Capital Ltd (LON:CAPD) has highlighted that current market conditions are extremely positive for its drilling business with the company boosted by robust gold prices and strong levels of tendering activity.
The contractor, in its fourth quarter trading update, said full year revenue amounted to US$135mln for 2020, up 18% on the prior year.
Revenue in the fourth quarter itself rose by 13% to US$34.6mln.
Rig utilisation in the period was marked at 59% which is in-line with the comparative figure for 2019. It had 94 rigs at the end of the year.
COVID-19 has had no material impact on operations, though Capital has experienced some restrictions on movement of personnel and its supply chain, the company noted.
The period saw a number of notable new contract wins and extensions, meanwhile, the company began work under recently gained contracts.
Significantly from a strategic point of view, the company marked something of a transition as in December it expanded its scope beyond drilling, landing a mining and waste stripping contract for Centamin’s Sukari Gold Mine, in Egypt.
Capital highlighted that the move marks a step-change in the scale of the business and its continuing evolution into a full-service mining contractor.
To support this growth the company raised £30mln and ordered a fleet of new equipment for the contract – including 17 dump trucks, seven blast hole drill rigs, three excavators, dozers, graders and water trucks.
Looking into the current trading period, the company noted that the strengthening gold price observed during 2020 has continued into the first quarter of 2021, which Capital notes is a positive indicator for its business which receives around 90% of group revenue from the sector.
It expects to provide guidance for 2021 in March alongside the release of final results for 2020.
Executive chairman Jamie Boyton, in a statement, said: “Capital has had an outstanding year, especially given the unprecedented challenges presented by the global COVID-19 pandemic.
“The recent contract wins at Sukari are an exciting transformational opportunity, delivering significant revenue diversification and consolidating Capital as one of the leading mining services operators in Africa.
“We have made excellent progress through the successful completion of the equity fundraise and finalising further debt financing facilities, with payments now significantly progressed on all major capital equipment purchases required to support the contract.”
Boyton added: “In addition to the award of the Sukari contracts, we have delivered exceptional results this year. We increased revenue by 18% and broadened our platform for growth through the extension of services at existing sites and a further two new long-term contracts with Firefinch and Barrick.”