Capital (LSE:CAPD) — Annual General Meeting

0:01 Good morning, and welcome to the CAPITAL LIMITED annual general meeting. Throughout this recorded meeting, attendees will be in listen only mode. I'd now like to hand you over to Jamie Boynton, chairman. Good morning to you, sir. Good morning. Thank you very much, and welcome to everyone that's dialed in today to CAPITAL's annual general meeting. Thank you very much for dialing in.

0:26 I will just give a brief overview of the agenda today, and and and really what we're gonna focus on is is is a quick run through of some overview slides, which includes outlook statement. We're then gonna hand over to Catherine Appville Appville, our company secretary, and Catherine will go through the results of the voting. And we'll then hand over to a q and a session. Just for your reference, you're likely to hear from or, obviously, hear from myself today, Catherine. With me is Peter Stokes, our CEO Rick Robson, our CFO and Connor Rowley, our corporate development and investor relations. So it'll be a combination of us depending on the, the questions that we feel today.

1:17 A brief introduction to CAPITAL for those that aren't familiar with us, but obviously, we're an integrated, multi disciplined service provider to mineral exploration, development, and mining companies across Africa, The Middle East with a growing presence in Canada. The service verticals, the main three service verticals are the drilling business, which is the the foundation of CAPITAL where we operate around 125 rigs in Africa and The Middle East making us the largest service provider or drilling company in the region. Mining, a newer business initiative for us and we've operated two projects both in Africa and Ivory Coast and Egypt, that's an earthmoving business.

2:12 MSA Labs, which is a very rapid growth geochem testing business And that is focused, global in nature with a very strong presence in Africa and Canada and going through a very rapid growth phase, 75% revenue growth year on year, so very strong growth there. Our investment portfolio, which is focused exclusively at this stage on, investments, in exploration and mining companies that are focused in Africa. And the fifth pillar of our business is our newly created innovation, division. It's been established since Peter came on board, which is in October of last year. And it's really been designed to put some structure around how we're approaching new technologies and how we can bring them into our business.

3:06 The genesis of that was obviously what we did with the Chrysos technology, which has been very successful for our laboratory business. Wellforce, our downhole survey business, more recently, mine power solutions, remote power solutions business, which we're looking at getting off the ground. So they're the five key pillars to the business. We provide services across the mining cycle all the way from exploration into production and processing. So we're an end to end service provider. We have a focus on tier one projects, meaning long life assets with low cost of production, growth prospects, and owned by top tier customers.

3:53 We have a business model to establish infrastructure at our customers' operations and grow our service offering offering leveraging that infrastructure, a focus on long term contracts, and about 90% of the group's revenue is derived from the services and activities that we provide at the mine sites.

4:19 The most recent update that we provided to the market was obviously the Q1 trading update where we showed very strong growth in our first quarter revenue, 16% higher than first quarter of last year. That growth has come predominantly from continued performance of our drilling business, particularly pleasing to see an increase in the ARPOR of the drilling business as we rationalize the portfolio in the second half of last year and have seen an improved performance on the remaining core portfolio and then continued rapid growth in our laboratory business. The mining business, which is the contract we're currently operating at Sukari, continues to perform very well, providing a very good platform across all three of the operating businesses.

5:19 Reiterating our outlook and guidance, we're guiding this year the revenue of $320,000,000 to $340,000,000 which is, as you can see, a very strong increase in that bottom right chart from $115,000,000 in 2019 when we were predominantly or almost exclusively a drilling business. The revenue contribution from our non drilling activities were from our mining and laboratory activities and moving in the high 20%. So we're very pleased with the growth there. Within that revenue guidance, we're guiding the laboratory business to contribute $40,000,000 to $50,000,000 this year with CAPEX guidance of $50,000,000 $60,000,000 These guidance numbers are consistent with the previous guidance numbers that we've given the market.

6:11 We are continuing to operate in extremely buoyant and supportive conditions. The portfolio of contracts on which we're working is as robust and strong as I've seen it in the company's history, providing a lot of growth opportunities not only within the existing platform and of of of projects, but also new tendering opportunities. A very brief introduction. On that note, I'll hand over to Catherine to run through the resolutions, The meeting has been convened to consider 12

7:12 resolutions, two resolutions. Resolution thirteen and fourteen 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 combined to the consideration of the resolutions contained in the notice of the meeting dated 04/13/2023. If there are no objections, I propose taking the notice as read. It is 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 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.

8:02 I hereby call a poll in respect of all the resolutions. As it will take some time to complete the poll procedure, the final result 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. Shareholders are presented with three 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 fits in relation to any other matter which is put before the meeting.

8:51 We will now proceed to vote by resolutions, which will formally propose to the meeting. The full text of the of the resolutions is set out in the notice. Resolution one. First resolution is an ordinary resolution to receive and adopt the director's report and accounts and the auditor's report for the year ended 12/31/2022. Prior to putting the first resolution to the meeting, I would draw your attention to the following proxies received by the company in relation to the resolution. So total votes, a 151,450,846, which is 78.2% of the current issued share capital. Four, a 151,450,846, which is a 100% of the votes cast against zero, and votes withheld 1,467,153.

9:45 I now propose that the directors reporting accounts, auditors reports be received and adopted. Will you please vote now?

9:56 I declare the poll closed. As mentioned at the beginning of the meeting, it will take some time to complete the poll procedure. Therefore, the results of the poll will be announced through our regulatory information service and posted on the company's website as soon as practicable. Second resolution, ordinary resolution to receive and approve the director's remuneration report for the year ended 12/31/2022. I'd like to draw your attention to the following proxies received by the company in relation to the resolution. So the total votes was 151,417,999, which is 78.2% of the current issued share capital. Votes in favor, a 149,242,899, which was 98.5%, 56% of the votes cast by proxy against 2,175,100,

10:52 which is 1.44% of the votes cast by proxy. Votes were held 1,500,000. I propose that the director's remuneration report to be received and approved. Will you please vote now?

11:09 I declare the court post. The results of the poll would be announced through our regulatory information service after meeting. Resolutions three to nine are ordinary resolutions to reelect all directors of the company being Alex Davidson, David Debry, Michael Rawlinson, Jamie Boynton, Peter Stokes, Brian Rad, and Cassie Fox. Prior to putting resolutions three to nine to the meeting, I would like to draw your attention to the following proxies received by the company in relation to each resolution. So resolutions three, Alex Davidson. Total votes, hundred and thirty nine million six hundred and seven five thousand six hundred and ten, which is 72% of the current issued share capital. Votes in favor, 99,210,009 and 12, which is 71.03 of the votes cast against four 40,464,698, which is 28.9% of the votes cast by proxy and withheld 13,242,003.

12:19 Resolution four, David Avery. Total votes, a 151,417,909. Nine. That's 78.7 of the current issue check at all. Votes in favor were a 130,708,429, which is 86.32 of the votes cast by proxy against 20,000,709,570, which is 13.68% of the votes cast. Votes withheld, 1,500,000. Resolution five, Michael Rawlinson. Total votes were a 152,917,999, which is 78.9% of the current issued share capital.

13:06 Votes in favor were a 155,879,275, is 95.4 votes cast by proxy against 7,038,724, which is 4.6% of the votes cast by proxy and no votes held. Next resolution, Jane Boynton. Total votes were a 152,000,917,999, which was 78.9% of the current issue check. So votes in favor were a 145,042,253, which is 94.85% of the votes cast by proxy against 7,875,746, which was 5.15% of the votes cast by proxy with no votes.

13:59 Resolution, Peter Stokes, 152 thou a 152,000,000, apologies. 917,999, which is 78.9% of the issued share capital. That's for the total votes. Votes in favor, 152,764,979, which is 99.9% of the votes cast by proxy. Against was a 153,020, which is 0.1% of the votes cast by proxy, and no votes were held. Next resolution, Brian Rudd. Total votes, 151,417,999, which is 78.17% of the current issue chair capsule.

14:44 Votes in favor, a 151,216,847, which is 99.87% of the votes cast by proxy against 201,152, which is 0.13% of votes cast by proxy and 1,500,000 votes withheld. Resolution nine, Kathy Boggs. Total votes, a hundred and fifty one million six hundred and forty two thousand nine ninety nine, which is 78.29% of the issued share capital. Votes in favor, a 147,210,052, which is 97.08% of the votes cast by proxy against

15:28 four million four hundred and forty four four hundred and thirty two thousand nine hundred and which is 2.2% of the votes cast by proxy and 1,275,000, votes withheld. I now propose that each of the directors stated above be reelected as a director of the company. Will you please vote on each resolution now?

16:00 I declare the poll closed. Results of the poll will be announced through our regulatory information service posted on the company's website as soon as practicable. Resolution ten, tenth resolution is an ordinary resolution to re reappoint BDO as auditor. Prior to this resolution, I would like to draw your attention to the following proxies. Total votes, 152,917,999, which is 78.9% of the current share capital. Votes in favor, a 151,308,629, which is 98.95% votes cast against 1,609,370, which is 1.05% of the votes cast and zero votes withheld.

16:48 I now propose that BDO be reappointed as auditor of the company. Will you please vote now?

16:59 I declare the poll closed. The results of the poll will be announced through our regulatory information service and posted on the company's website as soon as practicable. Eleventh resolution is an ordinary resolution to authorize the directors to agree the orders to remuneration. Following proxies received are total votes, a 152,917,299, which is 78.9% of the issued check at all. Faced in favor, a 151,308,629, which is 98.95% of the votes cast against 1,609,370, which is 1.05% of the votes cast with no votes withheld.

17:48 And now to agree the issue to the relation. Will you please vote now? I declare the poll closed. The results of the poll will be announced through our regulatory information service. Resolution 12 is seeking to grant authority to allot and issue up to 30%. We might have lost you there. Yeah. Catherine, if we could just ask you to continue via the dial in, that'd be great.

19:04 Hi, Catherine. If we could just get you to continue speaking through the speaker phone, that'd be great. Okay. Results of the poll will be announced afterwards. Resolution 13, special resolution relating to authorizing the board of directors to issue shares for cash without shares first being offered to existing shareholders in proportion to their existing holdings. Full wording of this resolution is set out in the notice. Votes in from the proxies. Total votes, a hundred and fifty two million nine hundred and sixty nine hundred and ninety nine, which is 78.95% of the issued share capital. Votes for a 150,452,729, which is 98.39% votes against 2,464,270, which is 1.61% votes cast. Votes were pounded 1,000.

20:06 I'm now proposing the resolutions passed. Will you please vote now? I declare the poll closed. Results of the poll will be announced afterwards. Final resolution, resolution 14, special resolution to authorize the directors of the company to make market purchases of the common shares of the company. Full details set out in the AGM notice. Property votes in a 152,047,543, which is 78.5% of the issue share capital votes in favor, a 150,772,543, which is 99.16 votes.

20:55 And against 1,275,000, which is point 84% votes cast votes withheld, 870,456. I now propose this resolution to be cast. Will you please vote now? I declare the poll closed. We will make fur a further announcement of all final results of the meeting to the markets through our regulatory information service and posted on our website to be seen as practical. Ladies and gentlemen, that concludes the voting. That is it for me. I will now pass you over to Peter Soakes, our CEO. Thanks, Cath. So now I think we're ready to take questions. I think there are a couple posted already, but just to give people an opportunity to post any questions they might have on the chat.

22:04 Peter, do you want me to kick off by answering some of the ones that have come in? There's one. Yeah. Well, there were there were a few questions that came in prior to the meeting. So, yeah, I'll just tackle those if you like before while the other ones appear on on this platform. The first one was re a question that we we have had before specifically focusing on buybacks and the company's stance on buybacks looking at reference to our share price versus our NAV. Our response to that would be that, obviously, we first off that we did engage in a buyback early twenty twenty two, a limited buyback, I might add.

22:55 And while we see and we'll continue to consider all options, naturally, it's about it's a capital allocation model that really has got to look at a number of factors, that is not just the obvious obviously, accretiveness of a short term buyback, but where you've seen in the last couple of years is the company has significantly increased the breadth and depth of its portfolio of customers that they were we are working with. So we've had really, our primary focus is capital allocation toward building that portfolio. Noting some of our contracts, the likes of Sukari and Geiger, we've been on those sites approaching twenty years.

23:44 And the projects that we have been allocating capital to in recent years, the lab business itself, but also projects like Rico Dick and Vindo Iron Ore, these have the potential to turn into twenty year type of contracts. So really, it's a balancing for us. Obviously, the short term impact of a buyback versus the long term impact of allocating capital to projects that are gonna give us that that those long duration assets. So that's hopefully, that covers that, that topic. The second question that has been raised is just whether we would with the investment portfolio, questioning whether we get value for that within the business and whether we'd look at distributing it.

24:31 The answer to that is no. We wouldn't consider distributing it. Two reasons for that primarily, number one is that many of these stakes are strategic in nature, and therefore, obviously distributed in the hands of individual shareholders. The strategic value of that stake wouldn't wouldn't remain. But then secondly, that the most of the positions we hold are in ASX companies and most of our register is UK funds that can't hold ASX equities. So, obviously, that would negate the the logic of doing that. What we will continue to do, however, is to look to recycle capital and to maximize the performance of that portfolio. The third question we're being asked about is more specific. We made a release recently about the pending potential IPO of Allied Gold.

25:29 We're getting rather direct questions on what our intentions are, which, look, we wouldn't flag to the market in in any of our holdings, what our intentions are ahead of ahead of time. But I think the most pertinent thing to do is probably just to reiterate what our investment strategy is. And we are investors in early stage companies in respect to the development of of those companies. Now early stage is is a is a broad definition. It can and to give you some light some some live examples, we have, in one instance, used our network of geologists to actually source properties, package them up, and put them, vend them into an ASX company.

26:19 So very early stage and that that example is Weir, who just this week announced a maiden resource of 1,300,000 ounces in Namibia. We're also early stage in that we'll look and assess companies portfolios where we think there's a lot of potential. And the most successful example of that has been predictive, where we look at the Ghanaian assets and thought they had a lot of potential and that is now a 4,300,000 ounce ore body. Golden Rim is another where we've had that that type of success. But then early stage can also mean corporate early stage. In the case of Mali Lithium, we provided a bridging facility and that company has gone through iterations and now the majority of that value now resides in LEO Lithium. And then Allied, the case in point where we provided bridge financing for them to purchase their first gold mine and they've since sub subsequently growing the business very successfully.

27:15 The criteria in which we make the investments is early stages, as I said, where we can add value as both an investor and as a service provider. And need needless to say, whilst we think they're a fantastic company, you're not gonna see us appear on the registers of the Barracks and b two golds of the world because we're not gonna add value as an investor. We we we can only add value there as a service provider. In terms of the allied stakes specifically, given given the the focus on it, there is the the deal is yet to be concluded, first off. And second off, we'll obviously always assess based on, should it should it successfully come to market, where it is trading, on the market. But the way they're pricing the transaction based on the literature that we've reviewed, it's still very attractive discount to to market peers.

28:09 There's also a question asking specifically the number we valued on at our December year end. Connor, I don't have that in front of me. The question is 7,700,000. If you could just answer that, please. That's broadly correct. 7.7 or 7.8. You. Peter, I'll hand back to you. The last one is on GeoDrill, a question about staying there increasingly focusing on margin versus bid win ratio. Is that a positive for drill margins and wins for capital? I think maybe just to go back one step on that one is we are very focused on significant potential ore bodies and blue chip miners. So we're very focused on near mine drilling operations when we're doing drilling. So whether that's grade control, blast hole ore body definition within the vicinity of current operations, and we do less exploration drilling.

29:18 But we continue and you'll see it in our results, we continue to drive for strong margins in our business, and we do that by ensuring we have longevity at the sites we go to. We're seeing as we build a portfolio or build our portfolio towards larger, longer term contracts, we're able to continue to drive strong margins across our business. So I think that the question here is around the focusing on margins versus bid win ratio. I think we really only bid on the contracts that we want to win as opposed to putting a lot of contracts in, and we're very focused on winning those contracts and making sure that they drive a strong margin building out on either nearby operations for us or countries where we've got a strong presence already.

30:06 Jamie, that was the last question that we had through. I'm not sure whether you wanted to make any other comments. Otherwise, I'll close the AGM for today. No, Peter. That's that's fine. Thank you. But just thanks again for everyone for dialing in and asking questions, but now back to you. Thank you. Thank you from me as well. I really appreciate people taking the time to join us for our AGM. I know some parts of this are somewhat administrative, but it's always good to have people join the call, ask questions. We do encourage our investors to engage with us where it makes sense on these things. We're happy to talk and engage with people and meet as we've done over the last while we actually, during this week, have met a number of investors in the business and happy to continue to do that more broadly.

30:59 Thank you very much. Appreciate the support and enjoying my first six or seven months now in the business and first AGM. Thank you very much. Thank you. Perfect. Thank you to the board for updating attendees today. Could I please ask attendees not to close the session as you'll now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the board of CAPITAL LIMITED, we'd like to thank you for attending today's annual general meeting, and good morning to you all.