Capital Ltd, the leading mining services company, has announced the award of a new drilling contract and the associated purchase of additional drill rigs and other capital equipment. The new contract is an expanded drilling services agreement with B2Gold Corp at the Fekola Gold Mine in Mali, which now runs to the end of 2024.
The services being provided on-site now include development (diamond & reverse circulation) and grade control drilling. This follows an initial drilling contract announced at the end of June 2022. To facilitate delivery of the new contract Capital has also purchased 10 rigs from African Mining Services (AMS), part of the Perenti Group. It has also purchased associated equipment and staff accommodation. These rigs are additional to the rig count increase for 2022 indicated in Capital’s interim results.
The company said this contract is another example of Capital’s focus on large scale, long life and low cost assets. B2Gold Corp has guided Fekola to producing between 570,000 and 600,000 oz of gold in 2022, making it amongst the largest gold mines in Africa.
As a result of the purchase of the rigs and other assets from AMS, capital expenditure is now expected to be approximately $60–65 million in 2022 (up from $50–55 million). Revenue guidance for the calendar year 2022 remains $280–$290 million (recently upgraded from $270–280 million in its H1 2022 results).
Commenting on the recent contract win, Jamie Boyton, Executive Chairman, said: “We are pleased to be further expanding our service offering at the Fekola gold mine and building our relationship with B2Gold. This new contract award is a strong endorsement of our strategy, not only of expanding our service offering on mine sites with blue–chip customers, but also in repositioning the portfolio to long term contracts that are positioned to operate consistently through the cycle.”
He adds: “We have been opportunistic in purchasing rigs from AMS which allows us to more rapidly commence operations and as a result we are increasing our 2022 capex guidance to $60–65 million and our year end rig count to ~130 rigs. Revenue guidance for this calendar year remains in line with our recently upgraded guidance of $280–290 million and we look forward to a strong contribution from the new contract in 2023 and 2024.”