The drill contractor for the mining industry generated some US$32mln of revenue in the quarter, up 20% from the same period in 2019, and up 5.9% from the preceding three month period.
The increase came as rig activity increased, with 56 rigs in use versus 47 in Q1 2019. The group's rig fleet totalled 99 at the end of the quarter. The company also highlighted strong growth in its non-drilling business, which contributed around 12% of the quarter’s revenue.
Geographically, West Africa accounted for 32% of the quarter’s revenue, which is significantly more than Q1 last year when it was 20%.
The company operates under long-term contracts at operating mine sites which, according to management, means that it has revenue stability. Moreover, given the focus of its client base, the company is supported by the strength of the gold price at this time.
It has a portfolio of eight long-term contracts and the mines in which it operates continue to produce, and gold exports are continuing.
Capital Drilling confirmed a second interim dividend of 0.7 cents per share will be payable in early May.
"It is pleasing to see the activity undertaken during 2019 to position the business for growth is now delivering improved revenue performance,” said Jamie Boyton, Capital Drilling's executive chairman in a statement.
“Notwithstanding these positive results, the COVID-19 pandemic continues to create uncertainty globally. We are closely monitoring developments and keeping our employees safe remains our first priority.
“We have experienced some disruption to international employee travel and have adjusted our business accordingly but have remained largely unaffected to date,” he added.
Boyton said Capital Drilling remains well positioned to pursue new opportunities.
“We will continue to focus on growth of our business in West Africa in conjuction with broadening our service offerings to our clients, together with opportunities presented by our successful expansion into mining services,” he said.
A month ago, the company reported US$114.8mln of revenue for full-year 2019, in line with its prior guidance for US$110mln to US$120mln. It also highlighted a strong net cash position at year-end with US$4.4mln and noted that its capital expenditure in the year was focused on building a growth platform for 2020 and 2021.
The company saw a significant increase in profitability and a strong balance sheet. It ended 2019 with US$17.6mln of cash and equivalents. Net profit increased by 34% to US$10.4mln for the year, up from US$7.7mln in 2018, while underlying earnings (EBITDA) reduced by 4% to US$27.3mln.