Capital Limited transformative contract award – Centamin in Egypt

Capital Limited

Capital Limited (LON:CAPD), a leading mining services company focused on the African markets, has announced that it has entered into a conditional open pit waste mining services contract with Sukari Gold Mines and has also expanded and extended its existing drilling contract with Sukari. Sukari is the operating company for the Sukari Gold Mine in Egypt, one of the largest gold mines in Africa and the principal asset of Centamin Plc (LSE: CEY, TSX: CEE).   

Collectively, the Sukari Contract and the Amended Sukari Drilling Contract are anticipated to deliver incremental revenues of US$235 – 260 million over a four-year period commencing 1 January 2021, representing the largest award of new business in the Company’s history.

The Company also announces a proposed placing to raise gross proceeds of approximately £22 million (approximately US$30 million) before expenses, via the issue of an aggregate of approximately 38.5 million new common shares in the Company at a price of 58 pence per share. The Placing is to be conducted by way of an accelerated bookbuild process, launched with immediate effect. Joh. Berenberg, Gossler & Co. KG, London Branch and Tamesis Partners LLP are acting as Joint Bookrunners in relation to the Placing.

The Sukari Contract and the issue of the Placing Shares are subject, inter alia, to shareholder approval. A circular containing a notice of General Meeting will shortly be posted to Shareholders and placed on the Company’s website. Information to be contained in the Circular is set out below. The Amended Sukari Drilling Contract is effective from 1 January 2021 and is not subject to shareholder approval or any other conditions precedent.

HIGHLIGHTS

·      Capital awarded a 120Mt open pit waste mining contract at Sukari Gold Mine providing load & haul and ancillary services

·      The Sukari Contract has a term of four years, expected to commence in January 2021

·      Existing drilling contract at Sukari extended to 31 December 2024 (from 30 September 2023) and expanded by nine additional rigs, bringing the rigs operating at Sukari to 24 in total

·      Collectively, the Sukari Contract and the Amended Sukari Drilling Contract are expected to deliver incremental revenues of US$235 – 260 million (vs 2020 revenue guidance of US$130 – 140 million) based on Sukari’s mine plan at the point of tender submission.

·      New business awards at Sukari build on Capital’s longstanding customer relationship with Centamin and represent a strong endorsement of the Company’s offering

·      To date the Company has spent US$23.4 million towards equipment and has made strong progress with early works, key personnel hiring and advanced operational planning

·      Further solidifies Capital’s revenue base, which is dominated by long term contracts at Tier 1 operations

·      Capital is currently active in several earthmoving tender processes with new and existing customers as it continues to evolve into a full-service mining contractor  

·      Proposed Placing to raise approximately £22 million (approximately US$30 million) before expenses at a price of 58p per share by way of an accelerated bookbuild process to be launched with immediate effect

·      The net proceeds of the Placing will be used to purchase equipment to fulfil obligations under the Sukari Contract and Amended Sukari Drilling Contract and for general corporate purposes

·      The Sukari Contract and Amended Sukari Drilling Contract are expected to be revenue and earnings accretive in 2021   

Commenting on today’s announcement, Jamie Boyton, Capital Limited Executive Chairman, said:

‘The winning of the tender for the Sukari open pit waste mining contract is a significant milestone for Capital – it is the largest contract win for the Group since inception, adds substantial scale to our mining services division, as well as providing revenue diversification from our drilling services business. We are also pleased to have increased the scope and scale of our existing drilling contract. Having operated at the Sukari mine since 2005, which started commercial gold production over a decade ago, Capital is pleased to be deepening further its strong client relationship with Centamin in assisting with the generation of significant value to Centamin over the medium and longer term as the Sukari mine enters its next phase of gold production.

The proposed fund raise provides Capital with the opportunity to broaden and deepen its shareholder register. Both the equity raise and the mining services contract will further consolidate Capital’s position as one of the leading mining and drilling services operators on the African continent. The Capital team is looking forward to mobilising the required equipment and operational staff to start the work required at Sukari.’

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