REG - Capital Limited - FY 2022 Trading Update

CapitalAnnouncement

19/01/2023 07:00

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RNS Number : 1432N  Capital Limited  19 January 2023

Capital Limited

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

 

FY 2022 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 2022 (the "Period").

 

FOURTH QUARTER (Q4) AND FULL YEAR 2022 KEY METRICS

                   Q4 2022  Q3 2022   vs             Q4 2021  vs        FY 2022*  FY 2021  FY 2022

                                      Q3 2022                 Q4 2021                      vs

                                                                                           FY 2021
 Revenue ($m)      79.1     73.1             8.2%    66.5     18.9%     290.3     226.8    28.0%
 ARPOR(#) ($)      191,000  182,000          4.9%    184,000  3.8%      180,000   181,000  -0.6%
 Average           94       91               3.3%    86       9.3%      93        78       19.2%

 Utilised Rigs
 Fleet             73       77               -5.2%   79       -7.6%     79        75       5.3%

 Utilisation (%)
 Average Fleet     129      119              8.4%    109      18.3%     118       104      13.5%
 Closing           129      127              1.6%    109      18.3%     129       109      18.3%

 Fleet Size

All amounts are in USD unless otherwise stated

(#) Average revenue per month per operating rig

* Unaudited numbers

 

 

Financial Highlights

·      FY 2022 revenue of $290.3 million, up 28.0% on FY 2021 ($226.8
million), slightly ahead of the upper end of revised guidance of $280-290
million (up from $270-280 million guided at our FY21 results);

·      This is the third consecutive year Capital has delivered material
growth in revenue, with full year revenues increasing 28%, following 68% YoY
growth in 2021 and 18% YoY growth in 2020;

·      Q4 2022 revenue of $79.1 million, another record quarter, up
18.9% on Q4 2021 ($66.5 million) and up 8.2% on Q3 2022 revenue ($73.1
million);

·      Non-drilling revenue contributed 28% of total revenue for FY
2022, compared with 22% in FY 2021, driven primarily by the increased
contribution from mining services and MSALABS.

 

 

Operational Update

·      Safety performance remains world-class with 2022 Total Recordable
Injury Frequency Rate ("TRIFR") of 1.2 per 1,000,000 hours worked (2021:
0.98).

·      Capital Drilling: Further strengthening of the contract portfolio

-       Average monthly revenue per operating rig ("ARPOR") in Q4 2022
at US$191,000, up 3.8% on Q4 2021 (US$184,000) and up 4.9% on Q3 2022
(US$182,000);

-       Fleet utilisation decreased to 73% in Q4 2022, compared to 79%
in Q4 2021 and 77% in Q3 2022. This is the result of our active strategy to
reposition the contract portfolio, as outlined at the H1 2022 results,
reducing exposure to short-term exploration contracts, and focusing on large
scale mine sites and Tier-1 projects with significant growth potential. FY
2022 average utilisation was 79% an increase on FY 2021 (75%);

-       New contract wins in Q4 2022 include:

•      A two-year contract extension for underground grade control
drilling with Barrick at the Bulyanhulu Gold Mine, Tanzania;

•      A three-year contract extension (with two-year further extension
option) for grade control and reverse circulation drilling with B2Gold at the
Fekola Gold Mine, Mali;

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

•      An extension of the exploration contract, including additional
rigs, with Tembo Mining at the Kabanga Nickel project, Tanzania, subject to
final terms and conditions.

-       Rig count increased from 127 to 129 through Q4 2022, net of
depletion.

·      Capital Mining: Continuing to perform strongly and ahead of
contracted levels through Q4 2022

-       Sukari Gold Mine (Egypt) waste mining contract had another
strong performance through Q4 2022 with the team exceeding their previous
daily production record since the project commenced;

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

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

•      MSALABS now has four units commissioned across Africa and
Canada, with three further units due to begin operations in Q1 2023, including
Barrick's Kibali Gold Mine;

•      Trials with major mining companies are continuing with
PhotonAssay in high demand globally. The expanded relationship with Chrysos
will see MSALABS deploy 21 units by 2025, giving the company a strong
competitive position in the coming years;

•      Routine copper analysis commenced at the unit at Barrick's
Bulyanahulu Gold Mine, Tanzania;

•      R&D has also commenced on automation of PhotonAssay adjacent
processes such as jar recycling.

-       MSALABS has also extended into the Yukon region in Canada, where
mining activity is rapidly growing, with a sample preparation laboratory at
Victoria Gold's Eagle mine.

 

Direct Investments Update

·      The total value of investments (listed and unlisted) was US$38.7
million as of 31 December 2022, versus $47.3 million at 30 June 2022 and
versus US$60.2 million at the end of 2021; The portfolio recorded investment
losses (unrealised) of US$9.55 million in H2 2022;

·      Capital was a net seller in 2022 and has invested a net total of
$12.5 million in the investment strategy since forming the Investment
Committee formally in January 2019;

·      The portfolio remains concentrated around a few key holdings with
our holding in Predictive Discovery accounting for ~50%;

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

 

Outlook

·      The Group continued to see strong demand across all its business
units in Q4 2022 and gives the Group confidence to continue to invest in
growth.

-       The drilling business has a strong outlook entering 2023 with
its highest rig count, robust utilisation and strong ARPOR;

-       The Sukari earth moving contract continues to perform extremely
well and is expected to operate at steady state through the coming year;

-       MSALABS continues to see strong demand for its laboratory
services and has now locked in a multi-year growth outlook, particularly
driven by the rollout of the Chrysos PhotonAssay units through 2023 and 2024;

-       The Group's contract portfolio developed further in 2022, in
both drilling and MSALABS, adding exposure to major mines and clients such as
Barrick's Kibali and B2Gold's Fekola while also expanding the Group's exposure
to gold and non-gold world class developing projects;

-       Tendering activity across all business units remains robust;

·      Revenue and capex guidance for 2023 will be announced alongside
the Group's full year results together with any dividend declaration on the
16(th) March 2023.

 

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

 

"The last financial year saw Capital materially increase its revenues for the
third consecutive year, but in addition to this growth, pleasingly Capital
enters 2023 with an even more robust contract portfolio. Through 2022, the
Group renewed multiple long-term contracts including Bulyanhulu in Q4 2022,
and also entered into new material contracts both at major operating mines,
such as Fekola and Kibali, and also at world-class projects with significant
growth potential in gold and non-gold commodities.

This contract portfolio suite, as well as the Group's continued focus on
productivity and stellar safety performance, ensures a robust platform from
which we can continue to invest in growth.  As we look to the year ahead, we
remain confident in the demand we are seeing on the ground. On top of
significant growth potential in drilling, MSALABS is set to see another year
of strong growth driven primarily by the rollout of further Chrysos
PhotonAssay units, and in mining we continue to progress a number of tendering
opportunities."

Peter Stokes, Chief Executive, said:

 

"Since joining Capital in October 2022, I've had the opportunity to visit our
key drilling operations across East and West Africa, our world class drilling
and mining operations at Sukari in Egypt and MSALABS' Canadian operations
including the revolutionary Chrysos PhotonAssay technology. It is clear
Capital stands as a leader in its chosen fields, not only through the strength
of its relationships and high-quality equipment but also through the focus on
safety and push towards a highly nationalised workforce, something that really
drew me to the company to begin with. Capital is certainly on an impressive
growth trajectory and we are very optimistic about the year ahead."

 

- ENDS -

 

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

 

Capital Limited
 
+230 464 3250

Jamie Boyton, Executive Chairman
 
investor@capdrill.com

Peter Stokes, Chief Executive
Officer

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 Cleary

 

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 Mauritius and it has
established operations in Côte d'Ivoire, Canada, Egypt, Guinea, Kenya, Mali,
Mauritania, Nigeria, Saudi Arabia and Tanzania.

 

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