TIDMCAPD
RNS Number : 6749L
Capital Limited
14 January 2021
For Immediate Release 14 January 2021
Capital Limited
("Capital", the "Group" or the "Company")
Q4 2020 Trading Update
Capital (LSE: CAPD), a leading mining services company focused
on the African markets, today provides its Q4 2020 trading update
for the period ended 31 December 2020 (the "Period"), ahead of
announcing its full year results on 18 March 2021.
FOURTH QUARTER (Q4) AND FULL YEAR 2020* KEY METRICS
Q4 2020 Q3 2020 % change FY 2020* FY 2019 % change
from Q3 from FY
2020 2019
=================== ========== ========== ========= =========== =========== =========
Revenue ($m) 34.6 35.3 -2% 135.0 114.8 18%
=================== ========== ========== ========= =========== =========== =========
ARPOR(#) ($) 172,000 171,000 1% 171,000 176,000 -3%
Average utilised
rigs 56 60 -7% 57 50 14%
=================== ========== ========== ========= =========== =========== =========
Fleet Utilisation
(%) 59 61 -3% 59 54 9%
Average Fleet 95 98 -3% 98 92 7%
=================== ========== ========== ========= =========== =========== =========
Closing fleet
size 94 98 -4% 94 95 -1%
=================== ========== ========== ========= =========== =========== =========
All amounts are in USD unless otherwise stated
(#) Average revenue per month per operating rig
* Unaudited numbers
Financial Highlights
-- Full year revenue $135.0 million, an increase of 18% on 2019
($114.8 million) and in line with guidance;
-- Q4 2020 revenue of $34.6 million, up 13% on Q4 2019 ($30.7
million), and a marginal 2% decrease over Q3 2020 ($35.3
million);
-- Non-drilling revenue contribution of 16% of total revenue for
Q4 2020, compared with Q3 2020 (12%), driven by MSALABS, mining
services and maintenance services (Q4 2019: 12%);
-- Successful equity fundraising completed with gross proceeds of approximately GBP30 million (approximately $40 million) as well as adding new high-quality investors to the shareholder register to support the recently announced Sukari waste stripping and extended drilling contracts;
-- Finalised debt documentation for two OEM facilities ($8.5
million from Sandvik and $2.6 million from Epiroc) and a $10.0
million asset-backed facility from Macquarie - with a total of
$12.6m drawn down as at 31 December 2020; and
-- Year-end net cash balance of $5.0 million (December 2019:
$4.4 million) comprising cash of $35.7 million and drawn debt of
$30.7 million.
Operational Highlights
-- Continued outstanding safety results, significantly below
industry standards, including Total Recordable Injury Frequency
Rate (TRIFR) of 0.77 per 1,000,000 hours worked and All Injury
Frequency Rate (AIFR) of 0.43;
-- Achievement of one-year LTI Free safety milestone at
Barrick's Jabal Sayid Gold Mine, Saudi Arabia;
-- Rig utilisation in Q4 of 59%, stable against Q4 2019 (59%)
with an average fleet of 95 rigs (Q4 2019: 93 rigs);
-- Closing fleet of 94 rigs (2019: 95 rigs) included
decommissioning of four rigs during the quarter as we continue the
focus on active fleet management to maintain industry leading
equipment standards;
-- Q4 2020 ARPOR of $172,000, a 1% increase on Q3 2020
($171,000). Full year ARPOR of $171,000 per rig (2019:
$176,000);
-- New contract awards include:
- Resolute: An extension to December 2021 of underground grade
control drilling services at its Syama Gold Mine, Mali; and
- Kinross: A two-year grade control drilling contract at its
Tasiast Gold Mine, Mauritania, commencing February 2021.
-- Commencement of drilling at new contracts in the quarter including:
- Firefinch: Two-year delineation contract at its Morila Gold Mine, Mali;
- Predictive Discovery: Exploration and delineation drilling
contract at its Bankan Project, Guinea; and
- Barrick: Two-year underground grade control drilling contract
at its Bulyanhulu Gold Mine, Tanzania.
-- MSALABS awarded its largest ever contract, a transformative
five-year laboratory services contract with Barrick at the
Bulyanhulu Gold Mine, Tanzania (previously announced);
-- The COVID-19 pandemic continues to have no material impact on
operations, and while we are experiencing some restrictions on
movement of personnel and supply chain, the Group's protocols and
management plan continue to be highly effective in minimising
incidents of infection;
-- Commenced 2021 drilling on multiple short-term exploration
contracts including Altus Strategies at its Diba Project, Mali,
Arrow Minerals, Burkina Faso and Awale Resources, Côte d'Ivoire;
and
-- The Group's portfolio of ten long-term mine-site based
contracts continue to deliver solid performances, including:
Tasiast (Kinross) in Mauritania, Syama (Resolute), Morila
(Firefinch) and Yanfolila (Hummingbird) in Mali, Bonikro (Allied
Gold) in Côte d'Ivoire, Sukari (Centamin) in Egypt, North Mara
(Barrick), Bulyanhulu (Barrick) and Geita (AngloGold Ashanti) in
Tanzania, and, Jabal Sayid (Barrick) in Saudi Arabia.
Transformative New Business Awards and Equity Placing
In December, Capital announced the successful awards of a 120Mt
waste stripping contract including load and haul and ancillary
services, and an expansion and extension of the existing drilling
contract at Centamin's Sukari Gold Mine, Egypt. Together, they are
expected to deliver US$235 - $260 million of incremental revenues
over a four-year term, the Company's largest award of new business
since its inception. The contract is a step-change in the scale of
the business and its continued evolution into a full-service mining
contractor. The contract will commence in Q1 2021 and is expected
to be earnings accretive by the end of the year.
Additionally, Capital completed a successful equity fundraising.
Gross proceeds of approximately GBP30 million (approximately $40
million), will be used to support the Sukari contracts together
with key debt financing facilities, several of which have also been
completed. The funds have facilitated further payments on major
capital equipment items required for the contracts, including 17
CAT 785 dump trucks, seven blast hole drill rigs, three excavators
and all major ancillary support equipment including dozers, graders
and water trucks. Negotiations for further debt financing
facilities are also underway and are progressing well.
Trading Update and Outlook
-- Trading conditions are extremely positive for Capital, with
the gold price remaining robust, equity markets supportive and
strong levels of tendering activity;
-- The strengthening gold price observed during 2020 has
continued into the first quarter of 2021, a positive indicator for
Capital with approximately 90% of Group revenue from the
sector;
-- Capital's well-established portfolio, recently expanded to
ten mine-site based contracts, provides a solid revenue platform to
support further growth opportunities;
-- We continue to establish a strong operational platform in
West Africa, with this now contributing significant revenue.
Further reverse circulation and multi-purpose rigs are arriving
imminently to support increased levels of demand for drilling
services;
-- The recently awarded Sukari waste mining contract provides a
firm basis to support growth of the mining services business and
further revenue diversification;
-- MSALABS is reaching critical mass through the established
long-term contract with Kinross (Tasiast Gold Mine, Mauritania),
together with new mine-site based contracts won during 2020 with
Barrick (Bulyanhulu Gold Mine, Tanzania) and Thor Explorations
(Segilola Gold Project, Nigeria) - through leveraging the Capital
networks, over 50% of revenue is now generated from Africa and a
solid revenue base has been established;
-- Tendering activity across all business units remains robust,
with a number of opportunities progressing well; and
-- Capital's healthy balance sheet positions the Group to
capture the expected strong growth in the market.
2021 guidance is to be announced on 18 March 2021, alongside the
Group's full year results and together with any dividend
declarations.
Commenting on the trading update, Jamie Boyton, Executive
Chairman, said:
'Capital has had an outstanding year, especially given the
unprecedented challenges presented by the global COVID-19 pandemic.
The recent contract wins at Sukari are an exciting transformational
opportunity, delivering significant revenue diversification and
consolidating Capital as one of the leading mining services
operators in Africa. We have made excellent progress through the
successful completion of the equity fundraise and finalising
further debt financing facilities, with payments now significantly
progressed on all major capital equipment purchases required to
support the contract. I would also like to take this opportunity to
thank our new and existing shareholders for their continued support
in the successful equity raising.
In addition to the award of the Sukari contracts, we have
delivered exceptional results this year. We increased revenue by
18% and broadened our platform for growth through the extension of
services at existing sites and a further two new long-term
contracts with Firefinch and Barrick.
Additionally, the West African region remained a focus for
growth. We have continued to build our platform in the area with
new rigs arriving during the quarter, the further long-term
contract win with Firefinch in Mali and an expansion of operations
into Guinea.
It is also very pleasing that MSALABS have been awarded their
largest contract since inception, a five-year laboratory services
contract with global miner Barrick. This contract further expands
MSALABS's African footprint and will contribute to increasing
Capital's non-drilling revenue, together with the Sukari open pit
waste mining contract.
As we begin 2021, we are encouraged by the strong trading
conditions, with a number of other tendering opportunities in
progress. We look forward to executing the Sukari contract and
further building our mining services business as we continue to
consolidate Capital's position as one of the leading mining
services companies operating in Africa.'
- 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
André Koekemoer, Chief Financial Officer
Rick Robson, Executive - Corporate Development
Berenberg +44 20 3207 7800
Matthew Armitt
Jennifer Wyllie
Detlir Elezi
Tamesis Partners LLP +44 20 3882 2868
Charlie Bendon
Richard Greenfield
Buchanan +44 20 7466 5000
Bobby Morse capital@buchanan.uk.com
Kelsey Traynor
James Husband
About Capital Limited
Capital 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; mining equipment hire and maintenance; and
geochemical analysis. The Group's corporate headquarters are in
Mauritius and it has established operations in Botswana, Burkina
Faso, Côte d'Ivoire, Egypt, Guinea, Mali, Mauritania, Nigeria,
Saudi Arabia and Tanzania.
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END
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