Capital Drilling

Capitalising on rising exploration spending in the West African market



Capital Drilling Limited provides a full range of drilling and ancillary services, focusing on the African mineral resources market. The London-listed company prides itself on supporting clients through each phase of the mining cycle, from first stage exploration through to production.  


Capital Drilling’s range of services includes blast hole, delineation, directional, exploration, grade control and underground drilling and it has a fleet of 91 modern rigs that can be mobilised to mine sites across the continent.  


Since establishing its reputation in Tanzania through its work with AngloGold Ashanti – which commenced in 2006 and continues today – the company has secured a steady stream of long-term contracts at Tier 1 operations across Africa, including in Egypt with Centamin and across West Africa with Kinross Gold and Resolute Mining. Underpinning these relationships with blue chip miners is Capital Drilling’s unwavering commitment to safety. 



“In each of our many services we have a similar philosophy: To do the job safely and efficiently,” says Capital Drilling’s Business Development Manager – West Africa, Chris Hall. “Everybody needs to come home at the end of the day without injury having provided an industry leading service for the customer. 


This safety-first philosophy was faultlessly adhered to in 2018, as the company achieved an unblemished safety record with a record zero lost time to injury over the course of the year. 


Flourishing financials 


Capital Drilling also flourished from a financial perspective in 2018, recording a significant increase in both profitability and cash levels. The company exceeded the top end of its revenue guidance, despite a 3% decrease year-on-year to US$116 million. 


Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 16% to $28.3 million in 2018, while net profit after tax (NPAT) rose 48% to $7.7 million and net cash more than doubled to $10.9 million – the highest level since Capital Drilling’s listing. 


The company also declared a full-year dividend of 1.5 cents per share, a 25% increase on the 2017 dividend, and pledged to continue its disciplined approach to capital management in order to return excess funds to shareholders through dividends. 


Similar strategic contract growth was achieved by Capital Drilling last year, evidenced by multiple wins with current and new customers, along with extensions on major existing long-term mine site contracts. 


Wading into West Africa 


In particular, Capital Drilling placed increasing focus on expanding into the West African market in 2018. The region has developed into a thriving mining hub and a world-class centre for exploration in recent years, with the largest concentration of exploration activity taking place in Africa at 45%. 


The lion’s share of West African exploration work takes place across the richly mineralised Birimian Greenstone Belt, which extends through Ghana, Côte d’Ivoire, Guinea, Mali and Burkina Faso. To date, approximately 52 million ounces of gold have been discovered across the sprawling formation. 


“We have positioned more rigs in West Africa over the last few years and established entities in various countries in response to increasing demand,” says Hall. “We plan to further expand our fleet to take advantage of the ongoing activity in the region. 


There are other rigs out in the market, but they tend to be less reliable and not performing to world class standards, so that is really our focus: to provide customers with world class rig maintenance, operation and safety standards. That will give them accurate results quickly and efficiently so they can move on to the next phase of the mine cycle  


In 2018, Capital Drilling doubled its rig fleet in West Africa to 31 and established infrastructure, including offices, warehouses, workshops and accommodation, in Mali and Cote d’Ivoire, adding to existing its facilities in Mauritania. 


Capturing contracts 


In Mali, the company was awarded a contract extension with Resolute Mining at its Syama Gold Mine and won new contracts with Hummingbird Resources at its Yanfolila Gold MineIn Mauritania, a maintenance contract was secured with Kinross Gold at the Tasiast Mine in addition to existing drilling contracts and in Cote d’Ivoire, Capital Drilling secured work at Sama Resources’ Samapleu Nickel-Copper project. 


Since increasing its presence in West Africa, Capital Drilling has seen revenue increase from 13% in 2017 to 25% of the group’s total in the second half of 2018. To continue this momentum, Hall has been appointed to lead business development and customer relations in West Africa. 


“In this role, I make myself available to all current and potential customers, making sure we keep in contact so Capital Drilling knows when tenders are coming and is in a position to be on the tender list.” 


Hall previously worked for another global drilling company for over 15 years, spending eight years looking after business development of the African business, which was largely focused on West Africa.  


“I have a similar role now with Capital Drilling. It’s a lot more flexible and I’m able to work on a variety of projects in different countries, but principally it’s a similar process of managing the key relationships with the customers. 


West African expansion  


Looking forward, Hall holds a firm belief that West Africa will provide the largest regional growth opportunity on the continent and says the company aims to continue the organic growth process in 2019 in much the same way as last year. 


“We’ve already slated increasing rig numbers in at least two West African countries because we see the market growing. We will continue to focus on investing in assets and infrastructure in West Africa and maintaining our organic growth in the region. 


After a prolonged four-year downturn, exploration spend across Africa has increased for the last two years, which is a positive sign for Capital Drilling as it looks to consolidate on the strategic and financial progress it made in 2018. The thriving West African market is set to provide the launchpad for further growth this year and beyond. 


We are seeing a definite upturn in the amount of capital raisings going on and the junior market is certainly starting to show some signs of life where it’s been slack in the last few years. Capital Drilling is well positioned to take advantage of that trend. 


“Our offering is second to none. We are efficient, safe and we have high quality equipment and personnel running that equipment.  


“Both the juniors coming to market and the majors on-site in West Africa need good quality operations and Capital Drilling will provide that, from exploration through to resource management and production.”