Capital Share Discussion Threads

[dangersimpson2] 06/10/2020 13:20

It would seem that way, share price fell on the news that Centamin would be reducing production at Sukari due to wall slippage. I expect the short-term negative impact of this to be limited, and the medium term may be positive since Centamin will require and adaption to their mine plan, or development of additional resources, in order to keep their production plant fed. These options are likely to require additional drilling above and beyond what was originally planned.

Gold remains above $1900, and the CAPD securities portfolio remains above $26m in value or 21% of the current market cap, so the outlook for drilling demand remains positive in current market conditions.

[hpcg] 06/10/2020 13:17

A lot of support at this level. Gold price holding up very well, much more than it needs to for Capital's customers to be expanding their operations.

[dmdmdmdm1] 06/10/2020 12:24

Good place to top up?

[qs99] 05/10/2020 08:21

looks like panic may be over? DYOR

[qs99] 02/10/2020 14:13

Looks like some buyers returning

[qs99] 02/10/2020 11:51

volumes reasonably low here as well, so does look like MMs marking things down "just in case"....good weekends all

[hpcg] 02/10/2020 11:20

Offshore similar Frazboy except standby would normally be specific to weather or permitting. Every contract is different though and in tough markets contractors will eat more risk. That isn't really the case here, Centamin will have to work harder on lower grade areas.

[frazboy] 02/10/2020 11:00

That's the optimistic read of the contractual terms hpcg. My experience (land rigs, oil industry), is that although the contracts can be long, the operator can put the rigs on standby, and thus the day rate paid is greatly reduced, or the contract can be terminated with the operator having to pay a fee and mobilisation expenses. It could be different in the mining industry tho?

Having said that, I agree with you, there isn't any news in that update to make me think that's the likely outcome, it was after all an open cast mine.

Happy to be corrected by more knowledgeable folk. And happy to hold.

[qs99] 02/10/2020 10:59

Agreed hpcg. new contracts announced and off we go me thinks

[hpcg] 02/10/2020 10:51

I was looking to buy more, however just been quoted 71p, right at the top of the spread, and that isn't good enough value given my holding. So to me it looks like the market makers are primarily protecting themselves from itchy fingers rather than responding to investor action. I'll see if there is any biting at the mid, which is possible looking at the trades thus far today.

[hpcg] 02/10/2020 10:41

I'm not sure they will get any hit from Sukari. I don't think Centamin will be doing less drilling or rock moving. Drilling might well need to increase. Also from the 2019 annual report risk mitigation sections:

For fluctuations in mining activity:
The Group is seeking to balance these risks by building a portfolio of long-term drilling contracts and expanding into new geographic areas.

For key customers:
The Group has entered into long-term contracts with its key customers for periods between two to five years. Contract renewal negotiations are initiated well in advance of expiry of contracts to ensure contract renewals are concluded without interruption to drilling services.

[qs99] 02/10/2020 10:28

Needs some new contracts to help me thinks.

[gleach23] 02/10/2020 10:26

Q3 Trading Update due in mid Oct will hopefully provide a fillip

[qs99] 02/10/2020 09:45

Have had a look through their a/cs and can't really see any clues, other than exchange rate risks and liabilities and it isn't a big old chunk, but still likely to have an effect if cancelled...DYOR

[shanklin] 02/10/2020 09:02

rivaldo

As previously discussed, one wonders whether miners commit to using equipment for a given contractual period or just pay a day rate for its use... ...or what? If its the former, there might be minimal or no impact on CAPD. If the latter then not so great.

When you say "material", any thoughts on what proportion of CAPD's revenue comes from CEY?

[rivaldo] 02/10/2020 08:39

Bad news from CEY this morning, with a big reduction in production at Sukari for Q4 and likely into 2021 from one area of the mine.

Likely to have a material impact on usage for CAPD, though all the contract wins we've seen recently and the bullish outlook in general will hopefully offset this to an extent.

Particularly if CAPD announce one of those large service contracts they've been talking about:

[rivaldo] 01/10/2020 12:15

New summary of CAPD on Proactive Canada dated 22nd September, including this from Berenberg:



"What the broker says

Capital is “on the cusp of a meaningful equity re-rating”, analysts at Berenberg wrote in September, with growth potential from its core drilling business and the fledgeling mining services operation.

The German bank issued a note exploring three scenarios: growth in utilisation rates for the drilling business, the winning of two US$40mln-per-year mining contracts; and a ‘dare to dream’ scenario combining both of these scenarios.

A mixture of a high gold price and improving capital markets are “pointing to a repeat of previous cycle highs” for Capital’s drilling business, in which case this could see utilisation rates increase from around 60% closer to 75% with limited capital investment.

If so, this would results in Berenberg’s revenue forecasts for 2021-22 increasing 24%, underlying profit (EBITDA) by 36% and free cash flow by 61%.

The broker has a ‘buy’ rating and 93p price target."

[mfhmfh] 30/9/2020 10:15

positive results from CORA on 24th September.

Hopefully, means more work for CAPD:

[qs99] 30/9/2020 07:49

Thanks Riv, good spot

[rivaldo] 30/9/2020 07:43

Good news this morning from Altus Strategies - successful results, but more to the point, further exploration drilling to commence in this Q4:

[qs99] 29/9/2020 12:00

gold price trying to nudge above $1,900 again

[rivaldo] 24/9/2020 12:38

Good spot ds2, cheers. That should be a nice bonus for Q4 just before the year end.

[mfhmfh] 24/9/2020 11:48

Ross Norman of MetalsDaily.com:

"Mining is getting harder in the sense that many of the large, low-cost mines, and older ones such as in South Africa, are nearing exhaustion..."

Experts note that there are relatively few unexplored regions left for mining, and possibly the most promising are in some of the more unstable parts of the world, such as in West Africa.

CAPD in the right place at the right time. IMHO.

[dangersimpson2] 24/9/2020 11:36

One more brick being cemented into the 'absolute wall of demand for Q4':



Oriole Resources PLC (AIM: ORR), the AIM-quoted exploration company focussed on West Africa, is pleased to announce that it has signed a 3,000 metre ('m') diamond drilling contract with Capital Limited ('Capital') with respect to its Bibemi exploration licence in Cameroon ('Bibemi' or 'the Project'). It is anticipated that mobilisation of equipment will take approximately six to eight weeks, which will enable the Company to commence its planned maiden drilling programme at the Project during Q4-2020 (announcement dated 11 May 2020).

[shanklin] 18/9/2020 11:29

Presumably not quite like this though?

Nice to know that at least its under 3% now.