Capital H1 Earnings Call Highlights

Capital (LON:CAPD) reported record first-half revenue and adjusted EBITDA margin for 2026, supported by growth in its MSALABS business and continued demand across its drilling and mining operations.

Executive Chair Jamie Boyton said the integrated mining services provider generated revenue growth of just under 38% in the first half, while adjusted EBITDA margin reached 25%. The company operates drilling, mining and laboratory businesses across Africa, the Middle East and North America, alongside an investment portfolio focused on early-stage mining projects.

Capital raised its full-year revenue guidance to between $430 million and $450 million, from a previous range of $410 million to $440 million. It maintained guidance for MSALABS revenue of $85 million to $95 million and group Capital expenditure of $55 million to $65 million.

Financial performance and balance sheet

Group adjusted EBITDA margin of 25% was at the lower end of Capital’s stated target range of 25% to 30%, Boyton said. The result included impairment and exit costs related to the conclusion of contracts in Mali and the United States.

Chief Financial Officer Rick Robson said operational net profit after tax was affected by an effective tax rate of about 45% in the first half. The elevated rate reflected higher withholding taxes in Tanzania as well as the impact of the U.S. and Mali wind-down costs. Capital expects its second-half effective tax rate to remain elevated, in the high-30% range or potentially beginning with a four.

Operating cash flow increased nearly 70% compared with the prior-year period. However, working capital moved adversely as prior-year mobilization and establishment payments unwound and operating activity increased.

Net debt rose to $43.3 million at June 30 from $31.8 million at the end of December. Robson attributed the increase to the working-capital movement and the company’s participation in equity raises by Allied Gold and Isara, partly offset by improved operating performance. Net debt to adjusted EBITDA remained at 0.4 times.

In March, Capital refinanced its previous $75 million revolving credit facility into a $37.5 million revolving credit facility and a $37.5 million term loan. The four-year amortizing term loan was fully drawn at refinancing, while the revolving facility had $25 million drawn at June 30.

Capital maintained its interim dividend at 1.3 cents per share, a level it said was consistent with the past four to five years.

MSALABS expands as revenue reaches $44.7 million

MSALABS posted first-half revenue of $44.7 million, up 45% year over year, with adjusted EBITDA margin of 16.6%. The laboratory business has 33 laboratories across Africa, the Middle East and North America, with North America representing the larger share of its revenue.

Boyton said the margin was within the unit’s targeted 15% to 20% range, following investment in laboratory capacity and increased business-development activity. Overall laboratory utilization was 54%, while more established sites were operating at higher utilization than recently commissioned facilities.

The company commissioned its Grand Falls laboratory in Newfoundland during the first half under a five-year contract with Equinox Gold. Four further laboratories are expected to be commissioned and begin contributing to earnings in the fourth quarter: one in Armenia, two in Ivory Coast, and a joint venture laboratory in Pakistan with Mari Minerals.

Capital also announced a five-year laboratory contract with Tungsten West for its project in the United Kingdom. Boyton said on-site laboratories generally serve a single customer and tend to carry lower margins, though the related capital expenditure is typically funded by the customer.

Drilling contracts, mining activity and Reko Diq

The company said its drilling fleet utilization stood at 71% during the first half. Boyton said the company considers about 75% fleet utilization to be optimal, allowing capacity for equipment movements, refurbishments and maintenance. Utilization on blast-hole and underground contracts can reach about 90% because of the longer visibility provided by multi-year mine plans.

Capital announced several long-term contract wins during the period, including drilling and laboratory work for Montage Gold, drilling work for Predictive Discovery Gold at the Bankan deposit in Guinea, and a new multi-rig exploration contract with Ma’aden in Saudi Arabia. Boyton said the Ma’aden award was Capital’s first direct contract with the company, although it has worked in Saudi Arabia since 2019 through the Barrick joint venture at Jabal Sayid.

In mining services, Capital continues to operate two contracts: waste stripping at the Sukari Gold Mine in Egypt and work at the Reko Diq development project in Pakistan. Mining activity at Sukari began ahead of schedule, with additional equipment expected to arrive in the fourth quarter.

Addressing investor questions on Reko Diq, Boyton said there had been a slowdown in activity that Barrick had previously flagged, but Capital’s contract continued to operate as agreed. He said Capital was the largest contractor at the site and that its work involved critical-path items required to move the project forward.

Boyton declined to speculate on potential changes in ownership of Reko Diq, but noted Barrick had invested more than $1 billion in the project and continued to invest at a reduced pace. He also stressed that Capital operates in 17 countries, serves 19 drilling and mining customers across 25 sites, and has more than 400 laboratory customers.

Portfolio optimization and investments

Capital exited its Mali and U.S. operations as part of what Boyton described as portfolio optimization. He said operating conditions in Mali were less favorable for international contractors, while Capital saw opportunities in Guinea and Ivory Coast. The U.S. contract did not meet the company’s return thresholds, he said, and assets have been redeployed.

Robson said the U.S. exit included about $1.1 million in losses on asset disposals and a further $1 million impairment against future disposals. He described the overall cost of exiting the U.S. business as likely in the mid-single-digit millions of dollars.

Capital’s investment portfolio was valued at $116 million at June 30 and recorded a $7 million gain in the first half, while the reference index used by the company declined 14%. Boyton said the portfolio has produced a cumulative 60% return over seven and a half years.

The company participated in Allied Gold’s recent fundraising, subject to shareholder approval expected in late September, and said it had broadly maintained its pre-raise ownership position. Boyton said Capital does not view the investment portfolio as a funding source for its operating businesses and did not consider selling portfolio holdings instead of conducting its November equity raise.

About Capital (LON:CAPD)

Capital Limited is a leading mining services company providing a complete range of drilling, mining, maintenance and geochemical laboratory solutions to customers within the global minerals industry. The Company's services include exploration, delineation and production drilling; load and haul services; maintenance; and geochemical analysis. The Group's corporate headquarters are in the United Kingdom and it has established operations in Côte d'Ivoire, Canada, Democratic Republic of Congo, Egypt, Gabon, Ghana, Guinea, Kenya, Mali, Mauritania, Nigeria, Pakistan, Saudi Arabia, Tanzania and United States of America. Our brands include Capital Drilling, Capital Mining, MSALABS and Well Force International. Capital Drilling provides a complete range of drilling solutions for projects across the mining cycle from exploration to production. Capital Mining provides Load and Haul services for clients from development to fully operational mine sites. MSALABS are a global provider of geochemical laboratory services for the exploration and mining industries and have an exclusive agreement with Chrysos Corporation to deploy their revolutionary PhotonAssay technology globally.

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