Its first drilling operation was 13 years ago in Tanzania and, in the same year, it worked on the expansion of the world-class Sukari Gold Mine in Egypt, owned by Centamin.
Today, it boasts a fleet of 20 blast-hole rigs, 42 diamond rigs, 12 reverse circulation rigs, nine multi-purpose rigs, six deep-hole diamond rigs and five underground rigs.
More than half its revenues come from mid-tier operators, although it does work with a significant number of majors too.
Its core areas are eastern and southern Africa, although Capital Drilling is currently working in Chile, Papua New Guinea, Armenia and Pakistan.
Trading conditions more supportive
Capital returned to profitability in 2017 for the first time in four years following a cyclical downturn.
The fall in commodity prices a few years ago hit mining exploration pretty hard – not good news when you’re contracted by miners to drill for them – but market conditions started to pick up in the middle of 2016 and have continued to be more supportive ever since.
Quarterly revenue amounted to US$27.1mln for the three months to the end of December, representing a slight decrease from the US$27.8mln reported in the same period of last year.
For the full year, revenue totalled US$119.4mln which represents a 28% increase from the preceding year. Capital Drilling finished the year with US$4.9mln of net cash.
“We have seen strong revenue and margin growth in 2017 despite the ongoing pressures and uncertainties of the Tanzanian mining sector, as well as some shorter-term contracts being completed during the period,” said executive chairman Jamie Boyton.
“We look forward to the year ahead with confidence due to a stronger underlying metals market as well as our geographic expansion particularly in West Africa, one of the most dynamic markets for drilling at the moment.
Situation in Tanzania ‘concerning’
The reason for the uncertainty in Tanzania is because of changes to the country’s mining legislation recently brought in by the authorities last year.
The Tanzanian government has passed bills relating to the sovereignty, contractual terms and amended the Mining & Petroleum Act over the past few months.
This comes on top of a 1% clearing tax recently imposed and a dispute with Acacia over the amount of concentrate the miner is exporting.
All far from lost though in Tanzania…
Clearly Acacia still sees bright future in Tanzania though, which bodes well for Capital.
At the end of last year, the two inked a two-year extension to the drilling contract at the North Mara mine in the country, where Capital is providing blast hole and grade control drilling services.
Capital – which has five rigs at the mine – has been active at the North Mara site since 2008 and the new extension takes the operation through to December 2019.