viewCapital Limited

Capital Drilling Ltd's continues to serve Africa's mining exploration efforts


  • A contractor focused on East and West Africa
  • Uptick in gold price is boosting exploration activity
  • Agreed its first full-service mine operation contract
drill rig

Quick facts: Capital Limited

Price: 78 GBX

Market: LSE
Market Cap: £106.85 m

What it does

Capital provides a drilling service including blast hole, delineation, directional, exploration, grade control and underground drilling plus a full range of ancillary services.

Fleet numbers above 90 rigs currently

Africa is the main area Capital operates, with rigs currently in Tanzania, Ivory Coast, Mauritania, Mali and others.

Customers include leading mining groups such as Acacia, Barrick, Glencore and Kinross.

Iin October, Capital signed first contract to run a mine - Allied Gold's Bonikro in The Ivory Coast.


How it's doing

First quarter revenue in 2020 was US$32.5mln, up around 20 on revenues in the corresponding quarter a year earlier.

As at the end of March, the companies operations had been largely unaffected by the coronavirus, and operations at all sites were continuing. 

The company's portfolio of eight long-term mine-site based contracts provides a level of revenue stability against the global risk exposure created by the pandemic, as mines continue to operate with gold exports continuing.

Capital Drilling's broader client base and extension of services provides a platform for further revenue and growth.

The company continues to be well positioned for an anticipated uplift in demand, especially in West Africa as is evidenced by the increased regional contribution to revenue, especially in the context of the rising gold price.


In October, Capital Drilling PLC (LON:CAPD) won a five-year contract with Allied Gold to provide a full range of mining services at the Bonikro Gold Mine in The Ivory Coast. 

It is the first time Capital has taken full control of operations at a mine and the deal sees it also taking a 3% stake in Allied through a US$3mln convertible loan.

Contract revenues over the five-year contract term are subject to confirmation of a mine plan, but for 2020 are expected to be between US$25-30mln.


What the boss says: Jamie Boyton, executive chairman

“The company continued its transition into mining services at the Bonikro mine site with the first of the new mining equipment delivered during the fourth quarter."

"We will remain focussed on continuing to improve the key metrics of our business, growing our portfolio of long-term mine-site based contracts, further expanding our West African footprint and maintaining strong cash flow generation to maximise returns to our stakeholders.”


Inflexion points

  • The gold price has hit a five-year high of more than US$1,7500 per ounce
  • Exploration activity picking up as a result
  • Results highly geared to fleet utilisation numbers
  • Company has taken on first mine operation contract
  • Allied Gold has teed up US$75mln for an acquisition programme potentially with Capital as a contractor
  • New rigs commissioned in the first quarter in 2020


Blue Sky

Capital Drilling has around one-third of its drilling rigs in West Africa, a region that accounts for 45% of the continent’s gold exploration spend, analysts said the predicted rise in spending could “lift utilisation rates and revenues”.

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