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Capital Drilling lands contract renewal for Centamin’s Sukari mine

"Capital Drilling has been working with Centamin for fourteen years and we are delighted to continue this relationship"
Drilling at the Sukari mine
The extension keeps Capital Drilling at Sukari until 2023

Capital Drilling Ltd (LON:CAPD) told investors it has landed an important new contract extension, keeping its rigs active at Centamin’s Sukari gold mine, in Egypt, until at least 2023.

It presently has a fleet of 14 rigs at Sukari where it provides blast hole and grade control drilling services for Centamin’s open pit operation. Capital drilling has been active at the mine since 2005.

WATCH: Capital Drilling Ltd - Proactive Investors Mining Capital Conference November 2018

"Capital Drilling has been working with Centamin for fourteen years and we are delighted to continue this relationship as the demand for our services continues,” said Jamie Boyton, Capital Drilling chairman.

“This contract extension is a testament to the Group's solid operational performance and provides stability in operations to support our ongoing investment, in what is one of the highest quality and long-life gold mines globally," he said.

finnCap says its significant news

House broker finncap analyst David Buxton described the Centamin extension and Wednesday’s new business win as ‘significant news’.

“The contract extension with Centamin underwrites continuity of a substantial proportion of group revenues over a 5-year period, while the new contract with Sama is the first in Cote d’Ivoire and highlights the potential of West Africa since the company strategically repositioned one-third of its rigs in this growth region,” Buxton said.

READ: Capital Drilling wins contract for Sama Resources in Côte d'Ivoire

He added: “While we retain existing forecasts, these contracts greatly improve revenue visibility and therefore should increase investor confidence. Further contract awards would have a significant drop through to profits and offer potential forecast upside.”

finncap has an 85p price target for Capital Drilling, in early afternoon trading, the shares held steady at 38.50p.

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