London-listed mining services company Capital has received a letter of intent from gold mining company Barrick Gold Corporation, the operator and 50% owner of the Reko Diq copper/gold project, in Pakistan, to significantly expand Capital’s service offering at the project beyond the reverse circulation and diamond drilling geotechnical services the company has provided since early 2023.

In an operational and trading update for the period October 1 to December 31, 2024, Capital reported that the additional works will use the majority of its combined mining fleets and cover two components.

The first component involves an early works civils and mining services contract award. Reko Diq Mining Company (RDMC) has received internal board approvals for Capital to undertake these works, with both parties currently working to finalise contract terms and conditions.

“The letter of intent from Reko Diq . . . will see the majority of both our mining fleets used at this large-scale project. While this will be a multi-year ramp-up, it is a compelling opportunity for our mining division that will generate stronger returns compared to an equipment sale.

“With this award, together with the operational and organisational changes we have implemented and will continue to implement over the first half of 2025, we see a clear pathway to putting the challenges of 2024 behind us,” Capital CE Peter Stokes said on January 20.

The initial contract is expected to have a three-year term, focusing on the construction phase of the project prior to first production. The first items of equipment are expected to arrive on site in the first half of the year, with ramp-up beginning in the second half.

The second component involves an additional longer-term tailings storage facility services contract award.

Subject to the conclusion of a definitive agreement, Capital said it plans to phase further items of equipment to arrive on site throughout the year, with a gradual ramp-up in operations starting in the fourth quarter. The company said it is currently envisaged that operations will reach run-rate use by the second half of 2026.

Following the completion of the mining contract at Centamin’s Sukari mine, in Egypt, the equipment required for the contract will undergo selective rebuild and maintenance work at workshop facilities in Egypt prior to shipping to Pakistan.

Capital reported that its full-year 2024 revenue reached $348-million, an increase of 9.3% compared with $318.4-million in 2023, though slightly below the guidance of $355-million to $375-million.

The company’s drilling business delivered 11.1% year-on-year growth in revenue, totalling $239.1-million. However, delays at Nevada Gold Mines (NGM) significantly impacted group margins, with contract revenues not yet supporting the cost base established to deliver the project.

Capital’s management has implemented changes to address these challenges, which are expected to take effect during the first half of the year as the NGM contract ramps to full capacity.

The focus for drilling this year includes finalising the delivery of NGM, while maintaining high use and consistent average revenue per operating rig across the fleet.

New drilling contract wins during the fourth quarter included an 18-month diamond drilling services contract at the Mingomba copper project in Zambia, which is owned by KoBold Metals; a two-year diamond drilling services contract at Perseus Mining’s Yaouré gold mine, in Côte d’Ivoire; a six-month reverse circulation drilling services contract with Aton Mining at various exploration properties in Egypt; and a six-month diamond drilling services contract with Lotus Gold at its project site in Egypt.

Capital’s laboratory business MSALABS recorded full-year 2024 revenue of $43.6-million, aligning with revised guidance of about $45-million. Delays in ramping up the significant NGM contract and below-expectation use across several commercial laboratories contributed to profitability challenges in 2024.

However, the company said strong momentum was observed toward year-end with sample processing starting at NGM. The business has implemented measures to improve performance, including appointing a COO and expanding the global business development team.

Construction of a new laboratory in Fairbanks, Alaska, was recently completed. This facility, underpinned by long-term contracts with Northern Star and Kinross, is expected to achieve strong use rapidly, Capital said.

The company said guidance for this year would be provided in its full-year 2024 results.

Capital expenditure for the year is expected to range between $45-million and $55-million, significantly lower than the guidance for the 2024 financial year of $70-million to $80-million. This expenditure will cover sustaining and replacement needs across the drilling fleet, selective rebuilds for the Sukari mining fleet and MSALABS’s expansion.

“2024 was a challenging year for the business, driven by material mining contracts coming to an end combined with delays in the ramp-up of new contracts in drilling and MSALABS, most notably at NGM.

“These delays have impacted both group revenue but also our margins with the start-up costs from these new business streams not yet fully supported by steady state operations,” Stokes said.