REG - Capital Limited - Q2 2023 Trading Update

CapitalAnnouncement

19/07/2023 07:15

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RNS Number : 4958G  Capital Limited  19 July 2023

Capital Limited

("Capital", the "Group" or the "Company")

 

Q2 2023 Trading Update

 

Capital (LSE: CAPD), a leading mining services company, today provides its
trading update for the period 1 April to 30 June 2023 (the "Period").

 

FIRST HALF (H1) 2023 KEY METRICS

                        H1 2023  H1 2022   vs         H2 2022  vs

                                           H1 2022             H2 2022
 Revenue ($m)           154.3    138.1    11.7%       152.2    1.4%
 ARPOR(#) ($)           188,000  173,000  8.7%        187,000  0.5%
 Average Utilised Rigs  93       93       0.0%        93       0.0%
 Fleet Utilisation (%)  75       83       -9.6%       75       0.0%
 Average Fleet          124      112      10.7%       124      0.0%
 Closing Fleet Size     125      116      7.8%        129      -3.1%

 

 

SECOND QUARTER (Q2) 2023 KEY METRICS

                        Q2 2023  Q2 2022   vs         Q1 2023  vs

                                           Q2 2022             Q1 2023
 Revenue ($m)           76.5     71.2     7.4%        77.8     -1.7%
 ARPOR(#) ($)           183,000  171,000  7.0%        192,000  -4.7%
 Average Utilised Rigs  90       97       -7.2%       95       -5.3%
 Fleet Utilisation (%)  73       85       -14.1%      77       -5.2%
 Average Fleet          124      114      8.8%        123      0.8%
 Closing Fleet Size     125      116      7.8%        123      1.6%

All amounts are in USD unless otherwise stated

(#) Average revenue per month per operating rig

* Unaudited numbers

 

 

Financial Highlights

·      Revenue US$76.5 million, a 7.4% increase on Q2 2022 (US$71.2
million) and a 1.7% decrease on Q1 2023 (US$77.8 million);

·      Three high-quality contracts are set to commence in Q3 2023:

-       The business is geared for a strong second half driven by the
ramp up of three high quality contracts, namely drilling at the Ivindo Iron
Ore Project ("Ivindo"), Gabon, and the Reko Diq copper-gold project, Pakistan,
and our recently announced mining services and crushing contract at Ivindo
Iron ore.

·      Temporary shutdown of operations at Perseus Mining's Meyas Sand
Gold Project, Sudan:

-       Following the escalation of conflict in Sudan in April 2023, we
alongside Perseus made the decision to temporarily cease operations at the
Meyas Sand Gold Project. We have been closely monitoring the situation and
with no reported incidents in an area of approximately 250,000 square
kilometres around the site, we are in discussions with Perseus to return to
operations in H2 2023.

·      Non-drilling revenue contributed 36% of total revenue in Q2 2023
with consistent Mining Services operations and MSALABS continuing along its
growth path;

·      In Q2 we paid the final dividend of US 2.6 cps declared at the
FY22 results for the 2022 financial year (2021: US 2.4 cps). This dividend was
paid on 09 May 2023.

 

Operational Update

·      Safety performance remains world-class with H1 2023 Total
Recordable Injury Frequency Rate ("TRIFR") of 1.03 per 1,000,000 hours worked
(FY 2022: 1.2).

·      Capital Drilling: Material contracts commencing Q3 2023

·      Fleet utilisation was 73% in Q2 2023, compared to 85% in Q2 2022
and 77% in Q1 2023, the decrease in part driven by the temporary shutdown of
rigs in Sudan.

·      Average monthly revenue per operating rig ("ARPOR") remained
strong at US$183,000 in Q2 2023, a 7.0% increase on Q2 2022 ($171,000) and a
4.7% decrease on Q1 2023 (US$192,000).

·      New contract win:

-       A reverse circulation exploration drilling contract with
Centamin, at the Nugrus Block in the Egyptian Eastern Desert;

·      Rig count increased from 123 to 125 through Q2 2023, net of
depletion.

·      Capital Mining: A second material contract win

·      New major earthmoving and crushing services contract: Capital has
secured its second high-quality mining services contract with Ivindo Iron SA
("Ivindo Iron"). This site is located in the northeast of Gabon, one of the
world's largest undeveloped, high-grade hematite iron deposits with the
potential to become a globally significant iron ore mine. This contract has a
term of up to 5 years and will generate approximately $30 million of revenue
per annum once fully operational; and

·      Sukari Gold Mine (Egypt) waste mining contract saw consistent
operations once again through Q2 2023;

·      MSALABS: Continuing to deliver on its multi-year growth
trajectory:

·      Chrysos' PhotonAssay™ unit rollout is progressing well as
MSALABS now has the largest international network of Chrysos PhotonAssay™
technology:

-       MSALABS now has ten units deployed or under construction across
Africa and Canada

-       New laboratories recently operational or now under construction
include Obuasi (Ghana), Kankan (Guinea) and Bamako (Mali) in West Africa and
in the Geita Township (Tanzania) in East Africa.

-       In accordance with Capital's sustainability goals, the
laboratory in Kankan (Guinea) is set to be solar powered through Mine Power
Solutions Limited (MPS), Capital's 50:50 joint venture with Enerwhere Limited
that focuses on providing solar hybrid power solutions; and

-       The expanded relationship with Chrysos will see MSALABS deploy
21 units by 2025.

·      MSALABS also continued the rollout of its traditional geochemical
business in the quarter, with a fire assay laboratory currently under
construction in Marsa Alam, Egypt; and

·      MSALABS has completed a $10 million equity raise to fund the
expansion of the business. Following this Capital's shareholding in MSALABS
has increased from 77.76% to 81.79%.

 

Outlook

·      Revenue guidance for 2023 remains $320 to $340 million;

·      Capital Drilling will see growth in revenues in H2 2023 driven by
the addition of two high-quality long-term contracts at Reqo Diq, Pakistan and
Ivindo, Gabon set to ramp up through Q3 2023;

·      Capital Mining will also see an improvement in revenues in H2
2023 with the mining contract at Ivindo, Gabon set to commence in Q3 2023,
with mobilisation to site having already commenced through Q2 2023. In
addition, the Sukari earth moving contract is expected to perform at steady
state through the remainder of the year;

·      MSALABS will continue its multi-year laboratory roll out,
particularly focused on Chrysos PhotonAssay™ units, with guidance for
MSALABS remaining $40-50 million for 2023, another significant increase YoY
(FY 2022: $27.3 million); and

·      Tendering activity remains robust across the Group with a number
of opportunities progressing.

 

Commenting on the trading update, Peter Stokes, Chief Executive, said:

 

"The Group took another strong step forward through the quarter with the award
of our second significant mining services contract win at the Ivindo Iron Ore
Project. This not only continues our strategy to diversify revenues but
alongside further growth in our drilling business and the impressive growth
trajectory of MSALABS, decouples the Group's growth trajectory from prevailing
commodity prices.

While Q2 saw some temporary operational interruptions, specifically at the
Meyas Sand Gold Project, we expect a strong second half and remain confident
in our revenue guidance of $320-340 million. This will be driven across all
business divisions, with the Ivindo iron ore mining contract commencing in Q3
2023, the world-class drilling contracts at Ivindo iron ore and Barrick's Reko
Diq project announced earlier in the year ramping up through Q3 2023, and also
MSALABS continuing to build its global network of laboratories."

- ENDS -

 

For further information, please visit Capital Limited's website
www.capdrill.com or contact:

 

Capital Limited
 
+230 464 3250

Peter Stokes, Chief Executive
Officer
investor@capdrill.com

Rick Robson, Chief Financial Officer

Conor Rowley, Investor Relations & Corporate Development Manager

 

Tamesis Partners LLP
 
+44 20 3882 2868

Charlie Bendon

Richard Greenfield

 

Stifel Nicolaus Europe Limited
 
+44 20 7710 7600

Ashton Clanfield

Callum Stewart

Rory Blundell

 

Buchanan
 
+44 20 7466 5000

Bobby
Morse
                   capital@buchanan.uk.com

George Pope

 

 

 

About Capital Limited

 

Capital Limited is a leading mining services company providing a complete
range of drilling, mining, maintenance and geochemical laboratory solutions to
customers within the global minerals industry, focusing on the African
markets. The Company's services include: exploration, delineation and
production drilling; load and haul services; maintenance; and geochemical
analysis. The Group's corporate headquarters are in the United Kingdom and it
has established operations in Côte d'Ivoire, Canada, Democratic Republic of
Congo, Egypt, Gabon, Guinea, Kenya, Mali, Mauritania, Nigeria, Pakistan, Saudi
Arabia, Sudan and Tanzania.

 

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