Capital Share Discussion Threads

[hpcg] 21/2/2023 13:17

The consolidation above 100 was healthy. We now also have the potential for those that traded out above 110 having to rapidly reload while still generating some alpha.

[gleach23] 21/2/2023 12:51

Large volume going through today @ 105p and then a lift in share price Perhaps an overhang clearing ahead of FY results in 3 or 4 weeks.

[rivaldo] 21/2/2023 07:24

PDI's shares rose 10% overnight on good drilling results from Bankan. CAPD are the driller, and they also own a £15m or so stake in PDI at the current price.

Drilling is continuing, and there's potential for more:



"“Regionally, the Bankan Project has significant potential for additional gold discoveries. Geophysics surveys are underway on the northern Argo permit, and we look forward to receiving results and commencing RC drilling at these exciting targets.”

Plus it seems CAPD have been buying more shares in Golden Rim:



CAPD now have 87.2m shares, worth around £1.5m at the current price.

[rivaldo] 20/2/2023 09:54

Excellent results overnight from CAPD investee company Golden Rim's drilling for gold at Kada, where CAPD are also the drilling contractor.

Lots more drilling now scheduled for the coming months:



"RC drilling at Bereko and Massan is now paused until further assays are received, and the Company will then commence a 5,000m air-core (AC) drilling exploration program. This AC drilling will test newly identified targets on both the Kada and the Bamfele licence areas.

Golden Rim expects to commence a 3,500m diamond drilling campaign at Kada in mid-February 2023. At Bereko, diamond drilling will focus on confirming the width, grade and extensions of the gold mineralisation discovered in the initial RC drilling program and providing structural information needed for resource estimation."

[rivaldo] 14/2/2023 12:38

Very encouraging chart/info for the sector in this new tweet from CAPD:



"Capital Limited
@_CapitalLimited

S&P Global’s Jan drilling report showed a strong start to 2023, with a number of record highs, including no. distinct drill holes reached 8,678, highest since records began in 2014, total projects a 4-month high & no. projects increasing m-o-m across all development stages. #CAPD"

[kaizenkid] 08/2/2023 08:59

the latest Sprott view on PDI: [...]

While the majority of pre-DFS peers focus on never ending drilling, Predictive, like some of its fast-to-permit
peers in Africa, is laying the foundations for a DFS / permit / production – because they can. In 2H22, this
saw the company focus on infill, and even early grade-control RC drilling. The positive of this is shorter
time to production, the negative is that we don’t see headline resource growth. But, therein lies our thesis
– if not one new ounce was added in future, we can see a pathway to >3x the current market cap. However,
investors can have their cake too as new hires on the regional team, and soon-to-complete geophysics,
lays the foundation for regional drilling starting soon. With Hummingbird and Robex nearby, and our
personal view that this belt may represent the southern extension of the prolific Kenieba Inlier in Mali
(Loulo-Gounkoto, Fekola), regional drilling offers very real upside potential. The team continue to run lean,
with quick math showing A$9m of drilling in 4Q equates to perhaps ~US$200/m for the c. 33km variably
drilled / reported during and immediately post quarter. As such, we maintain our BUY rating but lift our
0.4x multiple to 0.5x to reflect increase confidence in the resource, lifting our PT from A$0.45/sh to
A$0.55/sh. With drilling over the recent 6M clearly infill, we would suggest that today’s 9% drop in price
is unwarranted / retail driven. Coming on the back of ~A$10m of 1.8c warrants expiring on December 24,
this presents probably the last buying windows for institutional investors. We estimate a spot P/NAV
(undiluted for G&A/build) of 0.16xNAV5%-spot, or ~A$1/sh in production, fully-diluted for mine build. Looking
forward, the 2H23 scoping study (and PFS/DFS thereafter), should be key catalysts this year, even before
exciting, but speculative, regional drilling. Permitting and mining licences are also key, recently taking a
step forward after the ESIA was endorsed by the government post a multi-agency site visit.

[johnkidd1] 06/2/2023 16:32

Return on equity over 30 percent. PE ratio less than 4.Gaining good quality contracts. Really cheap. Can see this doubling in value....

[phillis] 06/2/2023 11:12

wakey wakey!

[owenski] 31/1/2023 10:05

Gold prices don't look like they're coming down do they.

[fozzie] 31/1/2023 09:55

There was a brief moment 10 days ago when I thought we had cracked it, now not so much, hey ho, still so unloved here.

[rivaldo] 31/1/2023 08:55

Good RNS from CAPD's point of view from long-term client Resolute Mining re Syama today:



"I am pleased to report that Resolute has recorded its fifth consecutive quarter of increased production, closing out a productive year for the Company with 353,069oz gold poured, exceeding our 2022 guidance of 345,000oz."

"Total exploration spend for the December quarter was $3.9 million, with intensive drilling programs continuing in Syama throughout the Quarter. The full year exploration expenditure was marginally higher than the $15 million guidance due to accelerated drilling at Syama North in the December Quarter based upon the positive results being returned."

"The Syama North gold deposit remains open down-dip over the entire 6km strike length. Diamond drilling is ongoing and expected to continue throughout 2023 to extend and increase Mineral Resource confidence in the deposit."

[johnrxx99] 30/1/2023 08:53

Glad I top-sliced. Coming back into range soon.

[rivaldo] 30/1/2023 08:26

CAPD own 141m shares in PDI worth £16m and are the drilling contractor at Bankan in Guinea.

PDI announced overnight "outstanding drilling results", with further drilling planned, and the shares rose 5%. Plus there's this commentary which reflects well on CAPD:



“Overall, our current drilling program is ahead of schedule due to recent strong performance and improved productivity by our drilling contractor.

“I am also delighted with initial progress made by our new regional exploration team, and look forward to activity ramping up in 2023 as we seek to prove up the enormous potential of the overall Bankan Gold Project.”

In addition, Leo Lithium's shares have risen nicely recently - they were up another 8% last night and are now worth exactly £4m.

[rivaldo] 26/1/2023 09:56

CAPD are the drilling contractor for Shanta at their West Kenya project, who announced today a 91% increase in indicated Resource/ounces. Which presumably puts CAPD in pole position as the mine develops into full production:



"Eric Zurrin, Chief Executive Officer, commented:

"The West Kenya project continues to deliver material growth and quality results, with the latest Mineral Resource Estimate demonstrating a substantial 91% increase in the Indicated ounces category and an overall increase to 1.72 Moz. Not only was there a significant conversion of the deposit into Indicated ounces, but these ounces yet again demonstrated high-grades, averaging 11.45 g/t Au.

The drilling results that have been delivered at the West Kenya project over the past year have been some of the best we have ever delivered, and it is clear to the team here at Shanta that we possess a potentially very high quality high-grade African gold mine. The high-grade Indicated category from today's results points towards a high margin cash flow during future operations."

[rivaldo] 25/1/2023 14:30

Canaccord say Buy and have a 140p target:



Lower than other analysts, but still decent upside and good to see more coverage. Hopefully they'll upgrade after the results as is usual practice.

[rivaldo] 24/1/2023 09:56

Great analysis of the trading update from Mark Simpson's Small Caps Live - here's the conclusion:



"The company is starting to be more than a drilling company, with MSALABS showing continued growth:

• MSALABS now has four units commissioned across Africa and Canada, with three further units due to begin operations in Q1 2023, including Barrick's Kibali Gold Mine;

• Trials with major mining companies are continuing with PhotonAssay in high demand globally. The expanded relationship with Chrysos will see MSALABS deploy 21 units by 2025, giving the company a strong competitive position in the coming years;

The guidance for revenue for the year just gone from MSALABS is around $30m, which from four newly commissioned Chrysos units and their existing fire assay business makes their 2025 estimate of $80m revenue from 21 Chrysos units look very conservative. Of course, the first units will go where they get maximum utilisation. But still, it is easy to see a route to $100m+ revenue here. With 25-30% EBITDA margin, their 75% stake in this business could represent a significant part of the current market cap.

Anyway, in summary have yet another beat, pretty significant on a quarterly basis, confirmation of further imminent progress at MSLABS and an upbeat outlook statement.

Despite this, the initial share price increase in response to this positive statement was met with selling. Partly this reflects that the share price had been strong in the run up to this trading statement and investors were “buying the rumour and selling the fact.”

It goes to show that the company’s shares are still pretty illiquid. It seems a few smaller investors may have been overweight and would be sellers at any price on the day. If this is the case, then it is easy to see why the share would be volatile.

However, those sellers may come to regret it, since this remains one of the cheapest shares on the market with excellent short and medium-term business momentum."

[rivaldo] 24/1/2023 09:08

Nice tweet from CAPD about the booming number of mining financings (with a bar chart I can't replicate):



"S&P Global’s Dec 22 financing data - 62% increase in funds raised by junior & intermediate miners, & a 75% increase in the no. of transactions, a 12-month high. Material increase in significant financings (US$2M +) to 90, from 58 in Nov. Gold financings up 146% on Nov to US$374M."

[johnrxx99] 24/1/2023 07:40

Posted on 24th January 2023 | By Bruce Packard
Capital Ltd FY Dec Trading Update

This African gold mining support services company, that was Mark Simpson’s pick for this year, announced a Q4/FY Dec Trading Update. I also own the shares. FY revenue was up +28% to $290m, which was the top end of the increased guidance range ($280-$290m v $270-$280m guided in H1). Pleasingly Q4 revenue v Q4 last year was up +19% to $79m. There’s no mention of PBT in the RNS, but there wasn’t in last year’s FY trading update either.

Outlook: The drilling business (72% of revenue) has a strong outlook for 2023 according to management. Their MSALABs (28% of revenue) also is seeing strong demand. This is an assay business, which tests for the quality and proportions of precious metals in ore. The price of gold has risen +16% to around $1,900 an ounce, so this bodes well for gold miners like Barrick and B2Gold, who are large customers of CAPD. Revenue and CAPEX guidance will be announced on 16th March when they report FY results.

Valuation: The shares are trading on 7x 2023F and 2024F PER. Return on Capital Employed is an impressive 22%, for a company on a such low PER rating. One concern is that CAPEX of $42m FY Dec 2020 and $46m FY Dec 2021 has been higher from net cash generated from operations, hence net cash from investing has outpaced cash generated in the last two years. Below is a long-term chart showing CAPEX v depreciation.

Hence the disconnect between RoCE and CashRoCI -7.7% and rising net debt ($36m at H1). I think that this is a timing difference, however, it is worth keeping an eye on and probably explains the low valuation as investors (rightly) prefer to focus on cash versus accounting profits.

Investments: Also worth noting that CAPD management often take equity stakes in their gold mining customers, which gives an adjusted net cash (ie including investments marked to market of $11m at H1). As of the end of December, the value of their investments (listed and unlisted) has fallen to $39m v $60m at the end of Dec 2021), partly because they were a net seller and partly because gold mining shares have fallen in value.

Opinion: Mining rigs in Africa and the current poor cash generation may be beyond some readers’ risk appetite, so please do your own thinking. However, I like it and CAPD strikes me as an interesting way of having some exposure to the gold price, without buying a gold mining company. Sharepad has the price of gold in US dollars, but below is a log chart showing the price of gold in GBP per ounce is up almost 8x in the last 20 years. I’d imagine that was a similar level to the 1970s when capital controls were in place.

Posted on 24th January 2023 | By Bruce Packard @ Sharescope

[kaizenkid] 23/1/2023 13:09

The wording around dividends is the same every year on the Q4/FY trading update in January.

[phillis] 21/1/2023 13:07

Cash dropped $6.5 m to $23m at the half year after big capex

[adamb1978] 20/1/2023 21:01

The reason they use that wording is that the board need to approve it. And for the board to approve it, they'll need to see liquidity analysis for the next 12-18 months

But I agree to some extent:
- if the divi was going to be broadly flat or slightly up, there's no point adding this comment
- if they intended this to come across as some meaningfully increased divi, they could have worded it a lot better

[podgyted] 20/1/2023 19:29

But it might - so why say it at all!

(Edit: Just to be clear I think they'll announce a dividend)

[phillis] 20/1/2023 18:58

Of course they will pay a dividend ( however miserly)
It doesn’t imply that at all