London-listed mining services company Capital Limited has lifted its yearly revenue guidance for the second time this year, this time to between $220-million and $225-million, from the between $200-million and $210-million stated in July and the between $185-million and $195-million that was initially targeted.
This followed record revenues of $61-million in the third quarter of the year, which was particularly impressive owing to the quarter usually being weaker owing to seasonal rains in West Africa.
The third-quarter revenue was a 12.6% improvement on that of the second quarter and a 74.5% improvement on that of the third quarter of last year.
Mine site services continue to underpin the company’s revenue stream, contributing 90% of group revenue.
The company has paid an interim dividend of 1.2c apiece, up 33.3% on the 2020 interim dividend.
Capital says that, after a strong first three quarters, with better-than-anticipated drilling utilisation rates and the Sukari mining operations, in Egypt, delivering ahead of contract targets, the group is increasing its anticipated revenue guidance for the year.
The company offers drilling services to predominantly the African market and has shaped its contract portfolio since listing in 2010 to gain exposure to on-site contract mining services.
In addition to the drilling business as its core focus, Capital believes the company’s foray into contract mining has the potential to meaningfully grow revenues.
Capital has managed to secure new contracts for maintenance and exploration services, which will serve revenues well in the fourth quarter.
Capital expects to have a closing drill rig fleet of 112 by the end of the year, which will enhance the company’s ability to secure further business.
The higher revenues witnessed in the third quarter and implied for the fourth quarter should result in substantially higher cash generation in the second half of the year once the full-year results are reported, which may lead to a higher full-year dividend, the company says.
It also believes macro conditions remain supportive of gold, which should deliver a strong tailwind for Capital with most of its revenue exposed to the gold mining sector.