Capital Limited

Overview

An investor-focused analysis of Capital Limited (LSE: CAPD), a mining services group providing drilling, mining and geochemical laboratory services. The report distills the latest reported financials, operating trends, and trading updates and evaluates the stock through William J. O’Neil’s CAN SLIM framework to determine an actionable rating.

Financial and Business Overview

Business model: CAPD generates revenue from three primary segments: (1) Drilling (exploration, delineation, grade control, production) and associated services; (2) Mining (load-and-haul and civils); and (3) MSALABS geochemical laboratories (featuring Chrysos PhotonAssay technology). 2024 results (audited): Revenue $348.0m (+9.3% YoY), Adjusted EBITDA $80.0m (23.0% margin, down from 28.8% in 2023), Operating profit $39.3m (or $47.3m ex-exceptionals), NPAT $18.3m (-52.5% YoY), Basic EPS 8.87c (-53.5% YoY). Free cash generation remained solid: cash from operations (adjusted for IFRS 16 leases) $77.1m (vs $84.3m in 2023). Net debt ended 2024 at $75.7m (vs $69.8m), with cash $40.5m and investments held at fair value $30.3m that provide additional flexibility. Capex moderated to $67.2m in 2024 (guidance $45–55m for 2025). Dividend was reduced to 2.6c for 2024 (from 3.9c in 2023). Operating KPIs: FY24 drilling utilisation 73%, ARPOR $204k/month (up 9.7% YoY), average utilised rigs 92; year-end fleet 130 rigs. Strategic shifts: Sukari waste mining contract ended in 2024 and Belinga mining contract concluded; CAPD is now focused on the large new Reko Diq copper-gold project (Pakistan) where it signed a major TSF/early works civils mining contract in 2025. MSALABS is scaling rapidly via PhotonAssay roll-outs and new labs (Nevada, Alaska, Saudi Arabia), albeit with earlier-than-expected ramp-up delays now improving.

Market Position & Competitive Advantages

Position: CAPD is a diversified African-centric mining services provider with growing presence in North America and the Middle East. It combines one of Africa’s largest independent drilling fleets with an expanding global lab network (MSALABS) and selective mining services. Competitive advantages: (1) Integrated offering—ability to bundle drilling plus labs (fast-turnaround PhotonAssay) to reduce client cycle-times; (2) High-quality client base, evidenced by multi-year contracts and extensions (e.g., Barrick Lumwana grade control to 2028; Allied Sadiola to 2027), and a marquee new mining contract at Reko Diq; (3) Safety and execution culture—TRIFR ~0.78–0.81 per 1m hours, which supports contract wins; (4) Capital discipline—capex materially reduced in 2025 post a multi-year investment cycle. Risks: (a) Earnings volatility during ramp-ups (US drilling, MSALABS, Reko Diq) with margin compression in 2024 and early 2025; (b) Country risk—exposure to Pakistan (Reko Diq), parts of Africa (DRC, Mali, Côte d’Ivoire, etc.) involving permitting, logistics and security; (c) Client concentration—H1’24: top two customers represented 46% of Africa segment revenues (Customer A 31%, Customer B 15%); (d) Balance sheet—moderate net debt ($75.7m FY24) alongside OEM/supplier finance and higher interest costs; (e) Execution risk in North America (Nevada) where earlier delays impacted returns; (f) Dividend reduced, signaling a near-term focus on balance sheet and growth capex over payouts.

Stock Performance

Share performance has lagged. FT data show CAPD down ~26% YoY by mid-May 2025 (GBX ~71.7 at that date). As of 9 Nov 2025, the structured feed shows the ADR/overlay price at ~$19.37 vs 52-week range ~$19.3–22.41 and trading below both 50-day (~$22.30) and 200-day (~$22.22) averages—indicative of a downtrend and weak relative strength. While operations improved QoQ in Q2’25 and guidance has been raised twice in 2025, the equity has not yet discounted a sustained margin recovery and continues to trade near its 52-week lows, reflecting investor caution on execution and geopolitical risks.

CAN SLIM Analysis

Conclusion

O’Neil discipline emphasizes accelerating quarterly EPS, strong annual growth, top-tier RS, and tight supply-demand dynamics—none of which are decisively present yet. Fundamentally, CAPD’s 2024–H1’25 margin pressure should ease as (1) Reko Diq ramps (civils underway, TSF to build through 2025–26), (2) MSALABS scales with PhotonAssay and new labs, and (3) capex falls, enabling stronger cash conversion. Management has already raised 2025 revenue guidance, suggesting top-line traction; however, the CAN SLIM ‘C’ and ‘A’ boxes require proof of EPS inflection and sustained margin recovery. Risk/reward improves at current depressed levels, but a higher-conviction BUY under CAN SLIM would need: (a) clear EPS acceleration in reported H2’25/FY25 numbers; (b) price reclaiming and holding above key moving averages on rising volume; (c) continued contract wins/execution (Reko Diq, NGM drilling) translating to margins closer to historical targets (Adj. EBITDA 25–30% at group level, 15–20% for MSALABS). For now, maintain HOLD with a watch list status; accumulate on technical confirmation and EPS re-acceleration.