REG - Capital Limited - Q2 2022 Trading Update

CapitalAnnouncement

19/07/2022 07:00

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RNS Number : 8677S  Capital Limited  19 July 2022

 For Immediate Release  19 July 2022

 

 

 

 

 

Capital Limited

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

 

Q2 2022 Trading Update

 

Capital (LSE: CAPD), a leading mining services company, today provides its
trading update for the period 1 January to 30 June 2022 (the "Period").  The
Company will announce its half year results and provide a further operational
update on 18 August 2022.

 

FIRST HALF (H1) 2022 KEY METRICS

                        H1 2022  H1 2021  H2 2021  % change from H1 2021  % change from H2 2021
 Revenue ($million)     138.1    98.7     128.1    39.9%                  7.8%
 ARPOR ($)              173,000  180,000  183,000  -3.9%                  -5.5%
 Average utilised rigs  93       73       83       27.4%                  12.0%
 Fleet Utilisation (%)  83       73       77       13.7%                  7.8%
 Average Fleet          112      99       108      13.1%                  3.7%
 Closing fleet size     116      106      109      9.4%                   6.4%

 

 

SECOND QUARTER (Q2) 2022 KEY METRICS

                        Q2 2022  Q2 2021  Q1 2022  % change from Q2 2021  % change from Q1 2022
 Revenue ($million)     71.2     54.7     66.9     30.2%                  6.4%
 ARPOR ($)              171,000  180,000  174,000  -5.0%                  -1.7%
 Average utilised rigs  97       81       90       19.8%                  7.8%
 Fleet Utilisation (%)  85       79       82       7.6%                   3.7%
 Average Fleet          114      103      110      10.7%                  3.6%
 Closing fleet size     116      106      110      9.4%                   5.5%

 

Financial Highlights

·        Q2 2022 revenue of $71.2 million, up 30.2% on Q2 2021 ($54.7
million) and up 6.4% on Q1 2022 revenue ($66.9 million);

·        H1 2022 revenue of $138.1 million, up 39.9% on H1 2021 ($98.7
million) and up 7.8% on H2 2021 ($128.1 million);

·        Non-drilling revenue contributed 28% of total revenue for H1
2022, compared with H1 2021 (17%), driven by growth YoY in mining services and
MSALABS;

·        Paid a final dividend of US2.4cps for 2021 financial year in
May 2022, up from US1.3cps for the 2021 financial year. This is in addition to
the ~$2.5 million buyback completed in Q1 2022;

·        H1 2022 results will be released on 18 August 2022.

 

 

Operational Update

·      Safety performance remains world-class with the Group TRIFR at
1.8 in H1 2022. Capital's target is zero harm across the Group;

·      Capital has now employed a full time Sustainability Manager to
assist in the Group's ESG strategy.

·      Capital Drilling: Strongest demand environment since the
company's inception

§ Fleet Utilisation increased to 85% in Q2 2022, an increase of 7.6% on Q2
2021 (79%) and 3.7% on Q1 2022 (82%);

§ New contract wins:

§ A three-year comprehensive drilling services contract with AngloGold
Ashanti with its GEITA GOLD MINE LIMITED in Tanzania: Our Tanzanian subsidiary
company, CMS (Tanzania) Limited has been awarded a contract to provide a full
range of drilling services including development (diamond & reverse
circulation), grade control, blast hole & underground drilling. Capital
will utilise the existing fleet, which now has a total of 25 rigs on site. It
is anticipated to generate ~$150 million over the three year contract term,
making it the second largest award of new business in the Company's history.

§ First contract with B2Gold Corporation at the Fekola Gold mine in Mali, one
of largest gold mines in Africa:  Capital has been awarded a reverse
circulation drilling services contract.

§ Rig count increased from 110 to 116 through Q2 2022, net of depletion.

·      Capital Mining continues to perform strongly

§ Sukari Gold Mine (Egypt) waste mining contract continues to perform well
and remained LTI free;

§ Capital remains active in the tendering pipeline.

·      MSALABS: Growth outlook improved through expanded relationship
with Chrysos and major contract extension

§ Expanded relationship with Chrysos Corporation:

§ MSALABS recently announced an expansion of its global partnership with
Chrysos, now guiding to deploying 21 Chrysos PhotonAssay units by 2025;

§ Rollout of initial six units by year end 2022 on track: In addition to four
units already announced at Bulyanhulu Gold Mine (Tanzania), the Morila Gold
Mine (Mali), the Kibali Gold Mine (DRC) and in Val d'Or (Quebec, Canada):

·      A fifth unit will arrive imminently at Yamoussoukro, Cote
d'Ivoire with facility preparations well advanced;

·      A sixth unit is due to begin installation in Timmins, Canada by
the end of 2022;

§ MSALABS has been awarded a two-year extension to the existing three-year
onsite laboratory services contract with Kinross at the Tasiast Gold Mine,
Mauritania, subject to final terms & conditions.

·      Capital Direct Investments (Capital DI): Impacted by general
market conditions but strong business development performance

§ The portfolio recorded investment losses (unrealised) of US$10.3 million.
The total value of investments (listed and unlisted) was US$47.3 million as of
30 June 2021, versus US$60.2 million at the end of 2021;

§ Over the period Capital continued to rationalize the breadth of holdings
and realized cash proceeds from the portfolio generating net sales after
investments of US2.6million, with the proceeds directed toward group capital
expenditures.

§ Key holdings update:

§ Predictive Discovery: The Company has made substantial progress under new
management, including a successful capital raising of over A$53 million, which
which sets a strong foundation for work programs in the months and years
ahead.  Capital DI has maintained its exposure by participating in this
equity raise at A$0.18 per share as an anchor shareholder.

§ Firefinch / Leo Lithium: Over the period Firefinch completed its demerger
of its lithium assets into Leo Lithium. Capital DI's exposure in Firefinch
Limited has largely pivoted to Leo Lithium, which listed on the ASX in June
2022.

§ Contract revenues from investee companies again contributed strongly to
Group revenues, totaling US$26.4mn over the H1 period.

 

Outlook

·      Q2 2022 has again seen extremely strong demand with the outlook
remaining supportive;

§ The drilling business is operating at high utilisation rates, and further
rigs will arrive in the second half with the group's rig count growing towards
~120 rigs;

§ The Sukari earth moving contract continues to perform well;

§ MSALABS is experiencing exceptional demand for its laboratory services. The
expanded partnership with Chrysos will drive material further growth through
2023 and 2024;

§ Business mix underpinned by long-term mine-site contracts. Capital is
taking advantage of strong demand in the market to not only win further
contracts, but also rotate into higher quality blue-chip customers as
highlighted by the recent contract win with B2Gold;

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

·      Revenue guidance for 2022 remains $270 to $280 million (compared
to FY2021 revenues of $226.8 million).

 

Conference Call Details - Today 09.00 UK time

The Company will host a conference call today, Tuesday, 19 July 2022, at 09.00
a.m. (London, UK time) to update investors and analysts on the Q2 trading
release.

Participants can join the conference call using the dial in link below

https://webcasting.buchanan.uk.com/broadcast/62ce9891287bf548a3b8c89d
(https://urldefense.proofpoint.com/v2/url?u=https-3A__webcasting.buchanan.uk.com_broadcast_62ce9891287bf548a3b8c89d&d=DwMGaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=TNh4oR-LGu-8h_MW8VdWHdCv7b9UsR1WCF3OFXbI2ak&m=JhpSY6XV3bONvFrCzYaD7ajauQKcITupx8r_CsWVb60&s=kbF9N-t2G5QLKKpyikF3xpkMh3gWR4NBBdrMmQbzMkA&e=)

 

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

"We are currently seeing the strongest demand since the Company's inception,
in contrast to the recent perception from global equity markets.

Our drilling fleet operated at 85% utilisation through Q2 2022 and finished
the quarter at 116 rigs. This represents both the highest rig count and also
the highest quarterly utilisation rate in the Group's history.  Our mining
fleet at Sukari also operated at steady state maintaining very high
utilisation of the equipment through the quarter.

It is equally pleasing that we continue to maintain our peer leading safety
standards, particularly when considering the significant expansion in activity
across the Group.

MSALABS has also now locked in a continuation of its impressive growth
trajectory with the expanded relationship with Chrysos. At the time of the
acquisition of a controlling interist in MSALABS in 2019, the company
generated just $3 million in annual revenue, and so it is incredibly pleasing
to see that business now guiding to over US$80 million just five years later."

- 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

 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

 Berenberg                                                                                                                                                                +44 20 3207 7800

 Matthew Armitt

 Jennifer Wyllie

 Detlir Elezi

 Buchanan                                                                                                                                                                 +44 20 7466 5000

 Bobby Morse                                                                                                                                                              capital@buchanan.uk.com

 James Husband

 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; 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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