Capital Share Discussion Threads

[adamb1978] 19/1/2024 10:44

Thanks QS99. I wouldnt mind an offer landing on the table! Presumably an acquiror could take out a pile of the target's admin costs so could materially boost the bottom line

[qs99] 19/1/2024 10:21

I'm hoping that Thamesis note (thanks Riv and good morning) is intimating that CAPD WILL get taken out if its share price stays depressed and the market won't recovnise its cheap valuation.

2.6X EV/EBITDA is nuts in my view.

So happy to hold, add to & get the yield, and wait for Mr market to wake up or a competitor.

DYOR
Cheers
QS99

[adamb1978] 19/1/2024 09:17

Agreed Fozzie! Another way of looking at it though is that if you believe the NAV per share (around 100p per share from memory) provides something of a floor (or at least the price can only go a certain amount below that), then you're being paid the 3.5%-4% dividend for holding.

[rivaldo] 19/1/2024 08:56

Tamwesis Partners retain their 160p target price, and conclude:

"Valuation

As Peter Stokes, CEO, comments: “The Group has delivered outstanding compound annual revenue growth of 33% since 2020 and we are confident of maintaining our growth momentum as we start 2024”. The breakthrough into North America is particularly noteworthy and more than offsets issues in West Africa to our mind.

The shares are trading on 2024 PE and EV/EBITDA multiples of 6.8x and 2.6x respectively with a dividend yield of 3.4%. Not sure there are that many companies, certainly in the industry, generating 33% CAGR in revenue and paying a decent dividend.

Meanwhile the sector consolidates (it was a hard year generally for drlling contractors) thereby improving potential industry returns and the economic rent of those operating within it. After DDH1 was taken over by Perenti the no.1 drilling company in the sector, Boart Longyear, is to be taken private by a consortium of Private Equity investors. We retain our PT of 160p."

[thepopeofchillitown] 19/1/2024 08:47

I've been in and out of this over the years but always kept my eye on it. I can't think of a more frustrating share where the price movement usually appears random. Just look at the rather messy chart. A great update, it barely moves. Misses FY revenue by a fraction of a percent down it goes.

[fozzie] 19/1/2024 08:45

But we have been saying that for years Adam, easily the most frustrating share in my portfolio.

[adamb1978] 19/1/2024 08:16

Yes, the miss is annoying rather than substantive and doesnt really change the investment case either way.

Will keep my holding. Company is cheap, but as mentioned before I'm not a fan of governance at CAPD and think there's big questions around their capital allocation decisions.

However its trading below NAV and I think the share price should be a good bit above 150p

[thepopeofchillitown] 19/1/2024 07:32

Not to split hairs, but FY revenue was missed, not Q4. Although, as you say, barely worth mentioning.

[rivaldo] 19/1/2024 07:23

Per the trading statement a teeny-tiny miss on Q4 revenues is hardly worth worrying about in the grand scheme of things.

Particularly given today's news of a Centamin drilling contract extension through to 2029, alongside a further contract win with Perseus Mining and a very positive trading outlook with Labs in particular still looking great - and all on the cheap fundamentals everyone is aware of.

The investment portfolio held up nicely, now worth over $47m, and $3.1m of H2 investment gains will help the bottom line.

To sum up:

"The Group has delivered outstanding compound annual revenue growth of 33% since 2020 and we are confident of maintaining our growth momentum as we start 2024. This is not only through our active tendering pipeline but also our stellar safety performance, blue-chip customer base and focus on long term mine site contracts, as highlighted by the substantial contract extension at Sukari, underpinning the business for this further growth."

[rivaldo] 10/1/2024 07:43

CAPD won this exploration drilling contract with Centamin only last summer, so it's likely they've been doing other exploration drilling for them too:

"New contract win:

- A reverse circulation exploration drilling contract with Centamin, at the Nugrus Block in the Egyptian Eastern Desert"

Worth keeping an eye on CAPD's shares in WIA Gold - they've been rising nicely recently to A$0.5, and are now worth almost £5m.

[deanowls] 09/1/2024 14:48

Who does cey’s exploration drilling? I also see from today’s announcement that sampling is flown to Ireland, I would have thought a local lab would make sense on the scale of exploration?

[rivaldo] 09/1/2024 14:12

Good to see the share price edging up slowly most days now.

Small Caps Live Weekly Summary on 29th December from Mark Simpson had this to say:

"Capital Limited (CAPD.L)

Could this be the year that we finally see the expected re-rating? For several years now this company has remained on a large discount to similar listed peers. The market has had several concerns. The first is the Africa-focus; the second is that they have been taking on debt to invest in growth; the third is that management had a tendency to sell on good news.

In all three, we have had good news recently. With large contracts in North America due to start, this is now becoming a more balanced portfolio. Their Centamin earth-moving contract is due to end in the middle of 2024, and the sale of the equipment could mean that they start to reduce debt (although at these levels, a buyback probably makes more sense.) With the current gold price strength, the current cycle seems far from over, so they have been proven right in pursuing growth over the last few years, but only long-term contracts with Tier 1 producers. Finally, management buys have outweighed sales recently. Could this be the year they are given credit for all the work going on behind the scenes and their record of good capital allocation?"

[concentrate] 05/1/2024 19:18

Allied Gold are involved in the Endeavour issues - by making the disputed transaction on Endeavours behalf.

Per the FT:

Allied Gold said it “received payment instructions in compliance with the obligations outlined in the purchase agreement” and payment was made in line with the instructions and agreement.

[qs99] 04/1/2024 11:00

Have also loaded up having dropped out over last year or so, good to be back and CAPD progress has been great. Weaker $ in 2024 should IMO help commodity environment DYOR

[rivaldo] 02/1/2024 10:23

With gold now up to $2,075 the environment for CAPD's clientele couldn't be much better.

Welcome Robsy2. Hopefully 2024 is the year when the market re-rates CAPD on the basis of its excellent prospects and track record, cheap fundamentals, the value of its $50m investment portfolio and in particular the increasing diversity and reduced risk of its geographies and the fast growth now being realised in its MSALabs/Chrysos division.

[mirfield] 28/12/2023 11:53

The recent trades at 89.24p showing as sells are actually buys ....

[robsy2] 28/12/2023 09:20

Hi Rivaldo. This looks very cheap so I've loaded up over the past few weeks.

[rivaldo] 28/12/2023 07:21

Good news overnight from CAPD's investee company Awale Resources.

CAPD are also the drilling contractor at Awale's Odienne project, and after recent investment from the behemoth Newmont Mining, Awale have announced a new drilling campaign at Odienne which is now a JV with Newmont (and Awale's share price rose almost 4% on the news):

[napoleon 14th] 22/12/2023 15:14

Interesting, from the usually very forensic "Small Caps Life":

Capital Limited (CAPD.L) - Contract Award
This is a sizable contract win for their 82% owned subsidiary:

The contract is anticipated to generate ~$140 million over the five-year term, with annual revenues of ~$30 million once fully operational, making it the largest award of new business in the history of MSALABS.

With the initial operations in place relatively soon:

"Phase I of the project will commence towards the end of H1 2024 with the commissioning of two Chrysos PhotonAssayTM units and a capacity of 80,000 samples per month."

We knew these three machines were coming to Barrick in Nevada since they were announced in October. However, this announcement gives the figures. Interestingly, this isn’t just a Chrysos implementation but will feature more traditional fire assay as well. It seems the traditional lab is added purely for multi-element testing. Chrysos claim their technology should be capable of handling many different elements, but it is currently only used for about 2 or 3 elements.

One of the things that stands out is the capex is relatively light:

"Capital expenditure for the project is expected of ~$7 million in 2024."

With revenue of $30m/year, and assuming MSALABS generates similar EBITDA margins to the rest of the group of 20-25%, that means $5-6m EBIT/pa for $7m incremental Capex. The ROIC of this deal appears to be somewhere north of 50%. Sooner or later, the market may have to re-evaluate its opinion that this company should only ever trade at 2xEBITDA because it is “capex-heavy”.

[e-mail]

[rivaldo] 22/12/2023 07:50

CAPD are the drilling contractor at HUM's Yanfolila mine, and per HUM's new update things are going well, with additional drilling expected:



"Yanfolila Gold Mine, Mali

· 78,220 ounces of gold ("oz") were produced at Yanfolila to 30 November 2023 at an average AISC of c.US$1,340 per oz and the Company is on target to meet FY-2023 production guidance of 80,000 - 90,000 oz and AISC under US$1,500 per oz.

· Key areas of focus remain the development of the Komana East Underground ("KEUG") operation and the continuation of mining performance across the mine."

"We plan to continue delivering targeted, cost effective drilling campaigns at known and future deposits with existing positive exploration results targeted at Yanfolila, and increasingly at Kouroussa. As we look forward, our team has developed detailed exploration plans which we will look to increasingly execute and remain confident of maintaining and extending Yanfolila's LOM and in particular extending Kouroussa's LOM to reach our target of a +1 million ounce Reserve base at that asset."

[bo doodak] 21/12/2023 17:43

That's a great RNS. In due course as MSALABS continues growing I hope they conclude a demerger is the way forward.

[benjonesinvestments] 21/12/2023 16:29

Good announcement. Revenue from labs business looking on track - estimating $3m annual revenue per Chrysos unit and $1m annual revenue from each traditional lab. The key for MSALABS is to make sure they're operating at high capacity, given the labs break even at around 50% capacity.

Also nice to see that the strong relationship with Barrick is still very strong

[hpcg] 21/12/2023 15:34

This line near the bottom of the RNS hasn't got much attention:

These three new PhotonAssay units mark the start of a broader partnership agreement with Barrick Gold, with trials underway for a possible ten further PhotonAssay units by the end of 2025 across multiple of Barrick's other operations."

[rivaldo] 21/12/2023 10:19

Glad to see Tamesis' research again davebowler, but I already posted it above only 54 minutes earlier, and distilled into a much more readable format :o))