Capital Drilling : 2019 FY Results Presentation

Capital Drilling Ltd 2019 Annual Results

19 March 2020

Disclaimer

IMPORTANT NOTICE

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2

Section 1 - Summary

Introducing Capital Drilling

Capital Drilling provides full service mining and drilling solutions to customers within the global minerals industry, focussing on the African markets

• Mining services company delivering:
• • Exploration & Delineation Drilling
  • Underground Drilling
  • Production Drilling
  • Load and Haul Services
  • Maintenance Services
  • Geochemical Analysis
• 15-yearhistory drilling in Africa, commenced operations in 2005
• Listed on LSE in June 2010
• Operations across nine African and Middle Eastern countries
• History of strong financial performance and investor returns

REVENUE

$114.8 million

Within guidance of $110 - $120 million

Expand range of services

MAJOR CLIENTS

KEY METRICS

NET PROFIT		NET CASH
$10.4 million		$4.4 million
Up 34% on 2018 ($7.7 million)		After $19.8 million capex spending
STRATEGIC PRIORITIES
Increase recurring mine-site		West African business
based revenue		growth
REVENUE BY CUSTOMER		REVENUE BY MINING PHASE
MAJOR & MID-TIER		PRODUCTION &
CLIENTS		UNDERGROUND MINING
96%		77%
Revenue derived primarily from		Less exposed to fluctuation in the
Tier 1 and Mid-Tier clients		mining cycle

4

Our Strategy

STRATEGIC FOCUS AREAS

DELIVERING AGAINST STRATEGY 2019

African Focused

• Strong established presence in East Africa and Egypt
• Expansion into West African region

• New entry into Burkina Faso and Namibia
• Continued infrastructure build in West Africa

Quality Providers	•	Deliver first world project execution standards in the emerging	•	Maintained first class project performance including high
	markets		availabilities and strong ARPOR
Industry Leading HSE	•	World class safety processes and procedures on every site	•	LTI-free milestones achieved at all long-term contracts during
	2019
		•
			Record AIFR result of 0.14, well below industry standards

Best in Class Fleet / Maintenance

•	Investment in Tier 1 on-site maintenance infrastructure	•	Continued active fleet management process including new asset
•	Rig maintenance and rebuild programs maintaining industry		purchases
	leading standards

Superior Portfolio of	•	Blue chip, mid-tier mining companies	•	Added four long-termmine-site based contracts in 2019
Contracts
Robust Balance Sheet	•	Strong cash generation	•	Strong cash flows funding new asset purchases and paying
•	Conservative approach to gearing		dividends
Increase Service Offering	•	Expand range of complimentary services	•	Addition of load and haul services
•	Growth in Geochem analysis activities
			•	Establishment of Mine Site Maintenance subsidiary

Our Services

EXPLORATION DRILLING	MINE SITE	BLAST HOLE	MINE SITE	UNDERGROUND	ANCILLARY
SERVICES	DRILLING SERVICES	DRILLING SERVICES	SERVICES	DRILLING SERVICES	SERVICES
Exploration Drilling	Delineation Programs	Blast Hole Drilling	Load and Haul Services	Underground Core Drilling	Mineral Analytic Services

Directional Software

Grade Control Drilling

Shot Loading and Firing

Equipment Hire

Underground RC Drilling

Maintenance Services

FULL RANGE OF SERVICES ACROSS THE MINING CYCLE

6

Expansion Into Mining Services

• Building capability in load and haul services, enabling a fully integrated service offering
• Mining service contracts typically provide significantly larger revenue opportunities
• • Exploration and delineation drilling contracts < $10 million p.a.
  • Production drilling contracts $10 million to $30 million p.a.
  • Load and haul contracts >$40 million p.a.
• Establishment of mining division, Capital Mining Services (CMS), largely complete with key roles filled and further recruitment in progress
• Commenced acquisition of Heavy Mining Equipment (HME) assets to build fleet, including dozers, graders and excavators. Additional equipment on order with delivery in H1 2020.
• Commenced operations at Allied Gold Corp's Bonikro Gold Mine (Côte d'Ivoire) in H2 2019. Current scope of services (Q1 2020)
• • Exploration drilling
  • Blast hole and grade control drilling
  • Mining equipment hire and maintenance contract
  • Mining and maintenance management contract

INCREASED CAPABILITY PROVIDES BROADER OPPORTUNITIES WITH LARGER CLIENT BASE

7

Industry Leading Safety Standards

LTI FREQUENCY RATE TREND (2009 - 2019)

0.41

0.29	0.25
0.18	0.2
0.11	0.13
0.09
0.09

0.05

0

FY 09

FY 10

FY 11

FY 12

FY 13

FY 14

FY 15

FY 16

FY 17

FY 18

FY 19

* LTI per 200,000 man hours worked

COMMENTARY

• Loss Time Injury Frequency Rate (LTIFR) of 0.05 in 2019
• All Injury Frequency Rate (AIFR) of 0.14, well below industry standards
• Geita Mine Site obtained ISO 45001, 9001, 14001 and SA 8000 certification
• Achievement of a number of safety records including:

˗	Tanzania, Mwanza Facility	11 years LTI free in January 2019
˗	Egypt, Sukari Project:	2 years LTI free in January 2019
˗ Tanzania, North Mara Project:	3 years LTI free in March 2019
˗	Tanzania, Geita Project:	2 years LTI free in March 2019
˗	Mauritania, Tasiast Project:	2 years LTI free in June 2019
˗	Mali, Syama Project:	3 years LTI free in June 2019

8

Well Established Contracts, Tier 1 Operations

WEST AFRICA

Mauritania	Mali
•	Commenced in 2010	•	Commenced in 2016
•	Grade control and delineation drilling	•	Underground, delineation and
•	Maintenance services		exploration drilling

• Laboratory services

Côte d'Ivoire

• Commenced 2019

• Exploration, grade control and blast

hole drilling

• Equipment hire, maintenance service

and management services

Current operations

Previous operations

Long-term contracts

MIDDLE EAST AND NORTH AFRICA

Egypt	Saudi Arabia
•	Commenced in 2005	•	Commenced in 2019
•	Blast hole, grade control and	•	Underground exploration drilling
	delineation drilling

EAST AFRICA

Tanzania	Tanzania
•	Commenced in 2006	•	Commenced in 2008
•	Blast hole, grade control,	• Blast hole and grade control drilling
	exploration, delineation and	•	Recently commenced deep hole
	underground drilling		delineation drilling

9

Section 2 - Results

2019 Highlights

STRATEGIC

	Multiple contract wins with existing and new customers	Award four new long-termmine-site contracts
	42% increase in rig fleet in West Africa to 44 rigs by end Q1 2020	Extension of services to include Load and Haul
	Rolling All Injury Frequency Rate (AIFR) of 0.14, well below	Substantial capex investment in existing and new assets
	industry standards
	FINANCIAL
	Solid net cash result $4.4 million	Revenue of $114.8 million, within guidance
	Diversifying revenue with broader number of clients and	Continued strong operating margins, despite record levels
	services	of asset mobilisation
	Significant increase in profitability, NPAT up 34% to $10.4	Final dividend of 0.7cps, bringing full year declaration to 1.4cps
	million

11

FY 2019 Financial Overview

Revenue KPIs	FY 2019	FY 2018	% change
Average Fleet Size	92	93	-1%
Fleet Utilisation (%)	54%	51%	6%
ARPOR (US$)	176,000	194,000	-9%

Reported Earning	FY 2019	FY 2018	% change
Revenue (US$m)	114.8	116.0	-1%
EBITDA (US$m)	27.3	28.3	-4%
EBIT (US$m)	16.6	14.8	12%
NPAT (US$m)	10.4	7.7	34%
Basic EPS (US cents)	7.7	5.7	35%
Diluted EPS (US cents)	7.6	5.7	33%
Gross Profit (%)	39.4	39.0	1%
EBITDA (%)	23.8	24.4	-3%
EBIT (%)	14.5	12.8	13%
NPAT (%)	9.0	6.7	36%

COMMENTARY

• Significant increase in profitability:
• • Despite a marginal decrease in revenue, NPAT increased 36% to US$10.4 million
  • Strong finish, with Q4 having the highest revenues for the year as contracts start up
  • The continued strength in margins reflected improved contract performance and ongoing management discipline on key costs
  • Depreciation reduced by $2.9 million due to assets reaching full depreciation and the continued implementation of the rebuild/SOW policy increasing in the useful life of certain assets
  • Significant improvement in Effective Tax Rate of 29% (2017: 39%) as more countries become tax efficient due to our longer presence in- country
  • Net cash result of US$4.4 million, despite increased operational capex of US$19.8 million (2018: 11.9 million) as we build our equipment service offering
  • Strong cash generation has enabled the Group to fund the West Africa expansion strategy and organically expand our service offering
• Full year dividend US0.7 cents per share, reduced to address potential risk from COVID-19. Interim Dividend was US0.7 cents per share

12

Sustained Profitability

GROSS PROFIT AND MARGINS

							GP (USDm)			GP (%)		Avg Margin
	30.0												42.2%	39.1%			45%
									38.1%				39.8%
																40%
	25.0		34.5%
								38.2%					35%
	20.0						26.4%	28.0%								30%	GP
US$m															%Margin
15.0					30.5%											25%
GP					22.4%								24.5		23.9	20%
	10.0									21.8	20.8	21.4	15%
							17.4
							13.6
	5.0		13.4	8.9	12.7										10%
															5%
	0.0																0%
		H1 15	H2 15	H1 16	H2 16	H1 17	H2 17	H1 18	H2 18	H1 19	H2 19

COMMENTARY

• Continued solid performance in Gross Profit margins, despite marginally lower revenue, elevated levels of asset movements and new contract commencements
• Ongoing strong performance at key mine site contracts

EBITDA AND MARGINS

	18.0						EBITDA (USDm)			EBITDA (%)			Avg Margin				30%
													27.2%
	16.0															23.2%	24.3%	25%
												22.9%
	14.0									22.2%
		20.3%
EBITDAUS$m	12.0							18.7%										20%
10.0					17.5%											14.6	%EBITDA
	8.0						11.2%							15.8
	6.0							11.6	12.7	12.5			12.7			10%
	4.0		7.9	5.0%	7.3
			5.8												5%
	2.0
				2.0
	0.0																	0%
		H1 15	H2 15	H1 16	H2 16	H1 17	H2 17	H1 18		H2 18	H1 19	H2 19

COMMENTARY

• Slight weakening in EBITDA margins as company prepares the necessary structures to support the increased service offerings
• Management focus remains critical for ongoing performance

13

Strong Cash Flow

Cash Flow	2019	2018
US$m	US$m
EBITDA	27.3	28.3
Other non Cash flow adjustments	1.3	0.8
Operating cash flows before working capital changes	28.6	29.1
Working Capital Movements	0.1	1.3
Cash generated from operations	28.7	30.4
CAPEX and proceeds from Capex (1)	(15.8)	(13.7)
Investments and cash from Business Combination	(7.8)	(2.6)
Finance charges and Tax Payments	(4.0)	(5.7)
Free Cash Flow	1.1	8.3
Movement in long term liabilities(1)	(0.3)	(3.0)
Dividends paid	(3.0)	(2.4)
Net increase in cash	-2.2	2.9
Opening Cash Balance	19.9	16.9
FX on cash	0.0	0.1
Closing cash balance	17.6	19.9

OPERATING CASH FLOW / FREE CASH FLOW

		Cash Generated from Operations		Free Cash Flow

25.0

20.0

15.0

10.0

5.0

-

(5.0)

H1 15

H2 15

H1 16

H2 16

H1 17

H2 17

H1 18

H2 18

H1 19

H2 19

FY 2019 NET CASH MOVEMENTS

(1) excludes assets purchased via finance leases

14

Capital Expenditure

US$m
30.0
25.0
20.0
15.0	26.7	30.0
10.0									19.8
5.0				13.6	7.9	12.8	10.8	11.9*
			4.3
0.0
FY 11	FY 12	FY 13	FY 14	FY 15	FY 16	FY 17	FY18	FY19

• 2018 Reported operational capex $11.9 million, restated in 2019 to US$14.1 million for IAS 16 adjustment, refer to FY 2019 Results RNS Release
• • Capital expenditure (capex) US$19.8 million
  • Increased capex from 2016 to 2018, driven by West African expansion strategy and entry into mining services, benefit will be realized in 2020 and beyond
  • Eight new rigs acquired to support long-term contracts, four of which were commissioned in Q1 2020
  • Purchased initial mining equipment totaling $3.4 million

FY 2019 CAPEX

MSA $0.5

Mining Equipment

$3.4m

Vehicles & Trucks

$3.2m

New Rigs

$5.2m

Rig Improvements

$6.8m

Rods $0.7m

DISCIPLINED APPROACH TO CAPITAL MANAGEMENT

15

Strong Balance Sheet

Balance Sheet	FY 2019	FY 2018	Change
US$m	US$m	%
Cash and cash equivalents	17.6	19.9	-11.4%
Investments	12.5	7.2	74.4%
Receivables	25.2	20.5	22.9%
Inventory	17.5	19.1	-8.3%
Goodwill & Intangible assets (MSA)	1.6	N/A	0.0%
Right of use assets (IFRS 16)	0.7	N/A	0.0%
Property, plant and equipment	52.9	41.0	29.0%
Taxation	0.3	0.3	10.0%
Total Assets	128.3	108.0	18.8%
Payables	23.1	18.1	28.0%
Borrowings	13.2	9.0	46.0%
Right of use liabilities (IFRS 16)	0.7	N/A	0.0%
Taxation	4.4	3.7	19.4%
Total Liabilities	41.4	30.8	34.5%
Total Equity	86.9	77.3	12.5%
Less Non-Controlling Interest	(1.2)	N/A	0.0%
Total Shareholders Equity	85.7	77.3	11.0%
Net Asset Value per share (cents)	63.0	56.9	10.6%
Net Cash ($m)	4.4	10.9	-59.2%
Gearing (Net Cash to Equity in %)	5.1	14.1	-63.4%
Return on Total Assets (%)*	13.0	13.7	-5.5%
Return on Invested Capital (%)*	17.0	18.3	-7.4%

• ROTA = LTM EBIT / Total assets ROIC = LTM EBIT / Invested capital

COMMENTARY

• Maintained positive Net Cash result $4.4 million (2018: $10.9 million) despite elevated operational capex and asset movements
• Dividend payments totaling $3.0 million paid in CY2019
• Receivables up due to increased prepayments and the addition of MSA Receivables into the Group
• Significant increase in assets due to investment into new rigs and Heavy Mining Equipment

GROSS DEBT vs NET CASH (DEBT) TO EQUITY (%)

			Total Debt		Net Cash (Debt) to Equity (%)
25.0						25.0%
20.0						20.0%
15.0						15.0%
10.0						10.0%
5.0						5.0%
0.0						0.0%
-5.0						(5.0%)
-10.0						(10.0%)

H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19

16

2019 Final Dividend

• FINAL DIVIDEND DECLARED FOR 2019 of US0.7cps
• 2018 final dividend of US1.5 cps paid in CY 2019
• Final dividend reduced as a precautionary measure given unprecedented uncertainty in the market due to the COVID-19 outbreak
• We will continue our disciplined approach to capital management - we remain committed to a strong balance sheet

DIVIDEND DECLARED	2014	2015	2016	2017	2018	2019
Cents per share	1.9	3.6	2.5	1.7	2.1	1.4
Amount ($'m)	$2.56	$4.85	$3.38	$2.31	$2.86	$1.91
DIVIDEND TIMETABLE
March 19, 2020	FY 2019 Results release & dividend declaration
April 09, 2020	Ex-dividend date
April 14, 2020	Record date
May 4, 2020	Payment date

Return excess to

ShareholdersInvestment through dividends

Strong

Balance Sheet

17

Section 3 - Strategy Update

Growth Drivers

Mine Site Contracts		Expanded Service
	Offering

West Africa Expansion

Utilise Idle Assets

• Competitive advantage with our unique full service offering
• Benefits derived from economies of scale and recurring revenue

• Adjacent services to broaden the offering to our customers
• Consistent with Capital Drilling's evolution from its exploration drilling history

• West Africa region has the largest concentration of exploration activity in Africa at 45%
• Capital Drilling's traditional markets of Tanzania and Egypt account for 5%

Mauritania
Mali	Niger
Guinea	Faso
Ghana
d'Ivoire	Nigeria
Côte

• Q4 2019 rig utilisation of 59%
• Production and underground fleet near full utilisation
• Substantial idle capacity in existing exploration fleet

19

Secure Long-termMine-site Contracts

BENEFITS

• Economies of scale from multiple revenue streams at the one location
• Shared infrastructure across assets and people
• Continuous improvement initiatives as the business develops
• Capacity to invest in training and provide career paths for employees
• Enhanced revenue visibility enables better planning

RECENT MINE SITE WINS

TANZANIA		SAUDI ARABIA		MAURITANIA
			COTE D'IVOIRE		TANZANIA
Underground		Underground		Laboratory		Exploration and		Grade Control,
Drilling		Exploration		Services		Mining Services		Blast Hole and
		Drilling						Underground
Contract		2 year contract,		3 year contract,		5 year contract,		Drilling
extension to		commenced		commenced		commenced		3 year contract
Q4 2020		Q4 2019		Q3 2019		Q3 2019		to Q4 2022

SIGNIFICANT CONTRACT AWARDS AND RENEWALS PROVIDE A SOLID REVENUE BASE

20

Increase Exploration Utilisation

2019 CONTRACT WINS		IDLE EXPLORATION RIGS

MALI

Commenced

Q2 2019

CÔTE

D'IVOIRE

Commenced

Q4 2019

SAUDI

ARABIA

Commenced

Q4 2019

BURKINA

FASO

Commenced

Q2 2019

NAMIBIA

Commenced

Q4 2019

EGYPT

Commencing

Q4 2019

BURKINA

FASO

Commenced

Q3 2019

MALI

Commenced

Q4 2019

TANZANIA

Commenced

Q1 2020

MALI

Commenced

Q4 2019

AircoreDiamond CoreReverse Circulation

CÔTE
D'IVOIRE
		POTENTIAL REVENUE CAPTURE
Commenced
Q4 2019			Approximately		2019 ARPOR of
			40 idle rigs
				US$176,000 per rig

MALI	Revenue opportunity		2019 revenue of
	> $80 million		US$114.8 million
Commencing
Q2 2020

RECORD NUMBER OF NEW CONTRACT WINS

21

Expansion into West Africa

AFRICAN EXPLORATION BUDGETS BY COUNTRY, 2019

					256 companies budgeting
2%					US$1.1 billion
				2%
				Egypt
Mauritania
Mali	Niger		1%
Senegal
	Burkina			Sudan
Guinea	Faso
Ghana	Nigeria			1%
Côte
d'Ivoire				Ethiopia
West Africa spent an			15%
aggregate of 45%	1%	Democratic Republic
			of the Congo	5%
					Tanzania
			3%		1%
		Angola	3%
		Malawi
				Zambia
		Namibia		1%
		3%	Madagascar
			4%	Botswana	1%
				9%
Date as of Mar 07, 2020			South Africa
Source: S&P Global Market Intelligence

Increased Rig Count

Rig count in region tripled in two years from 13 rigs at December 2017 to 44 rigs (46% of total fleet) in West Africa by end Q1 2020

Established Infrastructure

Offices, warehouses, workshops and accommodation in Bamako (Mali), Yamoussoukro (Côte d'Ivoire) and Nouakchott (Mauritania)

Key Business Development Hires

Increased Business Development depth with hires in exploration, maintenance services, labs and mining

Contract Wins

•	Allied Gold: Côte d'Ivoire	•	Kinross: Mauritania
• Arrow Minerals: Burkina Faso	•	Mali Lithium: Mali
•	Awale Resources: Côte d'Ivoire	• Perseus Mining: Cote d'Ivoire
•	Compass Gold: Mali	•	Resolute: Mali
•	Desert Gold: Mali	•	Hummingbird: Mali

Increase Revenue

West African revenues represent 22% of Group revenue in 2019

WEST AFRICA REPRESENTS THE LARGEST REGIONAL OPPORTUNITY	22

Compelling Growth Opportunities in West Africa

STRONG EQUITY MARKET SUPPORT

$4.7 B raised for West African projects

Financing for Gold Companies ($B)

2009 - 2019

12	10.5
10
8		6.6
6			4.7	3.9
4
2					1.6	1.4	1.4	1.3	1.1	1.1	1
0	Canada	Australia	West	USA	Mexico	Ghana	Indonesia	Brazil	Burkina	Colombia Romania
			Africa						Faso

SIGNIFICANT EXPLORATION ACTIVITY

Region features strongly in 2019 exploration budgets

2019 Exploration Budget (Gold)

	1,200
	992.7
	1,000	852.8
million	800		733.2
600			557.4	461.8
US$					376.9
400
	200						164.2	154.1
	0
	Latin America	Australia	Canada	Rest of World	West Africa	USA	Pacific/SE Asia	Rest of Africa

			2nd TOP GOLD PRODUCING REGION
			10.4Moz production in 2018 (Estimated)
			National Gold Production (Estimate) (Moz)
14	12.9				2018
12		10.4	10.2	9
10
8					7.2	6.2
6						4.6	4.6	4.3	4.1
4
2
0	China	West	Australia	Russia	USA	Canada Indonesia	Peru	Ghana	South
		Africa							Africa

GREATEST EXPLORATION SUCCESS

#1 global region for successful discoveries

Gold Discoveries (Moz)

2008 - 2018

45	41
40		32
35		27
30			23	20
			19
25					16
20							12	11	11	11	9	9
15								8	6
10
5
0	West Africa	Canada	USA	Ecuador	Russia	Chile	China	Colombia	South Africa	Mali	Burkina Faso	Ghana	Australia	Mexico	Peru

Source: S&P Global Market Intelligence	23

Outlook

Significant strengthening in gold prices is a strong lead indicator for increased demand for services, with c90% of Capital Drilling revenue from gold producers

Positive momentum with mine site exploration increasing, including Geita, Syama, Yanfolila and Sukari

Strong industry fundamentals with improved operating cash flows for producers and a fundamental need to replace depleted resources and reserves

West Africa continuing to attract bulk of African investment, asset movements into the region largely completed, providing strong platform to take advantage of new opportunities

Broader client base provides greater platform for revenue and growth as seen by sequential revenue increases during 2019, which combined with expansion of services into Load and Haul, increases opportunities for higher value contracts

Strong cash flow generation will support future growth opportunities

Global uncertainty associated with the rapidly evolving COVID-19 pandemic, Capital Drilling is closely monitoring the impact on operations

24

Capital Drilling Investment Proposition

Tier 1 Mine-site based clients	•	Stable and predictable revenue streams
Business Diversification
•	Diversity of services across the cycle, coupled with extension into complementary ancillary services, provides increased revenue security
Targeted Growth	•	Focus on high-growth West African region, with geographic concentration to drive margins
Excellence in Execution
•	Best-in-class project execution, fleet quality and management
Robust Balance Sheet
•	Capacity to fund growth initiatives and dividend payments
Exploration Fleet Capacity	•	Idle rig capacity provides growth upside
Executing on Strategic Priorities
•	Establishment of Capital Mining Services to deliver significant growth opportunities
Shareholder Returns
•	Focus on shareholder returns through growth, investments and dividend payments (since 2014)

25

Appendices

Revenue Metrics

UTILISATION vs ARPOR

	60%					56%			56%		56%		220
										210
							198	200
	55%
								52%			200
	189
		188			191			189
			49%	49%					190
	50%							183			(US$'000)ARPOR
			175				46%
Utilisation									170		180
45%				177								170
				40%
												160
	40%												150
			35%
		34%										140
	35%
													130
	30%												120
	H1 15	H2 15	H1 16	H2 16	H1 17	H2 17	H1 18	H2 18	H1 19	H2 19

REVENUE

US$m

70.00
60.00
50.00
40.00
30.00				51.60	62.30	57.11	54.48	61.50	54.8	60.0
20.00	39.00	39.70	41.70
10.00
0.00
H1 15	H2 15	H1 16	H2 16	H1 17	H2 17	H1 18	H2 18	H1 19	H2 19

COMMENTS

• Improvement in H2 utilisation as exploration contracts come on line, particularly in the fourth quarter
• ARPOR decline in H2 as a result of extensive activity relating to new contract mobilisations
• New exploration contracts increasing utilisation, with eight new contracts commencing in Q4
• Results underpinned by consistent performance at all long-term contracts

27

Gold Price Highly Supportive

Last price (US$/oz)		12M trailing average

		1,700
PriceGold	(US$/oz)priceGold	1,600
1,500
		1,400
		1,300
		1,200
		1,100

Mar-20

Feb-20

Jan-20

Dec-19

Nov-19

Oct-19

Sep-19

Aug-19

Jul-19

Jun-19

May-19

Apr-19

Mar-19

Feb-19

Jan-19

Dec-18

Nov-18

Oct-18

Sep-18

Aug-18

Jul-18

Jun-18

May-18

Apr-18

Mar-18

Feb-18

Jan-18

IndexMetalsBase	100torebasedpricespotclosing-MetalsBase	50.0%						Copper		Nickel		Zinc
40.0%
		30.0%
		20.0%
		10.0%
		0.0%
		-10.0%
		-20.0%
		-30.0%
		-40.0%
		-50.0%
		Jan-18	Apr-18	Jul-18	Oct-18	Jan-19	Apr-19	Jul-19	Oct-19	Jan-20

Source: Bloomberg (as at 04 March 2020)

• Highly supportive gold price, which has increased strongly since Q2 2019
• Gold remains the primary commodity for drilling activity
• • 50% of drilling exploration budget in 2019 (S&P Global Market Intelligence)
• Sector M&A highlights the desire to build reserve bases
• Weaker metals prices over 2018, primarily driven by concerns on the global economy and international trade disputes
• Emergence of demand for new battery metals driving new commodities for drilling, in addition to driving demand for industrial metals such as copper, nickel and cobalt

HIGHLY SUPPORTIVE GOLD PRICE

28

Exploration Budgets and Funding

Gold financings Base financings Number of financings completed

ByFinancingsJunior And IntermediateCompanies	raisedAmount(US$m)	0																																									0	Financingsof Numbe
		10,000																																										500
		9,000																																										450
		8,000																																										400
		7,000																																										350
		6,000																																										300
		5,000																																										250
		4,000																																										200
		3,000																																										150
		2,000																																										100
		1,000																																									50
			Q1	Q3	Q1	Q3	Q1		Q3		Q1	Q3			Q1	Q3			Q1	Q3		Q1	Q3	Q1	Q3	Q1		Q3	Q1	Q3	Q1	Q3	Q1	Q3
			2008	2009	2010		2011		2012		2013		2014	2015	2016	2017	2018	2019
	Source: S&P Global Market Intelligence - as at January 14, 2020

• Financing activity by juniors and intermediate companies steady over the past 4 years however well below previous peak levels seen in 2009 to 2011
• Dominated by raisings on the TSX and ASX

Global Nonferrous exploration budgets

Nonferrous Exploration Budget (US$ billion)

Nonferrous Exploration Budget Total		Annual Indexed Metals Price

24

21 3,300+ companies surveyed for

2019 exploration budgets

18

15

12

9

6

3

0

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

5
4	SNL
Indexed
3
Metals
2	Price
1	(1996=1)
0

• 2019 saw a marginal decrease in exploration budgets despite the stronger gold price as companies focus on M&A
• • US$9.8 billion budget total; decrease of 3%
• Global exploration budget still well below peak 2012 levels
• Materially higher gold prices in 2020 highly supportive of increased exploration activity

Source: S&P Global Market Intelligence - as at February 27, 2020

IMPROVING GOLD PRICE YET TO MEANIGFULLY FLOW TO CAPITAL MARKETS & EXPLORATION BUDGETS

29

Major Discoveries - Gold and Copper

										Gold in reserves, resources & past production							Projected new gold in discoveries (Moz)
										(Moz)
										Gold price (US$/oz)																	Gold exploration budgets
	250																																				(US$M)												10,000
(Moz)																																																			9,000
200																																																			8,000
discoveries
																																																		7,000
	150																																																			6,000
major																																																			5,000
in	100																																																		4,000
Gold																																																			3,000
50																																																			2,000
																																																			1,000
	0																																																			0
	1990	1991	1992	1993	1994		1995	1996	1997		1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009		2010	2011	2012	2013	2014	2015	2016	2017	2018

Data as of February 20, 2020

• Annual average market gold price. Source: S&P Global Market Intelligence

					Copper in discoveries				Projected copper in discoveries				Copper exploration budget
Gold		120																												5,000
budgetsexplorationgold/(US$/oz)price																														4,500	(US$M)budgetexplorationCopper
(Mt)discoveriesmajorinCopper	100																												4,000
20
		80																												3,500
																														3,000
		60																												2,500
																														2,000
		40																												1,500
																														1,000
(US$M)		1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	500
	2018
		0																												0
	Data as of February 20, 2020
	*Annual average LME Copper Grade A Cash Price
	Source: S&P Global Market Intelligence

• Dearth of discoveries in recent years means companies are depleting their asset bases
• Recent gold sector M&A highlights the desire to build reserve bases
• Mining companies need to replace depleting reserves, achieved by:
• • M&A (as demonstrated currently in the gold sector)
  • Exploration

DEPLETION OF RESERVE BASES POINTS TO EXPLORATION GROWTH

30

Client History

Armenia

Lydian

ChileDRC

AntofagastaAnvil

BarrickTiger

BHP

CMP

Glencore

Ethiopia

APM

BHP Billiton

Ethiopia Potash

Current Active Locations

Regional Offices (Inc Yards & Warehouses)

Previous Registered Offices & Operations

Mali	Mauritania

Aura Energy

OreCorp

Redblack

Knight Piesold

MRL

Burkina Faso

Côte d'Ivoire

Egypt

Aton Resourcs

Gippsland

Thani Dubai (AngloGold Ashanti)

Thani Stratex Resources

Namibia

Botswana

Alecto Minerals

Khoemacau Copper Mining

Eritrea

Andiamo

Chalice Gold

Sunridge

Saudi Arabia

Tanzania

Cradle

Glencore

Graphex

IMX

Liontown

Magnis

Mantra

MMG

Rift Valley

Strandline Resources

Tanga Resources

MMG

Polar Star

GhanaKenya

KinrossAcacia

PakistanPeru

Antofagasta	BHP
Barrick Gold

Serbia

Dundee

Nevsun

Resources

Mozambique

Boabab

Riversdale

Rio Tinto

PNG

Allied Gold

Barrick Gold

Oil Search

Santa Barbara

Zambia

Albidon

Barrick Gold

Equinox

FirstQuantum

MMG

Omega

31

Board of Directors

			EXECUTIVE
Jamie Boyton	• Over 20 years' experience in finance industry	Brian Rudd
Executive Chairman	•	Co-founder of Capital Drilling	Executive Director
	•	Previously Executive Director and Head of Asian Equity Syndication

and Corporate Broking at Macquarie Bank (HK)

NON-EXECUTIVE

• Over 30 years' experience in the mining industry in Africa and Australia
• Co-founderof Capital Drilling
• Previous experience includes 6 years as operations/general manager for Stanley Mining Services Tanzania (Layne Christensen)

David Abery

Senior NED

• Over 20 years experience in financial, commercial and strategic matters in African and UK corporate environments
• Ex Finance Director of Petra Diamonds, Tradepoint Financial Networks (subsequently Virt-X) (AIM) and Mission Testing plc (AIM)

Alex Davidson

NED

• Over 35 years experience in mining
• 16 years at Barrick Gold; Executive VP of Exploration and Corporate Development
• Ex NED for Highland Gold, now Namakwa Diamonds & NED of Yamana Gold

Michael Rawlinson	• Over 20 years investment
NED	banking experience with both
private and public companies
	• Senior NED at Hochschild
	Mining, and NED at Adriatic
	Metals
	• Ex Director of Liberum Capital
	and Talvivaara Mining
	• Previously Global Co-Head of
	Mining and Metals with
	Barclays

EXTENSIVE INDUSTRY EXPERIENCE, SOLID COMPLEMENT OF SKILLS

32

Corporate Snapshot

CAPITAL STRUCTURE

Fully paid ordinary shares																																		136,248,953
Share price (as at 31 December 2019)																														$0.87
Market capitalisation (undiluted)^																															$117.90
Cash (as at 31 December 2019)																																	$17.62
Debt (as at 31 December 2019)* includes bank borrowings & O/D													$13.19
Enterprise Value																																							$113.47
^ Share options and unvested share grants issued 6.0m
* RCF $9m, October 2020. LIBOR +5.75% and Asset financing of $4.19m
					NET ASSET VALUE PER SHARE vs SHARE PRICE
1.80															NAV per share							Share Price in US$
1.60
1.40
1.20
1.00
													0.71
0.80						0.59	0.66	0.69	0.68	0.69	0.67	0.63	0.57												0.57	0.58	0.63
	0.55																							0.54
0.60	0.52	0.52																						0.50	0.50	0.52	0.52
0.40
0.20

0.00

H1 10H2 10H1 11H2 11H1 12H2 12H1 13H2 13H1 14H2 14H1 15H2 15H1 16H2 16H1 17H2 17H1 18H2 18H1 19H2 19

SHAREHOLDING BLOCKS

	Top 10
Other Founders	Institutionals
48.3%
15.7%

Directors

26.7%Other

9.4%

DIRECTORS AND SENIOR MANAGEMENT

Jamie Boyton	Executive Chairman
Brian Rudd	Executive Director
David Abery	Senior Independent Non-Executive Director
Alex Davidson	Independent Non-Executive Director
Michael Rawlinson	Independent Non-Executive Director
André Koekemoer	Chief Financial Officer
Jodie North	Chief Operating Officer
Stuart Thomson	Executive, MSA Labs
Jeffery Court	Chief Development Officer, Mining
David Payne	Executive, Commercial
Tony Woolfe	Executive, Assets
Rick Robson	Executive, Corporate Development

33

Capital Drilling and Competitors

		Mkt. Cap.	Cash	Debt	Net Cash		Ent. Val.		EBITDA (US$m)			EV / EBITDA (x)		P / Book		Div. Yield		Perf.
Company									(12M)
		(US$m)	(US$m)	(US$m)	(US$m)		(US$m)		2019a/e	2020e	2021e		2019a/e	2020e	2021e	(x)		(%)		(%)
Perenti	381.2	171.3	613.8	(374.3)	823.7		233.0	263.1	280.0		3.5x	3.1x	2.9x	0.7x	3.8%	(22.4%)
Boart Longyear		29.1	20.2	784.3	(730.9)		793.2		87.3	113.4	135.2		9.1x	7.0x	5.9x	n/a		-		(24.2%)
Foraco International	18.2	16.1	144.9	(131.9)	147.1		29.1	-	-		5.1x	n/a	n/a	n/a	-	(12.6%)
Geodrill		35.9	11.0	3.8	3.6		28.7		19.6	21.2	22.1		1.5x	1.4x	1.3x	0.8x		-		34.8%
Major Drilling Group	154.2	20.2	12.6	17.8	146.6		29.9	39.3	50.2		4.9x	3.7x	2.9x	1.1x	-	(4.7%)
Mitchell Services		419.6	5.0	34.1	(9.0)		448.7		16.3	21.0	26.7		27.5x	21.4x	16.8x	2.7x		-		(6.1%)
Orbit Garant Drilling	14.2	1.1	29.1	(25.2)	42.2		6.8	12.8	13.2		6.2x	3.3x	3.2x	0.5x	-	(51.9%)
Swick Mining Services		25.3	8.4	14.4	(12.8)		31.3		17.3	14.9	19.1		1.8x	2.1x	1.6x	n/a		2.6%		(10.0%)
Mean													7.4x	6.0x	5.0x	1.2x		-		-
Capital Drilling Ltd.		56.2	17.6	13.2	4.4		51.8		27.3	32.7	34.1		1.9x	1.6x	1.5x	0.9x		3.4%		6.0%

Footnote:

• The share price data is as of 17 March 2020 and sourced from FactSet. Other data sourced from FactSet (fiscal years) and most recent company financial reports
• The CAPD yield is calculated using the final dividend of 0.7c for the year to 31 December 2009 and the interim dividend of 0.7c for the six months to 30 June 2019, translated at a GBP:USD exchange rate of 1.20 prevailing on 18 March 2020
• CAPD 2020 and 2021 estimates as per Tamesis' estimate as at 16 January 2020 as published on FactSet

140%

PRN-AU

BLY-AU

FAR-CA

GEO-CA

MDI-CA

MSV-AU

OGD-CA

SWK-AU

CAPD-GB

120%

100%

80%

60%

40%

20%

0%

-20%

-40%

-60%

-80%

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

GEO-CA, 34.8%

CAPD-GB, 6.0% MDI-CA, 11.2% MSV-AU,-6.1%SWK-AU,-10.0%FAR-CA,-12.6%BLY-AU, 6.4% PRN-AU,-22.4%OGD-CA,-51.9%

34

Glossary

The words below used in the presentation have the following meaning:

ARPOR	Average Revenue Per Operating Rig
CAPEX	Cash used on acquisition of property plant and equipment less
(Capital Expenditure)	proceeds on disposals of property plant and equipment
EBIT	Earnings (Loss) Before Interest and Taxes [Equal to profit (loss) from
operations per the financial statements]
EBITDA	Earnings (Loss) Before Interest, Taxes, Depreciation and Amortisation
EPS	Earnings (Loss) Per Share
Enterprise value	Market capitalisation + Debt - Cash
Free Cash Flow	Operating cash flow minus capital expenditures before financing
activities (Dividends, Loan repayments/drawdowns)
Group, Company	Capital Drilling and its subsidiaries
KPI	Key Performance Indicator
HSSE	Health, Safety, Social and Environment
LTI	Loss Time Injury

LTM	Last Twelve Months
Operating Cash flow	Profit or loss after tax adjusted for non-cash items +/- the net
change in working capital
Operating Cash flow Margin	Cash generated from operations / Sales
MTI	Medical Treatment Injury
NET CASH (DEBT)	Cash and cash equivalents less short term and long term debt
NPAT	Net profit (loss) after tax per the financial statements
(Headline) Revenue	Average fleet size x Utilisation x ARPOR
Return on Capital employed (ROCE %)	LTM EBIT / (Total Assets - Current Liabilities)
Return on Invested Capital (ROIC)	LTM EBIT / Invested Capital
Return on Total Assets (ROTA %)	LTM EBIT / Total Assets
Total assets	Current assets plus non-current assets

35

Company Contact Details

CAPITAL DRILLING LIMITED

Jamie Boyton

Executive Chairman [e-mail]

Mauritius

9th Floor, The CORE Ébène CyberCity Mauritius

Telephone: [phone] www.capdrill.com

UK BROKERS	UK PUBLIC RELATIONS
Peel Hunt LLP	Buchanan
Moor House, 120 London Wall, EC2Y 5ET	107 Cheapside, London EC2V 6DN
Telephone: [phone]	Telephone: + 44 20 7466 5000
Ross Allister	Bobby Morse
[e-mail]	[e-mail]
Tamesis Partners LLP
125 Old Broad Street, London EC2N 1 AR
Telephone: [phone]
Richard Greenfield
[e-mail]