Capital Ltd share price, company news, analysis and interviews
Capital Limited (LON: CAPD) provide full-service mining, drilling, maintenance and geochemical analysis solutions to customers within the global minerals industry, focussing on the African markets.
Their services extend across the mining cycle, from initial exploration drilling to load and haul, providing our customers with a fully integrated mining services solution.
The company’s reputation is built on an unwavering commitment to safety, delivering professional mining solutions and working closely with our customers to deliver operational efficiencies.
Capital Ltd (LON:CAPD) has announced the appointment of Mr. Rick Robson as Chief Financial Officer (“CFO”) following the departure of Mr. Giles Everist. Mr. Robson will replace Mr. Giles Everist with effect from 01 January 2023 and will work closely with Mr. Everist over the next two months to ensure an orderly transition. Mr. Robson is based in London and will report to Mr. Peter Stokes, Chief Executive Officer.
Mr. Robson has been a member of Capital’s senior management team since 2019 and is currently Head of Corporate Development & CFO of MSALABS. Over the last three years, Mr. Robson has led all the equity and debt financings entered into by the Group and, as CFO of MSALABS, has played a key role in delivering the division’s growth through its strategic relationship with Chrysos Corporation.
Mr. Robson has over 20 years of experience across corporate finance, M&A advisory and operational finance. Mr. Robson is a Chartered Accountant having trained at Deloitte. Prior to joining Capital, Mr. Robson was the CFO of a project development company with several greenfield assets in Colombia where he developed and ran the finance function. He was also formerly an investment banker with Barclays where he was focused on the mining sector.
Commenting on the transition, Mr Jamie Boyton, Executive Chairman, said:
“We would like to thank Giles for his significant contribution to the business. He has been integral to the group since early 2021, which has seen Capital grow materially within and beyond the core drilling business. We wish him the best of success in his future endeavours.
We are pleased Rick has taken the role of CFO and are confident in a smooth transition given Rick’s already extensive knowledge of the business.”
Capital Ltd (LON:CAPD), a leading mining services company, has provides its Q3 2022 trading update for the period ended 30 September 2022.
THIRD QUARTER (Q3) 2022 KEY METRICS
Q3 2022
Q3 2021
Q2 2022
% change fromQ3 2021
% change fromQ2 2022
Revenue (US$m)
73.1
61.6
71.2
18.7%
2.7%
ARPOR*(US$)
182,000
182,000
171,000
0.0%
6.4%
Average utilised rigs
91
81
97
12.3%
-6.2%
Fleet Utilisation (%)
77
76
85
1.3%
-9.4%
Average Fleet
119
107
114
11.2%
4.4%
Closing fleet size
127
108
116
17.6%
9.5%
* Average monthly revenue per operating rig
Financial Highlights
· Q3 2022 revenue of $73.1 million, up 18.7% on Q3 2021 ($61.6 million) and up 2.7% on Q2 2022 ($71.2 million);
· Non-drilling revenue contributed 29% of total revenue for Q3 2022, compared with 26% in Q3 2021 and up from 27% in Q2 2022;
· Average monthly revenue per operating rig (“ARPOR”) of $182,000 was flat on Q3 2021 ($182,000) but up 6.4% on Q2 2022 (US$171,000); and
· Interim dividend of 1.3 cents per share (cps), paid on 3 October, up 8.3% on 2021 interim dividend (1.2 cps).
Operational Highlights
· Safety performance remains world-class and improved through the quarter with the 9-month YTD TRIFR at 1.2, down from 1.8 in H1 2022;
· Capital Drilling: Strong performance while repositioning the contract portfolio through the quarter:
– Fleet Utilisation of 77% in Q3 2022 was up 1.3% on Q3 2021 and down 9.4% on Q2 2022, due to typical seasonal weakness, particularly the wet season in West Africa, and also increased asset mobilisation as the group begun repositioning the contract portfolio as outlined at our H1 22 results. Repositioning of rigs is continuing in Q4 2022 along with some refurbishments on the newly acquired rigs at Fekola;
– Previously announced contract wins (6 September):
§ An expanded drilling services contract with B2Gold Corp. at the Fekola Gold Mine, Mali, out to the end of 2024. Our services on site now include development (diamond and reverse circulation) and grade control drilling. To facilitate delivery of the new contract Capital has purchased 10 rigs from African Mining Services (‘AMS’), part of the Perenti Group.
– New contract wins:
§ A multi-rig exploration drilling contract (including reverse circulation, diamond and air core drilling) with Perseus Mining at its Block 14 Gold Project in Sudan; and
§ A reverse circulation drilling contract with Evolution Energy Minerals at its Chilalo graphite project in Tanzania.
– Rig count increased from 116 to 127 through Q3 2022, net of depletion (including the 10 rigs purchased from AMS).
· Capital Mining: Continuing to perform well:
– Sukari Gold Mine (Egypt) waste mining contract achieved a quarterly record of waste mined since the project began; and
– Capital remains active in the tendering pipeline.
· MSALABS: Robust growth trajectory continuing:
– Ongoing Chrysos PhotonAssay™ rollout:
§ MSALABS now has three Chrysos PhotonAssay™ units commissioned at Bulyanhulu Gold Mine (Tanzania), Morila Gold Mine (Mali) and Val d’Or (Quebec, Canada) with a fourth unit currently being commissioned in Yamoussoukro (Cote d’Ivoire);
§ The fifth and sixth units are set to arrive at the Kibali Gold Mine (DRC) and Prince George (Canada) in the coming weeks. A further unit is still earmarked for Timmins (Canada), as previously guided, which will be commissioned in Q1 2023; and
§ Increased geographic spread is enabling accelerated PhotonAssay trials with major mining houses. PhotonAssay continues to be in high demand giving MSALABS a strong competitive advantage especially following the expanded relationship with Chrysos Corporation to roll out 21 units by 2025.
– MSALABS has been awarded a 3-year mine site laboratory contract with Shanta Gold at its Singida Gold mine in Tanzania; and
– MSALABS has completed the construction of a laboratory in Bougouni, Mali to support gold and lithium operations in southern Mali along with providing additional sample flow for the Chrysos unit at the Morila Gold mine (Mali).
Outlook
· Q3 2022 continued to see robust demand across our blue-chip portfolio of customers;
· Revenue guidance for 2022 remains $280 to $290 million (upgraded from $270 – 280 million at the H1 2022 results). Capital expenditure guidance remains $60-65 million in 2022 (recently increased from $50-55 million as a result of the purchase of rigs and other assets from AMS):
– The drilling business has further improved its contract portfolio with high-quality long-term contracts, and further rigs will arrive in Q4 with the group’s rig count growing towards ~130 rigs by the end of 2022;
– The Sukari earth moving contract continues to perform well and at full capacity;
– MSALABS is experiencing strong demand for its laboratory services with revenue guidance for 2022 remaining ~$30 million (up from $15.6 million in 2021). The continued rollout of Chrysos PhotonAssay™ units will drive material further growth through 2023 and 2024; and
– Tendering activity across all business units remains robust, with a number of opportunities progressing.
Commenting on the trading update, Jamie Boyton, Executive Chairman, said:
“The third quarter of 2022 saw Capital again increase revenues despite seeing typical seasonal weakness compounded by increased asset movement as we repositioned the drilling contract portfolio. This is testament to the enhancements the business has made in its service offering over the past two years in particular, and the more robust and less volatile our revenues have become as a result.
Through the quarter we begun repositioning our drilling contract portfolio, not only reducing our exposure to small exploration contracts but also increasing our exposure to tier-1 assets, as highlighted with our expanded relationship with B2Gold at Fekola, and assets with exciting long-term potential as with Perseus Mining’s Block 14 project.
Our mining division continues to perform well with Sukari achieving a record quarter in waste mined since the project began. MSALABS also continues its impressive growth trajectory through the quarter, both through multi-year mine site contracts for its traditional business and in the roll out of the revolutionary Chrysos technology.”
Capital Ltd (LON:CAPD), a leading mining services company has announced the award of a new drilling contract and associated purchase of additional drill rigs and other capital equipment.
· An expanded drilling services contract with B2Gold Corp. at the Fekola Gold Mine, Mali, out to the end of 2024. Our services on site now include development (diamond & reverse circulation) and grade control drilling. This follows our initial drilling contract announced at the end of June 2022.
· Associated asset purchase: To facilitate delivery of the new contract Capital has purchased 10 rigs from African Mining Services (AMS), part of the Perenti Group. In addition we have purchased associated equipment and staff accommodation. These rigs are additional to the rig count increase for 2022 guided at our interim results.
This contract is another example of Capital’s focus on large scale, long life and low cost assets. B2Gold Corp. has guided Fekola to produce between 570,000 – 600,000 ounces of gold in 2022, making it amongst the largest gold mines in Africa.
· Guidance update: As a result of the purchase of rigs and other assets from AMS, capital expenditure is now expected to be approximately $60-65 million in 2022 (from $50-55 million). Revenue guidance for calendar year 2022 remains $280 – $290 million (recently upgraded from $270-280 million at the H122 results).
Commenting on the recent contract win, Jamie Boyton, Capital Limited Executive Chairman, said:
‘We are pleased to be further expanding our service offering at the Fekola gold mine and building our relationship with B2Gold.
This new contract award is a strong endorsement of our strategy, not only of expanding our service offering on mine sites with blue-chip customers, but also in repositioning the portfolio to long term contracts that are positioned to operate consistently through the cycle. We have been opportunistic in purchasing rigs from AMS which allows us to more rapidly commence operations and as a result we are increasing our 2022 capex guidance to $60-65 million and our year end rig count to ~130 rigs. Revenue guidance for this calendar year remains in line with our recently upgraded guidance of $280-290 million and we look forward to a strong contribution from the new contract in 2023 and 2024.’
Capital Ltd (LON:CAPD), a leading mining services company, has announced half year results for the period 1 January to 30 June 2022.
HALF YEAR RESULTS FOR THE PERIOD ENDED 30 JUNE 2022*
H1 2022
H1 2021
% change
Revenue ($ m)
138.1
98.7
39.9%
EBITDA1 ($ m)
41.4
28.4
45.8%
EBIT1 ($ m)
28.0
20.2
38.6%
Adjusted net profit2 ($ m)
19.9
12.7
56.7%
Investment (Losses) / Gains ($ m)
(10.3)
5.7
(280.7)%
Net Profit After Tax ($ m)
9.7
18.4
(47.3)%
Cash From Operations ($ m)
34.9
5.4
546.3%
Capex3 ($ m)
22.6
35.0
(35.4)%
Earnings per Share
Basic (adjusted)2 (cents)
10.5
6.7
56.7%
Basic (cents)
4.7
9.8
(52.0)%
Interim Dividend per Share (cents)
1.3
1.2
8.3%
Adjusted ROCE (%) 4
24.6
22.5
9.4%
Net cash / (debt) ($m)
(36.4)
(32.8)
11.0%
Net Debt/Equity (%)
16.3
20.1
(18.9)%
Investments ($m)
47.3
31.0
52.6%
Adjusted Net Cash (Including Investments) ($ m)
10.9
(1.8)
(12.2)%
*All amounts are in US dollars unless otherwise stated
(1)EBITDA, EBIT and Net Cash are non-IFRS financial measures and should not be used in isolation or as a substitute for Capital Limited financial results presented in accordance with IFRS.
(2)Adjusted net profit and adjusted earnings per share are pre investment losses and gains.
(3)Capital expenditure (Capex) consists of purchase of PPE for cash, prepayments for PPE and financed capex.
(4)Adjusted ROCE is calculated utilising annualised half year EBIT and excludes investments at fair value from assets.
Financial Overview
· H1 2022 revenue of $138.1 million, up 39.9% on H1 2021 ($98.7 million);
· Full year revenue guidance increased to $280 – $290 million (from $270 – 280 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;
· H1 2022 EBITDA of $41.4 million, up 45.8% on H1 2021 ($28.4 million);
· EBITDA margins increased to 30.0% from 28.8% in H1 2021;
· Net losses from equity investments of $10.3 million in H1 2022 (unrealised), decreasing the value of Group strategic investments to $47.3 million, net of cash proceeds, as of 30 June 2022 (31 December 2021: $60.2 million);
· Adjusted Net Profit After Tax (NPAT) $19.9 million (adjusted for changes in investments), an increase of 56.7% on H1 2021 ($12.7 million);
· Capex of $22.6 million (H1 2021: $35.0 million) including prepayments and financed capex;
· Cash generated from operations of $34.9 million (H1 2021: $5.4 million), a significant increase YoY and stronger cash conversion despite a further build in working capital with inventory of $51.5 million, up 35% on FY21 ($37.9 million) to accommodate larger revenues and supply chain constraints;
· Net debt of $36.4 million (H1 2021: $32.8 million and year end 2021 $31.9 million);
· Adjusted Net cash (including investments) of $10.9 million (H1 2021: adjusted net debt (including investments) of $1.8 million);
· Adjusted ROCE of 24.6% (H1 2021: 22.5%); and
· Declared an interim dividend of 1.3 cents per share, to be paid on 3 October 2022 to shareholders registered on 2 September 2022 (up 8.3% on 2021 interim dividend 1.2 cents per share).
Operational & Strategic Review
· Rig fleet utilisation was 83% in H1 2022, an increase of 13.7% on H1 2021 (73%) and 17.8% on H2 2021 (77%);
· Rig count increased from 110 to 116 through Q2 2022, net of depletion;
· Safety performance remains world-class with the Group TRIFR at 1.8 in H1 2022. Capital’s target is zero harm across the Group;
· Previously announced contracts:
· A three-year comprehensive drilling services contract with AngloGold Ashanti at the Geita gold mine: 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 and 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.
· Capital remains active in the tendering pipeline.
· MSALABS: Growth outlook improved through expanded relationship with Chrysos
· Expanded relationship with Chrysos Corporation:
o MSALABS recently announced an expansion of its global partnership with Chrysos, now guiding to deploying 21 Chrysos PhotonAssay units by 2025;
o 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 Val d’Or (Quebec, Canada):
o A fifth unit will arrive imminently at Yamoussoukro, Côte d’Ivoire, with facility preparations well advanced;
o 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 and 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.
· Contract revenues from investee companies again contributed strongly to Group revenues, totalling US$26.4mn over the H1 period.
Outlook
· Revenue guidance for 2022 increased to $280 – $290 million (from $270 – 280 million);
· EBITDA margins are expected to remain in a range of 25-30% going forward;
· Capital expenditure is now expected to be approximately $50-55 million in 2022. The increase in capex includes additional rig purchases, as well as higher sustaining capex driven by higher than anticipated utilisation of the expanded fleet;
· Drill rig fleet size forecast to increase to 120 rigs by the end of 2022, net of depletion;
· The Sukari earth moving contract continues to perform well at full run rates;
· MSALABS’s growth trajectory is now underpinned over the next 2-3 years by the expanded partnership with Chrysos. Revenue guidance for 2022 remains $30 million, and is expected to grow to over $80 million per annum from 2025 following the rollout of 21 Chrysos units in conjunction with growth in the traditional laboratories business;
· Tendering activity across all business units remains robust, with a number of opportunities progressing.
Commenting on the results, Jamie Boyton, Executive Chairman of Capital Limited, said:
“We have been very pleased with the performance of the Group through the first half of 2022, not only because we’ve again delivered another strong half year, but we have also taken decisive steps to ensuring a stronger company in the years to come, particularly in our drilling business and in MSALABS.
In drilling we have taken advantage of the strength we have seen in underlying demand to focus on contract selection and rotate our portfolio. Through the period we have commenced operations at two more of Africa’s largest gold mines, Kibali and Fekola, that are well positioned to operate consistently throughout the cycle. In addition, we have increased operations at Tier-1 gold and non-gold deposits with strong growth potential including Predictive Discovery’s Bankan project, Goulamina (lithium) and Kabanga (nickel). This focus on growing long term contracts and partnerships with blue-chip customers remains core to the business model at Capital, irrespective of levels of activity across the market, delivering lower volatility in earnings and sustainability of the business through the cycles.
Similarly, MSALABS has now secured a multi-year growth trajectory driven primarily by the rollout of the revolutionary Chrysos PhotonAssay units. The expanded relationship with Chrysos means MSALABS will now deploy 21 units into the market into 2025. In addition to growth in its existing geochemistry business, this should drive annual revenues in excess of $80 million by 2025, an impressive outlook for a business that generated just $3 million at the time of the controlling interest acquisition in 2019.
The underlying demand in the market continues to be encouraging, as is evident from the high utilisation rates the Group delivered in the first half. While there will be some seasonal slowdown through the third quarter, the tender pipeline remains buoyant across drilling, mining and laboratories and as a result of this strong demand, we are raising our revenue guidance for 2022 to $280-290 million. We have also lifted our capex guidance to $50-55 million, which includes higher sustaining capex on the expanded fleet, and additional rigs to replace expedited rig replacements. In the strong demand environment we are currently experiencing, we have decided to further replenish our fleet to ensure both high reliability as well as a peer leading safety performance which remains core to our operations.
Our capital allocation strategy continually targets the best returns for our shareholders. We are excited by the outlook and the market backdrop and will continue to target new opportunities while maintaining a strong balance sheet and a balanced capital allocation policy. Therefore, in addition to funding further growth, given the strength of the underlying business, we announced a buyback at the beginning of the year and we have today also announced an interim dividend to shareholders of 1.3 cents per share.
Capital Limited will be hosting a live webcast presentation at 09:00 BST on Thursday 18 August 2022, where questions can be submitted through the platform.
Participants may join the webcast approximately five minutes before the commencement time. A copy of the Company’s presentation will be available on www.capdrill.com
Capital Drilling (LON: CAPD) Chairman Jamie Boyton joins DirectorsTalk to discuss half year results for the period ended 30th June 2019. Jamie talks us through the financial highlights, the operational highlights and the outlook for H2 and beyond.
https://vimeo.com/355299759
Capital Drilling provides specialised drilling services to mineral exploration and mining companies in emerging and developing markets, for exploration, development and production stage projects. The Company currently owns and operates a fleet of 92 drilling rigs with established operations in Botswana, Burkina Faso, Côte d’Ivoire, Egypt, Kenya, Mali, Mauritania, Nigeria and Tanzania. The Group’s corporate headquarters are in Mauritius.
Capital Drilling (LON: CAPD) Chairman Jamie Boyton talks to DirectorsTalk about its full year results for the year ended 31st Dec 2018. Jamie talks about some of highlights from the year, expands on the big contract wins and extensions, shares his thoughts on company growth in West Africa, talks about the next steps and shares his view on consolidation of some of the smaller players competing with the big guys.
https://vimeo.com/323681463
Financial Overview
· Significant increase in profitability and net cash
· Full year 2018 revenue of $116.0 million, marginally above the top end of the 2018 guidance of $105 to $115 million (2017: $119.4 million)
· EBITDA up 16% to $28.3 million (2017: $24.3 million)
· EBIT up 26% to $14.8 million (2017: $11.7 million)
· Net Profit After Tax up 48% to $7.7 million (2017: $5.2 million)
· Net Operating Cash Flows up 9% to $22.5 million (2017: $20.7 million)
· Final Dividend of US1.5cps, up 25% (2017: US1.2cps) to be paid on 3 May 2019
· Net Cash up 122% to $10.9 million (2017: $4.9 million).
· The Company anticipates full year 2019 revenues of between $110 and $120 million underpinned by existing contracts.
Operational and Strategic Review
· Maintained full year ARPOR at $194,000, a significant achievement given the rig mobilisation into West Africa in H1 2018
· Annual rig utilisation 51% in 2018 (2017: 53%) with rig utilisation of 56% in H2 2018 driven by the commencement of new contracts in West Africa
· Purchased two new blast hole rigs in H1 2018, while disposing of four rigs during the year (sale and decommissioning), with a fleet size of 91 rigs at end of 2018
· Continued strong performance on our long-term contracts:
– Acacia Mining’s North Mara Gold Mine (Tanzania)
– AngloGold Ashanti’s Geita Gold Mine (Tanzania)
– Centamin’s Sukari Gold Mine (Egypt)
– Resolute Mining’s Syama Gold Mine (Mali)
– Kinross Gold’s Tasiast Mine (Mauritania)
· Awarded extension on three long terms contracts, including:
– Resolute Mining’s Syama Gold Mine: Awarded a three-year extension on surface drilling and delineation drilling
– Centamin’s Sukari Mine: Awarded a five-year extension, covering our existing blast hole and grade control drilling services
– AngloGold Ashanti’s Geita Gold Mine: Awarded a one-year extension covering our underground grade control and underground exploration drilling services
· Awarded numerous exploration contracts over 2018, including:
– Aton Resources (Egypt)
– De Beers (Botswana)
– Graphex Mining (Tanzania)
– Hummingbird Resources (Mali)
– OreCorp Limited (Mauritania)
– Sama Resources (Côte d’Ivoire)
– Strandline Resources (Tanzania)
· Significant progress in the implementation of the West Africa strategy:
– Established infrastructure with offices, warehouses, workshops and accommodation in Bamako, Mali, and Yamoussoukro, Côte d’Ivoire, adding to the existing presence in Mauritania
– Doubled rig count in the region to 31 rigs during the period
– Broadened Business Development presence
· Successful contract awards in West Africa including:
– Resolute Mining (mentioned above)
– Kinross Gold (mentioned above)
– Hummingbird Resources
– Orecorp Limited
– Sama Resources: commenced a 6,000m diamond drilling contract
· Outstanding safety performance with a record achievement of zero LTI’s and 0.45 AFIR (51% decline from 2017) for the year, reflecting our uncompromising commitment to safety
· Achievement of a number of world class safety milestones, including:
– Mali (Syama Project) achieved two years LTI free
– Tanzania (North Mara Project) achieved two years LTI free
– Tanzania (Geita Project) achieved one-year LTI free
Board and Management Update
The Company appointed Michael Rawlinson as Non-Executive Director in August 2018, who replaced Craig Burton. Michael was also appointed chair of the Remuneration Committee.
We are further pleased to announce today the appointment of Jodie North as Chief Operating Officer effective March 2019. Jodie was previously the Executive for Production and is bringing significant experience into this new role.
Commenting on the results, Jamie Boyton (Capital Drilling Executive Chairman) said:
“Capital Drilling enjoyed a year of significant progress with record net cash generated from our assets, a further strengthening of the balance sheet, as well as key strategic growth into West Africa. The quality of our business mix further improved with extensions to a number of our long-term drilling contracts, ARPOR remaining consistently robust, whilst utilisation saw a further improvement in the second half of the year, particularly with our exploration rig fleet. All of these metrics were underpinned by an exceptional safety record with zero LTIs and a halving of our AIFR to an industry leading 0.45, which demonstrates the management’s focus on our goal of a zero harm strategy.
The outlook for 2019 remains encouraging, albeit amidst mixed market drivers, specifically supportive commodity prices, in particular gold which represents circa 90% of Group revenue, offset by continued weak capital markets that impacted the funding for exploration activity. Our significantly increased presence in the key West African markets provides optimism for further contract wins over the year ahead. We believe that the careful investments we have made in 2018, both in terms of infrastructure as well as continually maintaining a high quality and young fleet, combined with our strong focus on cost discipline and return metrics on our asset base, will reap further benefits to all of our stakeholders over the course of the current financial year.
Our stated strategy of building our long-term business, coupled with a robust balance sheet and a focus on maximising the generation of free cash, is expected to see shareholders enjoy strong dividend growth, with a final payment for 2018 of 1.5c per share”
Capital Drilling Ltd (LON: CAPD) Chairman Jamie Boyton talks to DirectorsTalk about its Q4 2018 trading update. Jamie talks us through the key financial highlights, provides more detail around the operational highlights, expands on the solid tendering activity in West Africa, lets us know if we can expect more and what else investors can look out for over the coming months.
https://vimeo.com/312064666
Capital Drilling Limited provides specialised drilling services to mineral exploration and mining companies in emerging and developing markets, for exploration, development and production stage projects. The Company currently owns and operates a fleet of 91 drilling rigs with established operations in Botswana, Côte d’Ivoire, Egypt, Ghana, Kenya, Mali, Mauritania and Tanzania. The Group’s corporate headquarters are in Mauritius.
The Group’s strategy in 2019 will remain focused on continuing to improve the key metrics of our business, grow our portfolio of long term mine-site based contracts, further expand our footprint in the West African region and maintain the generation of free cash flow, enabling the delivery of returns to our stakeholders.
The Group’s full year results, together with any dividend declarations, will be announced 14 March 2019.
Capital Drilling Ltd (LON:CAPD) CEO Jamie Boyton talks to DirectorsTalk about its Q3 2018 trading update for the period to 10 October 2018. Jamie explains whats driven the successful quarter, its improved utilization rate, why we have seen its fleet drop, how the move to West Africa is going and what the company has been doing to achieve its ISO Certification.
https://vimeo.com/294724436
Financial Highlights
· Revenue of $31.0 million, representing 3% growth on Q3 2017 ($30.0 million) and an increase of 12% on Q2 2018 ($27.8 million)
· ARPOR up 2% ($198,000) on Q2 2018 ($195,000)
· Continued solid operational profitability, driven by improved revenue and continued cost management
· Declared an Interim dividend of US0.6cps for the H1 2018 period, paid on 05 October 2018 (2017: Interim dividend of US0.5cps), representing a 20% increase
· Strong cash position facilitated repayment of $2.0 million on current revolving facility, reducing gross debt to $10.0 million as at 30 September, with net cash increasing to $4.1 million
· Continue to track in line with recently upgraded revenue guidance of $105 to $115 million for 2018
Operational Highlights
· Strong ARPOR performance driven by continued solid performance across the Group’s key contracts at the Sukari Mine (Egypt – Centamin), the North Mara Mine (Tanzania – Acacia), the Geita Gold Mine (Tanzania – AngloGold Ashanti), the Tasiast Gold Mine (Mauritania – Kinross) and the Syama Gold Mine (Mali – Resolute)
· Utilisation increased to 53% from 48% in Q2 2018 reflecting the start of drilling activities for new projects – De Beers (Botswana), Hummingbird (Mali), Graphex (Tanzania)
· Further expanded mine site drilling activity during Q3 with the commencement of directional drilling and pre-split drilling at the Tasiast Mine (Kinross) in Mauritania (two rigs)
· Continued to expand our presence in West Africa, with Group rig count now at 31 rigs, representing one third of the Capital Drilling fleet
· Successfully completed an exploration contract at Algold (Mauritania)
· Decommissioned two rigs and sold two rigs during Q3, consistent with the continued focus on active asset management, resulting in a closing fleet size of 91 Rigs
Capital Drilling ltd provides specialised drilling services to mineral exploration and mining companies in emerging and developing markets, for exploration, development and production stage projects. The Company currently owns and operates a fleet of 91 drilling rigs with established operations in Botswana, Côte d’Ivoire, Egypt, Ghana, Kenya, Mali, Mauritania and Tanzania. The Group’s corporate headquarters are in Mauritius.
Capital Drilling Ltd (LON:CAPD) Chief Executive Officer Jamie Boyton caught up with DirectorsTalk for an exclusive interview to discuss their half-year results, new contracts in West Africa & the outlook going forward.
Q1: H1 results
out, can you talk us through the financial highlights?
A1: We had a pretty solid half I’d have to
say. The revenue came in at $54.8 million, it was a small increase on the first
half of last year, $54.5 million, and EBITDA of $12.7 million, again a small
increase, however, we did see quite large increases in a couple of key areas.
The first one,
profitability, the net profit after tax rose from $2.8 million to $5.1 million and
that is the impact of both lower depreciation and lower interest charges so a
really good kick-up in our EPS. We also had a very strong increase in the cash
from operations which rose from $7.2 million to $10.5 million so it just continues
this theme of really solid results, solid margins and solid cash generation.
As a result of that, we declared an interim dividend of 0.7 cent per share, that’s up 17% on the previous corresponding period, it gets paid in September so another good result for our shareholders.
Q2: In terms of
operational highlights, I see that you’ve got new contracts in Africa. What can
you tell us about these?
A2: We had a hugely successful first half
in terms of securing new business, we won a total of 9 contracts, most of them are
in West Africa so that certainly validates the group’s strategy to deploy
assets and focus on the West African region. We increased our focus there in
mid-2018.
We picked up 7
exploration contracts, 2 of which have already commenced drilling in the first
half, the other 5 are all going to kick off drilling in Q3 and Q4, when the wet
season is over.
So, a really
good result there so much as we started the year with 5 clients in West Africa and
now, we’re to 12 so more than doubling a client base and therefore good for the
pipeline.
On the long term
contracts, we also had some wins which is, again, a key strategic focus for the
group. These include underground drilling contract extension with Resolute, we
secured a 3-year mine site laboratory services contract with Tasiast in
Mauritania which is the biggest contract win we’ve had for our laboratory
business since acquiring that and we also secured a long-term grade contract
with Thor Explorations in Nigeria.
So, a really good mix, long-term and exploration, heavy focus on West Africa, really pleasing.
Q3: Looking
forward, what’s the outlook like for Capital Drilling in H2 and 2020?
A3: The outlook is that we typically have
a stronger second half than first half, we’ve given guidance to the market of $110-120
million revenue for the year and we did £55 million in the first half so naturally,
that implies a stronger second half which is consistent with last year. So, the
outlook there is positive.
These contracts
wins that we just discussed I think is extremely positive because what it’s
done is not only add to the long-term but also, it’s opened up a number of new customers
for us so it’s really been a very pleasing result from a pipeline perspective.
The obvious
thing that we’re all looking at, at the moment, is this spike in the gold price
which didn’t really start to occur until June and it has obviously since moved
above the $1,500 an ounce mark. So, with over 90% of our revenue coming out of
the gold sector, that is a really positive sign, it should lead to the opening
up of capital markets which obviously used to fund the juniors in exploration.
It should also lead to increase in mine site budgets as the mining companies
are obviously generating greater cash flows.
So, both of
those drivers are pointing to a very good second half and beyond for Capital
Drilling.
Capital Drilling Ltd (LON:CAPD) Chairman Jamie Boyton caught up with DirectorsTalk for an exclusive interview to discuss their strong full year results, big contract wins and extensions, their West African growth strategy and their next steps.
Q1: This morning you released some strong full year results, something shareholders must be really pleased with?
A1: Yes, absolutely, it was a really solid year for the company in 2018 and we had a nice reaction in the share price today.
We had a good performance revenue wise of £116 million, that was actually down just marginally on the year before, but we implemented quite a strategic change as the business deployed more assets to West Africa.
So, it was a tale of two halves, the first half was solemn, the second half was very strong, and it flowed through to improving margins over the year and strong performance in both EBITDA and profitability. Our EBITDA was up 16% year-on-year and our net profit after tax was up 48% year-on-year. So, in the context of the 3% weaker on the revenue, we had really solid performance as you went down the profitability lines.
Some big wins operationally, we had 0 LTI’s which is a safety record for us which is quite outstanding, and we made enormous progress in redeploying fleet to West Africa, we’re building infrastructure in West Africa and winning contracts in West Africa.
So, we’re pleased with the results and it would appear shareholders are as well.
Q2: As you mentioned, you did have some big contract wins and extensions in the last twelve months, can you tell us about the most significant ones?
A2: I put them in two different camps, the significant new ones which was part of the group’s push into West Africa, so we started to have the assets arrive in that part of Africa in Q1 and started to win contracts in Q2 and commenced those contracts in Q3.
Some of the bigger ones were winning contracts with the likes of Hummingbird at the Yanfolila mine in Mali and a contract with Resolute, we had an extension there for surface exploration and the most recent one that was announced in West Africa region was with Sama Resources in the Ivory Coast. So, we’ve now got, with the existing contract that we have with Tasiast, Tasiast being in Mauritania, quite a nice base of operations in West Africa to grow from.
Within the traditional business, we had two very significant contract extensions that we announced in the second half of the year. The first we announced was a 5-year extension of our drill and blast and our grade control drilling at the Sukari Gold mine so that contract now runs out to 2023 so that’s the biggest win for the company. We’ve been there since 2005 so really, it’s testimony to the great work the team has done on the ground.
We also received a contract extension at the Geita Gold mine for all our underground drilling, it’s a subcontract of the master contract but that was extended out to the end of this year and we’re pretty confident we’ll get further extensions moving forward.
So, across the board, there were some really solid contract wins that we’re very pleased with.
Q3: How do you feel your West African growth strategy has gone so far?
A3: I think well but there’s a lot more to come. We actually released a presentation, obviously, with the results and when you isolate just the exploration spending in the African continent, Tanzania and Egypt, which are the traditional markets for our company, account for about 5% of the spend last year, West Africa accounts for 45%.
So, I think up and until now the strategy has gone well, we certainly worked very hard, as I said, building infrastructure, getting rigs across, we’ve made hires in business development, so we’ve ticked a lot of boxes to really get that platform into place.
We’re very confident that, over the next 12 months, we’ll see more contract announcements because, obviously, we’ve now got the assets and the people on the ground to start picking up some of that 45% market share.
Q4: You mentioned the next 12 months, what are the next steps for Capital Drilling here, let’s look over the 6-month period?
A4: There’ll be more rigs moving into West Africa, we’ve still got a few more rigs we want to move in there, just to build out the rest of the fleet to make sure that we have all the different types of drill rigs available for our customers.
As I just alluded to, we’ve just made another business development hire, literally only probably 2 weeks ago, start of March actually, he joined us at the start of March and as I said, we think we’ll see more contract wins over the course of Q2 and onwards.
We’re also busy working on the analysis of adding some further business streams, to add to the group. The company started with exploration drilling and moved into blast hole and grade control and then underground drilling, but we’ve also added laboratory services, we’ve also added maintenance services.
So, that’s part of another big focus for the group to not only continue our growth in the drilling side of our business but adding further business streams and we hope to show some decent progress to the market later in the year.
Q5: Capital Drilling is in the top 10 mineral drillers by rig fleet, the top 3 account for over 70% of the market. Do you think there’ll be a consolidation amongst the smaller players in order to compete with the big guys?
A5: Look, given the consolidation that we’re seeing in the gold sector at the moment, there is certainly a lot of discussions starting to happen at the smaller end, we have seen some consolidation take place already in the West African region, particularly in Burkina Faso and the Ivory Coast.
It could become prevalent, but it is early days with what we’re seeing in terms of that activity, I think the industry tends to get read by the customer base and the customer base is clearly seeing some signs of consolidation at the moment.
Capital Drilling Ltd (LON:CAPD) Chairman Jamie Boyton caught up with DirectorsTalk for an exclusive interview to discuss their Q4 2018 trading update.
Q1: Capital Drilling Ltd have announced their Q4 2018 trading update showing strong revenue growth compared to Q4 2017, can you talk us through the financial highlights?
A1: The financial highlights are really just focussed on two main areas and this is clearly a revenue update.
Number one is just the strength of the revenue in Q3 of £31 million and in Q4 which is generally seasonally weaker than Q3, but we had very strong Q4 revenue of £30.5 million so only marginally lower then Q3 which is typically one of the stronger periods. This collectively meant that we had second half revenue of £65.1 million which is actually a 12.9% increase on the first half. So, it was a really strong result, primarily driven by stronger utilisation as we were awarded contracts in early second half.
The other key financial highlight, we have released our year-end cash balance and as we redeployed rigs from East Africa to West Africa, we had a quite substantial working capital outflow in the first half and we were really pleased to see that working capital start to flow back into the business in the second half. We saw that we ended up getting end of period net cash increased to £10.9 million from the 30th June amount of £3.4 million so really pleasing cash inflows in the second half of the year, in particularly Q4.
Q2: Can you give us a bit more detail around the operational highlights?
A2: I’d have to say that the biggest highlight was that we really worked hard to redeploy rigs into the region and we started the year with about 15 rigs in West Africa and finished the year with about 31 rigs. That resulted in quite a few contract wins with Sama in the Ivory Coast with Hummingbird and Resolute in Mali for example. So, we further built infrastructure in Mali and the Ivory Coast, so we really have put the framework in place for the West African business.
We saw a good increase in the rig utilisation, so the second half rig utilisation was 56% which is up on the first half of 46% contractually, the contracts that I’ve already mentioned. We also received a 5-year contract at the Sukari Gold Mine in Egypt which has been one of our longest standing customers and a 1-year contract extension at the Geita Gold Mine in Tanzania. So, some pretty substantial contract awards.
Finally, I have to say the most pleasing aspect was we actually had an incident-free year, we had loss-time injury of 0 which is an absolutely outstanding result as a safety metric. Absolutely industry-leading and it is testimony to the operating team to achieve such a result, it’s quite unparallel so really pleasing.
Q3: Now, I think you’ve mentioned this already, but you started this year with solid tendering activity in West Africa, can you expand on that a little and can we expect more of that throughout 2019?
A3: I think so, the tendering market itself I don’t think has changed materially, however, over the course of 2018 there was a little bit of softness that came in at the broader market in Q4, just with the geopolitical environment. However, West Africa has always traditionally been a hotbed of activity both in exploration and mining so as a result of this, we’ve had many clients over the years asking us to increase our presence there and simply as a result of us deploying assets and building infrastructure.
We’ve had very pleasing conclusion on many tender lists so we’re seeing the same in 2019, the tender list continues to expand as we continue to expand our rigs in the region and therefore the service offering that we can provide. So, we’re very hopeful that we’re get some contract wins over the first half and continue to grow that business.
Q4: Finally, what else can investors expect from Capital Drilling over the coming months?
A4: The coming months will be, I think, a lot of the same. We implemented the strategy into West Africa in late 2017/nearly 2018 and we still have some further rigs that we’re going to move across into the region, somewhere between another 5 and 10 rigs.
So, I think you’ll see more of the same in terms of rig deployment, I think we’ll see more contract awards and we do have some tendering opportunities in other jurisdictions within Africa so I’d expect to see some further news flow and I would hope we continue to see this strong operational performance and strong cash flow generation.
We’ve built a good base in 2018 and we’d like to see the business expand on that in 2019.
Capital Drilling Ltd (LON:CAPD) Chief Executive Officer Jamie Boyton caught up with DirectorsTalk for an exclusive interview to discuss their Q3 trading update.
Q1: Today’s Q3 update shows Capital Drilling to be on track for its FY18 earnings guidance of between $105 million and $115 million, with increased revenues for the period compared to Q2 of 2018 and Q3 of 2017. What’s behind this success?
A1: The main part that’s behind the success is we relocated a lot of rigs to West Africa, so we really spent the better part of Q4 of last year and Q1 of this year relocating rigs into the West African region and we finished the September quarter with 31 rigs in the region.
As a result of putting rigs over there, we managed to secure a number of contracts which led to high utilisation and a very strong September quarter where we did $30 million in revenue.
So, when you look at that run-rate on an annualised basis, we’re obviously beyond the top end of the range but we had a softer Q1 as we were in the process of moving rigs whereas Q3 really reflects the rigs being on the ground and the revenue has flowed through. So, very pleased.
Q2: What’s driving your improved utilisation rate?
A2: The utilisation rate is a function of securing some contracts wins in Tanzania; we won our first exploration contract there in 2 years, exploration contract wins in Botswana and then the balance of it again is West Africa, the more significant being a 3-rig delineation contract with Hummingbird Resources in Mali.
So, when you add of those rigs together, that’s where the utilisation growth came from.
Q3: I noticed that the fleet size has shrunk by two, is this a trend that we can expect to see going forward?
A3: No, it’s not a trend. The group is always very actively managing the assets that we have and we’re currently sitting with an average fleet age of approximately 5 years of age which is probably the youngest scale fleet in the industry. So, in the September quarter, we actually sold two of our rigs in Ethiopia and we decommissioned two of our older rigs in Mauritania.
So, we’ll continue to decommission the older rigs, but it won’t be a significant number and we won’t see a significant reduction in rig numbers.
Q4: How is the move to West Africa going? Do you remain optimistic about the region?
A4: I do. We’re just emerging from the wet season which obviously curtails activity, particularly in places like Mali, Burkina and Ivory Coast.
I’m very optimistic, it was a strategic decision made by the Board in Q4 of last year, we’ve had a lot of early success, we’re picking up contracts and we’re on tender lists so looks very optimistic.
We’ve historically operated in Tanzania and Egypt predominantly and when you look across those two countries, you’re talking 5 producing gold mines, move into West Africa and you’re talking north of 30 producing gold mines. So, it’s a much larger market so we’re very optimistic that we’re going to secure more work in the future.
Q5: I also see that you were awarded the ISO Certification in August of 2018, what is Capital Drilling doing to achieve these excellent health and safety requirements?
A5: This really is part of the embedded culture of the company since inception back in 2005, we’ve always had a very high level of focus on health and safety. That is being reflected in the customer base that is being attracted to us, the likes of the Kinross’ of the world where you really have to have the highest standards of health and safety.
So, the ISO award is very pleasing, they are just part of the ongoing process of continuous improvement across health and safety and will continue to be a very strong focus for the company moving forward.
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