REG - Capital Limited - FY 2021 Trading Update

CapitalAnnouncement

18/01/2022 07:05

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RNS Number : 7400Y  Capital Limited  18 January 2022

Capital Limited

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

 

FY 2021 Trading Update

 

Capital (LSE: CAPD), a leading mining services company focused on the African
markets, today provides its trading update for the period 1 January to 31
December 2021 (the "Period").

 

FOURTH QUARTER (Q4) AND FULL YEAR 2021 KEY METRICS

                   Q4 2021  Q3 2021   vs             Q4 2020  vs        FY 2021*  FY 2020  FY 2021

                                      Q3 2021                 Q4 2020                      vs

                                                                                           FY 2020
 Revenue ($m)      66.5     61.6             8.0%    34.6     92.2%     226.8     135.0    68.0%
 ARPOR(#) ($)      184,000  182,000          1.1%    172,000  7.0%      181,000   171,000  5.8%
 Average           86       81               6.2%    56       53.6%     78        57       36.8%

 utilised rigs
 Fleet             79       76               3.9%    59       33.9%     75        59       27.1%

 Utilisation (%)
 Average Fleet     109      107              1.9%    95       14.7%     104       98       6.1%
 Closing           109      108              0.9%    94       16.0%     109       94       16.0%

 fleet size

All amounts are in USD unless otherwise stated

(# )Average revenue per month per operating rig

* Unaudited numbers

 

Financial Highlights

·      FY 2021 revenue of $226.8 million, up 68% on FY 2020 ($135.0
million), slightly ahead of recently revised guidance of $220-225 million (up
from $200-210 million guided at our Q2 2021 trading update and up from
$185-195 million originally guided at the FY20 results). This is the second
consecutive year Capital has delivered material growth in revenue, following
18% YoY growth in 2020;

·      Q4 2021 revenue of $66.5 million, another record quarter, up 92%
on Q4 2020 ($34.6 million) and up 8% on Q3 2021 revenue ($61.6 million);

·      Non-drilling revenue contributed 22% of total revenue for FY
2021, compared with 9% in FY 2020, and 26% in Q4 2021, driven primarily by the
increased contribution from mining services and MSALABS.

 

Operational Update

·      Fleet utilisation increased to 79% in Q4 2021, an increase of 4%
on Q4 2020 (76%) and 34% on Q3 2021 (59%); FY 2021 average utilisation was 75%
an increase of 27% on FY 2020 (59%);

·      Average monthly revenue per operating rig ("ARPOR") at
US$184,000, up 7% on Q4 2020 (US$172,000) and up 6% on Q3 2021 (US$182,000);

·      Safety performance remains world class with the Group remaining
LTI free across eleven sites through 2021, six of which have remained LTI free
in excess of three years;

·      Recent contract win (already announced):

-     A three-year surface production drilling contract with AngloGold
Ashanti at the Geita Gold Mine, Tanzania. This contract will utilise five rigs
from the existing fleet together with one new rig during 2022, and is
anticipated to generate revenues of $33 million over the contract term;

 

·      New contract wins include:

-     An exploration contract with Firefinch at the Goulamina Lithium
mine, Mali, a JV project between Firefinch and the world's largest lithium
producer Ganfeng;

-     An exploration contract with Tembo Mining at the Kabanga Nickel
mine, Tanzania. This year has seen an investment from BHP intended to
accelerate the development at the project;

-     An underground contract with Barrick for an additional rig at North
Mara, Tanzania;

-     A one year contract extension for underground grade control drilling
with Resolute at the Syama Gold Mine, Mali.

·      Sukari Gold Mine (Egypt) waste mining and expanded drilling
contracts continue to perform ahead of contract targets:

-     Operations continued smoothly through Q4 2021 with 2021 finishing
above contracted mining quantities as all production phases were brought
on-line ahead of schedule;

-     The commencement and ramp up of this contract, involving over 400
new employees with associated new equipment, has completed, with its first
year of operation injury free.

·      MSALABS has had a very successful Q4 2021, cementing a strong
outlook for 2022:

-       The rollout of the Chrysos'™ PhotonAssay units is progressing
well:

·      The unit at the Bulyanhulu (Tanzania) laboratory has been
commissioned and commenced operations in October;

·      A unit will arrive in Val d'Or (Canada) in January 2022 and is
expected to be commissioned by late March 2022. This expands Capital's
presence in Canada and we have now been awarded a one year service contract
with Benz Mining and a one year contract with Solidus Resources;

·      A unit is due to arrive in March 2022 at the Morila Gold Mine in
Mali (80% owned by Firefinch ASX:FFX), to service a now finalised five-year
contract with Société Des Mines De Morila SA;

-       MSALABS has signed a Heads of Terms with Modern Mining Testing
Company in the Kingdom of Saudi Arabia which will seek to establish a major
hub laboratory in the region for the analysis of mining samples from within
Saudi Arabia and other international jurisdictions.

·      The total rig count increased from 108 (30 June 2021) to 109
through Q4 2021, with three further rigs currently undergoing commissioning;
and

·      The Group's portfolio of ten long-term mine-site based contracts
continue to perform well.

 

Direct Investments Update

·      Over the past several years, as a component of its business
development strategy, Capital has engaged in direct investments into
exploration and mining companies, aligning the activity with service
contracts;

·      The listed portfolio recorded investment gains (realised and
predominantly unrealised) of $29.1 million representing a 135% increase over
H2 2021;

·      The total value of listed investments was $51.9 million as of 31
December 2021, versus $21.6 million at the end of H1 2021; The revaluation of
the unlisted investments (which amounted to $9.4 million at the end of H1
2021) will be released with FY21 results;

·      The Direct Investment portfolio will provide a material mark to
market contribution to results.

 

Outlook

·      Q4 saw the strongest quarterly revenues in the Group's history,
and the momentum has continued into 2022 across all business units;

-       The drilling business has a strong outlook with a higher rig
count entering 2022, utilisation rates up after the seasonably weak Q3 and
pricing remaining robust;

-       The Sukari earth moving contract continues to perform above
expectations and with the project now safely commissioned, we expect the
operation to run at full capacity in the coming year;

-       MSALABS is seeing strong demand for its laboratory services and
the rollout of the Chrysos units will continue through 2022;

-       Business mix underpinned by long-term mine-site contracts with
blue-chip customers, growing exposure to metals beyond gold, and non-drilling
revenues expected to proportionally increase further in 2022;

-       Tendering activity across all business units remains robust,
with a number of opportunities progressing;

-       Strength across all business units gives the Group confidence to
continue to invest in growth.

·      Macro conditions continue to suggest sustained strength in the
demand environment and outlook with gold & other key commodities still
trading at near decade long highs; and

·      Revenue guidance for 2022 will be announced alongside the Group's
full year results and together with any dividend declaration.

 

Commenting on the trading update, Jamie Boyton, Executive Chairman, said:

 

"The last financial year saw Capital deliver three record quarters of revenue
growth, delivering the strongest year in our history. 2021 has been a
transformational year for Capital, driven in part by a surge in market
activity in our drilling business, but also the increasing contribution from
our non-drilling services which in Q4 2021 accounted for 26% of Group
revenues, compared to just 9% in 2020. Our focus on mine-site contracts, long
life assets and a blue-chip customer base, the diversity in our service
offering, and the increasing exposure to non-gold commodities at world class
assets, together underpin the sustainability of our business model.

It is pleasing to see not only an extremely successful execution in the ramp
ups of these new services but also with continued excellence in our safety
performance amongst this significant increase in activity across the Group.

As we look to the year ahead, there are a number of growth catalysts to come.
At Sukari, with operations now commissioned, 2022 will be the first complete
year with the earth moving contract at full run rate. MSALABS is also at an
exciting inflection point in Q4 2021, with one Chrysos Photon Assay unit
successfully commissioned and 2022 set to see material growth driven by the
rollout of further units as well as the construction of the Group's third
major hub lab, in Saudi Arabia. For the core drilling business, we also enter
2022 with the highest rig count in the group's history and we are confident in
maintaining strong utilisation levels given the increased activity we are
seeing from our existing clients as well as the strength we continue to see in
commodity pricing."

Conference Call Details - Today 09.00 GMT

 

The Company will host a conference call on Tuesday, 18 January 2022, at 09.00
GMT to update investors and analysts on the Q4 and FY 2021 Trading Update.

 

Participants can join the conference call using the dial in details below:

United Kingdom Toll-Free: 08003589473

United Kingdom Toll: +44 3333000804

PIN: 52117437#

International dial-in numbers - Link
(https://urldefense.proofpoint.com/v2/url?u=https-3A__events-2Dftp.arkadin.com_ev_docs_NE-5FW2-5FTF-5FEvents-5FInternational-5FAccess-5FList.pdf&d=DwMGaQ&c=24Pv9SDmf15C3K1GQEblf0-dR4hG0m_5jejOBrkAV6M&r=7EZXAV52PYrKZZf88jkL-d6mahROTN4YeaxC7jrgDG4&m=-p53C4_KUM_i6DAm3DV92mN2n_OllbUN0X62CT45aoQzYfPscN78hdh2pCIRJMSp&s=2-9rwRMM-objfAk5SdW-cfPHOIQ7l9wp03IOTVgRHhc&e=)

 

- ENDS -

 

 

 

 

 

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

 

 Capital                                                                                                                                                                  +230 464 3250
 Limited

                                                                                                                                                                        investor@capdrill.com (mailto:investor@capdrill.com)
 Jamie Boyton, Executive
 Chairman

 Giles Everist, Chief Financial Officer

 Conor Rowley, Investor Relations & Corporate Development Manager

 Berenberg                                                                                                                                                                +44 20 3207 7800

 Matthew Armitt

 Jennifer Wyllie

 Detlir Elezi
 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

 James Husband

 

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; mining equipment hire and
maintenance; and geochemical analysis. The Group's corporate headquarters are
in Mauritius and it has established operations in Burkina Faso, Côte
d'Ivoire, Egypt, Guinea, Kenya, Mali, Mauritania, Nigeria, Saudi Arabia and
Tanzania.

 

 

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