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Rockwood Strategic PLC announced their full year results this morning. In it they disclose that CAPD was one of the new additions to their portfolio, and they summarise:
"Capital Limited 3.2% NAV, Market capitalisation £174m
The company's two key founders remain heavily involved and invested in the business they have successfully created over the last 15 years. The company started out providing drilling services to small African based mining companies and, having developed a reputation of best in class health and safety, service levels and efficiency, has gradually built a diversified client base including a number of world's major mining companies. The rig fleet is now deployed across several continents and is complimented by other services, the most important for our thesis being the 'laboratory services' division which is providing leading edge, environmentally friendly assays and sample testing to its clients.
Capital's strong margins, and attractive returns on capital will be enhanced by the strong growth of this division, competitors are valued very highly. Whilst Capital has activities across a number of metals, it still retains a bias to Gold.
We expect further growth in its key projects, realisations from its strategic equity stakes in early-stage clients and an eventual realisation of value in the laboratories business.
The valuation looks anomalous given the ROCE and growth record, its asset base and prospects."
PDI announced "encouraging" drilling results last night from Bankan (where CAPD are the drilling contractors), with lots more drilling to come:
Https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02816330-6A1211173
"Encouraging results have also been received from several new areas such as Sanifolon North and Sanikourou. Drilling at Argo will continue to follow-up the best results at depth and along strike, and expand early-stage
drilling to untested areas with good potential.”
“The exploration program at Argo is advancing to the next phase, and we are excited to have commenced transitioning the Fouwagbe and Sounsoun targets into resource definition drilling programs with the resource development team. We believe this will ultimately deliver the first Mineral Resource estimates outside the NEB and BC area, highlighting the multi-deposit potential of the Bankan Gold Project.”
“PDI’s regional exploration strategy is to maintain a steady flow of targets moving through the exploration pipeline and, in line with this strategy, the regional exploration team is extending its efforts beyond the Argo permit. Drilling is underway on the Bokoro permit, initially targeting prospective geochemistry anomalies and artisanal workings. We look forward to receiving the first results from these new areas."
Encouraging to see a 107,458 share buy at the full 103p offer right on the bell on a Monday morning. And the bid price is now up to 102.5p.
Encouraging to see buyers paying the full 103p offer and sellers getting a premium at 101.4p.
Gut feeling only, but it feels like CAPD are on the verge of a breakout upwards. Hopefully it can achieve a big re-rating like TIG's recent run after a similarly long consolidation.
Or perhaps my gut just requires some lunch.
by mark watson-williams:
"capital limited (lon:capd) – mining for better valuation
this is another company that is holding its agm shortly, in the city on wednesday 5th june.
the group is a leading mining services operation providing a complete range of drilling, mining, maintenance and geochemical laboratory solutions to customers within the global minerals industry.
its services include exploration, delineation and production drilling; load and haul services; maintenance; and geochemical analysis.
although the group’s corporate headquarters are in the uk, it has established operations in côte d’ivoire, canada, democratic republic of congo, egypt, gabon, ghana, guinea, kenya, mali, mauritania, nigeria, ****stan, saudi arabia, tanzania and the usa.
analysts david butler and charlie bendon at tamesis partners have a 160p price objective out on the group’s shares, noting that:
“we remain positive on the outlook for a strong operational performance through 2024.
key growth projects in the capital business are ramping well, projects continue to be won with high quality clients and rigs are being mobilised to higher quality contracts.
msalabs is developing momentum, both at their ngm labs contract and their partnership with barrick.
the mining services business has the potential for another big contract.”
the group’s shares have at long last topped the 100p level, closing at 102.88p, and looking very capable of moving significantly higher."
Thanks, Rivaldo. i only know Rockwood from ST articles in the IC, but they seem a smart outfit, v encouraging to see them pick up on CAPD.
More work for CAPD for WIA Gold, who've announced a new drilling programme at Bouafle, where CAPD were appointed as exploration drilling contractors in Q1'22:
Https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02810780-6A1209099
"An initial 6,000m of drilling is planned, followed by an optional second-phase of 4,000m dependent on results from the different targets tested.
Wia Executive Chairman, Josef El-Raghy, commented:
“We are delighted to launch this RC program at Bouaflé as a logical and systematic follow-up on the exploration work previously completed there. Bouaflé is an exciting exploration project in Côte d’Ivoire, which has already demonstrated a strong mineralised gold footprint at significant scale."
I was at Mello yesterday, where Rockwood Strategic were presenting via the excellent Richard Stavely.
Reviewing their portfolio, he unveiled a new holding...CAPD....
CAPD now represent 3.2% of their portfolio.
They believe the market has missed the fact that Chrysos could be generating £10m+ profit on its own.
He also noted that CAPD were nicely cash-generating and that its kit/rigs backs up most of the m/cap on its own (there's $209m of PPE on the balance sheet).
Rockwood featured CAPD in their most recent monthly factsheet for the first time, but good to see CAPD highlighted at such a public forum.
Tthe gold price is up to a record $2,445 as I type. Which has to be good for CAPD's client base and resultant spending and growth plans.
In the Q1 trading update in April CAPD said re the big Nevada Gold Mines project:
"Material NGM drilling contract set for ramp up through Q2 2024: The commencement of operations at our high-quality contract at Nevada Gold Mines is scheduled for the second quarter with activity increasing progressively through the remainder of the year"
Barrick have now confirmed that it's "officially on track to produce 130,000 ounces (oz) of gold this year":
Https://www.e-mj.com/breaking-news/nevada-gold-mines-celebrates-official-opening-of-goldrush-mine/
Extract:
"Barrick, which owns 61.5% of the project through the NGM joint venture with Newmont (38.5%), is developing and will operate the mine, scheduled to reach commercial production by 2026 and growing to approximately 400,000 oz by 2028 (100% basis). The 24-year underground mine is expected to provide 500 jobs during its construction and employment for 570 people once operational.
More than $300 million of a $1 billion capital budget has been spent on the project which is expected to produce $326 million in net proceeds tax and a further $142 million in gold and silver excise tax for education in Nevada under the new mine tax framework."
WIA Gold were up another 9% overnight to new highs of A$0.12.
CAPD's holding in WIA alone is now worth £11.6m.
PDI have announced a successful A$50m fundraising at the excellent price of A$0.19.
CAPD may or may not have invested further, and the PDI share price understandably reverted back overnight to A$0.195.
The good news is that CAPD are the drilling contractor at PDI's core project at Bankan - and this will fund "and accelerate the multiple drilling programs" there:
Https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02802611-6A1205866
Wondering if this is attributable to the latest results? Seems to have begun rising before the 15th and gathered momentum after results published. I’m speculating the bullish sentiment in the update leaked sending the price up in the week ahead of results day. Time will tell if recent buyers are in it for the long haul but it’s good to see us above £1 again
capd has "further to go" (subscription-only):
https://*************.com/views/74154/capital-limited-q1-update-an-already-winning-share-tip-with-further-to-go
Wonder what tomorrow will bring. Would really like to see some volume here to justify the move upwards.
According to the FT Wia Gold is up 238.16% over the last year. It would be nice to be able to say the same for Capital Drilling. Quoted 98.2 to sell so heading in the right direction.
WIA Gold were up another 10.5% last night to A$0.105 - this holding is now worth almost exactly £10m.
Yep, great to see buying coming in now at 98.82p.
Hopefully Rockwood are continuing to buy....
Should have said, hope that the bid follows.
Good find Rivaldo. Interesting that the date of publication was the 31st March so probably does not account for the increasing share price of late. Would love to know what is encouraging buyers at these prices. Just noticed the ask has surged to 99p, hope that the ask follows.
CAPD have a new institutional investor - Rockwood Strategic disclosed as follows in their recent monthly factsheet for last month:
Https://d1bcjbyi5yiron.cloudfront.net/app/uploads/2024/04/Factsheet-Q1-2024.pdf
"We purchased two new holdings this quarter.....Secondly we bought Capital Limited. This business has grown consistently, building a world leading position in the provision of drilling services to Mining companies. Asset rich, it has, over time, diversified by geography and client, breaking into the majors, such as Barrick. It has an unparalleled safety record, and been developing a Laboratory services business which is totally ignored in the valuation of the shares on a ‘24 PE of 6.2x and EV/Ebitda 4x. Equity owning, proven management should address this in time. We believe its ‘hue’ of resources has created a blind spot for generalist investors."
CAPD's holding in WIA Gold has risen another 12% overnight (after a successful fundraising) to new highs at $AD0.098 - it's now worth £9.3m:
Https://www.asx.com.au/markets/company/wia
Indeed Lesville, a very encouraging performance today given both the usual trend on results day and especially going ex-div too.
Interesting little 8,776 buy at 95.4p reported late as well.
Thanks Rivaldo for posting Tamesis investment case guidance and how you see the appreciating gold price benefiting Capital Drilling. Let’s hope that the gold price remains strong for sometime yet.
Somewhat surprised at the strong share price today especially as the stock is now ex dividend, perhaps some are now beginning to realise the hidden value here.
Tamesis Partners reiterate their 160p target price and forecast 18.7c EPS this year, or exactly 15p EPS.
They summarise:
"Investments.
Total value of investments (listed and unlisted) was $51.7m as at 31 March 2024 up from ($47.2m) at as 31 December 2023). Strong growth in the investments over the quarter, driven by the gold rally as a majority of the investments are gold companies (namely Allied Gold, Predictive Discovery and WIA Gold). Predictive released their long awaited PFS this week, and WIA announced an updated MRE with a 63% increase in contained gold at their Kokoseb asset in Namibia
• Outlook.
Revenue guidance has been re-iterated at $355-375m. We expect strong improved performance across Drilling and MSALABs, while Mining is ticking along as expected. The Sukari kit has the ability to be redeployed and deliver step changes to the P&L, while the elevated commodity prices sets the scene for further potential drilling contracts. We maintain our current revenue estimate of $358m.
Investment Case
We remain positive on the outlook for a strong operational performance through 2024. Key growth projects in the Capital business are ramping well, projects continue to be won with high quality clients and rigs are being mobilised to higher quality contracts.
MSALABS is developing momentum, both at their NGM labs contract and their partnership with Barrick. The mining services business has the potential for another big contract. The company is trading on EV/EBITDA and PE multiples for FY24 of 2.4x and 6.2x, and for FY25 2.2x and 5.4x, while delivering a dividend yield of 3.4%. We remain comfortable with our 160p PT."