LSE-listed mining services company Capital Drilling recorded its strongest financial year yet in 2021, with three quarters of revenue growth, executive chairperson Jamie Boynton says.

He highlights that 2021 was a “transformational” year for Capital, driven in part by a surge in market activity in its drilling business, as well as the increasing contribution from its non-drilling services, which accounted for 26% of group revenues in the fourth quarter, compared with 9% in the fourth quarter of 2020.

“Our focus on mine-site contracts, long-life assets and a blue-chip customer base, the diversity in our service offering and the increasing exposure to non-gold commodities at world-class assets, together, underpin the sustainability of our business model.

“It is pleasing to see not only an extremely successful execution in the ramp-up of these new services but also continued excellence in our safety performance among this significant increase in activity across the group,” Boynton acclaims.

For the full year ended December 31, 2021, revenue was $226.8-million, up 68% on the previous year, and slightly ahead of the group’s recently revised guidance of $220-million to $225-million.

Fleet use increased by 79% in the fourth quarter, an increase of 4% on the previous year’s corresponding period and 34% on the previous quarter. The full-year average use was 75%, an increase of 27% on the previous year.

During the year, Capital secured a number of new contracts.

A recent notable contract was that of a three-year surface production drilling contract with AngloGold Ashanti at the Geita gold mine, in Tanzania. This contract will use five rigs from the existing fleet, together with one new rig during 2022, and is anticipated to generate revenues of $33-million over the contract term.

Capital’s subsidiary, geochemical laboratory services provider MSALABS has had a very successful fourth quarter, cementing a strong outlook for this year.

The total rig count increased from 108 as at June 30, 2021, to 109 through the fourth quarter, with three further rigs currently undergoing commissioning.

The group's portfolio of ten long-term mine-site-based contracts is noted as continuing to perform well.

Capital’s total value of listed investments was $51.9-million as at period end, compared with $21.6-million at the end of the first half of 2021.

OUTLOOK

“As we look to the year ahead, there are a number of growth catalysts to come. At Sukari, with operations now commissioned, 2022 will be the first complete year with the earthmoving contract at full run rate,” notes Boynton.

MSALABS is also at an exciting inflection point in the fourth quarter of 2021, with one Chrysos Photon Assay unit successfully commissioned.

The business unit is further expected to experience material growth this year, driven by the rollout of further units, as well as the construction of the group's third major hub lab, in Saudi Arabia.

“For the core drilling business, we also enter 2022 with the highest rig count in the group's history and we are confident in maintaining strong utilisation levels given the increased activity we are seeing from our existing clients as well as the strength we continue to see in commodity pricing,” Boynton indicates.

Macro conditions continue to suggest sustained strength in the demand environment and outlook, with gold and other key commodities still trading at near decade-long highs, the group notes.

Revenue guidance for the year will be announced alongside the company’s full-year results and together with any dividend declaration.