Capital Limited                                                                 

("Capital", the "Group" or the "Company")

Q4 2023 Trading Update

Capital (LSE: CAPD), a leading mining services company, today provides its trading update for the period 1 October to 31 December 2023 (the "Period").

FOURTH QUARTER (Q4) 2023 KEY METRICS

All amounts are in USD unless otherwise stated.

* Unaudited numbers

Financial Highlights

·      FY 2023 revenue of $318.4 million, up 9.7% on FY 2022 ($290.3 million), marginally below guidance of $320-340 million; Q4 revenues were impacted by a number of factors.

-       Q4 revenues were impacted by subdued activity in Mali and operations not yet re-commencing in Sudan with Perseus.

-       MSALABS revenues fell slightly behind its aggressive growth target for 2023, as we drive adoption of the new PhotonAssay^TM technology. Revenues were up over 40% YoY and with major mining companies now giving firm endorsement of the technology, we are confident in the continued multi-laboratory rollout over the coming year.

·      Q4 2023 revenue US$84.5 million, a 6.8% increase on Q4 2022 (US$79.1 million) and a 6.0% increase on Q3 2023 (US$79.7 million);

-       Drilling and associated revenue for the quarter was $54.1 million, down 7.2% on Q4 2022 ($58.3 million) and up 5.7% on Q3 2023 ($51.2 million);

-       Mining revenue for the quarter was $19.6 million, up 50.8% on Q4 2022 ($13.0 million) and up 8.9% on Q3 2023 ($18.0 million); and

-       Laboratories (MSALABS) revenue for the quarter was $10.8 million, up 38.5% on Q4 2022 ($7.8 million) and up 2.9% on Q3 2023 ($10.5 million).

Operational Update

·      Safety performance maintains its exceptional standing on a global scale with the 2023 Total Recordable Injury Frequency Rate ("TRIFR") of 0.75 per 1,000,000 hours worked, a significant improvement on FY 2022 (1.2).

·      Capital Drilling: Major contract long-term renewal

·      Sukari drilling services 5-year extension:

-       Following a competitive bidding process, Centamin's Sukari Gold Mine in Egypt has issued Capital with a letter of intent to award a 5-year open pit drilling services contract extension, commencing on January 1, 2025. Subject to conclusion of the definitive drilling services agreement, which will include both blast hole and grade control drilling, the contract will extend our activities on site out to the end of 2029, 25 years after we commenced operations in 2005.

·      Other contract wins:

-       A two-year grade control drilling services contract with Perseus Mining at the Sissingué gold mine in Côte d'Ivoire. This expands our relationship with Perseus from existing contracts in Sudan and the Yaouré mine, Côte d'Ivoire. 

-       Expanded rig count at Ivindo, Gabon, in 2024 under our existing three-year reverse circulation and diamond drilling services contract.

·      Fleet utilisation for the quarter was 72%, compared to 73% in Q4 2022 and 72% on Q3 2023;

·      Average monthly revenue per operating rig ("ARPOR") was US$188,000 in Q4 2023, down 1.6% on Q4 2022 ($191,000) and up 5.0% on Q3 2023 (US$179,000); and

·      Rig count increased from 126 to 127 through Q4 2023, net of depletion.

*Average revenue per month per operating rig

*Unaudited numbers

¹Associated revenue refers to revenue generated from complementary services tied to our drilling operations.

All amounts are in USD unless otherwise stated

·      Capital Mining: First ore shipped from new mining contract:

·      Operations at our mining contract with Ivindo SA (Gabon) have progressed well through Q4 2023, with the first ore from the project being shipped in the quarter. The remaining equipment will arrive on site in the coming months; and

·      Sukari Gold Mine (Egypt) waste mining contract saw consistent operations through Q4 2023.

·      MSALABS: Initiated strategic global partnership, breaking into the USA market with largest contract in MSALABS history:

·      MSALABS has been awarded a five-year comprehensive laboratory services contract with Nevada Gold Mines (NGM) in the United States of America (USA).

-       MSALABS will operate a state-of-the-art hybrid laboratory incorporating three Chrysos PhotonAssay units as well as traditional fire assay methods and full multi-element assaying capabilities; and

-       The contract is anticipated to generate ~$140 million over the five-year term, with annual revenues of ~$30 million once fully operational, making it the largest award of new business in the history of MSALABS. Capital expenditure for the project is expected of ~$7 million.

·      MSALABS has forged a global partnership with Barrick Gold and Chrysos Corporation to deliver PhotonAssay^TM technology across Barrick mine sites.

-       The three PhotonAssay^TM units with NGM mark the start of this broader partnership agreement, with trials underway for a possible ten further PhotonAssay^TM units by the end of 2025 across multiple of Barrick's other operations.

·      Capital Investments:

·      The total value of investments (listed and unlisted) was $47.2 million as at 31 December 2023 ($42.1 million as at 30 June 2023); The portfolio recorded investment gains (unrealised) of US$3.1 million in H2 2023; and

·      The portfolio continues to be focused on a select few key holdings with our holdings in Predictive Discovery, Allied Gold Corp and WIA Gold comprising the majority (~85%) of our investments.

Outlook

·      The Group continues to see strong demand across each of its business divisions;

·      Capital Drilling is set for further growth in 2024 particularly driven by the ramp up of operations with Nevada Gold Mines, USA as well as strong growth potential across a number of our existing operations;

·      Capital Mining will mobilise the last of the mining equipment to the Ivindo site in Gabon in the coming months with the project continuing to ramp up over the coming year. The Sukari earth moving contract is anticipated to maintain steady-state performance throughout the remaining duration of the contract (mid 2024).

·      MSALABS continues to advance its ongoing multi-year expansion strategy, particularly focused around the deployment of Chrysos PhotonAssay™ units. The pipeline is very strong and underpinned by the partnership recently formed with Barrick Gold and Chrysos Corporation; and

·      Tendering activity remains robust across the Group with a number of high-quality opportunities progressing.

·      Guidance for 2024 will be announced along with our FY2023 results.

Commenting on the trading update, Peter Stokes, Chief Executive, said:

"In the past fiscal year, Capital has achieved a number of landmarks that position the company for a prosperous 2024 and beyond. Most notably, we have now taken a further strategic step into North America with the award of comprehensive drilling and laboratory services contracts with Nevada Gold Mines (USA), adding to our existing and growing operations in Canada with MSALABS. We are excited by the potential in the region and see it as set to be a major contributor to group earnings in the years to come.  

In mining we were awarded our second material mining contract at Ivindo, Gabon, cementing our reputation for load & haul services with blue-chip customers and continuing our strategy to diversify our revenue stream through an expanded service offering.

In MSALABS we also continued our aggressive growth strategy driving global adoption of the new and revolutionary PhotonAssay technology. We are proud to now have the largest international network of PhotonAssay units while also forging a broader partnership with Barrick Gold and Chrysos to drive a continued laboratory rollout through 2024 and beyond.

The Group has delivered outstanding compound annual revenue growth of 33% since 2020 and we are confident of maintaining our growth momentum as we start 2024. This is not only through our active tendering pipeline but also our stellar safety performance, blue-chip customer base and focus on long term mine site contracts, as highlighted by the substantial contract extension at Sukari, underpinning the business for this further growth."

- ENDS -

For further information, please visit Capital's website www.capdrill.com or contact:

Capital Limited                                                                     investor@capdrill.com                      

Peter Stokes, Chief Executive Officer                             

Rick Robson, Chief Financial Officer

Conor Rowley, Corporate Development & Investor Relations 

Tamesis Partners LLP                                                          +44 20 3882 2868

Charlie Bendon

Richard Greenfield

Stifel Nicolaus Europe Limited                                          +44 20 7710 7600

Ashton Clanfield

Callum Stewart

Rory Blundell

Buchanan                                                                               +44 20 7466 5000

Bobby Morse                                                                        capital@buchanan.uk.com

George Pope

About Capital Limited

Capital Limited 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. The Company's services include: exploration, delineation and production drilling; load and haul services; maintenance; and geochemical analysis. The Group's corporate headquarters are in the United Kingdom and it has established operations in Côte d'Ivoire, Canada, Democratic Republic of Congo, Egypt, Gabon, Ghana, Guinea, Kenya, Mali, Mauritania, Nigeria, Pakistan, Saudi Arabia, Tanzania and the United States of America.