Q3 2023 Trading Update

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  Q3 2022	Q2 2023	vs 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  Q3 2022	Q2 2023	vs 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 revenue1 ($m)	1.8	1.4	28.6%	2.3	-21.7%
Total Drilling and associated revenue ($m)	51.2	52.3	-2.1%	52.6	-2.7%

*Average revenue per month per operating rig

*Unaudited numbers

¹Associated 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                                                                     [e-mail]                      

Peter Stokes, Chief Executive Officer                             

Rick Robson, Chief Financial Officer

Conor Rowley, Corporate Development & Investor Relations 

Tamesis Partners LLP                                                          [phone]

Charlie Bendon

Richard Greenfield

Stifel Nicolaus Europe Limited                                          [phone]

Ashton Clanfield

Callum Stewart

Rory Blundell

Buchanan                                                                               [phone]

Bobby Morse                                                                        [e-mail]

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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