London-listed mining services company Capital has told investors to expect adjusted EBITDA margins at the low end of its targeted 25-30% range as it delivers delayed growth projects to offset margin dilution from the growing MSALABS business and the end of its Sukari gold-mine waste contract.
Capital delivered 2024 first-half EBITDA of US$42.9 million, down 2.3% year-on-year, on a 9.8% yoy revenue uplift for the half to $169.4 million. It said full-year revenue guidance remained at $355-$375 million.
Its H1 2024 EBITDA margin of 25.3% compared with 28.5% for the same period in 2023.
CEO Peter Stokes said the first six months of 2024 had been challenging, “with the ramp-ups of some of our key growth areas, namely Nevada Gold Mines, USA, Belinga, Gabon and MSALABS, behind what we would have liked to see, impacting our [H1] results”.
“Despite these delays, we are confident in our ability to deliver the returns that will justify the material investment we have made,” Stokes said.
“As we look into next year, we expect to maintain the lower end of our targeted 25-30% adjusted EBITDA margins.
“Successful delivery of growth projects should drive higher margins at these sites, offsetting the impacts from losing economies of scale at Sukari and the anticipated margin dilution from MSALABS as it becomes a larger proportion of the total group.”
Capital expects to pocket about $31.2 million from the sale of its shareholding in Predictive Discovery to Perseus Mining. It said proceeds from the sale would be used mainly to cut debt.
It had also picked up a new drilling contract at Perseus’ Nyanzaga gold project in Tanzania.
Average drill fleet rig utilisation in Capital’s core drilling arm in H1 2024 was 69% versus 75% in H1 2023 (though it was up to 72% in Q2 2024). Capital targets circa-75% average rig utilisation. It had 127 units in its fleet at the end of June this year and expects this could grow to 136 by the end of 2024.
Average monthly revenue per operating rig (ARPOR) was $204,000 in H1 2024, up 8.5% on H1 2023.
“Capital in 2024 is undergoing a number of structural transitions that we expect will set up the business for the next wave of growth,” Stokes said.
“We are soon coming to the end of our waste mining contract at Sukari and, while at the end of 2020, this contract was the largest award in the company’s history, once it concludes we will emerge as a much larger business, a credit to the business development success across the rest of the group.”
Capital’s share price is down about 11% in the past month, capitalising the company at £170 million.
