Capital Drilling Ltd (LON:CAPD) gave a guardedly optimistic assessment of prospects as the mining contractor hiked its interim dividend payment by more than a third.
After a solid six months in which revenues grew 5% and underlying earnings (EBITDA) were stable, the company reported “positive signs of improvement, resulting in increased tendering”.
The strengthening of the gold price and the increased interest in the resources sector, particularly from potential funders of projects, are stimulating activity.
Looking at drivers for the company, long-term production and grade control contracts in Egypt and Tanzania have continued to “diversify and underpin performance”, Capital said.
In the six months ended June 30 turnover grew to US$41.7mln from US$39.7mln a year earlier, while EBITDA fell US$600,000 to US$7.3mln.
The business generated US$7.7mln of cash in the period and is returning some of it to investors in the form of a 1.5 cents a share dividend, up from 1.1 cents twelve months ago.
“We have a highly competitive operational model, diversified long-term contracts, a strong balance sheet, and a progressive dividend policy - Capital Drilling remains confident that it can continue to leverage its position in what appears to be a sustainable upswing in our core markets," said chief executive Mark Parsons.