Capital Ltd share price, company news, analysis and interviews

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 Mining continues to perform strongly

·      Sukari Gold Mine (Egypt) waste mining contract continues to perform well;

·      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.

The webcast presentation link:

https://www.lsegissuerservices.com/spark/CapitalDrillingLtd/events/db8bbc58-599b-4a60-aa07-abc49d7d187d

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 Ltd (LON:CAPD), a leading mining services company, has provided its trading update for the period 1 January to 30 June 2022.  The Company will announce its half year results and provide a further operational update on 18 August 2022.

FIRST HALF (H1) 2022 KEY METRICS

	H1 2022	H1 2021	H2 2021	% change from H1 2021	% change from H2 2021
Revenue ($million)	138.1	98.7	128.1	39.9%	7.8%
ARPOR ($)	173,000	180,000	183,000	-3.9%	-5.5%
Average utilised rigs	93	73	83	27.4%	12.0%
Fleet Utilisation (%)	83	73	77	13.7%	7.8%
Average Fleet	112	99	108	13.1%	3.7%
Closing fleet size	116	106	109	9.4%	6.4%

SECOND QUARTER (Q2) 2022 KEY METRICS

	Q2 2022	Q2 2021	Q1 2022	% change from Q2 2021	% change from Q1 2022
Revenue ($million)	71.2	54.7	66.9	30.2%	6.4%
ARPOR ($)	171,000	180,000	174,000	-5.0%	-1.7%
Average utilised rigs	97	81	90	19.8%	7.8%
Fleet Utilisation (%)	85	79	82	7.6%	3.7%
Average Fleet	114	103	110	10.7%	3.6%
Closing fleet size	116	106	110	9.4%	5.5%

Financial Highlights

·        Q2 2022 revenue of $71.2 million, up 30.2% on Q2 2021 ($54.7 million) and up 6.4% on Q1 2022 revenue ($66.9 million);

·        H1 2022 revenue of $138.1 million, up 39.9% on H1 2021 ($98.7 million) and up 7.8% on H2 2021 ($128.1 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;

·        Paid a final dividend of US2.4cps for 2021 financial year in May 2022, up from US1.3cps for the 2021 financial year. This is in addition to the ~$2.5 million buyback completed in Q1 2022;

·        H1 2022 results will be released on 18 August 2022.

Operational Update

·      Safety performance remains world-class with the Group TRIFR at 1.8 in H1 2022. Capital’s target is zero harm across the Group;

·      Capital has now employed a full time Sustainability Manager to assist in the Group’s ESG strategy.

·      Capital Drilling: Strongest demand environment since the company’s inception

– Fleet Utilisation increased to 85% in Q2 2022, an increase of 7.6% on Q2 2021 (79%) and 3.7% on Q1 2022 (82%);

– New contract wins:

– A three-year comprehensive drilling services contract with AngloGold Ashanti with its GEITA GOLD MINE LIMITED in Tanzania: 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 & 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.  

– Rig count increased from 110 to 116 through Q2 2022, net of depletion.

·      Capital Mining continues to perform strongly

– Sukari Gold Mine (Egypt) waste mining contract continues to perform well and remained LTI free;

– Capital remains active in the tendering pipeline.

·      MSALABS: Growth outlook improved through expanded relationship with Chrysos and major contract extension

– Expanded relationship with Chrysos Corporation:

– MSALABS recently announced an expansion of its global partnership with Chrysos, now guiding to deploying 21 Chrysos PhotonAssay units by 2025;

– 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 in Val d’Or (Quebec, Canada):

·      A fifth unit will arrive imminently at Yamoussoukro, Cote d’Ivoire with facility preparations well advanced;

·      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 & 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.

§ – Key holdings update:

– Predictive Discovery: The Company has made substantial progress under new management, including a successful capital raising of over A$53 million, which which sets a strong foundation for work programs in the months and years ahead.  Capital DI has maintained its exposure by participating in this equity raise at A$0.18 per share as an anchor shareholder.

– Firefinch / Leo Lithium: Over the period Firefinch completed its demerger of its lithium assets into Leo Lithium. Capital DI’s exposure in Firefinch Limited has largely pivoted to Leo Lithium, which listed on the ASX in June 2022.

– Contract revenues from investee companies again contributed strongly to Group revenues, totaling US$26.4mn over the H1 period.

Outlook

·      Q2 2022 has again seen extremely strong demand with the outlook remaining supportive;

– The drilling business is operating at high utilisation rates, and further rigs will arrive in the second half with the group’s rig count growing towards ~120 rigs; 

– The Sukari earth moving contract continues to perform well; 

– MSALABS is experiencing exceptional demand for its laboratory services. The expanded partnership with Chrysos will drive material further growth through 2023 and 2024;

– Business mix underpinned by long-term mine-site contracts. Capital is taking advantage of strong demand in the market to not only win further contracts, but also rotate into higher quality blue-chip customers as highlighted by the recent contract win with B2Gold;

– Tendering activity across all business units remains robust, with a number of opportunities progressing; and

·      Revenue guidance for 2022 remains $270 to $280 million (compared to FY2021 revenues of $226.8 million).

Conference Call Details – Today 09.00 UK time

The Company will host a conference call today, Tuesday, 19 July 2022, at 09.00 a.m. (London, UK time) to update investors and analysts on the Q2 trading release.

Participants can join the conference call using the dial in link below

https://webcasting.buchanan.uk.com/broadcast/62ce9891287bf548a3b8c89d

Commenting on the trading update, Jamie Boyton, Capital Executive Chairman, said:

“We are currently seeing the strongest demand since the Company’s inception, in contrast to the recent perception from global equity markets.

Our drilling fleet operated at 85% utilisation through Q2 2022 and finished the quarter at 116 rigs. This represents both the highest rig count and also the highest quarterly utilisation rate in the Group’s history.  Our mining fleet at Sukari also operated at steady state maintaining very high utilisation of the equipment through the quarter.

It is equally pleasing that we continue to maintain our peer leading safety standards, particularly when considering the significant expansion in activity across the Group.

MSALABS has also now locked in a continuation of its impressive growth trajectory with the expanded relationship with Chrysos. At the time of the acquisition of a controlling interist in MSALABS in 2019, the company generated just $3 million in annual revenue, and so it is incredibly pleasing to see that business now guiding to over US$80 million just five years later.”

MSALABS, a global provider of geochemical laboratory services for the exploration and mining sectors and a majority-owned subsidiary of Capital Ltd (LON:CAPD), has announced that it has expanded its global partnership with Chrysos Corporation. The partnership will see MSALABS, deploy 21 Chrysos PhotonAssay™ units across the globe by 2025.

Roll-out of initial six units proceeding on-track: In April 2021 MSALABS announced its global partnership with Chrysos and revealed the planned deployment of six PhotonAssay units across its global network.  This rollout commenced with a unit at Barrick Gold’s Bulyanhulu Gold Mine, Tanzania and represented the first Chrysos PhotonAssay^TM unit deployment outside of Australia. MSALABS has continued the rollout with units now commissioned at the Morila Gold Mine, Mali (Firefinch) and in Val d’Or, Quebec, Canada. A fourth unit will arrive imminently in Yamoussoukro, Cote d’Ivoire with facility preparations well advanced. A fifth unit is ready for shipment to the Kibali Gold Mine, DRC (Barrick Gold) with the sixth unit due to begin installation in Timmins, Canada by the end of 2022.

A further 15 units rolled out over 2023 and 2024: MSALABS has committed to a further 15 Chrysos PhotonAssay^TM units that will be rolled out over 2023 and 2024. MSALABS is currently engaged with multiple mining companies globally including most of the Top 10 and continues to see exceptional demand for this revolutionary new technology.

Chrysos PhotonAssay^TM – A revolutionary technology: MSALABS has become an early adopter of Chrysos PhotonAssay^TM as it delivers multiple advantages over the slower, more hazardous fire assay process. The PhotonAssay technology provides faster, safer, more accurate and environmentally-friendly analysis of gold, silver, copper and other elements. The process is significantly simpler than fire assay, dramatically improving the turnaround time for results and reducing the risk of human error, with the added benefit of being able to retain and retest samples. In addition, the use of X-rays avoids the high temperatures and harmful chemicals such as lead and acids involved in fire assay, making it more environmentally friendly with a lower carbon footprint.

Revenue outlook: Revenue guidance for MSALABS in 2022 remains ~$30 million which includes the rollout of the initial six Chrysos PhotonAssay^TM units by year end, with each unit generating $3-5 million, depending on utilisation. Following the rollout of the further 15 units across 2023 and 2024, in conjunction with the expansion of the existing geochemistry business, MSALABS anticipates generating revenues in excess of $80 million per annum.

Capital will be announcing its trading update for the six months to 30 June on 19 July, which will include a conference call and question and answer session. The call will also be attended by Stuart Thomson, the CEO of MSALABS.

Commenting on the additional units, Stuart Thomson, MSALABS CEO said

‘We are pleased to expand our relationship with Chrysos and to assist in the global rollout of its revolutionary technology. Over the past year, we have seen very strong demand for Chrysos PhotonAssay, and we expect this interest to continue to grow as our global mining customers not only gain confidence in its accuracy and reliability, but also benefit from the substantially improved turnaround time for results not possible with fire assay. 

In recent years we have grown our network significantly and now have 18 laboratories globally. Adding Chrysos PhotonAssay into our service offering is exciting for us and a key benefit for our customers.”

Capital Ltd Executive Chairman, Jamie Boyton, said:

‘Having been only a small part of Capital’s business following the acquisition of a controlling interest in 2019, MSALABS has seen exceptional expansion and quickly become a meaningful contributor to group revenues. We are pleased to see the extension of the relationship with Chrysos, which will continue to drive material growth over the coming years.’

Capital Ltd (LON:CAPD), a leading mining services company focused on the African markets, has provided its Q1 2022 trading update for the period ended 31 March 2022.

FIRST QUARTER (Q1) 2022 KEY METRICS

	Q1 2022	Q1 2021	Q4 2021	% change fromQ1 2021	% change fromQ4 2021
Revenue (US$m)	66.9	44.0	66.5	52.0%	0.6%
ARPOR*(US$)	174,000	180,000	184,000	-3.3%	-5.4%
Average utilised rigs	90	64	86	40.6%	4.7%
Fleet Utilisation (%)	82%	67%	79%	22.4%	3.8%
Average Fleet	110	95	109	15.8%	0.9%
Closing fleet size	110	98	109	12.2%	0.9%

* Average monthly revenue per operating rig

Financial Highlights

· Revenue US$66.9 million, a 52.0% increase on Q1 2021 (US$44.0 million) and a 0.6% increase on Q4 2021 (US$66.5 million);

· Mine-site services continue to underpin revenue streams, contributing 87% of Group revenue;

· Strong growth in non-drilling revenue contribution (28% of total revenue) compared with Q1 2021 (21%), particularly driven by the ramp up of Mining Services and MSALABS;

· Average monthly revenue per operating rig (“ARPOR”) decreased 2.2% on Q1 2021 ($184,000) and 5.4% (US$174,000) on Q4 2021 (US$184,000). ARPOR in the quarter was impacted by increased rig movement within each region and also a higher proportion of revenue at Geita coming from the underground;

· Final dividend of US 2.4 cps declared at the FY21 results for the 2021 financial year (2020: US 1.3 cps), will be payable 10 May 2022.

Operational Highlights

· Fleet Utilisation increased to 82%, an increase of 22.4% on Q1 2021 (67%) and 3.8% on Q4 2021 (79%) driven by start-up of new contracts;

· Safety performance remains world-class with the Group remaining LTI free across twenty-six sites in Q1 2022;

–  Two sites in our East African operations achieved safety milestones remaining LTI free for five and six years;

· Capital Drilling: Outlook underpinned by further contract wins:

–  New contract wins:

– An extension of the exploration and delineation drilling contract with Predictive Discovery at its Bankan Project in Guinea, initially expanding from 2 to 5 rigs;

– An exploration drilling contract with WIA Gold at its Bouaflé project in Côte d’Ivoire;

–  An extension of the exploration drilling contract with Golden Rim at the Kada Gold mine in Guinea;

–  An extension of the exploration drilling contract with Perseus Mining at the Yaouré Gold mine in in Côte d’Ivoire;

–  Rig count increased from 109 (31 December 2021) to 110, with 5 rigs due to be commissioned in Q2 2022.

· Capital Mining continues to perform strongly

–  Sukari Gold Mine (Egypt) waste mining contract continues to perform at steady state levels aligned to contract targets for the quarter;

–  Capital remains active in the tendering pipeline as mining projects move through the DFS stage.

· MSALABS: Growth trajectory on track

–  The rollout of the Chrysos’™ PhotonAssay units is progressing well:

– MSALABS provisionally awarded a 5-year agreement with Barrick at the Kibali Gold Mine in the Democratic Republic of Congo for provision of laboratory management, sample preparation, and geochemical assay services on site, subject to final terms and conditions. The contract includes the new Chrysos PhotonAssay technology, with a unit expected to be on site in H2 2022;

– Awarded a 12-month contract with New Found Gold for processing 20,000 samples per month through our new Val d’Or PhotonAssay facility commencing in Q2 2022;

–  Awarded a 3-year contract with Victoria Gold Corp for the provision of a sample preparation facility on site at its Eagle Gold Project near Mayo, Yukon as well as geochemical assay services in our Langley Hub laboratory;

–  Awarded a 2-year contract and commenced provision of services with Shanta Gold for sample preparation on site at their West Kenya Project Area. 

Outlook

· Q1 2022 has continued to see robust demand with the outlook remaining strong across all business units;

–  The drilling business has a strong outlook with utilisation rates at very high levels and the group’s rig count due to finish the year ~10 rigs higher than at the end of Q1 2022; 

–  The Sukari earth moving contract is now performing at steady state levels; 

–  MSALABS is experiencing very strong demand for its laboratory services with the rollout of the Chrysos units progressing further in Q1 2022 and set to continue through the remainder of the year;

–  Business mix underpinned by long-term mine-site contracts with blue-chip customers, with  non-drilling revenues to proportionally increase further through 2022;

–  Tendering activity across all business units remains robust, with a number of opportunities progressing;

· Macro conditions continue to suggest sustained strength in the demand environment and outlook with gold and other key commodities still trading at near decade long highs; and

· Revenue guidance for 2022 remains $270 to $280 million (compared to FY2021 revenues of $226.8 million).

Commenting on the trading update, Jamie Boyton, Capital Ltd Executive Chairman, said:

‘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. While we continue to see growth across all business units, our focus on operational excellence and safety remains paramount and so it is pleasing to see another world class performance. Market conditions remain buoyant, and we are very active in the tendering market across drilling, mining and MSALABS. We maintain our revenue guidance of $270-280 million.

In drilling, while we saw some short term variation in group ARPOR, utilisation rates were very strong as a number of new contracts were brought online. We expect the division to continue to grow through the year, with the expected increase in rig count weighted Q2-Q4 of this year. Our mining division continues to perform well with Sukari now operating at peak steady state levels. 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 Ltd (LON:CAPD) has announced its full year results for the year ended 31 December 2021.

	2021	2020	% change
Revenue ($ m)	226.8	135.0	68.0%
EBITDA1 ($ m)	73.3	33.8	116.9%
EBIT1 ($ m)	51.9	21.6	140.3%
Adjusted net profit ($ m)	36.6	11.2	226.6%
Investment Gains  ($ m)	33.7	13.6	147.9%
Net Profit After Tax ($ m)	70.3	24.8	183.5%
Cash From Operations ($ m)	42.6	36.0	18.3%
Capex ($ m)	46.3	42.2	9.6%
Earnings per Share
Basic (adjusted) (cents)	19.2	7.9	141.7%
Basic (cents)	37.0	17.8	108.2%
Final / Interim Dividend per Share (cents)	2.4	1.3	84.6%
Total dividend per Share (cents)	3.6	2.2	63.6%
Adjusted ROCE (%) 3	22.7	22.2	2.4%
Net cash / (debt) ($m)	(31.9)	5.0
Investments ($m)	60.2	27.2	121.4%
Adjusted Net Cash (Including Investments) ($ m)	28.3	32.2	(12.2)%
Net Cash/Equity (%)	12.9	21.9	(41.2)%

*All amounts are in US dollars unless otherwise stated

(1)      EBITDA, EBIT, Net Asset Value per share 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)      ROCE calculated utilising 12 months EBIT.
(3)      Adjusted ROCE excludes Mining Assets and Prepayments, Net Equity Raise proceeds and Sukari prepayment from Capital Employed.

Financial Overview

·      FY2021 revenue of $226.8 million, up 68% on FY 2020 ($135.0 million);

·      2021 EBITDA of $73.3 million, up 116.9% on FY 2020 ($33.8 million);

·      EBITDA margins increased to 32.3% up from 25.0% in FY 2020;

·      Net gains from equity investments of $33.7 million in 2021 (realised + unrealised), increasing the value of Group strategic investments to $60.2 million, net of cash proceeds, as of 31 December 2021 (31 December 2020: $27.2 million);

·      Net Profit After Tax (NPAT) $70.3 million (including investment gains), an increase of 183.5% on FY 2020 ($24.8 million); and adjusted net profit after tax of $36.6 million, up 226.6% on FY 2020 ($11.2 million);

·      Cash capex of $46.3 million, up 9.6% on FY2020 ($42.2 million);

·      Cash from operations of $42.6 million, an increase of 18.3% on FY 2020 ($36.0 million);

·      Net cash including investments of $28.3 million, down from net cash including investments of $32.2 million at year end 2020;

·      Basic earnings per share (including investment gains) of 37.0 cents, up 108.2% on FY 2020 (17.8 cents); and adjusted earnings per share of 19.2 cents, up 141.7% on FY 2020 (7.9 cents)

·      Declared a final dividend of US$2.4 cents per share, to be paid on 10 May 2022 which, together with the interim dividend of US$1.2 cents per share brings total dividends declared for 2021 of US$3.6 cents per share (up 64% on 2020 total dividend of US$2.2 cents per share). 

Operational and Strategic Highlights

·      Rig fleet utilisation increased to 79% in Q4 2021, up 4% on Q4 2020 (76%) and 34% on Q3 2021 (59%); FY 2021 average utilisation was 75%, an increase of 27% on FY 2020 (59%);

·      Non-drilling revenue contributed 22% of total revenue for 2021, compared with 2020 (9%^[1]), primarily driven by the increased contribution from mining services and MSALABS, which saw significant growth through 2021;

·      Average monthly revenue per operating rig (“ARPOR”) for Q4 2021 at US$184,000, up 7% (Q4 2020: US$172,000) and up 6% on Q3 2021 (US$182,000); FY 2021 ARPOR was $181,000 up 5.8% on FY 2020 $171,000 as core long-term contracts continue to perform strongly;

·      Safety performance remains world class with the Group remaining LTI free across eleven sites through 2021, six of which have remained LTI free in excess of three years;

·      Recent contract wins (previously announced):

• A three-year surface production drilling contract with AngloGold Ashanti at the Geita Gold Mine, Tanzania. This contract will utilise five rigs from the existing fleet together with one new rig during 2022, and is anticipated to generate revenues of $33 million over the contract term;

• An exploration contract with Firefinch at the Goulamina Lithium mine, Mali, a JV project between Firefinch and the world’s largest lithium producer Ganfeng; 

• An exploration contract with Tembo Mining at the Kabanga Nickel mine, Tanzania. This year has seen an investment from BHP intended to accelerate the development at the project;

• Expanded grade control services to include underground at North Mara, Tanzania; 

• A one-year contract extension for underground grade control drilling with Resolute at the Syama Gold Mine, Mali.

·      New contract wins:

• A three-year underground drilling contract with Barrick at the Jabal Sayid copper mine, Saudi Arabia; 

• An extension with Cora Gold at the Sanankoro Gold Project for drilling exploration;

• An exploration contract with Aton Mining, Egypt.

·      Sukari Gold Mine (Egypt) waste mining and expanded drilling contracts performed ahead of contract targets in 2021:

• Operations achieved mining quantities above contract in 2021, with all production phases brought on-line ahead of schedule;

• The commissioning phase of this contract involved over 400 new employees with associated new equipment, and concluded its first year of operation injury free.

·      MSALABS has had a very successful 2021:

• The rollout of the Chrysos’™ PhotonAssay units is progressing well:

·      The unit at the Bulyanhulu (Tanzania) laboratory has been commissioned and commenced operations in October;

·      Two further units are due to be commissioned in Val d’Or (Canada) and the Morila Gold Mine in Mali (80% owned by Firefinch ASX:FFX) in Q1 2022 and Q2 2022 respectively.

·      Accordingly, the Group’s portfolio of long-term mine-site based operations increased to ten sites, comprising 18 individual contracts with the addition of the new contracts with Barrick in Tanzania and Firefinch in Mali;

Outlook

·      Revenue guidance for 2022 of $270 to $280 million driven by an increased drill rig count, contract extensions and expansions from existing long-term contracts, load and haul waste stripping contract at Sukari, Egypt running for the whole year at full capacity and MSALABS continuing to grow through 2022;

·      Capital expenditure is expected to be approximately $45 million in 2022. This will fund an increase to the drill rig count, the expansion of MSALABS, including a major hub laboratory in Saudi Arabia, as well as sustaining capex on the enlarged drill fleet and the Sukari mining contract;

·      Drill rig fleet size forecast to increase by 11 rigs by the end of 2022, net of depletion;

·      The Sukari earth moving contract continues to perform well, with the project now safely commissioned and we expect the operation to contribute at full capacity through 2022;

·      Laboratories is seeing strong demand for its services and the rollout of the Chrysos units, with the business expected to deliver revenues of approximately $30 million in 2022, almost double revenue in 2021 (FY 2020 $15.6 million);

·      Business mix underpinned by long-term mine-site contracts with blue-chip customers, growing exposure to metals beyond gold, and non-drilling revenues expected to proportionally increase further in 2022;

·      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:

‘2021 has been another outstanding year for Capital and marks the business’s second consecutive year of material growth. While this has been supported by a rapid increase in demand over the past 12 months, we have also taken a notable shift forward in our service offering, increasing our non-drilling revenues to 22% of the Group from just 9% the prior year, while also growing our drilling business.

In order to drive the growth in the business, we increased our headcount by 1,000 new people through the year, and despite this significant new onboarding and increased activity across the group, we maintained our industry leading safety performance, with a TRIFR result of 0.98 (2020: 0.77).

We entered 2021 flagging the disconnect between decade-high commodity prices, with exploration spending at half the levels of a decade ago. We saw this begin to correct through early 2021 with a rapid pickup in market activity evident in our operational metrics. On top of an increased rig count, rig utilisation increased to 75% in 2021 compared to 59% in 2020, while ARPOR also increased by 5.8% to $181,000 from 2020. We are continuing to invest in our drill rig fleet to meet the continued strength in demand we are seeing and ensuring we have a favourable balance of rig type in the regions where we are operating. Our focus will nevertheless remain on growing long term contracts and partnerships with blue-chip customers to reduce the volatility and ensure the sustainability of the business through the cycles.

Our mining business has taken a sizeable step forward in 2021 with the exceptional ramp up of the Load & Haul contract at Sukari, which we delivered ahead of contact expectations. Operations are now fully commissioned and 2022 will be the first complete year with the earth moving contract at full run rate. Following the rise in commodity prices, we are seeing an increase in projects moving forward to development and therefore we expect the pipeline of new mining contracts to expand in the coming years.

MSALABS also performed well through 2021, setting the foundations for further growth in the coming years. 2022 will be an exciting year for MSALABS as it continues the rollout of the revolutionary Chrysos PhotonAssay technology, as well as developing a major hub laboratory in Saudi Arabia. PhotonAssay, which provides gold assay results in minutes rather than weeks or months, has the potential to disrupt the geochemical analysis sector. This technology is a key driver of growth in MSALABS, with revenues expected to approximately double in 2022 YoY.

Another key contributor to our strong result for the year has been returns from our equity investments, which have become a core pillar of our Group strategy. Capital Investments not only contributes through equity returns, which amounted to $33.7 million in 2021, but has also served as a highly effective business development tool for several years, with $41 million or 18% of group revenue coming from investee companies in 2021. This creates a strong partnership approach to our contracting model and remains core to the investment strategy.

In view of the significant progress made in 2021, Capital today is a stronger and more robust business. We will continue to pursue our key strategic priorities during 2022 and have confidence in maintaining a growth trajectory in the business, with revenues expected to reach $270-280 million in 2022.’

Results Conference Call

Capital Ltd will host a Webcast on Thursday 10 March 2022 at 09.00 am (London, UK time) to update investors and analysts on its results. Participants may join the webcast via the like below. Shareholders may also join the webcast by dialling one of the following numbers, approximately 10 minutes before the start of the call. Participants may also wish to download the 2021 Results Presentation, which is available by clicking https://webcasting.buchanan.uk.com/broadcast/6221ec7cd196af24e1e91a0c

Dial-In Details

United Kingdom Toll-Free: 08003589473

United Kingdom Toll: +44 3333000804

PIN: 35312080#

International dial-in numbers – Link

CHAIRMAN’S STATEMENT

2021 has been a transformational year with Capital delivering three record quarters of revenue growth and the strongest year in our history. We have seen growth in all our business areas, but most notably a sizeable shift forward in our service offering with the addition of large scale load and haul services at Sukari and the beginning of the rollout of the revolutionary Chrysos PhotonAssay units in our laboratory business, MSALABS. The operational execution of this growth has been outstanding, with an exceptional safety performance, maximising the value delivered to shareholders.

We delivered 68% revenue growth, 117% EBITDA growth and 140% EBIT growth. This is the second consecutive year we have delivered material growth, following 18% YoY growth in revenue in 2020. Amongst this growth however, our core focus on long life, mine site contracts (88% of revenue in 2021) with blue-chip customers has remained unchanged to ensure a business that is sustainable through the cycles.

Our strategy to develop a broader range of services continued successfully during 2021. The contribution from our non-drilling services increased significantly during the year to 22% of Group revenues, compared to 9% in 2020, driven primarily by the ramp up of the load and haul operation at Sukari and the continued expansion of MSALABS.

In 2020, we announced an equity raise to help fund equipment for a waste mining contract with Centamin at the Sukari Gold mine, which represented the largest award of business in the Group’s history. The ramp up of this operation in 2021 was ahead of contracted expectations and has reached full run rate going into 2022, while remaining injury free. This contract is anticipated to deliver incremental revenues of US$235 – $260 million over a four-year period.

Our laboratory business, MSALABS, continued to perform well and is positioning itself for material growth as it rolls out the revolutionary Chrysos PhotonAssay units. The first of these units was successfully commissioned in 2021 and in 2022 MSALABS will continue to roll out further units, a key driver of its growth. PhotonAssay technology has the potential to disrupt the geochemical analysis sector and we are encouraged by the demand we are seeing.

In addition to the expansion in our service offering, our core drilling business has also gone from strength to strength. As we entered 2021 there was a clear disconnect between the rapid increase in commodity pricing seen in 2020, compared to capital raisings and exploration budgets, which remained at close to half the level seen when commodity prices were last at these levels. This changed early in the year and we saw a rapid and significant increase in demand which was visible in our utilisation rates in the subsequent three quarters of the year. Elevated commodity prices have continued into 2022, as has the strong demand we are seeing for our services.

Our Direct Investments portfolio has also cemented itself as the fourth key pillar of our strategy. We undertook a significant and well-timed investment strategy in 2019 as we expanded our operations in West Africa. We have engaged in direct investments into exploration and mining companies, and drill for equity, aligning the activity with service contracts. The year-end portfolio was valued at $60.2 million, up 121% compared to the year end 2020 position of $27.2 million, with investment gains (predominantly unrealised) for the year of $33.7 million. This translated into significant net profit growth in 2021 of 184%.

In addition to the investment gains, these positions have cemented key relationships and partnerships with the investees, with contracts from these companies generating $41 million of revenue over 2021 (18% of Group revenue).

At the beginning of 2022 we also launched a buyback programme of up to two million shares. While our focus remains primarily on growth, the buyback demonstrates both the huge success we achieved in 2021 and also the confidence we have in the business going forward.

The Board of Directors has declared a final dividend for the 2021 period of 2.4cps ($4.5 million), payable on 10 May 2022 to shareholders on the register as of 7 April 2022. This brings the total dividend declared in 2021 to 3.6c per share. The dividend is a result of our solid financial and operating position.

OPERATIONAL & SAFETY UPDATE

I am extraordinarily proud of our Company’s achievements during 2021. Amongst the significant levels of growth and increased activity, the Group has also increased its headcount by 1,000 people, a 78% increase YoY. Nevertheless we maintained the consistency in our operations throughout the year and our industry leading safety record and I would like to take this opportunity to thank all our employees for their dedication.

The Group’s rig count increased from 94 at the end of 2020 to 109 at the end of 2021, with a further three rigs undergoing commissioning. The new rigs supported both existing long-term contracts and new contract wins. We remain very active with our fleet management in order to maintain our position as the provider of best-in-class equipment in the regions where we operate. In addition to the increased fleet size, our rig fleet utilisation increased to 75% in 2021 vs 59% in 2020, while full year ARPOR also increased 5.8% in 2021 to $181,000 (2020: $171,000). This stellar performance is a result of both improving commodity prices and macro conditions together with our successful geographical expansion into West Africa. This expansion has delivered regional revenue exposure beyond our traditional operations in Egypt and Tanzania, and with it new long-term mine site contracts.

Our portfolio of ten long-term mine site contracts continued to perform well through 2021 with a number seeing increased rig counts on site for further support and new services. In addition, we signed multiple new contracts while also expanding our commodity exposure.

By the nature of both the contracting market and also critically the geographic regions where we operate, gold mining remains our main exposure. However, at the beginning of 2022, Capital announced an exploration contract with Firefinch at the Goulamina Lithium Mine, Mali, a JV project between Firefinch and the world’s largest lithium producer Ganfeng, as well as an exploration contract with Tembo Mining at the Kabanga Nickel Mine, Tanzania. Both projects have the potential to be very large, long-life assets and the latter project has seen an investment from BHP intended to accelerate development.

For the ramp up of the Sukari mining project we hired over 400 new employees and purchased 4 excavators, 17 mining trucks and other associated vehicles. Nevertheless we delivered ahead of our contract terms with the ramp up also completed with its first year of operation injury free. This outstanding performance in our first major earth moving contract both reinforces our relationship with Centamin at Sukari, where we have provided drilling services since 2005, and also positions us well for future tender awards.

MSALABS is quickly becoming a key growth area for the Group. 2021 saw the start of the company’s rollout of Chrysos PhotonAssay units, with the first unit now commissioned at Barrick’s Bulyanhulu Gold Mine in Tanzania. This contract marked both the largest contract since MSALABS’ establishment, and the first PhotonAssay unit deployed outside Australia. Two more units were deployed in Q1 2022, the first in Val d’Or in Quebec, Canada, and the second at the Morila Gold Mine, Mali. MSALABS will also establish a third major hub laboratory in Saudi Arabia later this year, which will assist in setting the foundations for further growth in 2023 and beyond.

Once again, our focus and commitment to the safety of our employees delivered results significantly better than industry standards, and I congratulate everyone for their effort. We expect visible safety leadership at all levels of the business, from the Executive Leadership Team to crews on site, and we actively invest in training programs to ensure our workforce is skilled, competent and can identify and mitigate hazards in the workplace. Our Total Recordable Injury Frequency Rate (TRIFR) was 0.98 per 1,000,000 hours worked. We also achieved a number of site records and safety milestones during 2021 including:

·              13 years LTIF at Mwanza, Tanzania

·              5 years LTIF at the Syama Gold Mine, Mali

·              5 years LTIF at the North Mara Gold Mine, Tanzania

·              4 years LTIF at the Geita Gold Mine, Tanzania

·              3 years LTIF at Bamako, Mali

·              3 years LTIF at Hummingbird, Mali

·              2 years LTIF at the Jabal Sayid Copper Mine, Saudi Arabia

·              1 year LTIF at the Bulyanhulu Gold Mine, Tanzania

·              1 year LTIF at the Bonikro Mine, Cote d’Ivoire

·              1 year LTIF at the Sukari Gold Mine, Egypt

·              1 year LTIF at the Bankan gold project, Guinea

OUTLOOK

As we look to the year ahead, trading conditions continue to point to very strong demand. Commodity prices, including our main exposure gold, remain at very high levels which provide strong profitability and cash flows for the producers and is a positive indicator for continued momentum throughout 2022.

Equity markets also remain highly supportive for the mining industry, with financings through 2021 at decade highs according to S&P Global Market Intelligence. Together this suggests a further improvement in exploration budgets and demand for our services across all of our business units.

Our focus on long-term mine site contracts continues to underpin our business through 2022. At the end of 2020, we saw an extension and expansion of the drilling contract at Sukari (in line with the mining contract award) and in 2021 we saw major contract renewals at Geita. These contract renewals provide clear revenue visibility and a strong foundation for the year ahead.

At Sukari, operations are now fully commissioned, and 2022 will be the first complete year with the earth moving contract at full run rate. MSALABS is also at an exciting inflection point, with one Chrysos PhotonAssay unit successfully commissioned in Q4 2021 and 2022 set to see material growth driven by the rollout of further units, as well as the construction of the Group’s third major hub lab in Saudi Arabia.

As we enter 2022, our core drilling business has the highest rig count in the group’s history and we are confident in maintaining strong utilisation levels given the increased activity we are seeing from our existing clients, as well as the strength we continue to see in commodity pricing. We are also continuing to invest in our fleet and this will drive a further increase to our fleet size (net of decommissioning old rigs).

We will continue to execute our key strategic priorities in 2022, focussing on growing our full-service mining business, growing revenues from our ancillary services businesses, particularly MSALABS, expanding capacity with our existing clients and maintaining high levels of utilisation through our fleet.

I would like to take this opportunity to thank all our employees, business partners, shareholders, our Board of Directors and other stakeholders for their continued support of our Company.

Jamie Boyton

Executive Chairman

9 March 2022

CHIEF FINANCIAL OFFICER’S REVIEW

OVERVIEW

Capital Ltd has delivered a stellar performance in 2021 with all our business areas achieving growth through the year. We have made transformational steps through 2021, including expanding our service offering in order to continue to grow the business even further in 2022 and beyond.

Revenue increased by 68% to $226.8 million (2020: $135.0 million). H2 revenue ($128.1 million) was 30% higher than H1 revenue ($98.7 million) primarily due to the weighting of the ramp up of the Sukari waste mining contract, but also new drilling contract wins through the year, an associated increase in rig count and improved revenues at MSALABS.

Profitability also improved, with margin improvements across all key metrics on the back of increased expenditure discipline. YoY EBITDA and EBIT increased by 117% and 140% respectively.

Primarily as a result of our expanded service offering into waste mining and the associated equipment purchases, our capex remained elevated relative to 2020 with cash capital expenditure of $46.3 million (2020: $42.2 million). In addition to the Sukari load & haul contract, growth capex funded the expansion of the rig fleet in 2021 and also deposits for rigs due to arrive and commission in 2022.

Through 2021 we have increased our debt profile through additional financing to fund equipment purchases in combination with operating cash flow. We obtained this financing from Macquarie Bank ($27.7 million) and OEM financing from Sandvik and Epiroc.

Cash generated from operations was $42.6 million (2020: $36.0 million). Closing cash was $30.6 million (2020: $35.7 million), aided by an additional $27.7 million in new financing in the year, with net debt of $31.9 million (2020: $5.0 million net cash). Weighing on cash flows was the increased capex outflow associated in particular with the Sukari mining ramp up. Nevertheless our balance sheet remains in a very strong position with the group finishing 2021 with net cash including investments of $28.3 million.

Our portfolio of long-term mine-site based contracts continues to underpin our cash flow and growth strategy. Mine-site based contracts represent 88% (2020: 93%) of our Company revenue and growth of this portfolio remains a focus.

Our investment portfolio generated a $33.7 million gain on investments reflected in the Profit and Loss. This outstanding performance reflects a significant value increase in a number of investments within the portfolio. The result is a consequence of the successful 2019 investment strategy. Investment activity decreased in 2020 and 2021 as the cycle improved and capital markets became significantly more accommodating to equity issuance. The Company’s strategy has therefore matured and rationalised to a portfolio of strategic core holdings, while continuing to evaluate new opportunities.

Our focus on long-term mine site contracts both reduces the volatility of earnings and ensures the sustainability of the business through the cycles. This stable business platform was demonstrated through 2020 and early 2021 through the COVID-19 pandemic where our portfolio of mine-site based contracts continued uninterrupted. However, given the sometimes unpredictable nature of the countries where we operate, we have evaluated a downside model taking the aggregate effect of the reasonable downside short term risks and demonstrated that the business is robust to scenarios far worse than experienced or expected. Refer to Note 1.1 of the Annual Financial Statements for further detail.

Statement of Comprehensive Income

Reported	2021	2020
$’m	$’m
Revenue	226.8	135.0
EBITDA	73.3	33.8
EBITDA (%)	32.3	25.1
EBIT	51.9	21.6
PBT	82.0	34.1
NPAT	70.3	24.8
Basic EPS (cent)	37.0	17.8
Diluted EPS (cent)	36.4	17.6

Table 1: Statement of Comprehensive Income (Summary)

Average rig utilisation increased 16% to 75% (2020: 59%) on a larger average fleet size of 104 (2020: 98). Average revenue per operating rig (ARPOR) per month also saw an increase in 2021 to $181,000 (2020: $171,000) attributed to the increased mobilisation of exploration rigs and some renegotiation of existing contracts.

Non-drilling revenues saw a notable increase in contribution to Group revenues in 2021, driven by the ramp up of the Sukari mining contract as well as the continued ramp up of MSALABS. 2021 contribution to revenue from non-drilling services was 22% in 2021 (2020: 9%) and is expected to increase further in 2022.

EBITDA increased 117% to $73.3 million delivering a 32.3% margin (2020: $33.8 million/25.0%).

EBIT increased 140% to $51.9 million delivering a 22.9% margin (2020: $21.6 million/16.0%).

Profit Before Tax (PBT) increased by 141% to $82.0 million (2020: $34.1million) impacted by Net Interest of $3.6 million (2020: $1.1 million) and benefitting from an investment gain of $33.7 million (2020: $13.6 million gain). These investments were aligned to activity with service contracts and provided greater revenue and earnings. Depreciation of $21.4 million (2020: $12.2 million), flat as a percentage of revenue at 9%.

NPAT increased 184% to $70.3 million (2020: $24.8 million). The improved NPAT benefitted from net gains on unrealised equity investments of $33.7 million (2020: $13.6 million gain).

The Effective Tax Rate for 2021 was 14.3% (2020: 27.4%). The decrease YoY reflects adjustments in 2020 that did not recur in 2021. In 2020 tax included a $2.8m adjustment in respect of prior periods’ assessments which were finalised in 2020. The tax recognised in respect of prior periods in 2021 was $0.2 million. As the Group operates in multiple jurisdictions, there is an inherent uncertainty in the interpretation of income tax laws. As at 31 December 2021, the Group had uncertain income tax positions with an assessment valued at $2.0 million (2020: $2.7 million). The Group has recognised a provision of $0.2 million (2020: $0.9 million) as management’s best estimate of the likely exposure.

As at 31 December 2021, the Group had uncertain income tax positions with an assessment valued at $2.0 million (2020: $2.7 million). The Group has recognised a provision of $0.2 million (2020: $0.9 million) as management’s best estimate of the likely exposure.

The Basic Earnings Per Share (EPS) for the year increased 108% to 37.0 cents (2020: 17.8 cents). The weighted average number of ordinary shares used in the earnings per share calculation was 189,765,149 (2020: 138,367,746).

The substantial growth in Earnings per Share was driven by the strong operating performance and investment gains.

Statement of Financial Position

Reported	2021$’m	2020$’m
Non-current assets	162.4	91.1
Current assets	189.1	135.2
Total assets	351.5	226.3
Non-current liabilities	53.0	26.5
Current liabilities	75.6	51.8
Total liabilities	128.6	78.3
Shareholders’ equity (1)	219.2	146.7

Table 2: Statement of Financial Position (Summary)

⁽¹⁾ Excludes non-controlling interest of $3.8 million

As at 31 December 2021, shareholders’ equity increased by 49.4% driven primarily by strong net profit of $70.3 million. The Group distributed dividends of $4.7 million (2020: $2.2 million) to shareholders.

The total rig fleet size at the end of 2021 was 109 drill rigs with 3 further rigs undergoing commissioning (2019: 94).

Overall PPE increased from $89.0 million in 2020 to $143.6 million in 2021, reflecting depreciation of $21.4 million (2020: $12.2 million), assets disposed of $0.5 million (2020: $0.8 million) and additional operating capital expenditure of $75.7 million (2020: $48.7 million).

Current assets increased to $189.1 million (2020: $135.2million). Inventory increased by $13.2 million to $37.9 million (2020: $24.7 million) due to increased inventory levels primarily in Egypt. Prepaid expenses decreased by $10.7 million to $17.7 million (2020 $28.4 million). Cash and cash equivalents decreased by $5.1 million to $30.6 million (2020:$35.7 million). Investments held of $60.2 million (2020: $27.2 million) are the fair value of trade investments.

Non-current liabilities of $53.0 million (2020: $26.5 million) includes $45.6million (2020: $26.1 million) of long term loans. Total long term debt includes $15 million of the renewed Revolving Credit Facility, a $37.7 million asset backed facility with Macquarie and OEM financing direct through Epiroc & Sandvik .

Current liabilities consisted of trade and other payables, $46.5 million (2020: $39.7million), current portion of long-term liabilities $16.9 million (2020: $4.6 million) and tax liabilities of $10.0 million (2020: $7.2 million). Trade and other payables includes increased trade payables of $22.1 million (2020: $19.9 million) due to increased activity levels and investment in the Sukari contract.

Statement of changes in equity

Reported	2021$’m	2020$’m
Opening equity	148.1	87.0
Net proceeds from Equity raise	–	37.2
Share based payments	2.0	1.4
Total comprehensive income	70.3	24.7
Dividends paid	(4.8)	(2.2)
Gain on change in ownership	5.6	–
NCI ex Business Combination	1.7	–
Closing equity	222.9	148.1

Table 3: Statement of changes in equity (Summary)

Statement of Cash Flows

Reported	2021$’m	2020$’m
Net cash from operating activities	30.4	28.3
Net cash used in investing activities	(50.1)	(60.7)
Net cash generated from/(used in) financing activities	15.5	50.1
Net (decrease)/increase in cash and cash equivalents	(4.2)	17.7
Opening cash and cash equivalents	35.7	17.6
Translation of foreign currency cash	(0.9)	0.4
Closing cash and cash equivalents	30.6	35.7

Table 4: Statement of Cash Flows (Summary)

Reconciliation of net cash (debt) position

Reported	2021$’m	2020$’m
Net cash at the beginning of the year	5.0	4.4
Net (decrease)/increase in cash and cash equivalents	(4.2)	17.7
(increase) in long term liabilities	(31.8)	(17.5)
Translation of foreign currency cash	(0.9)	0.4
Net cash at the end of the year	(31.9)	5.0

Table 5: Reconciliation of net cash (debt) position

Cash generated from operations was $42.6 million (2020: $36.0 million), an increase of 18.3% year-on-year.

The investing cash flow have decreased year-on-year with some investments, including prepayments, for the new Sukari contract occurring in 2020. We continued to invest through 2021, however, both to complete the ramp up for the Sukari mining contract as well as increase our drill rig count to meet existing client requirements and maintain fleet operational readiness.

Financing activities included the dividend cash payment of $4.8 million (2019: $2.2 million).

The dividend history for the past three years is as follows:

	H1 2019	FY 2019	H1 2020	FY 2020	H1 2021	FY 2021
Declaration	22 Aug 2019	19 Mar 2020	20 Aug 2020	18 Mar 2021	19 Aug 2021	10 Mar 2022
Cents per share	0.7	0.7	0.9	1.3	1.2	2.4
Dividend amount ($’m)	$0.95	$0.96	$1.23	$2.47	$2.28	$4.55