Aim-listed Capital Drilling’s strategic investment and expansion into West Africa is generating multiple new opportunities and netting it several new contracts.

The group increased its capital expenditure by 18.4% to $6.4-million during the first half of 2019, as it expanded its support base in West Africa.

Investments climbed from $5.7-million as at December 31, 2018, to $7.7-million as at June 30, to align the West African business development strategy and support a number of new contract awards.

“Our increased presence in the region, together with business development activity undertaken during the half-year period, has developed a solid pipeline of new contracts, including a number of new clients and further expansion of operations into Burkina Faso and Nigeria,” says Capital Drilling executive chairperson Jamie Boyton.

Under the new business development strategy, Capital Drilling entered the new markets of Burkina Faso, where a new drilling contract started in the second quarter, and Nigeria, where the company already operates a successful mineral analytics laboratory, during the first six months of the year.

It also secured new clients within its established operations across West Africa.

“The strategic expansion into West Africa continues to yield results which will diversify our revenue base,” he said, noting that the new contracts would start contributing to group revenues from the end of the third quarter.

The new multiyear contracts expanded the group’s portfolio of long-term mine-site-based contracts to eight, which provides revenue stability, while the strong performance of existing long-term contracts maintains an average revenue per operating rig of $183 000.

“We continue to target mine-site-based contracts and it is extremely pleasing to have announced the award of a further three long-term contracts during the period,” Boyton notes.

Its geochemical laboratory services provider, MSALABs, was awarded a three-year on-site laboratory services contract by Kinross Gold for the Tasiast gold mine, in Mauritania, where operations started in July.

In addition, the company’s underground grade-control drilling contract with Resolute Mining, in Mali, was extended for a further year.

Also, three new exploration contracts will start in the second half of 2019. These include Arrow Minerals, in Burkina Faso; Desert Gold Ventures, in Mali; and Awale Resources, in Côte d’Ivoire.

Several exploration contracts were also awarded in the first half, including Compass Gold, in Mali, which comprises a 10 000 m exploration drilling contract that started in June.

In addition, the company secured a 20 000 m exploration drilling contract, which started in May, from Golden Rim Resources, in Burkina Faso.

Allied Gold, in Côte d’Ivoire, awarded Capital Drilling a five-year exploration drilling contract, which is scheduled to start in the fourth quarter of the year.

Meanwhile, Thor Explorations, in Nigeria, awarded the group a five-year exploration and grade-control contract.

Exploration drilling is scheduled to start in the fourth quarter of the year and grade control in the first half of 2020.