REG - Capital Limited - Q3 2023 Trading Update

CapitalAnnouncement

18/10/2023 07:00

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RNS Number : 4248Q  Capital Limited  18 October 2023

 
Capital
Limited

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

 

Q3 2023 Trading Update

 

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

 

THIRD QUARTER (Q3) 2023 KEY METRICS

                                       Q3 2023  Q3 2022   vs         Q2 2023  vs

                                                          Q3 2022             Q2 2023
 Revenue ($m)                          79.7     73.1     9.0%        76.5     4.2%
 Drilling and associated revenue ($m)  51.2     52.3     -2.1%       52.6     -2.7%
 Mining revenue ($m)                   18.0     13.0     38.5%       14.3     25.9%
 MSALABS revenue ($m)                  10.5     7.7      36.4%       9.6      9.4%

All amounts are in USD unless otherwise stated.

* Unaudited numbers

 

Financial Highlights

·      Revenue US$79.7 million, a 9.0% increase on Q3 2022 (US$73.1
million) and a 4.2% increase on Q2 2023 (US$76.5 million);

-       Drilling and associated revenue for the quarter was $51.2
million, down 2.1% on Q3 2022($52.3 million) and 2.7% on Q2 2023 ($52.6
million);

-       Mining revenue for the quarter was $18.0 million, up 38.5% on Q3
2022 ($13.0 million) and 25.9% on Q2 2023 ($14.3 million); and

-       Laboratories (MSALABS) revenue for the quarter was $10.5
million, up 36.4% on Q3 2022 ($7.7 million) and 9.4% on Q2 2023 ($9.6
million).

·      Interim dividend of 1.3 cents per share (cps), paid on 3 October
2023, (1.3 cps H1 2022).

 

Operational Update

·      Safety performance remains world-class with the nine-month YTD
Total Recordable Injury Frequency Rate ("TRIFR") of 1.23 per 1,000,000 hours
worked (FY 2022 1.2).

·      Capital Drilling: Continuing geographical expansion:

·      Fleet utilisation for the quarter was 72%, down 6.5% on Q3 2022
and 1.4% on Q2 2023, impacted by seasonal weather conditions in West Africa as
well as softer activity levels in Mali; and

·      Average monthly revenue per operating rig ("ARPOR") was
US$179,000 in Q3 2023, down 1.6% on Q3 2022 ($182,000) and 2.2% on Q2 2023
(US$183,000) similarly impacted by seasonal weather conditions.

·      New major multi service drilling contract won:

-       Capital has secured a new comprehensive drilling services
contract with Nevada Gold Mines (NGM), USA, extending our drilling presence
into North America. The contract encompasses a wide array of drilling services
including underground reverse circulation and diamond, both surface and
underground. The contract has a term of 3 years and will generate
approximately $35 million of revenue per annum once fully operational from
2025.

 

 

·      Other contract wins:

-       An extension of the exploration drilling contract with Allied
Gold Corp at its Sadiola project in Mali; and

-       An additional grade contract drilling contract with Allied Gold
Corp at its Sadiola project.

·      Ongoing ramp up of material contracts: The two high-quality
contracts at Reko Diq, Pakistan and Ivindo SA, Gabon began to ramp in the
third quarter and will continue towards full operating rates as we progress
through Q4 2023.

·      Meyas Sand Gold Project update:

-       Operations at Perseus Mining's Meyas Sand Gold Project had been
temporarily ceased following the escalation of conflict in Sudan in April
2023. Capital alongside Perseus Mining have been closely monitoring the
situation and are actively engaged in discussions with the anticipation of
resuming operations in 2024.

·      Rig count increased from 125 to 126 through Q3 2023, net of
depletion.

 

                                             Q3 2023  Q3 2022   vs         Q2 2023  vs

                                                                Q3 2022             Q2 2023
 Closing fleet size                          126      127      -0.8%       125      0.8%
 Average Fleet                               125      119      5.0%        124      0.8%
 Fleet utilisation (%)                       72       77       -6.5%       73       -1.4%
 Average utilised rigs                       90       91       -1.1%       90
 ARPOR*($)                                   179,000  182,000  -1.6%       183,000  -2.2%
 Drilling revenue ($m)                       48.6     49.8     -2.4%       49.4     -1.6%
 Surveying revenue                           0.9      1.1      -18.2%      0.9
 Other Associated revenue(1) ($m)            1.8      1.4      28.6%       2.3      -21.7%
 Total Drilling and associated revenue ($m)  51.2     52.3     -2.1%       52.6     -2.7%

*Average revenue per month per operating rig

*Unaudited numbers

(1)Associated revenue refers to revenue generated from complementary services
tied to our drilling operations.

All amounts are in USD unless otherwise stated

 

·      Capital Mining: Ramp up of major contract continues

·      Mobilisation at our mining contract with Ivindo SA is progressing
rapidly, with the majority of mining equipment now on site. The contract has a
term of up to 5 years and will generate approximately $30 million of revenue
per annum once fully operational. The contract involves both earthmoving and
crushing services; and

·      Sukari Gold Mine (Egypt) waste mining contract saw consistent
operations once again through Q3 2023.

 

·      MSALABS: Building momentum of its multi-year growth strategy:

·      The deployment of Chrysos' PhotonAssay™ units remains on track
and continues to advance successfully:

-       MSALABS possesses the largest international network of Chrysos
PhotonAssay™ technology with ten units currently deployed or under
construction across Africa and Canada; and

-       MSALABS relationship with Chrysos remains strong and is making
significant progress towards the deployment of 21 units by 2025.

·      MSALABS continues to make strides with its traditional
geochemical business with the establishment of a mine site fire assay
laboratory at Barrick's Kibali, DRC Phase II project which is set to become
operational imminently.

 

·      Capital Investments: Allied Gold IPOs during the quarter:

·      The total value of investments (listed and unlisted) was $47.8
million as at 30 September 2023 ($42.1 million at as 30 June 2023);

·      The portfolio continues to be focused on a select few key
holdings with our holdings in Predictive Discovery, Allied Gold Corp, WIA Gold
and Leo Lithium comprising the majority of our investments; and

·      Allied Gold Corp listed on the Toronto Stock Exchange during the
quarter with a market capitalisation of C$1.3 billion, Canada's largest mining
IPO since 2010.  Capital's holding in Allied Gold was worth ~$10 million as
at 30th September 2023, at Allied Gold's share price of C$4.74.

 

Outlook

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

·      Capital Drilling will see positive momentum into Q4 2023 from the
continued ramp up of operations particularly at Ivindo and Reko Diq. This
momentum will continue further into 2024 as operations commence with Nevada
Gold Mines, USA;

·      Capital Mining is focusing on finalising the mobilisation of
equipment at our mining contract at Ivindo, Gabon. In addition, the Sukari
earth moving contract is expected to perform at steady state through the
remainder of the year;

·      MSALABS is continuing its multi-year laboratory expansion, with a
strong emphasis on the deployment of Chrysos PhotonAssay™ units. Client
assay trials continue to grow the reputation of Chrysos PhotonAssay technology
and we remain very confident on the continued rollout of 21 units over the
next 12 months; 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 recorded an increase in revenue during the quarter, despite the
typical seasonal impacts, underscoring the high quality and diverse nature of
our services. This growth was bolstered by the ramp-up in our high-quality
contracts at Reko Diq, Pakistan, and Ivindo, Gabon, across drilling and mining
as well as the continued laboratory rollout in MSALABS.

Furthermore, we are thrilled to continue expand our services with Barrick at
the Nevada Gold Mines complex.  This contract represents a significant
milestone for our Group extending our geographic reach in drilling into North
America, adding to our growing presence in the Americas with MSALABS and
building a strong platform for additional growth as we look towards 2024 and
beyond."

- ENDS -

 

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

 

Capital Limited
 
investor@capdrill.com

Peter Stokes, Chief Executive
Officer

Rick Robson, Chief Financial Officer

Conor Rowley, Corporate Development & Investor Relations

 

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. 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, Ghana,Guinea, Kenya, Mali,
Mauritania, Nigeria, Pakistan, Saudi Arabia and Tanzania.

 

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