LSE-listed mining services company Capital reports that its revenue for the six months ended June 30 increased by 52% year-on-year to $98.7-million

Focused on African markets, Capital also increased its fleet use by 79% year-on-year, with average used rigs totalling 81.

Executive chairperson Jamie Boynton says the company has delivered the strongest first-half in its history, with drilling particularly strong throughout the period and the non-drilling contribution continuing to grow.

As such, in May, Capital paid a final dividend of $0.013 apiece for the 2020 financial year, up from $0.007 apiece for the 2019 financial year.

During the period under review, Capital had net debt of $33.6-million, while its net cash balance was $5-million as at the end of December 2020.

The company notes that the majority of the remaining capital for the Sukari gold project (which is operated by Centamin, and in which Capital is undertaking work) was spent in the first half, as previously guided.

In terms of regional contribution, Capital reports operations in West Africa contributed 38% of group revenue in the first half of this year; this compares to a 31% contribution in the first half of 2020, and 32% of the second half of 2020.

Boynton adds that the near decade high commodity prices remain a significant tailwind, with Capital seeing “exceptionally strong” demand for its drilling business, driving use rates not seen since 2012.

“This has been the primary driver for our 2021 revenue guidance uplift announced.”

Non-drilling revenue contributed 17% of total revenue for the period, compared with 9% from the corresponding period of 2020. This was driven by mining services, maintenance services and laboratory services company MSALABS.

Capital reports that non-drilling services are quickly becoming a larger portion of the group’s business mix.

OUTLOOK

Capital reports that “very robust demand” conditions for drilling services should keep use rates high throughout the second half of the year.

Driving this demand is gold’s continued high value, which is supportive of further increases in capital expenditure and exploration budgets across the mining industry. This is providing a strong tailwind for Capital, with about 90% of revenue exposed to the African gold mining sector.

The company also reports that the Sukari earthmoving works continue to ramp up in line with expectations and guidance for full operating run rate remains the fourth quarter of the year.

In addition, Capital reports that tendering activity across all business units remains robust, with a number of opportunities progressing.

Going forward, the company’s revenue guidance for this year is raised to between $200-million and $210-million, compared with the $185-million to $195-million originally guided in its 2020 financial year results.