Capital maintains growth ascent

Drilling and mining services firm says it remains on track for c20% FY22 revenue lift

Drilling and mining services company Capital has maintained its elevated December-quarter revenue run rate in the first three months of 2022, reporting Q1 revenue of US$66.9 million, up more than 50% on the same time last year.

The March quarter number was 0.6% higher than December’s $66.5m.

Capital executive chairman Jamie Boyton reiterated FY22 guidance of $270-280m revenue, 19-23% higher than FY21.

“‘The group had another strong performance through Q1 2022 across all its business units, setting a solid foundation to deliver another record year in 2022,” Boyton said.

“In drilling, while we saw some short-term variation in group ARPOR [average monthly revenue per operating rig], utilisation rates were very strong as a number of new contracts were brought online.”

Capital’s expanded fleet of 110 drill rigs achieved 82% utilisation in Q1 compared with 79% in Q4 of 2021 and 67% in the same period a year ago. ARPOR for the March quarter was US$174,000 versus $184,000 in the December quarter.

Capital expects to commission a further five drill rigs before June 30 this year.

“Market conditions remain buoyant, and we are very active in the tendering market across drilling, mining and [laboratory services arm] MSALABS,” Boyton said.

During Q1 2022, the drilling arm signed one new contract (an exploration drilling contract with WIA Gold at its Bouafle project in Cote d’Ivoire) and three contract extensions (Predictive Discovery at its Bankan project in Guinea; Golden Rim at the Kada gold mine in Guinea; and Perseus Mining at the Yaoure gold mine in Cote d’Ivoire).

Capital’s non-drilling activities contributed 28% of total revenue in the March quarter, up from 21% a year ago.

“Our mining division continues to perform well with Sukari [gold mine in Egypt owned by Centamin] now operating at peak steady state levels,” Boyton said. “MSALABS also continues to go from strength to strength on an exceptional growth trajectory, both with its traditional business and in the roll out of the revolutionary Chrysos technology, highlighted by the clear demand for the unit in Val d’Or and the provisional award for a unit at Barrick’s Kibali gold mine.”

Capital will pay a US2.4c/share final dividend for FY21 on May 10.

The company’s share price (LSE: CAPD) is up nearly 20% in 2022, capitalising it at circa-£200 million.


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