Capital Limited Share News (CAPD)

(Alliance News) - Capital Drilling Ltd on Wednesday said it has signed binding agreements with Allied Gold Corp for the provision of a full range of mining services to its Bonikro gold mine in Cote d'Ivoire.

Bonikro is a producing gold mine in Cote d'Ivoire which commenced production in 2008 and was previously operated by Newcrest Mining Ltd, prior to sale to a consortium of F&M Gold Resources and the Africa Finance Corp in December 2017, and the recent acquisition by Allied. Bonikro has historically produced over one million ounces of gold.

Capital Drilling, a mining services company, said the agreements represent its first comprehensive mining services contract win, with Capital Drilling now able to provide load and haul services to its clients, in addition to its existing drilling, maintenance and mineral analytic capabilities.

Senior Capital Drilling personnel commenced on site September, the company said, working with Allied management to refine the Bonikro mine plan, before transitioning to a planned longer-term comprehensive schedule of rates contract, expected to be signed in the first half of 2020.

Contract revenue for 2020, subject to confirmation of mine plan, is currently expected to be between USD25 million and USD30 million, Capital Drilling said. The initial term of the contract is intended to be five years.

The contract will initially utilise five production rigs, including two from Capital Drilling's existing fleet. Furthermore, the company said it will assume management control of Bonikro's heavy mining equipment fleet including 16 mining dump trucks, four mining shovels and other associated mining equipment.

Together with the three new blast hole rigs to be acquired, near-term capital commitments are expected to total USD8 million, Capital Drilling said, apportioned between the drilling fleet and the ancillary earth moving equipment.

The contract is expected to contribute modestly to 2019 revenue, the company noted, and therefore it maintained its previously issued guidance range of USD110 million to USD120 million.

"We are excited to embark on this new phase for Capital Drilling and to commence our first comprehensive mining services contract," said Executive Chair Jamie Boyton.

"We will draw on the extensive experience of our team to successfully incorporate and deliver this new service. It is also pleasing to add another long-term contract to our existing portfolio of long term, mine-site based projects," added Boyton.

Capital Drilling shares were trading 9.3% higher on Wednesday in London at 66.64 pence each.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

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