Capital Limited (CAPD) Earnings Call Transcript & Summary

Good morning, and welcome to the Capital Limited full year results investor presentation. [Operator Instructions] The company may not be in a position to answer every question it received in the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to spend the following poll. I'd now like to hand you over to Jamie Boyton, Chairman.

Thank you very much. Good morning, everyone, and welcome to the Capital Limited 2021 Full Year Results Presentation. With me today, I've got a few people from our team, Giles Everist, who is the Group CFO based in London; Conor Rowley, who runs our Investor Relations and works on the corporate development team based in London. And I've asked Stuart Thomson to join us today, and Stuart is the CEO of our labs business, MSALABS. What I'll do is we'll run through the presentation. I imagine it will take about 20 minutes to go through the slides, and then obviously we'll hand it over to Q&A. So to kick off, obviously, we released our results last Thursday. We had already obviously released the revenue results back in January, and it really was an outstanding set of numbers for the full year. Revenue of $226.8 million was up 68% on the prior year, and noting that 2020 actually grew 18% on the year before. So we really are back in growth mode. We recorded records across the board, record EBITDA of $73.3 million, up 117%. We reported a profit of $70.3 million. But for the purposes of transparency and reporting, we've divided that into what we call the adjusted net profit of $36.6 million, which was up. That's essentially the operating business, the operating profit of Capital. That was up 227%, and we reported equity investment gains of $33.7 million, so we had an outstanding year with our investment portfolio as well. So look, a really strong year's performance. Just a couple of things to bring to bear that we actually upgraded our revenue guidance twice during 2021, and we still came out slightly above the upgraded guidance. And then as part of the results released last Thursday, we provided revenue guidance for the current year of $270 million to $280 million, which is at the midpoint, a 21% increase year-on-year. The final thing, just to bring to bear, is we announced an increase in the dividend, the final dividend of $0.024 a share for a full year of $0.036, and that's a 64% increase year-on-year, so really an outstanding set of numbers. Moving on to -- really, it's an overview of 3 operating businesses, specifically, Capital Drilling, Capital Mining and MSALABS, and obviously, our investment arm. Obviously, most people are pretty familiar with what these businesses are. So the main point I would just reference here is that if I was making this presentation 3 years ago, we would have just been talking about Capital Drilling. And what we've done over the last 3 years is huge amount of work has gone into regionalizing our business with the main focuses for the drilling and mining business being West Africa, East Africa and MENA, but then we have also grown our service offering. The laboratory business, which Stuart will talk to, has really gathered a lot of momentum and established a very solid footprint and had an outstanding year. And the mining business, which started in 2019 but really kicked off its first large-scale contract in 2021 and beat all our expectations and particularly the clients' expectations, so it's been a really solid performance from the mining team as well. The table that you see on the far right, the thin blue line, that shows you the growth in our nondrilling revenue, and that was 9%, and that's now in 22% in 2021, and we're expecting that to grow further as a contributor to the overall revenue in 2022. We always highlight our safety performance upfront. If you -- if I can direct your eyes to the table on the bottom left, we're in the dark blue. As you can see, it's an absolutely outstanding performance when you look at our safety performance against our peers. We pride ourselves on our standards, whether they be training and development of people, our asset standards, our safety standards. And this statistic makes us very proud as a management team. It's particularly significant when you consider that we added about 1,000 people, so close to doubled our workforce over the year as well as added a significant new business stream in the form of the large-scale mining contract, which was ramped up ahead of schedule incident free. So again, an absolutely outstanding result on the safety front. I'm just going to spend a few minutes on the macro because I think the macro thematic is critical obviously. There's a couple of points I'd bring to bear on this slide. And it is really just the strength of what are the absolute lead indicators for demand in drilling, labs and mining businesses in terms of the service providers. And the lead indicators are strong metal prices and strong capital markets activity. And look, we have been talking about this for quite some time. And as you can see, top left, gold price. I mean it's close to all-time highs. Bottom left, metal prices and, particularly of late, a surge in metal prices. But we've got a structural shift happening right now with battery metal demand and structural shifts are not short-term phenomena, and that's driving the prices of lithium, nickel and copper, all of which we have exposure to with our contracts. And then the financing market, it really opened up in the second half of 2020. And as you can see, 2021 capital raisings back to decade high. So those factors are hugely positive tailwinds with respect to the demand profile for services. And just taking that one step further, what we have, as a group, been talking about for some time has been the disconnect between those strong metal prices and strong capital markets activities and how that has flowed through to demand. So if I draw your attention to the chart on the top left, you see that exploration spending globally is still 40% below where it was a decade ago despite the metal prices and capital markets being back at those highs. And then if I -- we've added a new slide to the pack with these results, and that's the chart on the bottom right, and that's the gold reserves of the major gold mining companies. As you can see from the period from 2012 to the trough in 2019, gold reserves, which is essentially the asset base of these companies, declined by 19%. So the thematic that we again have been flagging has been a disconnect. There's been a prolonged decade-long trend in the industry where the mining companies have been running their assets for cash. They've been focused on capital preservation, balance sheets, dividend payments. We have, however, seen M&A activity. And as we flag in this note, there's 2 ways, if you're a mining company, to grow your asset base: one is via acquisition, M&A; and the other is by exploration. So whilst M&A is featured, exploration has not. And it was very pleasing that, in 2021, we finally saw this disconnect begin to rectify itself. And exploration spend globally in 2021 was up 35% on 2020. And as this thematic also develops, as the cycle develops, it then flows into CapEx. And again, the CapEx trend is very clear. That's the bottom left. It has gradually ticked up off the lows, but still well off previous cycle peaks. When we talk the mining business, I'll go into a bit more detail here that the CapEx pipeline, which flows through to our mining activities, is also firming up very nicely. I'll now delve into the individual businesses. Drilling business. Look, the header says it all, the strongest demand in a decade. Top right, you can see that the period between January '13 and January '21, there was really no change in our fleet size. We obviously did acquire new rigs, but we decommissioned the older ones. And in this year just passed, we've resumed growth in our fleet. But the bottom left tells the big story, and that's the utilization. And again, it had gradually improved since the trough. But even if I go back to 2020, you're still looking at, in our case, 41% of our fleet was idle. In the case of the industry, I'd suggest that number was close to 50%, so you still had a lot of idle capacity. In 2021, that dynamic changed, and it changed rapidly. And that is what drove us to have twice upgrade our revenue guidance, predominantly driven by the demand for drilling services. We had 79% utilization in Q4, and very pleasing that a lot of the growth that we saw was really demand from existing customers, and we're obviously able to capitalize on our recently established West Africa footprint as well. We are forecasting further rig growth in the year ahead. We're expecting to end the year around about 120 rigs, and the demand environment is very solid. And it's worth -- that supply-demand dynamic that has significantly changed in the last 12 months is obviously now starting to flow through to higher productivity and higher prices with respect to drilling rigs. The mining business. We've discussed many times the Sukari contract. We announced it in December 2020. We started earthmoving activities in the first quarter. For 2021, we reached full run rate in September. So last year was a story of ramp-up, whereas 2022 will be a story of full run rate. We on-boarded 400 new employees. We mobilized 17 trucks, 4 excavators, all the ancillary equipment. And we did it in, I would have to say, pretty dramatic record time and beat all the contract ramp-up schedule. So the team has done an outstanding job. It's put us on the map in terms of the last 12 months in the geographies in which we deal. This is the largest scale earthmoving contract awarded. We certainly have a team of very experienced and talented people, but pragmatically and frankly, as a company, we had not done this before. And having achieved this milestone is a very significant one because it has put us on the map at being able to deliver large-scale rapid ramp-up of mining projects. And that's obviously opening us up to a lot more tendering opportunities. The pipeline is improving, again, back to the contracts that have been awarded over the last 12 months. All of them have been for -- again, in our geography, all of them have been for existing operations or old mines coming back on stream, such as the Morila and Sadiola mines in Mali. But what we are seeing is multiple numbers of projects, in the teens, that are at the DFS stage. And they're in the final stages of their definitive feasibility studies, which means they are close to their financing, which means they then move into contract awards and the commencement of preproduction activities. So the pipeline from H2 and into 2023 is looking -- is increasingly encouraging, noting again that the first services that will move in an upcycle that is only 12 months old are drilling and assaying, and then the next derivative will hit the mining activity. Moving on to the lab business, I'll hand over to Stuart to run through MSALABS.

Thanks very much, Jamie. To understand MSA, I just want to take through a little bit of the history of how we got to where we are today and then think about where we're going to in the future as well. So if you start off looking at the revenue chart on the bottom right and relate that to the map, just above it to the top left. Back in 2019, we had 7 laboratories, of which only 2 of those were assay laboratories. We had one small facility in Africa and a number of franchise operations. So a relatively small business that was very much driven by the exploration cycle in the northern hemisphere, but a lot of cyclicality and the business was -- while it had a platform there, it did not have the scale to perform well in terms of financially. Since 2019, what we've done is to expand both geographically and in segments. So geographically, you can see where we get to today, where we've got 16 laboratories where a lot of that growth has been within Africa, both East and West Africa. And then today, we have a full mine site laboratory as well. So we've got a very strong baseload in terms of revenue for the business. We've got some very strong contracts there with Barrick, along with Tasiast as well and Firefinch in Morila, which is a recent one that we started last year. So the business has grown quite significantly from 2019 through to 2021, and you can see that increase from $3 million to $16 million. The increase that you can see going through from where we are today through into 2022, a material chunk of that is actually driven by Chrysos, and Chrysos is a relatively new technology who's developed and came out of the CSIRO in Australia. It says a revolutionary change from fire assay. If you walked into a traditional fire assay laboratory, it looks like a blacksmith's forge, to want for another word. If you walk into a Chrysos facility, it looks like a hospital. It's really quite the difference in terms of the environmental operations. That's it visually. When you actually think about what it does for the clients, the biggest change here for the clients is that getting that data faster. From the time that you take to put one of the jars on the belt in the picture, you can see the top left-hand side. But when the jar goes through the machine, you actually get the results in 5 minutes. The amount of time it actually takes to prepare for this sample is much shorter because you're actually dealing with a significantly larger sample that you're dealing with and then the process that's after that is much quicker as well. So in terms of time frames, the best fire assay time frames would be a day. You're now getting down to an hour, practically. So a really significant change there. The unit will do 40,000 samples in a month. The scale for a 40,000-sample fire assay facility is much bigger. There's quite a strong ESG component with this. For those of you familiar with fire assay, fire assay uses a lot of furnaces. It burns a lot of diesel or electricity, and the process of smelting that material down and then you're using lead fluxes as well. All of that is removed as well. So quite a significant change in terms of what it does for the environment and for our clients. So we're getting a lot of uptakes or a lot of interest in these units. Our first unit was installed at Barrick and Bulyanhulu in October last year, and that is absolutely performing brilliantly. The client is very happy with the process. And we're assaying gold, silver and copper at that operation, and it's performing very well. The next unit that is going to be up and running is being put together right now in Val d'Or, and that will be turned on by the end of this quarter. And then we're going to continue the rollout of those further 6 units over the rest of the year. Over to you, Jamie.

Thank you. okay. Moving on to the fourth part of contributor to the results, and that's our investment portfolio. We'll go through the returns when we hit the financial section. But it's been a highly effective tool for capital. We really kicked off in earnest. We had been doing direct investments for many years dating back to 2015. However, in 2019, we saw a lack of capital in the market and mispriced opportunities. We deployed that capital and we secured service contracts. And the contract revenue, as you can see, has grown, from investee companies, has grown from $5 million to $41 million over the last couple of years. So highly effective BD tool. It's really formed a very strong partnering relationship with a number of our customers, and the portfolio itself has performed very well. And where we are, obviously, on the ground, interacting with the companies every day and identifying opportunities very early in their life cycle and has proven to be a great model both from BD and from financial returns. Sustainability. The team in London have been working tirelessly over the last 12 months with a number of external consulting groups to put a much more rigorous reporting framework around our ESG activities. A lot of the platforms, particularly with the corporate governance and social responsibility and the health and safety that I referred to earlier, those building blocks are well and truly in place at Capital already. What we have done in those 2 areas just to improve the reporting framework, and we formed a Sustainability Committee late last year and Cassie Boggs, who's ex-Barrick and RCF substantial resource capital funds, she's joined us as the Chair of our Sustainability Committee. So social responsibility, the chart on the top right shows the percentage of our employees that are actually nationals. So again, we've had a lot of history there in training and development programs. In terms of our carbon footprint in the annual report, we have now very bottom-up granularly calculated our carbon emissions, and that's been put in the annual report. And many initiatives have been commenced to reduce those carbon emissions, and we'll enhance the reporting framework around that over the coming periods. But the initiatives, including hydrogen units on some of the equipment where we're trialing in Egypt, electric underground drill rigs that you can see in the picture on the bottom right, Chrysos has huge ESG benefits over traditional fire assay, as Stuart has flagged. So very much a focus for the company. Moving into the results. I'll hand over to you, Giles, if you could please run through.

Great. Thanks, Jamie. So look, in terms of the slide, Jamie's run through the impacts on the revenue. So I think the key takeaway from this slide is in terms of margin. And you can see there that for '21, we delivered an EBITDA margin of just over 32%. And I think that probably surprised us on the upside as well. And when you analyze it, there were a number of factors that helped us and increased that beyond our expectations. So some of the things were that if you look at FY '19 and FY '20, in terms of fleet movements, we actually mobilized about 50% of our fleet. And in 2021, the amount of cross-border mobilizations was relatively small. So that was certainly an improvement. The other part was that we have actually invested a lot in fleet, and we've now got a younger fleet. And the amount of repairs and maintenance we incurred in FY '21 was lower than one would anticipate running into some of these contracts. So for instance, the Sukari mining contract. We also -- in terms of the Sukari mining contract, I think we've seen some digging in softer ground at the beginning of the contract. So we have seen less wear and less consumables, so less consumption of consumables. So such things as tires and teeth on buckets. So I think that certainly, when we look at this and we look at what reasonable margins would be when you've got strong market conditions and tailwinds, now we'd be looking at more of an EBITDA margin range of 25% to 30%. And when we look forward to '22, it's probably more in the higher end of that range. So moving on to the next slide. So building on what Jamie was talking about in terms of the investment portfolio and the strong contribution that made to earnings, so the portfolio effectively more than doubled in value. So we actually had investment gains of over $33 million. Predominantly, those are unrealized gains. But just to give you a bit of color, you can see here in terms of the bottom left-hand graph, this has been a well, sort of, thought through strategy. We invested approximately $8 million in 2019. And in 2020, 2021, the cash flows have largely been neutral. And you can see there on the right-hand side, the increase over -- rapidly over a couple of years. So moving back to the next few slides, we'll go through our -- give you the cash story, the CapEx story and the balance sheet. So this slide is the cash flow waterfall. You can see here that we had strong EBITDA, $73 million. But we also had, as we had flagged, it was a heavy investment year. So CapEx of more or less $61 million, but also increase in working capital, largely inventory at the Sukari mining project, and increase in trade receivables through the increase in the volume of revenue. So taking -- stepping then into -- looking at the CapEx. So as I said, on the top left, you can see here that we've had heavy investment years in 2020, 2021 of about $60 million. As I said, Sukari mining and increasing the fleet, as Jamie said, from $94 million up to $109 million during the end of the year. When we look at 2022, we're guiding to a CapEx of $45 million. To give you some color on that $45 million, approximately $5 million is for MSA and head office, leaving $40 million for the drilling and mining divisions, and approximately $25 million of that is sustaining stay in business CapEx and the remaining $15 million is growth CapEx. That growth CapEx is entirely drilling related. We have not built any assumptions in here in terms of winning a new mining contract, either in the revenue or in the CapEx. And if we were to win one, then that would be a transaction where we'd have to revise our forecast. Bottom left, you can see here that the investment in 2021 of CapEx and working capital is very much a first half, H1 story. And you can see that there was a strong return to operating cash flows and free cash in the second half. So completing the story in terms of cash and CapEx and balance sheet. So in terms of the year-end, we ended up with a net debt position of around about $32 million, which is approximately 15% gearing ratio. If you do the sums and take our revenue guidance, supply and EBITDA margin and the CapEx and take off some cash, interest and dividend, then it would be reasonable to assume that, that net debt would decrease and probably half or thereabouts. So when we think about the balance sheet, we -- in terms of funding growth, I think the leverage ratio is probably a good one to use, and we would be comfortable going up to approximately 1x EBITDA for net debt. So let's just say EBITDA was $80 million, then we would be comfortable going up to our net debt position of perhaps $80 million, which would, therefore, mean that we have capacity on the balance sheet in theory to self-finance through debt a Sukari-like contract and not have to go to the market to raise equity. And all of the -- if we look at that debt, the debt number, the $62.5 million, $15 million of that is revolving -- a revolver, working capital effectively, and the remainder $40 million, $45 million, $47 million is asset-backed finance. Okay. Just rounding out then in terms of our capital allocation, capital management policy. We certainly see ourselves as being a growth company and therefore, keeping a strong balance sheet and being able to fund -- self-fund our organic growth. However, we do recognize that we do need to reward shareholders. So we do have a relatively modest payout policy. So we pay up to 20% of net operating profit after tax. We declared a $0.024 final dividend, which totals $0.036 for the year, so around about 17% payout ratio. We did also, from a capital management perspective, initiate a buyback in beginning of January, a small one, USD 2.5 million, which I think was well-received. And it's certainly something that we would look at keeping in our back pocket and use as and when appropriate going forward. So with that, I'll hand back to Jamie for the outlook and guidance.

Good. Thank you, Giles. Strategic priorities for the years ahead. The statements themselves are a little underwhelming, they're a little bland. But the fact is we've now done a lot of the work establishing these core business streams. So our focus very much in 2022 and beyond, particularly as this cycle gathers momentum is to really build on those platforms that we've created and expand the breadth and depth of the customer base to expand the services and continue with the model that we've been deploying. We remain very focused on choosing the right partners both in terms of people and projects. And we do have a demonstrable track record. I mean some of our customers, for example, we've been at the Sukari site since 2005. We've been at Geita since 2006. We've been at North Mara since 2008. We've been at Tasiast since 2010. We are looking for long-life mine sites with favorable cost structures where we can grow with the customer, and we'll continue to do that as a key focus. Maintaining a strong balance sheet, clearly, a focus for the company. And obviously, as always, delivering world-class health and safety, and delivering world-class standards, frankly. The outlook, look, we've covered in the macro section. I can't overemphasize that the stars are aligning with respect to all the lead indicators, and we certainly have significant tailwinds. To the point, as I raised earlier, we upgraded guidance -- revenue guidance twice last year and still came out above the top end of that guidance. So certainly, a very supportive environment, and that's given us confidence in our revenue guidance this year, a 21% increase, and we're looking forward to a number of good years ahead as this cycle gathers momentum. That brings us to the conclusion of the formal presentation. So we'll now revert to open to the Q&A session. Thanks.

[Operator Instructions] I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. As you can see, we've received a number of questions prior to and throughout today's presentation, and thank you to all the investors for submitting those. Could I ask you to read out the questions and give response where it's appropriate to do so? And then I'll pick up with you guys at the end.

Very good. Sorry, I lost the line there for a second and talked at the top of you. Conor, do you want to chair this questioning session? Or would you like me to?

I don't mind, but if you like, I think I could carry it.

Yes...

Sure. so I think the first one is on equity investments. The question is, because I understand that you have a number of investments in unlisted mining companies in terms of the 2021 balance sheet, are these holdings shown at cost or based on the estimates? Yes, so in terms of valuation of the unlisted.

They're quasi based on the -- our estimate of their value, but it's done with rigorous peer comparators. The largest of those unlisted is a company called Allied. They're an African producer. So therefore, we look at resources, reserves, production profile, profitability measures, comparing against the peers. We apply an unlisted discount. That goes through our investment committee, and that then goes through the audit process in the Audit Committee. So it's very fundamentally based peer analysis to underpin the valuation. That is done every 6 months.

Sure, thanks. Maybe one for Stu here. I recently saw that Anglo Asian is using X-ray diffraction in portable machines to get live geochemical analysis of samples. I wonder if that's a competitive threat to PhotonAssay and what MSA is doing.

Yes. So it's quite a different technology, and it tends to be a part of a different application as well. It's more the Chrysos as a much broader application. So it's not a competitive threat.

Thanks, Stu. Maybe one for Giles. Revenue has increased from $135 million to $226.8 million. Trade and other receivables have gone from 18.9 to 42.2. What are the reasons for the increase in these receivable days?

Great. Thanks, Conor. Well, look, I think, first of all, in terms of where trade receivables finished at the year-end, I think it's perhaps more comparable not to use the full year revenue but to look at the revenue for the fourth quarter as we released in our Q4 trading update. Revenue for the fourth quarter was $66.5 million. And I think if you work it out, that takes [ debtor ] days [ down sub-60 ]. So it's partly that. And also we -- trade receivables at the end of 2020 was slightly lower than anticipated because we received some funds ahead of terms. But in terms of -- I think the main thrust of the question is, is there an issue? And certainly not. We're in terms across the board.

Thanks. I think more looking forward here, maybe one for Jamie. Do you see future growth coming organically? Or are you looking to M&A as part of the move forward?

The history of Capital is predominantly organically. And actually, the only business that we've actually acquired was MSALABS. But when -- as when Stuart went through his revenues history slide, when we bought it, there was negligible revenue. What we bought was a platform and a business that had accreditation, and then Stuart stepped in and grew it from there. So our preference is to grow organically. We're very focused on the culture of the company, and the culture has delivered over the years. We find that we have success in recruiting good quality people. And obviously, we can purchase the equipment that we need to grow. So the primary focus is organic.

Thanks, Jamie. A couple of here on the portfolio. It's had an incredible year. Have there been any significant realizations to date? And what is the plan with this going forward?

There has been realizations. And as Giles showed in those slides in the last 2 years with essentially the portfolio is called on head office for a total sum of $600,000. Whilst the portfolio has gone up by, what, 45, 50, we've been recycling capital. So there has been realizations that have gone into -- back into either new positions or alternatively into upsizing some of the core positions that we believe have got significant upside due to the quality of the ore bodies and the management teams running them. So yes, it's been validated via realizations, and we'll continue to do so when we think appropriate.

Thanks. I guess a couple here on each of the divisions. I'll start with MSA. You've previously said that MSALABS could be a $50 million revenue business by 2024, 2025. Is that now looking a little light given 2022 is forecasting $30 million of revenue and shows no sign of slowing down?

It's yours, Stu.

Look, it's a little bit early to say. What I'm looking for primarily with the business is the steepness of the curve as we go out of this year. We've got a number of projects. We're currently constructing 3 new facilities. We're upgrading 3 further. And in terms of guidance for the following year, it's going to be around the timing and the rate of adoption of these new facilities that will drive where it gets to. I'm comfortable with the $30 million position. We'll talk to what that's going to look like for the following year once we get closer to the end of the year.

Yes. I mean you're probably being slightly appropriately cautious with respect to guidance, let me put it. We said, as Stuart and his team have built this platform that is creating a much stronger base moving forward, I mean, certainly, yes, we had flagged 50 now. The thinking is growing beyond that. 80 is a number that we've discussed. And you can see a run rate to take it further than that. We're certainly not providing specific guidance on further out, but this business has got momentum now. So we think -- our thinking has evolved, and we do think it has more potential than we probably did 12 months ago.

There's a couple of questions here that are broadly linked. Looking at the split of our business divisions, 78%, 22% split of drilling business versus our nondrilling businesses. Can you talk about the different margins of each of these businesses and how they fall to the bottom line? And then I think a similar question is what correlation is there between ARPU and the rates you get on mining and earthmoving services?

Do you want to take that?

Yes, yes, I'll take that. Okay. Okay. So the -- yes, the split between the revenues on the GP. So broadly speaking, the margins are not dissimilar between the 3 businesses. I think traditionally, you'd say that mining might be slightly lower than drilling. And certainly, if you look at -- and maybe, Stu, you can give some more color on this as well. But when you take a look at MSA, if you look at comparable larger businesses, then their EBITDA margins are certainly in that range of that 25% to 30%. I think if you look at SL, I think they're probably around about the 30% range.

Yes. MSA is significantly higher. Their EBIT is sort of 30% range for the geochemistry component of the business.

Great, and thanks. A couple more on the divisions. Are there any plans to get more exposure to other commodities in the drilling, such as -- I mean the question here is helium and maybe a little specific, but I guess the other commodity exposure?

When we came to market back in 2010, we had about 30% to 35% of our revenue coming from copper, nickel and the balance from gold. As we expanded geographically and the base metals market weakened, the gold market stayed relatively robust. That portfolio moved to 95% gold. What's particularly encouraging is that we've recently announced some new contract wins, or 3, actually. With the results last week, we announced a 3-year extension at Jabal Sayid, which is a copper mine in Saudi Arabia. And then recently, we announced a drilling contract with Leo Lithium, which is part of Firefinch, currently. That's the Goulamina Lithium deposit in Mali, which is one of the largest undeveloped spodumene deposits globally. And then, finally, we announced recently that we just started drilling at Kabanga Nickel in Tanzania, which coincidentally is one of the first jobs we ever had as a company way back in 2005. And not long after started to drill at Kabanga Nickel, BHP announced that they're going to have earn-in by spending $100 million. So the demand for services from what's called the battery metals is certainly increasing, and we certainly expect to get a greater exposure to that moving forward.

Thanks, Jamie. Now one on mining. The question is, you've clearly seen -- keen to get another Sukari-type contract. Can you talk a little bit about the pipeline of these projects and what the competition is like on them?

We certainly are keen. And I think one of the critical points to make is that the team that have done an outstanding job commissioning and ramping up Sukari, pretty much their job is done. And we do have the capacity and bandwidth both operationally and financially to look at another opportunity. As I said, when we were talking through the mining slide, what's particularly encouraging is the number of new development projects there. At the moment, I could count on one hand new mines that have been developed in our geographies in the last couple of years. But if I look forward, I need more than both hands. In Tanzania alone, there's 3 projects that are close to financing stage and multiple in West Africa. So the pipeline is very, very encouraging. In terms of competition, look, it's -- the way I'd sort of articulated it, it's drilling all labs with a lag. What you're seeing in the drilling and lab businesses as activities picked up, they're very responsive businesses and they're already finding capacity constraints. Mining, these are longer lead times, longer duration contracts. So what's happening at the moment in the competitive market is the idle equipment is going back to work and predominantly going back to contract or going to contracts that are for existing operations. But what that's obviously doing is taking the spare capacity out of the industry. So I think as you look H2 and beyond, it will be a bit of an even playing field for new contracts because all the contractors will have to source the equipment. They can't just get it from their shed. And then your capability, as opposed to your speed of response, will actually become a more significant factor.

Thanks, Jamie. Now maybe one, just flipping into the company operations themselves. A question here on COVID related. Any COVID-related personnel issues and maybe we broaden that to just the labor situation in general?

I have to -- we've managed through COVID particularly well. In fact, we've had 2 of our strongest growth years through COVID. One of the -- we actually got asked this question interestingly right in our first audit during COVID. And my response was that mine sites are actually one of the safest destinations because everyone gets health screened before they walk in a security guard. So very well-controlled environment. And we've had no major -- we've had hiccups here and there, but certainly nothing material in terms of supply disruption, personnel disruption. Certainly, it's added layers of complexity to traveling and quarantine, but I'm sure everyone on this call has felt that as well. But we've managed the business through this very well.

Thanks, Jamie. Just a couple more. First one on MSALABS. Would you consider spinning that out given the growth rates? It would undoubtedly get a much higher rating than brokers are currently attributing.

Options are on the table. Let me put it that way. We run a capital allocation model at head office. We look at the regions and allocate capital on a returns basis and look at capital returns, contract strengths, et cetera. When it comes to the individual businesses, MSALABS, to the questioner's point, the labs businesses, in general, trade on significantly higher multiples. So it's a possibility is what I would say, but we're in a very rapid growth phase. We don't think we'd get the recognition of value to do that prematurely. So certainly, whilst it sits within the broader group with an independent management team, we'd rather see this business reach a much larger scale before that became a topic to be tabled.

Okay. Now I think we'll finish on one of these number questions. I think Giles alluded to it in the presentation. But given the share price in the market doesn't seem to be giving enough credit to the share price, does it not make sense to be aggressively increasing the buyback?

Yes. Look, so Conor, as you said, I did touch on that. And again, I'd just reiterate, we did a buyback. It was a small one, $2.5 million. Our focus is on growth and retaining a strong balance sheet and being able to internally fund organic growth. However, if the time was right, we would, I think, look at another buyback. But again, it would be relatively small.

That's great. Conor, thank you for chairing the Q&A. I think you actually managed to address all those questions from investors. And of course, the company will review all questions submitted today, and we will publish those responses on the investor company platform. Just before we direct investors to provide you with their feedback, which I know is particularly important for the company, Jamie, could I ask you for a few closing comments?

Certainly. So I think, look, obviously, in conclusion, I think the key takeaway is that the business has done and the team have done an outstanding job over the last number of years, really positioning the business geographically and service offering-wise to capitalize on this cycle. And one of the questions, certainly from the institutional market I think we get is where are we in the cycle? And look, we're firmly of the view that this is early stage. I mean it was literally 12 months ago that the demand really started to take off. So we're approaching this cycle, geographically established service offering, established very robust balance sheet and a team of some very highly capable people. So certainly very bullish and very positive on the years ahead. So look, on that, I'll conclude. I just want to thank everyone for dialing in today. Thank you very much for the questions, and look forward to communicating again with our next release. Thank you very much.

Jamie, thank you very much. And thanks to all the team for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected by your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company. On behalf of the management team of Capital Limited, we'd like to thank you for attending today's presentation, and good morning to you all.

Thank you.