Mining services company Capital has announced first-half revenue of $169.4-million, marking a 9.8% increase from $154.3-million in the 2023 interim period. The company's full-year revenue guidance remains at between $355-million and $375-million.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) of $42.9-million were 2.3% lower year-on-year, while the Ebitda margin was 25.3%, down from 28.5% in the first half of 2023.

"Capital is undergoing a number of structural transitions that Capital expect will set up the business for the next wave of growth," CE Peter Stokes said on August 15.

He added that the company was nearing the end of its waste mining contract at the Sukari gold mine, in Egypt. Although this contract was the largest award in the company's history, its conclusion would position Capital as a significantly larger business.

Capital has diversified its client portfolio, service offerings and geographical footprint, adding lower-risk jurisdictions such as the US and Canada in its drilling and laboratories businesses. This was achieved through longstanding relationships with miners globally.

However, Stokes said that the first half of the year presented challenges with slower-than-expected ramp-ups at key growth areas such as Nevada Gold Mines (a joint venture between Barrick and Newmont), Belinga in Gabon (majority owned by Fortescue Metals Group), and MSALABS. These delays impacted on the company's results.

Despite these challenges, Capital remains confident that it can deliver returns that will justify their material investments. As the company looks into the next year, it expects to maintain the lower end of its targeted 25% to 30% adjusted Ebitda margins.

Successful delivery of growth projects is expected to drive higher margins at these sites, offsetting impacts from losing economies of scale at Sukari and anticipated margin dilution from MSALABS, which targets lower adjusted Ebitda margins of 15% to 20%.

From a balance sheet perspective, Stokes said Capital was in a transitionary period. The recent sale of its shareholding in Predictive Discovery marked the first major step in reducing its debt levels. The company was also actively marketing the sale of the mining fleet at Sukari, which would further reduce debt exposure. This de-gearing was expected to reset the business by reducing interest payments and providing greater flexibility to pursue new opportunities.

Capital has announced an interim dividend of $0.013 a share, to be paid on October 3, to shareholders registered on August 30. The first half of this year saw a net profit after tax of $11.8-million, a 29.8% decrease from $16.8-million in the first half of 2023.

This decrease was driven by a reduction in group Ebitda margin from new business growth, higher interest costs of about $2-million increasing year-on-year from funding investments in new growth areas, particularly in the US, and a higher tax expense of about $1-million year-on-year.

The company incurred exceptional costs of $1.65-million in the first half related to the implementation of an enterprise resource planning (ERP) system. ERP costs will continue until the end of next year. Capital's cash from operations was $52.3-million, a 36.9% increase from $38.2-million in the first half of 2023, driven partly by a favourable working capital position.

Capital expenditure for the first half of 2024 was $44.3-million, up from $36.2-million in the first half of 2023, including prepayments and assets financed by original-equipment manufacturers.

In the first half of 2024, Capital completed a strategic investment in Eco Detection, acquiring a 22% stake for $6.6-million. As part of this investment, Capital agreed to an exclusive arrangement for distributing Eco Detection technology to the mining industry.

The value of the group's direct investment portfolio increased to $47.8-million from $47.2-million at the end of December 2023 and $42.1-million at the end of June 2023.

Net debt at the first half of 2024 was $86.4-million, a 29.9% increase from $66.5-million in the first half of 2023, mainly to fund new contracts with Nevada Gold Mines across both drilling and laboratory services.

On August 14, Capital announced an agreement to sell its Predictive Discovery holding to Perseus Mining for about $31.2-million in cash, which will be used primarily to reduce debt.