Capital Limited Share News (CAPD)

(Sharecast News) - Mining services company Capital Limited reported a 17.6% improvement in third-quarter revenue year-on-year on Thursday, to $93.7m, although it flagged a number of operational setbacks.

The London-listed firm said the revenue growth was driven primarily by a 24.8% increase in drilling revenue to $63.9m, along with a 7.2% rise in mining revenue to $19.3m.

However, revenue from MSALABS, the company's laboratory division, remained flat at $10.5m, reflecting delays in the ramp-up of its significant contract with Nevada Gold Mines.

Capital said its drilling operations saw fleet utilisation rise to 76%, up from 72% in both the second quarter of this year and the third quarter of 2023.

The company's rig count stood at 126, with new rigs expected to be commissioned soon.

Average monthly revenue per operating rig (ARPOR) increased 17.3% year-on-year to $0.21m.

In mining, the completion of the Sukari Gold Mine contract in Egypt and a change in strategy at Belinga in Gabon were leading to the demobilisation of equipment.

Capital said it expected early contract closure fees from Belinga, and said it would continue to support drilling for resource definition.

The firm's investment portfolio saw notable activity, with the sale of its stake in Predictive Discovery generating $31.2m.

As of the end of the quarter, the total value of Capital's investments stood at $30.9m, down from $47.8m in June, with realised and unrealised investment gains of $15m in the period.

Looking ahead, Capital maintained its full-year revenue guidance of $355m to $375m, though expectations for MSALABS revenue were revised to $45m due to delays in contract execution.

The company said it was still seeing strong tendering activity, adding that it anticipated growth in drilling revenue, particularly from the ramp-up of operations at Nevada Gold Mines.

"Through the quarter we continued to navigate the structural transitions across the group," said chief executive officer Peter Stokes.

"In drilling, the business is now performing above target utilisation rates and at a strong ARPOR.

"Total rig count will increase further as rigs arriving on site, predominantly in Nevada, are commissioned."

Stokes said MSALABS had now started receiving samples at its significant contract with Nevada Gold Mines, although that was ramping slower than anticipated.

"Whilst this delay has impacted our 2024 revenues, we look forward to continuing to ramp the business through 2025.

"Mining revenues were strong in the third quarter, particularly driven by the extended activity at Sukari.

"At Belinga, however, Fortescue Metals Group has now decided to pivot its development strategy from pre-production mining to resource development and, consequently, given the very limited mining activity at Belinga, has made the decision to conclude our mining contract early."

As a result, Peter Stokes said Capital would have available mining fleets across both Egypt and Gabon once demobilisations were complete.

"We are now finalising next steps for this mining equipment and will then update the market.

"Despite these challenges, we are retaining our group revenue guidance of $355m to $375m including contribution in the fourth quarter from Capital Mining, pertaining to typical demobilisation payments as well as early contract closure fees."

At 1435 BST, shares in Capital Limited were down 2.56% at 83.8p.

Reporting by Josh White for Sharecast.com.