Africa-focused mining services provider Capital reports 24% earnings rise in 2020

LSE-listed Capital Ltd has described the current trading conditions as ‘the best in its history’, amid releasing its full-year financial results for the COVID-impacted 2020.

The Africa-focused mining services firm said demand for drilling services – its traditional service offering – increased strongly from the last quarter of 2020, particularly in West Africa where the group now has 41 rigs.

Capital expects its drill rig fleet size to increase by a further 17 rigs, with the majority allocated to previously announced contracts at Sukari in Egypt and the Bulyanhulu and Geita mines in Tanzania.

In its 2020 results announcement, the firm also noted strong demand for laboratory services with MSALABS working at near full capacity across all major laboratories.

Underlying earnings (EBITDA) rose 24% to US$33.8 million as revenue grew 18% to $135 million, with these strong figures encouraging Capital to pay a final dividend of 1.3 US cents per share, up 86% from the year-earlier final payment.

“Capital’s strategy proved resilient against the challenges of 2020 and our performance was outstanding,” said executive chairman Jamie Boyton, specifically referencing the company’s earthmoving contract win with long-term client Centamin, which will deliver up to $260 million in revenues over four years.

“We are highly encouraged for the year ahead given favourable operating conditions are continuing.

“The gold price, our principal commodity exposure, remains at elevated levels and equity markets continue to be supportive for capital raising activity, with fundraisings for Juniors and Intermediates experiencing a significant month-on-month uptick in activity during February, with the greatest number of large financings in recent history, a strong indicator of future demand.”