Capital Share Discussion Threads

[rivaldo] 12/1/2023 07:19

Looking strong here, and a number of news items:

- gold still rising and now at $1,883, and could continue to do so with expectations that the US Federal Reserve will slow its interest rate rises

- news overnight that Marvel Gold's Yanfolila mine- where CAPD are the contractor - has produced encouraging results:



- interesting article in the FT today noting that Saudi Arabia are launching a mining fund of up to $15 billion in an effort to reduce their oil dependency, which would do very nicely for the sector as a whole!



"Saudi Arabia has launched a mining fund that plans to invest up to $15bn of capital in overseas assets according to people familiar with the details, as the country works to reduce its dependence on fossil fuels.

The venture, 51 per cent owned by Saudi state-owned miner Ma’aden, with the remainder owned by the country’s Public Investment Fund, will take non-operating minority stakes in mining projects internationally, the two companies said on Wednesday."

"Given the scale of projects in commodity markets, the fund is prepared to deploy more than $15bn of capital for investments over the coming years as suitable opportunities emerge, the people added. PIF declined to comment beyond the statement."

[davebowler] 11/1/2023 12:54

Gold just about at an alltime high in £s .bullionvault.com/gold-price-chart.do

[adamb1978] 09/1/2023 09:22

Only a few pence from an all time high now I believe

Trading statement either at end of this week, or more likely next week, should hopefully get them there

[rivaldo] 09/1/2023 09:04

Good news overnight from Golden Rim at Kada in Guinea, where CAPD are the exploration drilling contractor, with much more drilling to come:



"Golden Rim’s Chief Executive Officer, Tim Strong, said:

“We are delighted at the speed with which the drilling has commenced and the progress of our exploration program at our flagship Kada project in Guinea. RC drilling has averaged more than 1,000 metres per week at Massan. The RC rig has moved to the Bereko prospect, 9km north of the current Mineral Resource, allowing us to commence a trenching campaign at Massan to further improve geological confidence within the Mineral Resource area.

“A diamond drilling rig is scheduled to commence soon and is expected to provide us with vital structural information about the controls on mineralisation across both the Massan and Bereko prospects.

“We are expecting our first assay results towards the end of January, and the two drill rigs and trenching will provide us with a steady stream of new results over the coming months."

[shanklin] 06/1/2023 21:09

No defence of breaking copyright as above but if you Google the article’s title, you can read the whole article as I did a couple of hours ago

[adamb1978] 06/1/2023 15:25

Agreed Brucie - there's lot of renegades on this website and Rivaldo certainly isn't one of them!

Separately, is there any IC content which they make freely available, either immediately or after an embargo period? I've never subscribed to it or familiar with how they publish their stuff

[brucie5] 06/1/2023 15:12

What Adam says. Won't add any more on the subject.
Rivaldo, I enjoy your posts, btw. Can accept this was done in good faith.

[adamb1978] 06/1/2023 15:03

I'm with Brucie on this, mostly because of fairness vs people who pay for IC (I don't) or other publications.

We also have a dearth of financial commentary in this country so I don't think its great to repeat paid-for sources on BBs.

Separately, I'm a little surprised that the IC don't have their website set-up to prevent copying/pasting

edit: if its freely available as Rivaldo says, thats a completely different matter

[rivaldo] 06/1/2023 15:03

I completely agree as regards the likes of new content from SCSW, Momentum Investor, Techinvest etc. Although I often post older content from the prior month's issue as it's been superceded - often with a link to encourage people to click and perhaps subscribe, so the publishers get to benefit from the views.

The above IC content was available free of charge to anyone who wanted to see it this morning when I looked, so to post it didn't seem problematic. As a general rule I wouldn't post IC content until say well into the next working day if it was behind a paywall.

[brucie5] 06/1/2023 14:24

Whether good or not, whether content covered by others, or not, is beside the point. It's copyright, time sensitive material. Peeps do the same with Scsw, it's a bit unprincipled, imo, quite apart from legally problematic.
Just thought I'd say.

[deanowls] 06/1/2023 13:15

There’s not one thing in that article that hasn’t been discussed on this board. Tbh not a touch in danger simpsons analysis.

[brucie5] 06/1/2023 13:06

Hmm. Maybe a copyright issue here and also for those who pay to subscribe..?

[rivaldo] 06/1/2023 11:00

Thx davebowler, but that link doesn't work for some reason, so.....



"INVESTMENT IDEAS

Capital Limited in name only

The drilling services company is under the radar, growing well and inexplicably cheap

January 5, 2023

Name aside, it’s not hard to guess why investors might look past Capital Limited (CAPD). As an on-site services provider largely catering to Africa’s gold producers, the FTSE Small Cap index member appears to be in a cyclical sector in a high-risk geography. Its assets are rust-prone heavy drilling rigs, rather than
precious metals. And while its clients seek treasure and exposure to limitless spot markets, Capital hunts for modest margins on multi-year drilling or earth-moving contracts.

But there’s a lot more to the business than first appearances – a point you might think investors had grasped, more than a decade on from the company’s London initial public offering and seven years into a 330 per cent share price rally.

Indeed, by any measure, Capital has talked and walked like a well-managed growth company for some time, and little suggests that its trajectory is about to stop.

How then, does one account for the cheapness of its shares? Despite a lack of debt, they trade in line with book value. And despite rising sales and an expanding operating margin, they trade at less than six times forward earnings, a 40 per cent discount to peers and the stock’s own five-year average of nine. Capital’s price-to-earnings growth (PEG) ratio of less than one also suggests the past year’s share price appreciation has been overly cautious. Not that long-term investors will
have minded; had they reinvested their steadily growing dividends back into the stock, annual returns would have averaged 25 per cent since late 2017.

The answer, we would venture, is that the market has mispriced Capital’s risk premium. Let’s start with the basic mechanics of the business. Capital provides a wide range of services across the mining cycle, from the exploration phase to a mine’s development and eventual production stages. These include the leasing of equipment, geological sampling, fleet management, and drilling and earth-moving
work. Since 2019, it has offered on-site laboratory services, which allow its clients to outsource geochemical analysis and assay work to an independent, licensed contractor.

These services are provided through contracts comprising a mix of management, volume-based and per-sample fees, and are typically signed for between two and five years. But Capital’s close working relationships with its mining customers mean the group always has a clear idea of long-term spending plans, and repeat awards are
common. Contracts also contain provisions that help to shield Capital from the effects of cost inflation.

One historic issue with mining services business is the limited demand visibility. This matters a great deal to services businesses’ own capital-intensive investment decisions: time the cycle wrong, and profits and cash flows can quickly sour. However, Capital is addressing this in two ways.

First, since 2019, a rich source of new contracts has come from the company’s own portfolio investments. By taking equity stakes in miners, primarily at the exploration and development stage, Capital has gained a strong idea of its pipeline and the likely timing of tendering activity, which the company says is always
carried out at arm’s length.

The return on this investment strategy has been excellent. Since Capital began taking stakes in 2018, annual recurring revenues from portfolio firms has jumped from zero to $48mn (£40mn), while the value of its listed and unlisted portfolio
has swelled to $47.3mn, from a cumulative cash outlay of $11.5mn. Granted, these stakes are highly speculative and prone to skew the group’s reported income statement, but the dual benefits of these investments are plain to see.

Second, the group recently appointed resources and logistics veteran Peter Stokes as chief executive. He is based out of Perth, which will not only puts the company close to the capital spending decisions of important prospective future clients, but frees up co-founder and executive chairman Jamie Boyton to look for more contract opportunities around the world.

Currently, the clear majority of mine-site sales are made in Africa, where Capital is the largest independent mining services company and focuses largely on tier-one assets managed by premier mining groups including AngloGold Ashanti (US:AU)Ashanti (US:AU), Centamin (CEY) and Barrick (US:GOLD).

Although there is competition in many of the countries where the group operates, international miners’ preference is to partner with established names with a good track record of safety and local workers. On both these fronts, Capital is a sector leader. The group is also bullish on the outlook for mining capital expenditure, citing the historic depletion of reserves across various metals and massive
forecast demand for materials that will be critical to the global energy transition.

Recent contract awards – and rising utilisation rates for Capital’s growing fleet of drilling rigs – suggest this demand is already on the up. Arguably, the customer base is more concentrated than is ideal, with around half of all revenues coming from the Centamin-operated Sukari mine and another unnamed project. However, these revenues are split across six on-site contracts, so are not as risky as they appear.

More broadly, by selling ancillary services to a hot sector – and having built up a good track record and scale since it began trading in 2005 – Capital Limited is a stock in the best tradition of ‘picks and shovels’ investment plays.

Even without growing organic sales from its dominant drilling business, its canny push into laboratory services looks like a strong driver of growth and is expected to generate more than $80mn in annual revenue by 2025, up from $30mn this year and just $3mn in 2019.

The volatility of the mining cycle means investors should be careful not to forecast too far ahead. But the strength of Capital’s near-term outlook could hardly be more detached from its market valuation."

[davebowler] 06/1/2023 09:21

Inexplicably cheap....

[adamb1978] 06/1/2023 08:43

There is the £1....

[gleach23] 06/1/2023 08:22

It's one we've become all too familiar with here but it would be great if this coverage could get us over £1 leading into the mid-month trading update.

[rivaldo] 06/1/2023 07:23

Cheers gleach, should provide some impetus - I like the phrase "inexplicably cheap" :o))

[gleach23] 05/1/2023 22:02

Looks like some decent coverage tomorrow in the IC -

[hpcg] 05/1/2023 13:54

GDXJ is rising and the charts for some of the holdings are looking somewhat stronger. Only Allied (no chart), Firefinch, Leo Lithium, Predictive and WIA gold really matter, with predictive being most consequential by far. I reckon FY valuations will be somewhere in the $24-36mn bracket with mid to upper mid value favoured depending on the Allied estimate and their actual holdings to which we aren't party. Firefinch has been a big loser. We don't know if CAPD selling had anything to do with some of the moves down.

[rivaldo] 05/1/2023 12:40

i.i.i have set up a momentum screen for small cap shares where:

The 50-day moving average price has risen above the 200-day moving average price
Price strength has been positive against the market over one year, three months and one month
Positive forecast earnings-per-share growth in the year ahead

CAPD are one of the top 10 shares highlighted in yesterday's article, with a P/E of 5.3:

[mtioc] 30/12/2022 08:47

Invested today. Many thanks for an excellent and helpful thread.

A couple of less obvious sources I found useful were: Chrysos listing doc for tech and market(hxxps://wcsecure.weblink.com.au/pdf/C79/02518680.pdf), Chrysos trading up-date (hxxps://wcsecure.weblink.com.au/pdf/C79/02605797.pdf) and Geodrill's latest, bullish up-date (hxxps://www.geodrill-gh.com/wp-content/uploads/2022/12/Geodrill-LD-Micro-Invitational-XV-Oct-2022.pdf).

[rivaldo] 22/12/2022 09:14

Encouraging to see the bid price up to 99p and a tiny spread at 99p-99.4p now.

EDIT - well the 99p bid price was nice while it lasted :o)) Still a 99.2p offer anyway.

[rivaldo] 19/12/2022 07:23

CAPD have been the drilling contractor for Golden Rim at their Kada mine in Guinea.

Golden Rim have overnight announced they've "commenced a 10,000m reverse circulation (RC) drilling program" there. Lots more to come:



"Extensive drill program expected to increase the gold inventory in the Mineral Resource area as well as targeting other prospects along the Kada Gold Corridor.
• Follow-up drilling will be conducted at the Bereko prospect, where initial exploration drilling discovered multiple high-grade zones of mineralisation, including previously reported shallow oxide intersections of 11m @ 6.3g/t gold and 10m @ 5.6g/t gold.
• Drilling will target potential resource extension at the Massan prospect, where Golden Rim has discovered zones of wide gold mineralisation up to 400m outside the maiden Inferred Mineral Resource with 930,000oz1 of contained gold.
• 3,500m of diamond drilling (DD) is scheduled to commence in January 2023.
• First results from the RC drilling program are expected late January 2023."

"19 December 2022
GOLDEN RIM RESOURCES ASX:GMR 2
Golden Rim’s Chief Executive Officer, Tim Strong, said:
“On the back of our recent successful capital raising, we are extremely excited to commence this next phase of exploration at our flagship Kada project in Guinea to test for additional ounces at both the Massan resource area and the newly discovered Bereko prospect. This next phase of drilling aims to increase the inventory of gold ounces across the property.
“If successful, we expect this 10,000m drill program will confirm and expand the Mineral Resource at Massan, prepare us for a maiden Mineral Resource at Bereko, and discover additional areas for exploration within the central portion of the mineralised belt.
“As we receive results during the coming field season, I am confident that Kada will be firmly on the radar of the international community as a major new gold discovery in West Africa.’

[rivaldo] 15/12/2022 13:48

Cheers chaps, appreciated.

A brief mention in today's Shares Magazine from George Ensor, Portfolio Manager at R&M UK Micro Cap - certainly is a "low valuation"!

"Our top performer in 2022 has been Capital (CAPD), a business that provides production and exploration drilling services for gold miners. High fleet utilisation has driven improving return on capital and cash generation and the shares remain on a low valuation despite the strong performance."