Ontario/Marseille, France - November 2, 2018. Foraco International SA (TSX: FAR) (the "Company" or "Foraco"), a leading global provider of mineral drilling services, released its unaudited financial results for the third quarter 2018 today. All amounts are denominated in US Dollars (US$) unless otherwise indicated.

"With US$46 million in revenue, a 37% increase quarter over quarter, Q3 2018 confirms the positive trend observed since 2017. On a year to date basis, the 2018 revenue exceeds the comparative period of 2017 by 31%. In the quarter, high growth regions include Canada, Australia, Russia and Chile." commented Daniel Simoncini, Chairman and Co-CEO of Foraco. "Our utilization rate also increased to 46% this quarter, compared to 35% in Q3 2017. During the low part of the cycle, we continued to enhance our technical capability, maintaining our fleet to a high standard and leading industry technological changes, such as the implementation of remote control rigs. This together with our strategy to serve major mining companies in their main countries of operation and retain key employees throughout the industry cycles provide us a competitive advantage in the current market upturn.".

"In Q3 2018, we recorded an EBITDA of US$6.3 million, an 88% increase compared to Q3 2017. Our contracts are delivering their expected margins in all countries. We managed to keep our SG&A expenses stable despite a significant increase in activity. Our EBIT is positive at US$2.1 million this quarter and is also positive on a year to date basis. We believe that there is scope for even greater progress, given that selling prices have not yet recovered and we have not reached our full capacity" added Jean-Pierre Charmensat, Co-CEO and Chief Financial Officer. "The activity increase generates additional requirements in working capital and CAPEX. We invested US$3.6 million in relation to new contracts. As a result, our net debt as at September 30, 2018 amounts to US$131.0 million. We continue to focus on the generation of operating cash flow and the optimization of our working capital."

Q3 2018 Highlights

Revenue

•  Q3 2018 revenue amounted to US$ 46.4 million compared to US$ 33.9 million in Q3 2017, an increase of 37%.

•  The utilization rate was 46% in Q3 2018 (43% in Q2 2018 and 40% in Q1 2018) compared to 35% in Q3 2017.

Profitability

•  The Q3 2018 gross margin including depreciation within cost of sales was US$ 7.3 million (or 15.7% of revenue) compared to US$ 4.2 million (or 12.5% of revenue) in Q3 2017, this improvement is mainly due to increased revenue and performance on contracts, as well as a better absorption of fixed operational costs.

•  During the quarter, EBITDA amounted to US$ 6.3 million (or 13.5% of revenue), compared to US$ 3.3 million (or 9.8% of revenue) for the same quarter last year.

YTD Q3 2018 Highlights

Revenue

•  YTD Q3 2018 revenue amounted to US$ 132.1 million compared to US$ 100.8 million in YTD Q3 2018, an increase of 31%.

Profitability

•  YTD Q3 2018 gross margin including depreciation within cost of sales was US$ 16.4 million (or 12.4% of revenue) compared to US$ 9.8 million (or 9.7% of revenue) in YTD Q3 2017. This improvement is mainly due to performance on contracts and a better absorption of fixed operational costs linked to the revenue increase.

•  During the nine-month period, EBITDA amounted to US$ 13.7 million (or 10.4% of revenue) compared to US$ 8.2 million (or 8.2% of revenue) for the same period last year.

Net debt

•  The net debt was US$ 131.0 million as at September 30, 2018 compared to US$ 122.7 million as at December 31, 2017. The increase is mainly attributable to higher working capital requirements linked to the increased activity, partially compensated by a favorable exchange rate.

Selected financial data
(In thousands of US$)	Three-month period ended	Nine-month period ended
(unaudited)	September 30,	September 30,
2018 2017	2018 2017

Revenue	46,353	33,868	132,055	100,759
Gross profit (1)	7,286	4,233	16,439	9,788
As a percentage of sales	15.7%	12.5%	12.4%	9.7%
EBITDA	6,260	3,335	13,710	8,247
As a percentage of sales	13.5%	9.8%	10.4%	8.2%
Operating profit / (loss)	2,089	(1,283)	933	(5,831)
As a percentage of sales	4.5%	-3.8%	0.7%	-5.8%
Profit / (loss) for the
period	(855)	(2,717)	(6,995)	(8,710)
Attributable to:
Equity holders of the
Company	(737)	(2,963)	(6,683)	(8,412)
Non-controlling interests	(118)	246	(312)	(298)
EPS (in US cents)
Basic	(0.82)	(3.31)	(7.45)	(9.38)
Diluted	(0.82)	(3.31)	(7.45)	(9.38)

(1) This line item includes amortization and depreciation expenses related to operationsFinancial results

Revenue

(In thousands of US$) - (unaudited)	Q3 2018	%	Q3 2017	YTD Q3	%	YTD Q3
change	2018	change	2017
Reporting segment
Mining ........................................	45,285	38%	32,750	128,374	35%	94,855
Water ........................................	1,068	-4%	1,118	3,681	-38%	5,904
Total revenue .............................	46,353	37%	33,868	132,055	31%	100,759
Geographic region
Europe, Middle East and Africa ..........	10,094	13%	8,969	33,517	-1%	33,944
South America ..............................	7,832	14%	6,884	23,874	7%	22,359
North America ..............................	19,274	72%	11,181	50,916	74%	29,311
Asia Pacific ..................................	9,153	34%	6,834	23,748	57%	15,145
Total revenue .............................	46,353	37%	33,868	132,055	31%	100,759
Q3 2018

Q3 2018 revenue amounted to US$ 46.4 million compared to US$ 33.9 million in Q3 2017, an increase of 37%.

In EMEA, revenue increased by 13%, to US$ 10.1 million in Q3 2018 from US$ 9.0 million in Q3 2017, as a result of a higher level of activity in Russia, partially compensated by a decreased activity in France and in Africa.

Revenue in South America increased by 14% at US$ 7.8 million in Q3 2018 (US$ 6.9 million in Q3 2017). In Chile, the increased activity was generated with new contracts for major clients. This increase was compensated by a slowdown in activity with our major clients in Brazil.

Revenue in North America strongly increased by 72% to US$ 19.3 million in Q3 2018 from US$ 11.1 million in Q3 2017. Compared to last year, the Company continued to benefit from new contracts with major companies and junior companies and increased activity on ongoing contracts in an overall growing market.

In Asia Pacific, Q3 2018 revenue amounted to US$ 9.2 million, an increase of 34% mainly due to new contracts initiated in the second half of 2017 in Australia.

YTD Q3 2018

YTD Q3 2018 revenue amounted to US$ 132.1 million compared to US$ 100.8 million in YTD Q3 2017, an increase of 31%.

In EMEA, revenue decreased by 1%, to US$ 33.5 million in YTD Q3 2018 from US$ 33.9 million in YTD Q3 2017, as a result of the decreased activity in France and in Africa, only partially compensated by a higher level of activity in Russia.

Revenue in South America increased by 7% to US$ 23.9 million in YTD Q3 2018 (US$ 22.4 million in YTD Q3 2017). The increase of activity in Chile more than compensated the slowdown in Brazil.

Revenue in North America strongly increased by 74% to US$ 50.9 million in YTD Q3 2018 from US$ 29.3 million in YTD Q3 2017. Compared to last year, the Company gained new contracts with major and junior companies and increased activity on ongoing contracts in an overall growing market.

In Asia Pacific, YTD Q3 2018 revenue amounted to US$ 23.7 million, an increase of 57% mainly due to new contracts initiated in the second half of 2017 in Australia.

Gross profit

(In thousands of US$) -	Q3 2018	%	Q3 2017	YTD Q3	%	YTD Q3
(unaudited)	change	2018	change	2017
Reporting segment
Mining ...................................	7,194	58%	4,554	16,308	64%	9,942
Water ...................................	92	n/a	(321)	131	n/a	(154)
Total gross profit / (loss) .........	7,286	72%	4,233	16,439	68%	9,788
Q3 2018

The Q3 2018 gross margin including depreciation within cost of sales was US$ 7.3 million (or 15.7% of revenue) compared to US$ 4.2 million (or 12.5% of revenue) in Q3 2017. This 72% improvement is mainly due to increased revenue and performance of contracts, as well as a better absorption of fixed operational costs.

YTD Q3 2018

YTD Q3 2018 gross margin including depreciation within cost of sales increased by 68% compared to the same period last year. As a percentage of revenue, the gross margin increased from 9,7% to 12.4%. This improvement is mainly due to performance on contracts and a better absorption of fixed operational costs linked to the revenue increase.

Selling, General and Administrative Expenses

(In thousands of US$) - (unaudited)

Q3 2018 % change Q3 2017

YTD Q3

%YTD Q3

2018 change

Selling, general and administrative expenses ....................................

5,197

-3%

5,356

15,506

2%

2017 15,154

Q3 2018

Despite the higher level of activity, SG&A decreased by US$ 0.2 million compared to the same quarter last year. As a percentage of revenue, SG&A decreased from 15.8% in Q3 2017 to 11.2% in Q3 2018.

YTD Q3 2018

Despite the higher level of activity, SG&A only increased by US$ 0.4 million compared to the same period last year. As a percentage of revenue, SG&A decreased from 15.0% in YTD Q3 2017 to 11.7% in YTD Q3 2018.

Operating result

(In thousands of US$) -	Q3 2018	%	Q3 2017	YTD Q3	%	YTD Q3
(unaudited)	change	2018	change	2017
Reporting segment
Mining ...................................	2,117	n/a	(785)	1,550	n/a	(4,795)
Water ...................................	(28)	n/a	(498)	(617)	n/a	(1,036)
Total gross profit / (loss) .........	2,089	n/a	(1,283)	933	n/a	(5,831)