Capital signs largest contract with Sukari in Egypt
Capital Limited, a mining services company focused on Africa, has entered into a conditional open pit waste mining services contract with Sukari Gold Mines, and expanded 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 Cetamin.
In a statement, Capital Limited says that collectively the Sukari contract and amended agreement are anticipated to deliver incremental revenues of £175.8 million to £194.5 million over a four-year period commencing January 1 – representing the largest award of new business in the company’s history.
“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,” says Jamie Boyton, executive chairman of Capital Limited.
“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,” he adds.
The statement also announces a proposed placing to raise gross proceeds of approximately £22 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.
“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,” says Boyton.
Joh. Berenberg, Gossler & Co. KG, London Branch and Tamesis Partners LLP are acting as Joint Bookrunners in relation to the placing, the statement says.
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.
The Amended Sukari Drilling Contract, effective January 1, is not subject to shareholder approval or any other conditions precedent, the statement concludes.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”