Capital Ltd (LSE:CAPD) has reported the strongest half-year in its history with revenues up by 52% and operating profits more than doubling as gold drilling activity continues to increase.
The interim dividend has been increased by a third to reflect the strength across all areas of the business, said Jamie Boyton, executive chairman.
Revenues for the six months to end June rose to US$98.7mln (US$65.1mln) while operating profits rose to US$20.1mlm from US$9.6mln. Pre-tax profits were US$24.3mln (US$19.1mln).
Capital’s improved performance is being driven by both an outstanding performance in its underlying contract drill operations and improved market activity, said Boyton.
“Not only did our fleet size rise from 94 to 106 rigs through the half but our utilisation rate increased from 60% in H2 2020 to 73% in H1 2021, ending Q2 at 79%, levels not seen since 2012,” he said
“This uplift has been driven by new contract wins and expansion at existing sites including West Africa, a pleasing result following our focus on restructuring and rebalancing our business over the past three years.
Boyton added that the group’s first major earthmoving contract at Centamin PLC (LSE:CEY)’s Sukari mine in Egypt now has three excavators in operation with a steady-state expected in the fourth quarter this year.
This contract will deliver incremental revenues of US$235mln –US$260mln over the next four years.
“The gold price, our principal commodity exposure, remains at elevated levels and equity markets continue to be supportive for capital raising activity, with fundraisings for Juniors and Intermediates experiencing a significant uptick in H1 2021 to decade highs,” he noted.
Elsewhere, Capital said it is seeing good traction at its assay business with the first of its Chrysos PhotonAssay units now en route to the Bulyanhulu mine site in Tanzania.
Returns from equity investments also remained healthy at US$5.7mln in the first half.
Bouton concluded: “Capital's position of offering not only drilling but also mining and laboratory services to mine sites, all of which are crucial to the sustainability and growth of any large scale mine, has provided a broader, stronger platform to sustain its growth trajectory over the next few years.”