Capital deliver a strong first half performance

Capital Limited (LON:CAPD), a leading mining services company focused on the African markets, has announced half year results for the period 1 January to 30 June 2020. 

Financial Overview

·    H1 2020 revenue of $65.1 million, up 18.8% on H1 2019 ($54.8 million) and 8.5% on H2 2019 ($60.0 million);

·    EBITDA of $15.4 million, up 21.3% on H1 2019 ($12.7 million) and 5.5% on H2 2019 ($14.6 million);

·    EBITDA margins increased from 23.2% in H1 2019 to 23.7% in H1 2020, despite higher labour costs associated with the management of COVID-19, reflecting the sustained focus on cost management;

·    Net gains from equity investments (unrealised) of $9.9 million in H1 2020, increasing the value of Group strategic investments to $23.2 million as of 30 June 2020 (31 December 2019: $12.5 million);

·    Net Profit After Tax (NPAT) $13.6 million (including investment gains), a material increase of 166.7% on H1 2019 ($5.1 million);

·    Capex of $7.0 million (H1 2019: $6.4 million) relating to sustaining capex, upgrading of support equipment and the purchase of an additional underground drill rig;

·    Net cash generated from operations of $7.0 million (H1 2019: $10.5 million), with the decrease attributable to asset prepayments, increased inventory and receivables timing;

·    Net cash of -$0.1 million (FY 2019: $4.4 million) reflecting working capital movements including fixed asset prepayments for mining equipment relating to H2 2020 capex;

·    Earnings per share (including investment gains) improved by 170.5% to 10.0 cents (H1 2019: 3.7 cents);

·    Successfully renewed and increased the value of the Group RCF facility to $15 million (previously $12 million) with a three-year term with Standard Bank; and

·    Declared an interim dividend of 0.9 cents per share, to be paid on 25 September 2020 to shareholders registered on 4 September 2020 (up 28.6% on 2019 interim dividend 0.7 cents per share).

Operational and Strategic Review

·      Stable ARPOR result from drilling operations of $170,000, consistent with H2 2019 ($170,000), driven by the strong performance of core long-term contracts, with no material production interruptions due to COVID-19;

·      Increased activity levels at a number of existing operational sites, driving an increase in fleet utilisation to 57%, up 9.6% on H1 2019 and 1.8% on H2 2019;

·      COVID-19 impact remains limited to people movement and slower supply chain movement due to travel restrictions, increased Rostered Days Off (RDO’s) for fatigue management, delayed tendering activity and curtailment of exploration activity;

·      Commissioned a further underground rig during Q2, bringing total rig fleet to 100;

·      Previously announced world class safety achievements:

–     Sukari Gold Mine (Egypt) achieved three years LTI free in January

–     North Mara Gold Mine (Tanzania) achieved four years LTI free in March

–     Geita Gold Mine (Tanzania) achieved three years LTI free in March

–     Tasiast Gold Mine (Mauritania) achieved three years LTI free in June

–     Syama Gold Mine (Mali) achieved four years LTI free in June

·      Strong performance underpinned by operations across the Group’s long-term mine site contracts, including: Tasiast (Kinross) in Mauritania, Syama (Resolute) and Yanfolila (Hummingbird) in Mali, Bonikro (Allied) in Côte d’Ivoire, Sukari (Centamin) in Egypt, North Mara (Barrick) and Geita (AngloGold Ashanti) in Tanzania and Jabal Sayid (Barrick) in Saudi Arabia;

·      Previously announced new contract awards include a two-year contract with Hummingbird (Mali), together with exploration contracts with Allied Gold (Egypt), Altus Strategies (Mali) and Barrick Bulyanhulu (Tanzania);

·      Contract extensions (previously announced) include Perseus Mining (Côte d’Ivoire), Resolute (Mali), Barrick North Mara (Tanzania) and AngloGold Ashanti (Tanzania);

·      Encouragingly, exploration activity increased with the resumption of exploration projects in June and July, specifically Altus Strategies (Mali) and Arrow Minerals (Burkina Faso);

·      Commenced drilling for Awale (Côte d’Ivoire) in August;

·      Revenue from the West African region continued to increase, contributing 31% of Group revenues in H1 2020;

·      Continued the asset relocation strategy into West Africa, with the rig count now 42, up from 15 rigs in January 2018 (42% of the fleet now in the region);

·      Growth of non-drilling revenue to 11% of total revenue for H1 2020, compared with H1 2019 (5%), of which MSALABS contributed 50%, the balance attributed to mining services and maintenance services;

·      MSALABS footprint increased in Africa with the acquisition of the ELAM laboratory in Yamoussoukro (Côte d’Ivoire), commissioning of a laboratory in Nouakchott (Mauritania) and signing of a binding agreement for on-site laboratory construction and management with Thor Explorations, at its Segilola Project (Nigeria);

·      Continued recruitment of key positions within the Mining business, including Chief Development Officer, Commercial Manager, Contracts and Legal Manager and Maintenance Manager; and

·      Progressively building mining fleet via existing cash flow and balance sheet, better positioning the business to actively engage in the tendering market.


·      Despite the uncertainty and disruptions caused by the impact of COVID-19, the business has continued to perform strongly;

·      The gold price has continued to strengthen throughout Q2, reaching all-time highs early in Q3, a positive indicator for Capital given over 90% of revenue is derived from the gold sector;

·      Improving gold markets have positively impacted cash flows of mining companies, which is expected to contribute to an increase in demand for services from existing customers;

·      The strong gold price has seen a surge of activity in equity markets during Q2, a leading indicator for demand;

·      Substantial increase in activity pipeline across all business units;

·      Strong demand for drilling services anticipated following the completion of the West African wet season;

·      Capital Mining engaging in a number of large tendering opportunities, with an improved tendering pipeline across all business units;

·      COVID-19 continues to provide a level of uncertainty, however the current impact on Capital remains limited and positive recent developments include the easing in COVID-19 related travel restrictions, together with the resumption of smaller exploration projects in Burkina Faso and Côte d’Ivoire;

·      Capital continues to closely monitor the situation in Mali, which has seen President Ibrahim Boubacar Keita resign and announce the dissolution of parliament. The safety of personnel at our operations and offices remains our utmost priority and focus; and

·      Capital remains committed to its strategy of maintaining a strong balance sheet and providing returns to its shareholders.

The Group reinstates its revenue guidance, with expected revenue of $130 – $140 million for 2020 (versus $114.8 million in 2019).

 Commenting on the results, Jamie Boyton, Executive Chairman of Capital Limited, said:

“Capital delivered a strong first half performance despite the unprecedented challenges presented by the global COVID-19 pandemic. I would like to thank our staff and management team for their ongoing efforts in ensuring we continued to operate safely and efficiently during this uncertain time. It is encouraging to see some signs of improvement, however we must remain vigilant to the evolving situation, ensuring we adjust and manage our business accordingly.

We posted very strong revenue growth during the half year period, up 18.8% on the prior corresponding period, primarily driven by an increase in assets at many of our long-term projects. In addition, activity undertaken during 2018 and in particular 2019 to build the pipeline and relocate assets into West Africa ensured we were well placed to start the year contributing further to this outstanding result, with the region contributing 31% of total revenues during the period.

A robust increase in EBITDA and earnings per share reflects the ongoing strong performance at our underlying operations. Our long-term contract portfolio strengthened further with the award of a two-year contract with Hummingbird in Mali. Additionally, we were awarded extensions at three existing long-term contracts with Resolute (Mali), Barrick North Mara (Tanzania) and AngloGold Ashanti (Tanzania), a positive reflection of our performance delivery at these sites.

MSALABS, our laboratory business, continued to perform well. During the half year period it significantly increased its West African presence through the establishment of new laboratories in Côte d’Ivoire and Mauritania. The region now contributes more than 50% of MSALAB’s revenue and is shifting the geographic focus for the business.

Importantly, our commitment to operating safely has seen the achievement of outstanding LTI results during the half, with safety milestones achieved across many of our existing long-term contract sites including Geita and North Mara in Tanzania, Sukari in Egypt, Syama in Mali and Tasiast in Mauritania.

A key contributor to our strong result for the half has been returns from our equity investments. These have been a business development tool for several years with Capital completing direct investments into exploration and mining companies. This strategy has been successful, both in securing preferred contractor status with multiple companies and the provision of equity returns. During Q2, these investments delivered material unrealised returns of $9.9 million.

While the COVID-19 pandemic still provides a level of uncertainty for the future, the gold price has reached record highs, and we anticipate strong demand for our services following the West African wet season in Q4. This is encouraging for Capital due to our high gold sector exposure and established presence in the West African region. We have now filled key positions within our mining division, and the mining business is seeing increased tendering activity, providing further optimism of higher activity levels in the second half and into 2021.”

Capital Limited will be hosting a live webcast presentation at 09:00 BST on Thursday 20 August 2020, where questions can be submitted through the platform.

The webcast presentation link:

Participants may join the webcast approximately five minutes before the commencement time. A copy of the Company’s presentation will be available on



We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2020 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related notes 1 to 16.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors’ responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs).  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ”Interim Financial Reporting”.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ”Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, issued by the Financial Reporting Council for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.


Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of half-yearly financial reporting in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.


Chartered Accountants

London, UK

19 August 2020

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