Capital Limited ($CAPD)

Good morning. Welcome to the Capital Limited Annual General Meeting. For I'd like to hand over to Chair, Jamie Boy. Good morning.

Good morning. Thank you very much, and welcome, everyone, to Capital Limited's Annual General Meeting. I'd like to introduce some of the Board and senior executives that are joining me on today's call. In London, we have on the screen from assuming they're on the screen actually from left to right, Graeme Dacomb, who's the Chair of our Audit Committee; Catherine Athor -- sorry, Rick Robson,our Group CFO; and Catherine Apthorpe, our Company Secretary. Joining us on the line from Denver at 3:00 a.m. Thank you very much, is Cassie Boggs, the Chair of our Sustainability Committee. And we've got Ryan Tennis on the line from Perth. He's the Head of IR. And just to round out the disparate locations, I'm dialing in today from Hong Kong, but welcome, everyone, to the Annual General Meeting. As per previous years, we'll do a quick introduction slide deck before handing over for the resolutions and then through to Q&A. Just by way of introduction for those on the call that aren't familiar with Capital reintroduction, we are an integrated services provider to exploration and mining companies across Africa, the Middle East and North America. We run 3 distinct operating businesses, specifically Capital Drilling, Capital Mining and MSALABS, which very broadly have a revenue split of about 60% Capital Drilling, 20% Capital Mining and 20% MSALABS. Capital Drilling runs a fleet in the mid-130s of rigs, the largest drilling rig fleet in Africa and the Middle East with some operations in the U.S. in Nevada, running a full range of drilling services from exploration through to grade control blast and underground. Capital Mining is a niche service provider for load and haul services. We're currently running 2 contracts in our portfolio, one which has recently commenced, the second iteration of the Sukari waste stripping contract in Egypt and the Reko Diq mining contract that has been running now for about 12 months. MSALABS has about 36 labs spanning operations in Africa, the Middle East and the Americas with quite a substantial footprint in the U.S. and Canada and is very much a high-growth vehicle within the group. Outside of those operating businesses, the company has 2 other arms, specifically capital investments, which is a venture capital investment fund targeting early-stage explorers and developers have been very successful and currently running a portfolio of around about USD 110 million. And capital Innovation, which is a working group within the business that is tasked with identifying developing technologies, bringing them onto our platform, integrating them within our business and commercializing them where we've had a lot of success specifically the PhotonAssay in our laboratory business being the first company to roll that technology out on a global basis and more recently made investments in a water testing business, Eco Detection and an analytical testing company, Portable PPB. So that's the introduction to the businesses. I'll move on to the operational updates. And just as a reminder that we released our first quarter revenue results on the 21st of April. That was, in fact, a record quarter for the company. We recorded revenue of $101.7 million, which was up 42% on the first quarter of 2025. Within that framework, the drilling business saw a 9% increase in revenue. Our mining business, which was in the stages of fleet redeployment in the first quarter of last year, so not a reference point per se. But as the contracts increased activity, redeployed the assets in the second half of last year. So the mining revenue in the first quarter was up almost double on the fourth quarter of last year. And then MSA revenue in the first quarter was up 55% on the first quarter of last year. So an all-round very strong trading result. Just going through a little more divisional detail. The drilling business as is certainly trading well. As I said, revenue up 9%. We are seeing an improvement in our ARPU, which is the measure of the output of the revenue output of the rigs on a monthly basis. Utilization is running in the low to mid-70% range, which is near what we regard as optimal, and we're seeing very good demand across the drilling platform. The mining business, as I mentioned earlier, we were recently awarded a new contract, which was our second iteration for the waste stripping contract at the Sukari Gold Mine in Egypt. That contract was announced in the first quarter, has started ahead of schedule, is operating to plan and with further equipment due to arrive in the coming quarter and is performing very well. And the Reko Diq contract has continued its ramp going through its ramp-up phases and is currently operating to plan. Across MSALABS, we are seeing widespread increase in demand for our laboratory business as reflected in that first quarter revenue up 55%. We have seen utilization increase. We have recently announced the commissioning of a new lab in Newfoundland in Canada, which is underpinned by a long-term contract with Equinox at the Valentine mine. And we are very close to commissioning 2 new lab builds, one a client-based lab for Montage in the Ivory Coast and another a commercial lab in Northern Ivory Coast. Both are expected to be commissioned in the third quarter. We have included some commentary about the recent turmoil in the Middle East and the impact on our operations, just obviously because it's a pertinent topic at the moment. We have reported that we've had no disruption to any of our on-site activities from the recent geopolitical tensions. We have not had any indications that our customers are experiencing fuel supply issues and getting a little granular here, but we often get asked about the impact of fuel prices, almost exclusively, the fuel prices are borne by the customers as opposed to us as the contractor. And in recent weeks, the initial travel and logistics disruptions that we saw with the disruption in the Middle East have normalized to a large extent. So the business trading very well as per the first quarter update that we provided. In terms of guidance and outlook, we've maintained the guidance that we released with the full year results in March, where we have revenue guidance of $410 million to $440 million, which puts us back on a growth path of circa 20% revenue growth year-on-year. Within that, MSA's guidance is $85 million to $95 million off a base of $73 million last year. Turning the focus to the macro conditions in which the company is currently operating. We have in recent times announced multiple new long-term high-quality contracts. We obviously raised capital in late 2025 with a lens to the demand pipeline that was increasing quite significantly, which has given us the ability to preempt some asset purchases, a very clear example being the purchasing of equipment for the Sukari mining contract. It's given -- put the business in a very good position to capture this demand that is coming through. Obviously, we're operating in an environment of record commodity prices. And we've used this chart in some previous recent presentations. And I think it's very important to -- we've deliberately shaded 2 areas of this chart. It's with a lens on the previous cycle where obviously, there was a very strong demand environment and very strong commodity prices. But you can see that the free cash flow that was generated in the sector in the previous bull cycle that ran until sort of 2012, generally was negative free cash flow, very heavy CapEx cycle, a lot of M&A activity. The period that we have entered in the last 18 months is quite unprecedented in my experience in the industry. And particularly the parabolic move in the gold prices, obviously, which is the largest commodity that we face as a service provider. It's generating record free cash flows for our client base. Now within that, we're yet to see a significant inflection in exploration spend within the industry, which is a disconnect. We are certainly starting to see an increase in M&A activity. We're certainly starting to see an increase in brownfields budgets at the mine sites, and we're just starting to see the increased demand coming from the exploration market. So we're very much of the view that we're at the front end of the demand cycle as it relates to the service providers. And we do think that we are well positioned for a very strong period of demand for the years ahead. So on that note, I will hand over to Catherine to read the resolutions, please.

Thanks, Jamie. Good morning, everyone. Turning to the formal business of the meeting. The registrar has confirmed that the shareholders' quorum is present for the meeting to proceed. This meeting has been convened to consider 12 ordinary resolutions and 2 special resolutions. Resolutions 13 and 14 are special resolutions, which require 75% or more of the votes cast for the motion to be carried. All other resolutions are ordinary resolutions and will be passed if more than 50% of the votes cast are in favor. The business of the meeting is confined to the consideration of the resolutions contained in the notice of the meeting dated the 16th of April 2026. If there are no objections, I propose taking the notice as read. It's intended that voting on all resolutions at this meeting will be conducted on a poll rather than a show of hands A poll reflects the number of voting rights exercisable by each shareholder, and so the Board considers it to be a more democratic method of voting. A poll also ensures that the votes of shareholders who have appointed proxies are taken into account in the final voting results. I hereby call a poll in respect of all the resolutions. As it will take some time to complete the poll procedure, the final results of the voting, including the proxy votes on the resolutions will be announced through our regulatory information service and published on our website as soon as reasonably practicable. When you registered your attendance, you will have been given a poll card, which shareholders, proxies and corporate representatives should complete and sign as indicated. Shareholders are presented with 3 options for each resolution. You can vote for the proposed resolution against the proposed resolution or you may withhold your vote. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote or abstain from voting as he or she thinks fit in relation to any other matter which is put before the meeting. I should mention that for those shareholders who have already lodged a proxy form, you do not need to complete a poll card unless you want to change your vote. Please complete your poll card by marking with an X the appropriate box next to the relevant resolution, depending on how you wish to cast your vote. Please then sign the poll card and hand it to me at the end of the meeting. Should you require any further assistance, I will be happy to assist you. We will now proceed to vote on all the resolutions, which I will formally propose to the meeting. The full text of each resolution is set out in the Notice of Meeting. Resolution 1. The first resolution as set out in the notice of the Annual General Meeting is an ordinary resolution to receive and adopt the financial statements of the company for the year ended 31st of December 2025, together with the reports of the directors and auditors. I now propose that the financial statements of the company, together with the reports of the directors and auditors be received and adopted. Will you please vote now. [Voting]

I declare the poll closed. Resolution 2. The second resolution is an ordinary resolution to receive and approve the directors' remuneration report for the year ended 31st of December 2025. I now propose that the directors' remuneration report be received and approved. Will you please vote now. [Voting]

I declare the poll closed. Resolutions 3 to 9 are ordinary resolutions to re-elect each director of the company being Cassie Boggs, Jamie Boyton, Graeme Dacomb, Alex Davidson, Anu Dhir, Michael Rawlinson and Brian Rudd. I now separately propose each of the resolutions 3 to 9 to re-elect each of the directors just named. Will you please vote on each resolution now. [Voting]

I declare the poll closed. Resolution 10. The 10th resolution is an ordinary resolution to reappoint BDO as auditor of the company. I now propose that BDO be reappointed as auditor of the company. Will you please vote now. [Voting]

I declare the poll closed. Resolution 11. The 11th resolution is an ordinary resolution to authorize the directors to agree the auditor's remuneration. I now propose that the directors be authorized to agree the auditor's remuneration. Will please vote now. [Voting]

I declare the poll closed. Resolution 12. The 12th resolution is an ordinary resolution authorizing the Board of Directors of the company to allot and issue equity securities up to an aggregate nominal amount, which represents approximately 33% of the existing share capital, the full wording of which is set out in the notice of AGM. I now propose this resolution is passed. Will please vote now. [Voting]

I declare the poll closed. Resolution 13. The 13th resolution is a special resolution authorizing the Board of Directors to issue shares for cash without the shares first being offered to existing shareholders in proportion to their existing holdings provided that such issue does not exceed an aggregate nominal amount, which represents approximately 5% of the existing issued share capital of the company. The full wording of this resolution is set out in the notice of AGM. I now propose that this resolution is passed. Will please vote now. [Voting]

I declare the poll closed. Resolution 14. The 14th resolution is a special resolution to authorize the directors of the company to make market purchases of up to a maximum of 22,570,159 common shares of the company, the full details of which are set out in the notice of AGM. I now propose this resolution be passed. Will you please vote now. [Voting]

I declare the poll closed. We will make an announcement of all final results of the meeting to the market through our regulatory information service and posted on our website as soon as practicable. Ladies and gentlemen, that concludes the voting. That's it for me. I'll pass you back to Jamie.

Thank you. I think it's over to Ryan in terms of Q&A, please.

Correct. I have a couple of questions there. So Jamie, first question is how scalable is the current operating model of Cap?

I'd look at that through the lens of a couple of things. The infrastructure that's in place at the corporate level is certainly scalable. But I'd probably dive into the operating levels. And where I'd look at is the availability, asset availability and capacity availability with an operating lens. Certainly, from a mining fleet perspective, we -- there's not a lot of latent capacity within the business. However, there is latent capacity to a degree in the drilling business. Certainly, the ability to pick up maybe another 10 rigs in terms of utilization, but the company has been very selective at the moment about the opportunity set because we do think the demand is going to be strong and sustainable. And therefore, it's about picking the right contracts that are going to have duration over the forthcoming cycles. In terms of our lab business, last year's revenue was in the mid-70s, and that was a lab business running at approximately -- in the mid-40s in terms of utilization. So there's certainly a lot of scalability and operating leverage within that platform. We've added labs in the interim, but obviously, there's the ability on a $70 million revenue base to another $30 million to $40 million worth of revenue just by putting further volumes through that pre-existing infrastructure. So there is scalability within the operating platform with the exception of our mining business, as I said, which at the moment is close to fully utilized.

Thanks, Jamie. And then second question is, how does management view the company's market position compared with competitors today versus a few years ago?

I think unequivocally, it's improved, and it's a function of the improving demand environment. when answering questions about market position, I think even when a lot of investors look at us as an Africa Middle East predominant on our drilling side of the business, for example, there are very specific nuances to each and every country in which we operate in and very different competitive dynamics in each country in which we operate in. But broadly speaking, an improving demand environment is -- it strengthens our market position. And the main function of that is that we are a premium provider to the sector. We differentiate ourselves with our safety standards, our equipment standards, our training and development programs, and we price ourselves accordingly, and we are known for delivery. So as the market improves and budgets are allocated that are increased year-on-year, we're seeing an increasing propensity for our customers to focus in on service providers that can actually deliver the outcomes that they need in this very strong demand environment. So we've also seen less international competition in a number of our markets. So as an international provider, we are, in many markets, the largest or only international provider. So certainly, market conditions and the dynamics of our competitive position have improved as this cycle is kicking off.

Thanks, Jamie. That is all the questions today. I'll hand over back to Mark to close out the session.

Thank you.

Thank you to the Board and thank you for those joining online. We will now redirect you for your feedback.