Capital Drilling Ltd, a leading drilling solutions company focused on the African markets, has provided its Q4 2018 trading update for the period ended 31 December 2018, ahead of
announcing its full year results on 14 March 2019. Jamie Boyton, Executive Chairman, said: “Capital Drilling’s trading performance in 2018 was strong, particularly in the second half of the year which saw the Group accelerate its penetration into the fast growth West African mineral drilling industry. The quality of our business improved further, with zero LTIs recorded, an outstanding result, in addition to some material contract extensions with some of our longstanding blue chip customers.” He added: “The current year has started strongly with solid tendering activity in West Africa, where we are benefitting from the infrastructure investment that we have made over the past 12 to 18 months.”
The company stated: “The Group’s increased footprint in West Africa, coupled with our track record of delivering the highest quality service to our customers, resulted in multiple contract wins over the year, including Resolute Mining, Hummingbird Resources and Sama Resources. As a result of the increased focus on the region, Group revenues attributable to the region increased from 13% in 2017 to 24% in H2 2018.” Capital had 91 rigs at end of year (2017: 93) with continued active fleet management, maintaining industry leading
equipment standards, with the purchase of two new blasthole rigs in H1 2018, while disposing of four rigs during the year (sale and decommissioning).
Activity in East and Southern Africa also showed signs of improvement over 2018, with contracts awarded to Capital Drilling in Botswana (De Beers), Tanzania (Graphex, Strandline) and Kenya (Acacia). Significantly, the Group was awarded contract extensions with two of its major long-term customers, receiving a five year extension at the Sukari Gold Mine (Centamin) and a twelve month extension at the Geita Gold Mine (AngloGold Ashanti). “The core long term production contracts continued to perform strongly over Q4 2018, and we are pleased to have secured extensions to facilitate continued investment and improvement at these contracts.” The Geita contract covers underground grade control and underground exploration drilling services; while at Sukari it includes blast hole and grade control drilling services. Capital commenced a 6,000 m diamond drilling contract with Sama Resources in Côte d’Ivoire and the above referenced program of up to 30,000 m of aircore drilling under contract with Strandline Resources in Tanzania.
Strong contract performance, ongoing cost management, capital discipline and outstanding working capital management drove a substantial increase in cash generation in Q4 2018. The Group ended the period with $10.9 million in net cash, up from $3.4 million at June 30, 2018. Gross debt was reduced over the half year period by $3 million to $9 million, positioning the Group well for 2019.
