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Capital Drilling steps up into mine operation with Bonikro contact

Snapshot

  • A contactor 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 Drilling Ltd

Price: 56.5 GBX

LSE:CAPD
Market: LSE
Market Cap: £76.98 m
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What it does

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

Fleet numbers around 91 rigs currently, which the company estimates is among the youngest in the industry.

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.

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

 

How it’s doing

In the six months to June, fleet utilisation rose to 52% from 46% the year before while the average fleet size (number of drilling rigs) dipped to 91 from 94.

Revenue edged up to US$54.8mln from US$54.5mln and Capital reiterated its full-year revenue guidance range of US$110-US$120mln.

Profit before tax jumped to US$7.59mln from US$4.98mln in the first half of 2018.

 

Bonikro

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, CEO

“Load and haul operations [at Bonikro] are a natural extension to our existing world-class drilling and maintenance capabilities.

“It means we can now offer clients a completely integrated mining service from initial exploration drilling right through to extraction and delivery of ore to the mill.”

 

Latest video

 

Inflection points

  • The gold price has hit a five-year high of more than US$1,500 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

Blue Sky

Capital Drilling gas 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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Watch

Full interview: 'New phase' for Capital Drilling with first comprehensive...

Capital Drilling PLC's (LON:CAPD) Jamie Boyton speaks to Proactive London's Andrew Scott after announcing they'd won a five-year contract with Allied Gold Corp 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...

on 10/10/19

2 min read