Capital Ltd

Renowned drilling company broadens its range of services to the African mining market



In June 2020, Capital Drilling announced it would be rebranding to Capital Limited, after building a reputation for providing a range of exploration and production drilling services to Tier 1 mining operations predominantly across Africa and the Middle East over the last 17 years. Capital’s business development director – West Africa Chris Hall explains that the shortened name better resembles the company’s expanding suite of mining services, which now includes load and haul work at operating mine sites, as well as maintenance and geochemical analysis laboratories under the LSE-listed company’s different brands. Nonetheless, with nearly two decades of experience operating drill rigs at mineral projects across Africa, Hall stresses that drilling will remain a large part of Capital’s offering to the mining market on the continent and the rebrand simply promotes the broader reach of the firm’s services in recent years. 


Under the Capital Drilling moniker, Capital developed relationships with some of the biggest players in the mid and major tiers of the global mining sector, including the likes of AngloGold Ashanti, Barrick Gold and CentaminAs a result of its quality of service delivery, Capital has provided drilling services to Centamin’s Sukari Gold Mine in Egypt since 2005 and AngloGold Ashanti’s Geita Gold Mine since 2006. 


Transformative Sukari contracts 


In December 2020, Capital revealed it had secured a renewal of the drilling contract at the global Tier 1 Sukari mine that would extend the relationship to one year shy of 20 years. But more significantly, the company announced it had also entered into a conditional open pit waste mining services contract with Centamin, which Hall describes as a ‘transformational contract’. 


“A year or so ago, wmade the decision to expand into broader mine services. We had some smaller contracts in place, but this is our first major one,” he proclaims. 


It’s all part and parcel of the extension of our offering. We have successfully attached other strings to our bow since our company’s inception and now we’ve moved into the mining world. We have recruited a high calibre team with extensive experience in the field to manage this part of our business. It’s a big deal for the company. 


The transformative contracts at Sukari, which commenced in Q1 of 2021, are expected to deliver US$235-$260 million in incremental revenues over the four-year term, with the 120 million tonne waste stripping contract the largest award since Capital’s inception. It is also symbolic of the company’s evolution into a fullservice mining contractor. 


In addition to the drilling and mining segments of the business, Capital also offers lab and mine maintenance services through the MSALABS and Mine Site Maintenance (MSM) brands, as well as Well Force International  Capital’s tool business.


We are evolving into complete mining services supplier” Hall says. It’s a huge fillip to the company for Centamin to put their trust in us as a mine services provider to such a great extent. We know the asset very well and have an established team and infrastructure on site and we expect this to contribute to the successful execution of this project 


“We’ll be able to go to tenders with other customers in Africa with real experience from a large mining operation that will clearly demonstrate our capabilities.” 


Wooing West Africa 


Hall’s area of focus is West Africa, which has grown to become the busiest sub-region on the continent for exploration and mining over the last decade. In fact, Mining Journal’s West Africa 2020 review estimated that more than $3.7 billion of new mine and expansion projects are currently in build mode, approved or awaiting final development and financing decisions. 


The lion’s share of this total investment sum in West African mining is focused on gold exploration and production along the Birimian Greenstone Belt – a world-class geological formation that extends through Ghana, Côte d’Ivoire, Guinea, Mali and Burkina Faso. 


Throughout the last year-and-a-half, gold exploration companies and producers in West Africa have been helped by sustained high gold prices, particularly after the COVID-19 pandemic created unprecedented disruption and uncertainty in the global economy in 2020, when the gold price reached its zenith in August at around $2,068 per ounce. 


Our customers business benefit from strong gold price. When they experience the positive phase of the price cycle, they attract investors themselves and are able to ramp up exploration and production.  


“But they need to take advantage of the wave, and that’s when we as suppliers of drilling services need to be quick off the mark for them so they can get their drilling results into the market when things are going well. We have proven over the years that we can mobilise rigs quickly and deliver quality samples to meet their timelines. 


True to Hall’s word, Capital has made sure to position itself front and centre in West Africa’s burgeoning mining sector during the high gold price environment, as evidenced by recent mobilisation of rigs at ASX-listed Marvel Gold’s Tabakorole Gold Project in Mali and fellow ASX-listed explorer Predictive Discovery’s Bankan Project in Guinea in Q1 of 2021. 


Other ongoing contractual work being fulfilled by Capital in West Africa includes exploration, delineation and underground drilling at Resolute Mining’s Syama Gold Mine in Mali and Hummingbird’s Yanfolila Gold Mine in Mali. 


At Kinross Gold’s Tasiat Gold Mine in Mauritania, Capital is undertaking maintenance, laboratory services and grade control drilling, while at Firefinch’s Morila Gold Mine in Mali, it is fulfilling delineation drilling and exploration, grade control and blast hole drilling, together with equipment, maintenance and management services at Allied Gold Corp’s Bonikro Gold Mine in Côte d’Ivoire. 


In the last few years, we’ve focused on West Africa and invested heavily in equipment and infrastructure in the regionThere are a number of new machines arriving into West Africa in this first quarter of 2021 and there are a lot of customers in the region who need rigs at the moment, which we can provide. 


COVID-19 challenges 


While the company has certainly benefitted from high metals prices – not just in gold but also base metals, including copper and nickel – in 2020, Hall reflects on the challenges that came about from the COVID-19 pandemic, not least the health risks facing its employees on the ground. 


“Many of our field guys did very long stints last year as the first wave descended. Our customers did a superb job of managing the implementation of health protocols required while our team’s compliance with all new COVID-safe procedures to prevent the spread of the virus on-site and in the regions surrounding operations proved very effective in minimising rates of infection. 


As well as the entirely unforeseen challenges facing staff, the company also had to deal with disrupted supply chains across Africa and the rest of the world. However, logistical issues were largely resolved by the end of the first wave and Hall believes the industry has grown another layer of resilience in the wake of the pandemic. 


The business development director also relays the satisfaction felt by senior management after Capital published strong full-year financial results in mid-January. The trading update revealed that full-year revenue in 2020 had increased 18% on 2019 to $135 million. 


But perhaps the most interesting take home from the results was that non-drilling revenue contributed 16% to total revenue in Q4, compared with 12% in Q3. This 4% quarterly increase is a sign of things to come as Capital looks to further broaden its scope to full lifeofmine services. 


We are gradually growing our services offering. We like to grow slowly so that we can continue to provide quality services and not make the mistake of rushing into new things and therefore not being able to do the job properly,” Hall explains. 


“Overall, we had a positive year notwithstanding COVID. We managed to weather the storm extremely well and we continue to have confidence in the industry as can be seen by the investment in Sukari.” 


Advancing the evolution 


Finally, Hall outlines Capital’s strategic priorities for the rest of 2021: To bed in the full-service mining division, to hit the ground running at Sukari and use that significant waste stripping contract as a steppingstone to other projects with existing and new customers across the continent. 


“While we do that, we’re not going to forget our exploration drilling customers that need our service to further develop in the coming years, especially as we continue to grow in West Africa.  


We’re all about delivering quality drilling and mining services and we’ll continue to grow our own brands; MSALABS, MSM and Well Force International,” he concludes.