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Vancouver, BC – Cabo Mining Enterprises Corp. (“Cabo” or the “Company”) (TSX-V:CBE) today reported a third quarter loss of $181,000 ($0.007 loss per common share – basic) before recovery of bad debt and taxes and net earnings of $239,000 ($0.009 earnings per common share – basic) after recovery of bad debt and taxes,
compared to a loss of $258,000 ($0.028 loss per common share – basic) recorded in the third quarter of 2004.


(CDN $000s, except earnings per share)

3 months ending 
Mar 31-05

3 months ending 
Mar 31-04

6 months ending 
Mar 31-05

6 months ending 
Mar 31-04


$ -              
$15,883 $ -

Net Earnings (loss) before interest, amortization,
foreign exchange, loss on termination of contracts,
stock compensation and taxes

 (245) (256) 163 (383)

Net Earnings (Loss) Before Stock-based Compensation and Taxes

 (181) (258) 122 (419)

Net Earnings (Loss) After Stock-based Compensation and Taxes

 239 (258) (177) (419)

Earnings (Loss) per Share ($) Basic Before Stock-based Compensation and Taxes

(0.007) (0.028) 0.014 (0.046)

Earnings (Loss) per Share ($) Basic After Stock-based Compensation and Taxes

 0.009 (0.028)  (0.006)  (0.046) 

Gross Margin %

 11.4%  - 14.7%  -

Working Capital (deficiency)

 6,324 216  6,324  216

 The Company reports:

  • Third quarter fiscal 2005 revenues of $5,898 million compared with $4,693 million in the second quarter of fiscal 2005, and $0 for the third quarter fiscal year 2004.
  • Net loss for the quarter of $181,000 before recovery of bad debt and taxes and net earnings of $239,000 after recovery of bad debt and tax adjustments. This compares with the second quarter fiscal 2005 loss of $76,000 before stock-based compensation and taxes and $772,000 after stock-based compensation and taxes resulting in a loss per share of $0.003 and $0.028 respectively.
  • Overall gross margin percentage for the third quarter fiscal 2005 of 11.4%, compared with gross margin of 14.7% in the second quarter fiscal 2005 and 0% in previous fiscal 2004.
  • Integration of Advanced Drilling Ltd. into the Cabo portfolio of drilling companies.
  • Signing of Letter of Intent to acquire Les Forages de Montréal (1988) Inc., a drilling company based in
  • Quebec.
  • A current asset balance of $10.69 million and working capital of $6.3 million.
  • Total assets of $19.67 million and total liabilities of $4.63 million.

The third quarter of the current fiscal year marks Cabo’s nine months as a drilling services and exploration company. During the third quarter the Company integrated Advanced Drilling Ltd. into the Cabo portfolio of drilling companies.

“With BC’s share of exploration spending in Canada growing from less than 5% in 2001 to more than 12% this past year we are confident that this most recent acquisition of Advanced Drilling, an experienced BC based company, will put Cabo in a good position to compete for these exploration contracts,” said Mr. John Versfelt, Chairman, President & CEO of Cabo.

The Company is presently working to close the acquisition of Les Forages de Montréal (1988) Inc. announced on February 21, 2005. This strategic acquisition will enhance Cabo’s presence in the geotechnical and environmental drilling sector in the Montreal-Quebec market. The Company will be merging the operations of its subsidiary Stratacan (Quebec) Inc. with the newly acquired Les Forages de Montreal and the companies will continue to operate under the new name Forages Cabo Inc.

Metal prices, which have been up anywhere from 13 to 206 percent in 2004, depending on the commodity, appear fairly stable at their current high levels for the short term at least. Strong metal prices translate into continued higher demand for drilling services which we have been seeing through an increased volume of bid
requests. Increased demand for mineral drilling business is now supporting better prices for drilling services which should result in improved gross margins over the next twelve months as we improve the efficiencies of the drilling divisions and assimilate the new acquisitions.

Operationally, the Company was again hampered by inclement weather, delaying the start-up of many of our drilling projects scheduled for January, increasing consumable costs and decreasing the overall efficiency that is normally associated with better working conditions. Despite this, the Company was able to meet the revenue projections for this quarter. From a gross margin perspective, the poor start in the third quarter was only partially mitigated as more favourable drilling conditions increased operational efficiencies later in March 2005.

Looking ahead we are optimistic that the trend we saw in March 2005 will continue into the next quarter and into summer months of operation.

“Cabo has continued to experience significant revenue growth within the parameters of its business plan due to its success in acquiring viable regional companies and to the continuing strong metals market,” stated John Versfelt.

“The Company recorded a recovery of a previously written off bad debt resulting in a contribution of $204,000 to the bottom line in this quarter which together with certain tax recoveries provided a net after tax profit of $239,000 for the third quarter,” continued Mr. Versfelt.

Third Quarter ended March 31, 2005
The Company’s third quarter revenue of $5.898 million was higher than revenues earned in the previous quarter ($4.693 million). This increase can be partially attributed to improvement in drilling services demand in March 2005. The increase in sales can also be attributed to the additional revenues included in Cabo’s operations as a result of the Advanced Drilling Ltd. acquisition during the period. During the two months, as part of the company’s portfolio of drilling companies, the Advanced Drilling Ltd. acquisition generated revenues of $0.612 million.

For the nine months ended March 31, 2005, Cabo Mining Enterprises Corp. posted revenues of $15.883 million. Overall, revenues continue to meet management’s expectations.

Integration and operational efficiency expenditures increased general and administrative expenses for the quarter as the Company is continuing its efforts to streamline and implement operational efficiencies. The anticipated
synergies from the acquisition of the various drilling cove not been realized yet and will not be fully realized until the Company’s Information Technology system has been fully implemented.

The Company remains committed to the mineral exploration aspect of its business. During the quarter an extensive drilling and exploration program was undertaken on the Cobalt property. Exploration programs are also continuing on the Company’s other properties. Cabo maintains that its mineral properties have potential to discover mineral reserves that will add further asset value.
Cabo remains strong financially, and this strength is reflected on its balance sheet with a current asset balance of $10.690 million and total assets of $19.672 million. Working capital at March 31, 2005 is $6.324 million and the Company has little long-term debt. Cabo does not foresee any problems over the next year in financing any capital requirements within its drilling operations or funding its current mineral exploration projects.

Results of Operations – Third Quarter Ended March 31, 2005
The results of operations for the third quarter 2005 reflect the consolidated performance of Cabo and its drilling subsidiaries. As noted earlier, the Company was not involved in providing drilling services until the beginning of the 2005 fiscal year and as such, no appropriate comparatives are available.

Total revenue for the third quarter was $5.898 million. Surface drilling accounted for $4.101 million in revenue compared to the $1.764 million realized from underground drilling activities and $0.018 million realized for reverse circulation drilling for the three months ended March 31, 2005. Sundry sales totalled $0.015 million for the period.

The overall gross margin percentage for the quarter was 11.4 percent. The decreased margin in the quarter (relative to 14.7% and 17.9% realized in Q2-05 and Q1-05 respectively) can be partially attributed to inclement weather and the high cost associated with the start-up drilling projects in January and February 2005. A shortage of skilled labourers, a growing problem in this industry sector, affected the Company’s financial performance by reducing the efficiency of the drill rigs operations. The Company is in the process of hiring and training new drill operators to alleviate this shortage. It is expected that as favourable drilling conditions emerge, and new drillers gain experience, increased productivity should be realized which will have a positive impact on the Company’s gross margin. The Company has renegotiated some long term contracts at higher
rates and expect to finalize negotiations on its other long term agreements by year end. Consequently, gross margins should improve in subsequent periods.

During the three months ended March 31, 2005, general and administrative costs were $0.915 million for the period, an increase of $0.227 million from the previous quarter ($0.688 million). This increase can be partially attributed to the additional administrative costs from Advanced Drilling Ltd. Additional expenditures were also
incurred by the Company in marketing, investor relations and travel. Other factors that accounted for the higher G&A costs this quarter were higher administrative costs which were a result of a series of internal system reviews to realize any synergies that may come about through improved controls.

During the quarter, the Company also realized a recovery of debt previously written-off. Consideration received
for settlement of the debt was $114,000 in cash and $90,000 in marketable securities.

Mineral Properties
Mineral exploration expenses and mineral property expenditures for the three months ended March 31, 2005 totalled $0.345 million compared to $0.180 million last quarter.

Future Developments
Going forward, the Company anticipates that current mineral and metal prices will remain buoyant which bodes well for Canadian and international exploration and mine development projects and consequently, the mineral drilling services sector. As the opportunities arise, the Company anticipates further acquisitions of drilling
services companies and with these acquisitions would expect continued improved revenues as a result. These acquisitions would however result in additional acquisition and integration expenses. The Company is continuing its review of its drilling operations to seek operational efficiencies and potential cost reductions. The management of Cabo remains committed to good, sound fiscal management that provides value to its shareholders.

A copy of the Quarterly Report is available through SEDAR ( and
the Company’s website (

Cabo Mining Enterprises Corp. is a drilling services and mineral exploration company headquartered in North Vancouver, British Columbia, Canada. The Company provides drilling services through its subsidiaries Heath
& Sherwood Drilling (1986) Inc., of Kirkland Lake, Ontario; Petro Drilling Company Limited of Springdale, Newfoundland; Stratacan Inc. of St. John’s, Newfoundland; Stratacan (Quebec) Inc. of St. Julie, Quebec; and Advanced Drilling Ltd. of Surrey, British Columbia. Cabo’s mineral exploration properties are located near Cobalt, Kenora, and Sudbury, Ontario, Canada. The Company’s common shares trade on the TSX Venture Exchange under the symbol: CBE.ON BEHALF OF THE BOARD

“John A. Versfelt”

John A. Versfelt
Chairman, President and CEO

Further information about the Company can be found on the Cabo website ( and SEDAR ( or by contacting Investor Relations Mr. Garett Greene or Mr. John A. Versfelt, Chairman, President & CEO of the Company at 604-984-8894.

* * * *

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

Last Updated: 05/27/2005