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MINING | Capital Drilling
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CAPITAL DRILLING
Capitalising on rising exploration spending in the West African market
MINING | Capital Drilling
Capital Drilling Limited provides a full range of drilling and ancillary services, focusing on the African mineral resources market. The London-listed company prides itself on supporting clients through each phase of the mining cycle, from first stage exploration through to production. Capital Drilling’s range of services includes blast hole, delineation, directional, exploration, grade control and underground drilling and it has a fleet of 91 modern rigs that can be mobilised to mine sites across the continent. Since establishing its reputation in Tanzania through its work with AngloGold Ashanti which commenced in 2006 and continues today - the company has secured a steady stream of long-term contracts at Tier 1 operations across Africa, including in Egypt with Centamin and across West Africa with Kinross Gold and Resolute Mining. Underpinning these relationships with blue chip miners is Capital Drilling’s unwavering commitment to safety.
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MINING | Capital Drilling “In each of our many services we have a
This safety-first philosophy was faultlessly
similar philosophy: To do the job safely and
adhered to in 2018, as the company achieved
efficiently,” says Capital Drilling’s business
an unblemished safety record with a record
development manager – West Africa, Chris
zero lost time to injury over the course of the
Hall. “Everybody needs to come home at the
year.
end of the day without injury having provided an industry leading service for the customer.”
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Flourishing financials Capital Drilling also flourished from a financial perspective in 2018, recording a significant increase in both profitability and cash levels. The company exceeded the top end of its revenue guidance, despite a 3% decrease year-on-year to US$116 million.
MINING | Capital Drilling
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“We are seeing a definite upturn in the amount of capital raisings going on and the junior market is certainly starting to show some signs of life where it’s been slack in the last few years. Capital Drilling is well positioned to take advantage of that trend” Chris Hall, business development manager – West Africa
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Earnings before interest, tax, depreciation
The company also declared a full-year
and amortisation (EBITDA) increased 16% to
dividend of 1.5 cents per share, a 25%
$28.3 million in 2018, while net profit after
increase on the 2017 dividend, and pledged
tax (NPAT) rose 48% to $7.7 million and net
to continue its disciplined approach to capital
cash more than doubled to $10.9 million –
management in order to return excess funds
the highest level since Capital Drilling’s listing.
to shareholders through dividends.
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Capital Drilling Rig 84 at Hummingbird Resources mine in Mali
Similar strategic contract growth was
and Burkina Faso. To date, approximately 52
achieved by Capital Drilling last year,
million ounces of gold have been discovered
evidenced by multiple wins with current and
across the sprawling formation.
new customers, along with extensions on major existing long-term mine site contracts.
Wading into West Africa
“We have positioned more rigs in West Africa over the last few years and established entities in various countries in response to
In particular, Capital Drilling placed increasing
increasing demand,” says Hall. “We plan to
focus on expanding into the West African
further expand our fleet to take advantage of
market in 2018. The region has developed
the ongoing activity in the region.
into a thriving mining hub and a world-class centre for exploration in recent years, with
“There are other rigs out in the market,
the largest concentration of exploration
but they tend to be less reliable and not
activity taking place in Africa at 45%.
performing to world class standards, so that is really our focus: to provide customers with
The lion’s share of West African exploration
world class rig maintenance, operation and
work takes place across the richly mineralised safety standards. That will give them accurate Birimian Greenstone Belt, which extends
results quickly and efficiently so they can
through Ghana, Côte d’Ivoire, Guinea, Mali
move on to the next phase of the mine cycle.”
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In 2018, Capital Drilling doubled its rig
Since increasing its presence in West Africa,
fleet in West Africa to 31 and established
Capital Drilling has seen revenue increase
infrastructure, including offices, warehouses,
from 13% in 2017 to 25% of the group’s total
workshops and accommodation, in Mali and
in the second half of 2018. To continue this
Côte d’Ivoire, adding to existing its facilities in
momentum, Hall has been appointed to
Mauritania.
lead business development and customer
Capturing contracts
relations in West Africa.
In Mali, the company was awarded a contract
“In this role, I make myself available to all
extension with Resolute Mining at its Syama
current and potential customers, making sure
Gold Mine and won new contracts with
we keep in contact so Capital Drilling knows
Hummingbird Resources at its Yanfolila Gold
when tenders are coming and is in a position
Mine. In Mauritania, a maintenance contract
to be on the tender list.”
was secured with Kinross Gold at the Tasiast Mine in addition to existing drilling contracts
Hall previously worked for another
and in Côte d’Ivoire, Capital Drilling secured
global drilling company for over 15 years,
work at Sama Resources’ Samapleu Nickel-
spending eight years looking after business
Copper project.
development of the African business, which was largely focused on West Africa.
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“We have acquired more rigs in West Africa over the last few years and established entities in various countries in response to increasing demand” “I have a similar role now with Capital Drilling.
on the strategic and financial progress it
It’s a lot more flexible and I’m able to work on
made in 2018. The thriving West African
a variety of projects in different countries, but
market is set to provide the launchpad for
principally it’s a similar process of managing
further growth this year and beyond.
the key relationships with the customers.”
West African expansion
“We are seeing a definite upturn in the amount of capital raisings going on and the
Looking forward, Hall holds a firm belief that
junior market is certainly starting to show
West Africa will provide the largest regional
some signs of life where it’s been slack in
growth opportunity on the continent and
the last few years. Capital Drilling is well
says the company aims to continue the
positioned to take advantage of that trend.
organic growth process in 2019 in much the same way as last year.
“Our offering is second to none. We are efficient, safe and we have high quality
“We’ve already slated increasing rig numbers
equipment and personnel running that
in at least two West African countries
equipment.
because we see the market growing. We will continue to focus on investing in assets and
“Both the juniors coming to market and the
infrastructure in West Africa and maintaining
majors on-site in West Africa need good
our organic growth in the region.”
quality operations and Capital Drilling will provide that, from exploration through to
After a prolonged four-year downturn,
resource management and production.”
exploration spend across Africa has increased for the last two years, which is a positive sign for Capital Drilling as it looks to consolidate
LSE:CAPD
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Published by Anderson Murray Media Ltd
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