REG - Capital Limited - Q1 2023 Trading Update

CapitalAnnouncement

20/04/2023 07:00

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RNS Number : 7983W  Capital Limited  20 April 2023

FOR IMMEDIATE RELEASE

20 APRIL 2023

 

 

 

Capital Limited

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

 

Q1 2023 Trading Update

 

Capital (LSE: CAPD), a leading mining services company, today provides its
trading update for the period 1 January to 31 March 2023 (the "Period").

 

FIRST QUARTER (Q1) 2023 KEY METRICS

                        Q1 2023  Q1 2022   vs         Q4 2022  vs

                                           Q1 2022             Q4 2022
 Revenue ($m)           77.8     66.9     16.3%       79.1     -1.6%
 ARPOR(#) ($)           192,000  174,000  10.3%       191,000  0.5%
 Average Utilised Rigs  95       90       5.6%        94       1.1%
 Fleet Utilisation (%)  77%      82%      -6.1%       73%      5.5%
 Average Fleet          123      110      11.8%       129      -4.7%
 Closing Fleet Size     123      110      11.8%       129      -4.7%

All amounts are in USD unless otherwise stated

(#) Average revenue per month per operating rig

* Unaudited numbers

 

 

Financial Highlights

·      Revenue US$77.8 million, a 16.3% increase on Q1 2022 (US$66.9
million) and a 1.6% decrease on Q4 2022 (US$79.1 million);

·      Non-drilling revenue contributed 27% of total revenue in Q1 2023
with consistent Mining Services operations and MSALABS continuing along its
growth path;

·      Average monthly revenue per operating rig ("ARPOR") was
US$192,000 in Q1 2023, a 10.3% increase on Q1 2022 ($174,000) and 0.5% on Q4
2022 (US$191,000). We saw ARPOR pick up particularly in Q4 2022 and expect
higher levels to continue going forward. This has been the direct result of
our fleet repositioning strategy in the latter half of 2022, with a focus away
from shorter term contracts in favour of large scale mine sites and world
class developments;

·      Final dividend of US 2.6 cps declared at the FY22 results for the
2022 financial year (2021: US 2.4 cps), will be payable 09 May 2022.

 

Operational Update

·      Safety performance remains world-class with Q1 2023 Total
Recordable Injury Frequency Rate ("TRIFR") of 0.7 per 1,000,000 hours worked
(FY 2022: 1.2).

·      Capital Drilling: Improving ARPOR following fleet repositioning
strategy

-       Fleet utilisation was 77% in Q1 2023, compared to 82% in Q1 2022
and 73% in Q4 2022. While we continue to see very strong demand for our
services, this level is close to our target utilisation, allowing us to
mobilise quickly to new projects and also operate an effective maintenance
strategy, key to ensuring we provide a high quality of service;

-       New contract wins:

§ An extension of the exploration drilling contract with Perseus Mining at
the Yaouré gold mine in Côte d'Ivoire;

-       Recent Q1 2023 contract wins (previously announced):

§ A two-year diamond drilling services contract with Barrick at the Reko Diq
copper-gold project, Pakistan;

§ A three-year reverse circulation and diamond drilling services contract
with Fortescue Metals Group at the Belinga iron ore project, Gabon;

§ A diamond drilling services contract with Kodal Minerals at the Bougouni
lithium project, Mali.

-       Rig count decreased from 129 to 123 through Q1 2023. This is the
result of timing differences between decommissioning of old rigs and
replacement rigs commissioning. We continue to expect rig count to end 2023 at
similar levels to the end of 2022 as guided at our FY22 results.

·      Capital Mining: Consistent performance continuing

-       Sukari Gold Mine (Egypt) waste mining contract had another
strong performance through Q1 2023;

-       Capital remains active in the tendering pipeline.

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

-       Chrysos' PhotonAssay™ unit rollout is progressing well:

•      MSALABS now has six units commissioned across Africa and Canada,
with a mine site laboratory at Barrick's Kibali gold mine, and the commercial
laboratory in Prince George, Canada successfully commissioned in Q1 2023;

•      The expanded relationship with Chrysos will see MSALABS deploy
21 units by 2025;

-       MSALABS extended into the Yukon region in Canada in Q1 2023,
where mining activity is rapidly growing, with a sample preparation laboratory
at Victoria Gold's Eagle mine.

-       MSALABS commissioned in Q1 2023 a mine site laboratory at Shanta
Gold's Singida mine, Tanzania, and a laboratory in Bougouni, Mali, which will
support gold and lithium operations in southern Mali.

 

Outlook

·      Revenue guidance for 2023 remains $320 to $340 million as guided
at our FY22 results;

·      Capital Drilling will continue to see improvement in the contract
portfolio, as evidenced in the strengthening ARPOR run rates. While planned
decommissioning lowered the rig count through Q1 2023, replacement rigs will
bring our total fleet size back up to similar levels as the end of 2022, as
guided at our FY22 results;

·      Capital Mining will remain robust through 2023 with the Sukari
earth moving contract expected to perform at steady state through the year
while we continue to progress opportunities in the tendering market;

·      MSALABS will continue its multi-year laboratory roll out,
particularly focused on Chrysos PhotonAssay™ units, and has got off to a
strong start in Q1 2023. Guidance for MSALABS remains $40-50 million for 2023,
as guided at our FY22 results, and another significant increase YoY (FY 2022:
$27.3 million);

·      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 has got off to a strong start in 2023 across all our business units
and we remain confident in the $320-340 million revenue guidance we set at our
FY22 results a little over a month ago. Our mining business at Sukari will
remain at steady state through the year but MSALABS is set to grow
significantly again YoY as it continues to build its global network, skewing
Group revenues more to the second half.

What has been particularly pleasing in Q1 2023 is the ongoing improvement we
have seen in our drilling business's ARPOR, largely a direct result of our
efforts to reposition and strengthen the portfolio suite through the back half
of last year. Through contract extensions such as with Perseus in Cote
d'Ivoire as announced today, or through the addition of contracts on world
class projects such as Barrick's Reko Diq copper project and FMG's Belinga
iron ore project announced earlier this year, we expend this trend in ARPOR to
continue positively."

Our fleet remains highly utilised, our safety performance world class and we
continue to see a strong tender pipeline of opportunities. This provides us a
solid platform to achieve another record year milestone for 2023."

 

- 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 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 Mauritius and it has
established operations in Côte d'Ivoire, Canada, Democratic Republic of
Congo, Egypt, Guinea, Kenya, Mali, Mauritania, Nigeria, Pakistan, Saudi
Arabia, Sudan and Tanzania.

 

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