Good day, ladies and gentlemen. Capital Limited FY 2022 results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session through the phone lines, and the instructions will follow at that time. Alternatively, participants can submit written questions using the Ask a Question button on the webcast page. I would like to remind everyone that this call is being recorded. I will now hand over to Jamie Boyton, Executive Chairman of Capital Limited. Please go ahead.
Thank you very much for the introduction, welcome everyone to Capital Limited's 2022 results call and presentation. Quite a few people joining me today. Obviously myself, Chairman of Capital. We've got Peter Stokes on the line, our recently appointed CEO. Rick Robson has joined us. Rick's been with us a number of years but was recently promoted to the role of CFO. We have Conor Rowley, who handles investor relations and manages our corporate development function. We're all here in London, just about to kick off in a couple of days of investor meetings. We'll move into the results. We're starting with a couple of slides just to give an overview of the numbers and some of the highlights.
Obviously another very strong year of revenue growth for Capital, with the revenue number up 28%, to $290.3 million. It's a very pleasing revenue growth. Just to put some context around this, we experienced 68% revenue growth in 2021 and 18% revenue growth in 2020. The company really is on a very strong growth trajectory, which will be borne out in some of the latter slides. That flowed through to a 19% increase in Adjusted EBITDA to $86.4 million. A record Adjusted NPAT of $42.5 million. That's effectively the operating net profit for the operating business.
Very pleasingly, a very significant lift in our cash from operations, which were up 68% to $69.8 million. On all metrics, a really solid set of numbers. Today we've released guidance for the 2023 year. As you can see there, it's $320 million-$340 million. In the midpoint of that range, another 14% growth this year, and we'll go into some recent contract wins which will help with that in 2023. Moving on to slide four. I won't talk to all the numbers. A lot will be covered when we move into the financial section with Rick Robson.
I think the one thing I'd really like to highlight here is the outstanding return on capital employed number of 25.9%. We have said this in a number of recent presentations around the half year and previous full year, is that we've had a significant increase in revenue and a significant increase in the capital that we've invested in our business, both our traditional drilling business but also into the mining, to a lesser extent, the labs business over the last couple of years. A lot of capital has gone into the business. The really showing the strength of this business model, the rapid turnaround to generate very strong return on capital, leveraging the existing customer base and existing infrastructure.
That is a number that we're obviously very, very proud of. Moving on to slide five, the investment proposition. The strategy of the company is maintaining consistency. We are a premium provider predominantly in the African continent, albeit expanding within the MENA region and into Canada through our labs business. We work on a partnership model, looking for long-term partnerships with our customers. As I flagged earlier, best-in-class both returns and margins. We've been running return on capital north of 20% now for five odd years, and EBITDA margins at elevated. You know, 25%-30% range is where we've gone, but we are running at about 30% EBITDA margins.
We have a Tier 1 portfolio client list with the likes of AngloGold Ashanti, Barrick, B2Gold, Centamin, Kinross. Really aiming at the pre-premier end of the market. We'll go into some more slides and a bit more detail on that. We're increasing our exposure to the energy transition, which is particularly pleasing. We've now commenced contracts on copper deposits, graphite, lithium, nickel. We continue to have a heightened focus on developing a local workforce and developing our local communities. We have over 90% of our workforce, which is over 2,500 people now, are nationals. And we're very focused on training and development of these people to run the business on the ground. Particularly pleased again with our peer-leading safety record.
That table you can see there in the bottom left, the dark blue, that's Capital against our peers. To have taken on board more than 1,000 new staff into new business streams, such as earthmoving, in a material way, rapid expansion of the business to continue to deliver these safety metrics and safety performance, again, is something that we're particularly proud of. We'll move on to slide six. What we've done is the traditional map just to explain our operations, but we've actually split it to highlight the growth in both the gold and the non-gold. As you can see, these are the gold projects that we're working on across Africa. The names are household names, top tier of the market. We're currently active on four of the top 10 gold mines in Africa.
What I think is a particularly stand out point here is when you look at places like Sukari, we've been there since 2005, North Mara since 2008, Gator since 2006. In recent times, we've added some absolutely Tier 1 assets, including Kibali, which is Africa's biggest mine, Fekola, which is Africa's third biggest mine. We also have some exposure to some emerging top-tier assets such as Meyas Sand, which is owned by Perseus, and Bankan, which is owned by Predictive. The portfolio of the gold projects on which we operate is really first class. Moving on to slide seven. What we put in here is the our increasing exposure to the non-gold and particularly battery metal exposure.
today, we're pleased to announce two new contracts, one in the battery metal space, at the Reko Diq project in Pakistan with Barrick. This is a project we operated on way back pre-IPO, so 2006, 2007, and 2008. one of the world's largest undeveloped copper gold projects. we're very excited to be going back to work there. We're also working at Kabanga Nickel, which is the project that is being earned into by the world's largest mining company, BHP. They're now at 17% of that project. Again, that's a global top five undeveloped nickel sulfide deposit. the Goulamina mine owned by Leo Lithium. Again, we're talking a top four undeveloped global mine for spodumene in the lithium space.
These are absolutely top-tier, long mine life assets owned by high-quality companies that are gonna give us a solid growth path moving forward. The final one today, obviously, we announced a contract with Fortescue FMG out of Australia, the Belinga Iron Ore Project in Gabon, which is kicking off with three, four rigs going in there. Rapid kickoff and again, absolutely large scale iron ore project. Very pleased that we're building this diversification outside gold, and we're continuing with the strategy of Tier 1 large-scale assets. Moving on to slide eight. We put this slide in here today just to really get some context around MSALABS. Look, it's still a young, rapidly growing business.
Rick can talk to revenue guidance a little later. The footprint of this business is just growing exponentially. This map just... It's a little messy, but the point is there's a very rapidly growing network of laboratories around the globe. The most recent, we've added a franchise sample prep in Kazakhstan. We've commissioned Chrysos units at Kibali in the DRC, Chrysos unit in Prince George in just near Langley, you can see there in British Columbia. Really starting to get some critical mass in terms of labs and a lab network. On the right-hand side, we've included the customer base of MSALABS. You know, the names again speak for themselves. Agnico, Eva, B2Gold, Barrick.
Absolutely top-tier customers. For a young business to have that sort of cost customer base, we're really quite excited for that trajectory this business is on. We'll move on to slide nine. There's a couple of things we wanna, again, just to reiterate the thematic that we've talked about for quite some time, which is the demand drivers that impact us as a service provider to mining and exploration companies. The first one is focusing on the diversification of our revenue growth. As you can see, probably best evident in the bottom chart there, the gold price has been pretty much steady now since 2020.
It's certainly been strong in recent weeks, to say the least, there's some volatility in the capital markets and commodity markets. The gold price has been relatively steady for the last two years, yet our revenue growth has really kicked into gear. That is obviously up 115% since 2020, and that has been driven by not only strong demand in our drilling business, but the diversification of our service offering, which is really somewhat decoupling us from, you know, the cycle, so to speak, as we add more services to the existing platform. Onto slide 10. Here we go into the exploration activity.
The point we make here is that despite the exploration cycle, the top left chart is looking at the global exploration spend as tracked against the annualized metal index. You can see that the last time the cycle peaked was over $20 billion of exploration spend. This is a good lead indicator for obviously demand, particularly in the laboratories business and in the drilling business. The cycle obviously dropped in 2016, and it was a fairly deep trough cycle. It has gradually improved since 2016. You can see it's still well off its highs in 2012, and this is not inflation-adjusted, I might add. Well off its highs in 2012.
You know, we continue to believe, and we're reading the commentary of certainly the customer base, that there is still a lot of activity yet to come through in exploration spend. Down the bottom, we actually put some new tables in here. The one on the bottom left, again, dealing with the gold exposure is just to give some context of the significance of gold, in exploration spend. You can see it's over 50% of the global industry for exploration spend. Primarily is the nature of the function. It's a function of the ore bodies. They require a lot more drilling than, say, an iron ore deposit.
What is also encouraging to see, and we've got chart next to that, is whilst the growth year-on-year in exploration spend in gold has still been the largest growth. There is a lot of growth starting to now come through in copper, in nickel, and in lithium. This is part of the structural shift into battery metals. This is a recently new phenomenon and really driving another very significant potential area of growth for our services in the years ahead. Moving this thematic from exploration into mining, which obviously affects, again, our drilling business, our laboratory business and in this case, the mining business. These two charts tell a very significant story.
The top one being the CapEx of the top global miners, which you can see it's from the previous peak. It's down 52% from the previous peak. Again, whilst the cycle has bottomed in 2016, there has not been a significant increase in CapEx for expansions and for new projects. The chart at the bottom left tells that story with the CapEx to depreciation at 30-year low. Effectively, when you look at those numbers, that's telling us that the industry is really spending CapEx, sustaining CapEx, not growth CapEx. We are very positive when you look into the market to see the number of companies going through their pre-feasibility studies, the definitive feasibility studies through to banking. There is a very growing opportunity set in front of us of emerging mines.
When you read a lot of the industry research, whether it be broker research or consulting firms like Wood Mackenzie, the amount of mines that need to be developed to meet this demand coming through for battery metals for the energy transition, we really are just at the start of that cycle. Look, we're very positive on the demand outlook across all aspects of our business. Onto slide 12. Reiterating our strategy. We're an integrated provider. We have added a fifth key pillar. I'll let Peter talk to that in the outlook. Obviously, the drilling business, well-established, the leader in Africa. The mining business, a well-established contract at Sukari, an improving tendering pipeline, and we've attracted some top talent in that business to take that forward.
MSA Labs, growing rapidly as flagged earlier, and obviously investments continues to be a pillar of our strategy. More recently, we've formalized a fifth pillar, which is Capital Innovation. I'll let Peter talk to that later. If we can move on to slide 13, please. Our services. Again, we're an end-to-end service provider through exploration, development, both production in both surface and underground and processing. Just to reiterate, the model that we work with is to get to be mine site-focused. 87% of our revenue in 2022 was generated from services at the mine site. Typically, we'll start with mine sites with drilling or laboratory activities, build a presence on the mine site and then add services into that infrastructure.
Again, that integrated business model is continuing to work very well for us. Onto slide 14. A few slides now just to go through the individual businesses. The drilling business has been exceptionally strong for a number of years now. It really kicked in, the demand really kicked in in 2021. The fleet was 79% utilized in 2022, which as you can see is really around, hovering around record levels of utilization. Particularly pleasing though is that we have concentrated the fleet. We made announcements in the second half of last year about portfolio optimization. We made the decision to pull back from some shorter-term contracts and focus on the larger contracts with potential to grow.
The significant ones obviously that we announced in the second half was the Pitole Mine, Africa's third largest, where we now currently have about 10 rigs operating. That transition where we purchased those rigs into government contract is working very well. As I flagged earlier, adding companies to the portfolio like Goulamina, Kabanga Nickel, Belinga Iron Ore, Wickedy. These, again, world-class large scale projects that set the tone for the business going forward. Drilling cycle is very strong. Demand is strong. It is giving us the ability to be quite selective about what we look at and maintain that discipline in terms of focusing on the right assets and the right customers.
Moving on. The mining business, look, we commenced this contract in 2021. We've onboarded over 400 people. The contract has performed above our expectations. I think, fair to say, above the client's expectations. We've brought on board some very high quality people, and in fact, we hit some production records in the fourth quarter of last year. What this has achieved for us is not only proving that we can do this at a large scale, but obviously it has opened doors for us in terms of tendering opportunities. I think, you know, fair to say, we would like to see some depth to the portfolio. We are shortlisted on a number of opportunities at the moment.
We are very selective about what we're looking at, obviously, with the capital commitment, and the profiling of the customer. That discipline remains in place. Operationally, I couldn't speak more highly of what the team have achieved at Sukari. Moving on to 16. MSALABS, the sample growth, top left, tells a pretty clear story. Really rapid ramp up reflected in the services, laboratory services reflected in the new bottom left. We've obviously already guided this year, sorry, $14 million-$50 million, but $80 million out to 2025, which is possibly a little conservative. We've made a lot of releases around our strategic move into a partnership with Chrysos. We have now signed up to take on board 21 of the Chrysos units rolling out to 2025.
That really sort of underpins our guidance. I think it's important to point out that that pie chart, that Chrysos was only actually 14% of our revenue in 2022 because we're at the very early stages of rolling out those Chrysos units. It'll have a more meaningful impact in the current year, obviously, and even more significant impact in 2024. We're getting growth not only through Chrysos, but through our traditional commercial labs as well. As I explained earlier, absolutely blue chip customer, customers. Moving on to slide 17. Investments. We have been a little less active with new investments over the last few years. The portfolio holdings on the right-hand side. Invested capital now is about $12.5 million.
The portfolio value is at $10 under $39 million at the end of 2022. It's been a very powerful business development tool. You can see in the bottom left charts show that we've generated, you know, close to $100 million worth of revenue over the last two y ears after the investee companies, which is done on an arm's length tendering basis. This was a very powerful tool, particularly when we went into West Africa with a lack of capital available in the market. We went in with rigs and reviewed companies, made some initial investments. What we've done over the last number of years is really rationalized that portfolio to a number of companies, ones we think have got absolute world-class projects to take into development.
The portfolio is concentrated with three holdings, specifically Allied, which has got producing mines, in Ivory Coast and Mali, and development assets in Ethiopia. Leo Lithium, which I flagged earlier, and Predictive Discovery, which is the Bankan discovery in Guinea. Well, both of those two will be going into production over the next 18 months, two years. Those three names represent about 80% of the portfolio. I think what this chart table perhaps doesn't tell you is that we have concentrated the portfolio down, and we're continuing to look at new opportunities. We'll move on to the next slide into the financial results. This is where I'll sign over to Rick. Thank you very much.
Thanks, Jamie. Good morning, everybody. We'll go straight into the next slide. I've mentioned already a strong performance across the three operational divisions. Revenues up $64 million year-over-year or 28%. The growth really driven by our long-term mine site contracts, particularly at Sukari and Gator. Also MSA growth impressed. We're up 70% on MSA year-over-year, which contributed $10 million of growth to the year-over-year numbers. A business clearly that we've got lines and a lot more to come there. These results introduce a new performance measure for the group. It's the lease-Adjusted EBITDA. I'll come on to talk about that on the next page.
On a go forward, that's a metric that we are using in the business to assess performance. We think it's a metric that we will or is relevant for the market to see as well. We will discuss that and use that as our reporting metric going forward. Overall, this lease-Adjusted EBITDA margins remain robust. In 2022, we're at circa 30% lease-Adjusted EBITDA, compared to 31%, 32% in FY 2021. On an EBIT basis, reporting 21% for 2022, again versus 22% or 23% for FY 2021. Margins remain robust.
As Jamie pointed out, we've got a very strong return on capital employed in the business as well versus particularly versus 2021 there, at 22.7%. Next page, please, Conor. Just to talk you through this new performance measure. The traditional EBITDA that we report does not include any of the IFRS 16 lease payments. Which for us are most notably the minimum lease cost payments to Chrysos. Look, whilst that's not a significant difference for this reporting year, so for FY 2022, it will grow as we roll out the Chrysos units over the coming years. Currently, the lease payments for the year are $3.7 million versus our traditional EBITDA of $90 million.
That 3.7 will increase as we roll out more units in 2023, 2024 and 2025. The lease cost is obviously a very key cost of the operation for MSM. And internally, it's a metric we look at Adjusted EBITDA as a performance metric. And we think that's a much more of a more representative of the underlying profitability of the business and the underlying cash generation of the operating business. Just to cover off how the mechanic works and so people can see it's quite transparent. We have our traditional EBITDA on the left there at $90.1. In the cash flow statement, we have the IFRS 16 lease payments discretely identifiable under the financing activity section.
We're proposing to adjust the EBITDA for that lease payment. In 2022, the $90.1 traditional EBITDA becomes a lease-Adjusted EBITDA of $86.4. On the balance sheet side of things, with the IFRS 16, we pick up a right-to-use asset and a right-to-use liability. At the end of 2022, that right-to-use liability is $16 million. As we report this Adjusted EBITDA, you do not need to factor in the lease liability into the net debt of the group. An important distinction there. As I say, this is with one eye on the future of these numbers becoming much more significant to the group as we roll out the 21 units.
Next slide, please, Conor. As Jamie pointed out, you know, we've got consistent strong returns in the group. I think, We've presented EBITDA on a lease adjusted basis for consistency here, and the EBIT below that. I think what's clear is the growth in activity, the focus on the mine sites and the consistency in the operations is clearly shown with those margins, remaining robust in the last couple of years. I think the drilling and mining margins going forward into 2023 will remain strong.
We will point out MSALABS will see lower margins in the near term, primarily that's as a result of the ramp up of the new laboratories planned for 2023, many of which are commercial labs, so take a little bit longer to ramp up. Look, overall, we see very strong returns continuing. We do have, as we pointed out there, peer-leading returns of over 25% on a ROCE basis. Next page. Just covering off the net debt waterfall. Taking us from 31 December 2021 on the left there, $31.9, through to the end of December 2022. Just unpick the key components of the bridge there.
We've deliberately shown EBITDA and the lease payments together there just to show you the Adjusted EBITDA and the composition again. Look, I won't, I won't go through that nausea, but the key components here, working capital of $25.8 in the year. Cash outflow, if you like, $25.8 in the year primarily reflects inventory build in the business. You know, we had to react to sort of global constraints in the supply chain and in order to protect the operations, to maintain consistency and maintain performance. Inventory saw a bit of build there, and we expect that to normalize as we move forward in H1 and H2 this year.
Also the working capital just reflects, you know, increased activity, so a little bit of increased receivables, et cetera, as we've grown the business. On the CapEx side, CapEx shown here is all the cash CapEx, any prepayments we've made against future CapEx, plus that includes the OEM financed CapEx. $57.5 million in total, and I've got a slide on that later. Really reflects obviously the rig increases or rig purchases that we made in 2022 with respect to replacement, but also the new contracts that we've now mobilized on. Just to cover off interest tax payments, the split there is $10 million of tax, $6 million on interest.
At the end there, other, primarily since we've used EBITDA at the start, it's non-cash items, which is primarily our ECL provision for the year and small write-off that we've had in the year as well. Overall, net debt-to-EBITDA at 0.5x . We've got some good flexibility for growth in the business. A comfortable position for us. Movements on investments. Performance has already been disclosed to the market. I think important to note that despite the mark-to-market losses for the year, the portfolio is over 200% up on its initial investment amount of $12.5 million.
In the year, we were a net seller in 2022 with net cash proceeds of $1.6 million. As I said, the performance and the value of the investments is already disclosed to market. We're at $38.7 million of investment to the end of December of 2022. CapEx. We've shown quite a long length of history there on the CapEx chart.
It's important to show, I think the clear correlation with our revenue growth, again, with the CapEx. Also, I think pointedly, when, you know, the markets contracted and revenue contracted, we were able to show a strong discipline, and we have that strong ability to put the brakes on if required. I think that's an important point still for people to bear in mind. 2021 and 2020 were a lot higher due to the Sukari rollout as people will recall. 2022, $57.5, that's cash expenditure on the CapEx. Any assets that we've financed on OEM, plus prepayments against future purchases.
It includes the purchase of the 10 rigs that we bought from AMS during the year. It reflects the full rig purchases that we've made over the course of 2022. Guidance going forward, $50 million-$60 million on CapEx. The fleet replacement program will continue. You know, we're focusing a lot more on ensuring we have a young and reliable fleet. Higher sustaining CapEx will naturally, you know, sustaining capital will naturally increase as the business growth comes through and the scale of the business increases. For 2023, there's a little bit more of a contribution than normal for MSA. You know, we've got some commercial labs ahead of us. Commercial labs are labs that we build.
The CapEx has been factored into the guidance accordingly. That's fine, Conor. On the balance sheet, we already covered off a decent chunk of this already. Worth pointing out conservative gearing, net debt to equity of 20% at the end of 2022. A very conservative position for us. I think it's worth saying that, you know, we are focusing or we are in discussions around, you know, ongoing discussions around debt refinancing, you know, with a view to us providing more flexibility to fund future growth. We are, we have been over the years focused on our relationships with the banks, with both banks that we work with, but also new potential partners for us as well. Lastly, from me.
We've declared a final div for 2022 of $0.026, up 8% year-over-year on the final, but actually both on the total it's 8% higher on the total for 2021 as well. Look, we remain committed to balance sheet discipline here, but we have consistently delivered shareholder value through the years, through divs. Also earlier this year through the share buyback. We've put the key dates on the bottom there for people's information. Thank you. Over to Peter for outlook.
Thanks, Rick. Good morning, everyone, or good afternoon, wherever anyone is. really delighted to be joining this first call as CEO for the Capital Group. I'm very excited about what I've seen so far in the first few months of the business. I've been around a lot of the operations, met a lot of our customers, and there's a, you know, real sense of us being able to continue to grow very strongly on the back of a very good business, very strong safety, strong people, great customer relationships, and as Jamie pointed out earlier, some very long customer relationships and partnerships where we've worked together closely. I'm really happy to be talking through this section about the innovation work stream that we've now launched in the business.
We just go to the next one, Conor. We recently appointed a dedicated head of this innovation group. Capital's always been focused on driving bringing new technologies, building them, working with various partners to bring new ways of operating to the market. We thought it was time to now formalize that process and start to really grow that and then feed these opportunities back into the business and/or commercialize where it makes sense. As we talked earlier, the Chrysos technology is one of those that we've really taken a lead in the market. As you saw through the results there, it continues to grow very strongly. It's got being adopted by most of the large mining gold miners around the world now and rapidly rolling out.
We're uniquely placed to do 21 of the first 30 units. It's a, you know, fantastic technology that we have been involved with from early on and really got the first mine site lab operating at Bulyanhulu with Barrick. We're really in the technology or innovation front, we're also really looking for how we bring different ways of sustainability into our business. Whether that's the electric mobile rigs that we're running underground to be more efficient. These are mobile rigs that we can now run in our operations underground, 1st of those that we've brought into Africa.
We've got some, a solar partnership, where we are looking for mobiles, you know, to roll out mobile solar plants, particularly on drill rigs, camps and other smaller operations where it makes sense. Our Well Force business has started to bring some new technologies for directional drilling to the market, and we'll continue to push in that space where we've got a lot of expertise in particularly in the deep drilling space. I think some of the technologies that we've been involved with there will equally apply across our more mining blast hole in other parts of the business. We have a formalized funnel that we work our way through, or a process, on the right-hand side of slide 28. We'll also continue to bring other offerings where it makes sense.
We get lots of opportunities but we are very conscious of focusing on the right ones, managing the CapEx. It's not an open budget here that we will just start doing lots of different things because we like to, but it's very focused around how we drive that in our business. If I just go to the next slide, please, Conor. There's a little bit more about Minepower Solutions. You'll see a picture on the right-hand side here of a mobile solar plant. What we're looking to do there is initially for some of our camps that we can use, but we're really looking at how and working with our major OEMs on how we can get to electric drills, not just simply plug-in drills, but battery-powered drills in operations.
There's a couple of those in early trials at the moment, but I think, you know, it's still got a way to go. We are certainly part of the mix in developing that technology, and then have a great solution here with Minepower Solutions, that we can work together and start to roll these out across, particularly our African business, but we're certainly getting interest elsewhere. Another area that we've been working on is the International Apprenticeship and Competency Academy in Tanzania. This is a fantastic way for us to bring our capability into a place like Tanzania, continue to develop our local employees, in formalized training, in various different categories. We've been using this for our own people. We have some external customers that have come through too.
We're looking at full apprenticeships to get qualified or skilled operators into the business. I think as Jamie alluded to earlier in our Sukari contract, it's very high nationalized workforce there over 95%. We've been able to train our operators to be exceptionally good in the way they operate. The productivity levels we're delivering are world-class. So we want to bring that sort of capability into the other countries that we operate. It's part of our sustainability approach, where we want to give back in the countries that we are working in. I think this has been very well received in Tanzania, and we look to try and do similar sort of initiatives more broadly in the business.
If I just move on to the last slide of the presentation, which is our outlook and guidance. Jamie alluded to early on in the presentation, looking at revenue guidance, $320 million-$340 million for the year. I think, you know, we continue to see commodities trading well. Gold, as we talked about before, you know, now over $1,900 U.S. again. Some of the other commodities have fluctuated a fair bit over the last few days with uncertainty in the markets, but they, you know, generally at very high levels. Gold last year was at an average highest U.S. dollar rate ever and continues to be strong.
It had some minor fluctuation towards the back end of last year, but we're very confident around the commodities, the miners that we continue to work with. As Jamie said too, the miners have healthy balance sheets, and we're seeing more spend on the right through the cycle. I think for us, one of the things we talked about earlier was that end-to-end solution from drilling to assay labs through to the mining cycle. We think, you know, our unique offering and being able to support our mining customers right through that process, really puts us in a very strong position going forward. The CapEx we talked about $50 million-$60 million for the year. The MSALABS continuing, sort of, growing at the significant rate, 70% last year.
Similar or slightly larger growth for next year, aiming for $40 million-$50 million. We're working through, you know, in our CapEx around the rig replacement, some of the sustaining capital to continue to ensure we provide the best quality equipment across the business. We've built a capability up at Sukari around the heavy asset maintenance and have delivered some refurbishments of some of the key equipment up there already this year and extended the life of that equipment for another cycle. That gives us an opportunity to continue to support Sukari, but also take that into some of the other key operations that we are working on. Just in summary, I think I'm very happy to be part of the Capital team, having joined recently.
Looking forward to a very strong year again this year, building on what we just delivered in 2022. I'll hand back to you, Conor, now so that we can address some of the questions that have come through. Thanks. I think we're gonna get.
We will shortly begin. We will shortly begin the question and answer session. As a reminder, participants can submit written questions using the Ask a Question button on the webcast page. To ask a question on the phone line, please press star one on your telephone. We will pause for a moment to assemble the queue. We will take our first question from Alex Bedwany of Canaccord Genuity. Your line is now open. Please proceed.
G'day, guys. Thanks for the presentation. Just a couple of questions from me. One is on the non-cash one-off expenses in admin costs. What was the root cause of those bad debts? Do you think it could get any worse? I assume it's a one-off. The second question is how do you see margins evolving with the pivot to these larger blue chip contracts? Is it a case of revenue-driven growth, or do you think that there are synergies on site as well as you expand your operations there? Thanks.
Shall I take the first one?
Yeah. Yeah, you take the first one. Yeah. Yeah. Both.
Yeah, yeah. Non-cash items on the admin expenses there. Yeah, the credit loss provision, we do consider that to be a one-off. As people will probably recall, we haven't had credit loss provisions of that magnitude in the past. It's primarily related to a specific situation, you know, we are trying to manage. We're trying to recover, but we nevertheless we're conservative and provided against it. As for the bad debt write-off, that primarily related to basically a drill for equity initiative that didn't go our way. The revenue component, if you like, was written off as was the investment. Relatively small. Yeah, because the results were not promising, we decided to terminate and wrote off the exposure.
I think there was a question with margins as well. Was there?
Yeah. Sorry. Alex, you wanna just re-repeat the question?
Sure. Yeah. Just how do you see margins evolving with this pivot to blue chip contracts? Is it just a revenue growth driven thing, or do you think that there are synergies on site as well?
Look, I'll let Jamie and Peter come in as well, but I think there will always be synergies on site. We've shown that Sukari is a case in point. Once we established the level of infrastructure that we have there was very strong synergies as we went into the broader contract suite across mining. I think, you know, there will be similar opportunities, perhaps not to the same degree, but similar opportunities elsewhere. We'll for sure look towards that as we go forward.
Just to add on to that one, too. I think, Alex, probably the other part I alluded to is that, you know, the synergies across the service lines that we are providing. I think that's, you know, we're seeing that where we've got labs and drilling and others, we can operate, you know, with a common overhead across the group. Also I think the opportunity where we're at some of these big mining companies is seeing other services. You know, where we might be doing grade or exploration, starting to do grade control and/or drill and blast. Gator is a great example of that with AGA. You know, big blue chip customer. We've been there a long time. They're very comfortable with the services.
You know, we have an exceptional safety record and high productivity. The customer in that case is seeing some of what they see as not their non-core services, that someone like, you know, that Capital can then come and work on. Similarly with, you know, we're growing our footprint with Barrick pretty significantly, and, you know, a lot of that's more recently been on the assay side of the business. We're, you know, we're seeing opportunities to grow with some of those customers, too, to bring the Capital capability into places where it hasn't been before. Like, you know, back into Reko Diq as we start up that contract, is a good example.
Very clear. Thank you, guys.
The next question is from Andrew Bridgman of Stifel. Please go ahead.
Thanks. Good morning. I have two kind of areas of questions. The first is on some of the new contracts that you highlighted, specifically on Reko Diq. Barrick's mentioning that there's quite a lot of work going on there with the feasibility expected by the end of next year, and they've been talking about evaluating geothermal power and doing some geotechnical work. I guess the first question is, what's the scope of your contract there? More generally, what's the approach to mobilizing at these new sites? Will existing rigs be able to be redeployed or will they require new equipment purchases?
Peter.
Andrew, so Reko Diq, You're right, there are a number of different scopes of work that will likely come out of that. Our initial work is around the geotech and potentially some water bore work. There's quite a bit of early works for them to identify their water sources, potentially geothermal for power down the track. We've been working closely with the team at Barrick on exactly what we do. We're redeploying two drills there at the moment from the current fleet that makes sense to do the geotech work. The water bore work will be more specialized equipment. There's some fleet that we could potentially deploy.
It just depends on depth, and that hasn't been well defined yet. We'll start to work through that also. I think maybe your earlier question was, you know, we have a number of key people in the business who are all the way back from that time in Pakistan. We've got some, you know, still some very strong connections back into Pakistan through the business. We are working closely with the Barrick team on how we mobilize timing, where our entry and all of those sort of things, imports and all that, the other. It's moving at pace now with the approvals. You know, we need to work closely with Barrick, and that's certainly been the case to date.
I think it's interesting, we actually still have staff in Pakistan from 2007, 8. Some of our supply chain staff are still there because and our head of HR we actually hired out of Pakistan way back in 2007. There's a lot of people within the team who've got experience with that team's point.
Okay, great. Thank you. If I could just ask on a sort of second area. Peter, thanks for the introduction to the Capital Innovation business. That was, that was great, and the potential there looks exciting. Could you maybe speak a little to how collaborative that process can be with your existing customers in terms of evaluating the technologies and assessing the opportunities? Then secondly, what are the metrics or hurdles that you're looking towards in terms of market size or returns in order to progress those opportunities through that funnel that you showed?
Okay, yeah. I'll answer the first one. We certainly, we're working with customers closely on things like the mine power solutions. Some of the tools that we're using for drilling, you know, we're often collaborating on how we develop or specific requirements for customers. That's a, you know, I guess that will continue to be the case. We've got our Well Force business that does a lot of the ancillary services around the orientation of drill core and the like, you know, and controlling our deep drilling as we talk to the team there. I think there's some more technology that we can do in that one.
We haven't yet, Andrew, put the hurdles in of what we'd see for different projects because I think, you know, at the moment they're, they are at all different sizes. Look, we certainly don't want to do things that, you know, that reduce the overall returns of the business, but we'd be looking to invest in some different technologies, jointly build some of those with partners we've already identified. To that end, you know, we will allocate capital to that business, and have allocated some this year. It's, you know, I think it's really start small, get the right projects in and then scale up as we're, you know, that we're comfortable that they'll deliver for us.
Some of them I think will be a slower burn, but I think others, like the mine power solutions, could, you know, could get some momentum fairly quickly, as could some of the other drill tools if we can, you know, start to, you know, bring some new capability into the market.
That's great. Thank you.
There are no further questions on the conference line. I will now hand over to Conor Rowley, Investor Relations and Corporate Development Manager of Capital Limited, to run through the written questions submitted through the webcast page.
Thanks. Look, I won't cover any questions that have already been answered. Look, I think start with one on MSA. Maybe this one for you, Peter. I mean, it's early days with Chrysos in terms of the rollout. Can you give us the sense of what you're seeing in terms of the pipeline and how confident you are in terms of rolling those 21 units out over the next few years?
Yeah, sure, Conor. I think, certainly from what I've seen, and I've been to a number of our labs already, the Chrysos units and our non-Chrysos labs also, there is a huge pent-up demand to turn around gold samples more quickly is one key part. The other part is, you know, the new technology, which I'm sure a lot of you are aware of, certainly provides, you know, a very different sample outcome on repeatability of samples given the size of 500 grams, so typically 10-1 5 times the size of traditional fire assay.
I think the third part of the Chrysos that is very attractive to both for us and for our customers is the significant reduction in ESG, so around energy use, and certainly, you know, the waste that comes out of the traditional fire assay. A number of our large customers are now moving their whole business across for gold assays to Chrysos. If I look at some of the ones that are now mandating, Northern Star is moving that way. Barrick is. Newmont has started to. AGA is moving that way as well. You know, I think Gold Fields also have absolutely mandated. That starts to build up some real demand.
Having 21 of the first 30 units that will be commissioned puts us in a pretty unique position as well. I think, you know, our early mover in some of the key mining districts in Canada places us exceptionally well with three labs across the key mining districts, and Canada will be up and running by the end of Q1. Two of those are now operating already. As you see from that list, that Jamie talked through on MSA, there are a number of large Canadian mining companies in the Val d'Or area and towards Timmins that are already either already using the labs or are starting to put more samples. We see more pent-up demand for those laboratories.
The big one at Kibali will run to be near full with just running Kibali samples given the size. We see some real opportunities in the other parts of Africa as well. Alongside some of those large operations we are ready to either do site based or commercial labs and continue to grow the business. Then we've already got an established lab in Yamoussoukro that's starting to really get some demand through as well. We've got a good spread of the MSALABS across Africa. I'm, you know, really confident of what I've seen that that'll continue to grow and the aggressive timelines we've got for growth are, you know, definitely achievable. I think actually the biggest challenge is probably not customer demand.
It's more can we mobilize labs? Can Chrysos support the labs in the right places? We're working really closely with them. We're building a team an implementation team led by one of our very experienced operators to roll out these labs as we, you know, as the demand gets locked in.
Brilliant. Thanks. Maybe a similar outlook question on the mining division. I mean, you mentioned Jamie, sort of shortlisted on a couple, but what are we generally seeing in terms of the tender pipeline in that business?
Yes. The, there are a number of tenders, as Jamie alluded to, that we are shortlisted on. Down to the last couple on, at least three at the moment. In, you know, all bar, one are in Africa, one in Canada. You know, we're looking to really, you know, hopefully in the next month or so we'll have some clarity on those contracts. As we talked about earlier, we've built some very strong capability in the mining place. We've demonstrated that at Sukari. We use Sukari as a, you know, as a site for potential customers to visit. You know, we've had exceptionally strong feedback. Very confident that we'll get a mining contract in the next couple of months to build on the portfolio.
If we want to grow that in a structured way, it's not a, you know, as Jamie said, this is about finding the right partners that we want to grow. We're not bidding on every single piece of work that comes up. We're selective where we're bidding and the type of work that we're trying to bid on as well. You know, in most cases it's with existing customers that we can grow and, you know, where we have good relationships already.
Thanks. I guess, just one in terms of this year, I mean, the guidance points to an uplift in the drilling business, but without an increase in the rig count. Can you talk about the balance of utilization and output in the coming year?
Yeah. As we talked earlier, the utilization rates are, you know, have been quite high during last year. We did buy in the third quarter of last year, the AMS business in Fekola, that's provided a couple of extra rigs. You know, our rig count's 129. We're running through, you know, a normal program this year. We've got quite a bit of sustaining work or refurbishment work on rigs. We've got a number of new rigs coming into the business. We've actually been awarded some more underground work, you know, there are some new underground rigs coming later in the year that'll continue to grow that business. I think it's right.
It's a balance of the growth in the business, keeping the utilization rates up and our forecasted output continue to be around the levels that we're operating now, in some cases maybe slightly higher.
Okay, thanks. Just a couple of I guess for Rick, a couple of finance ones. A number of questions are coming on the increase in admin expenses, but I think we've covered that just to pull people to look at the non-cash adjustments within that. I guess one on CapEx. Can you give us a sense on the split of what's in our CapEx guidance for this year?
It's primarily on the drilling side of the business with respect to the replacement program that we're running through there and the sustaining CapEx associated with that. MSA as a contribution there by division is smaller. MSA is more in the sort of $10 million category for the commercial lab rollout during the course of 2023. Primarily a rig replacement program with a $10 million MSA contribution.
There's just one other part is we are continuing to work through the, you know, our current mining fleet. We have some, you know, fleet in addition to what we have at Sukari. Some of the other CapEx is preparing fleet for new projects, but also some of the major CapEx on equipment up at Sukari, we've done a refurbishment of about two-thirds of the truck, of the used part of the truck fleet. There's other ancillary equipment so that they've got another life in those. There's a bit in those coming into this year as well.
Thanks. Maybe Rick, another one for you just on, you mentioned earlier, sort of debt refinancing coming this year. I mean, how do you think about that now in terms of giving us flexibility and also with interest rates being higher than they were last year?
Yeah. Sure. Look, we, you know, currently the position with respect to our debt facilities is such that we're fully drawn on RCF. We have taken asset-backed loan off Macquarie, plus some OEM financing as well. Right now within the actual facilities themselves, there's no additional flexibility there to draw further. I think we've got one eye on creating flexibility. Look, in part, the cash flow business is very cash generative, so we would expect pay down of the RCF during the course of the year. We want to create the flexibility to be able to grow the business and take on bigger contracts or a series of contracts as the year progresses.
As we know, when we mobilize on the contracts, CapEx is one thing. Needs to work in capital draw as well. We want to have the flexibility within the capital structure to be able to deal with that. As for the cost of the debt, well, A, there's not much we can do about it, but we're running it sort of all in, 10% cost of debt. We have seen the margins that the lenders are offering us over base. We have seen those margins come down as we just have more of a deeper relationship with the lenders. Yes, the debt cost is elevated, but I think it's still, if we have the right contracts and the right growth trajectory, then I think the cost of those funds can be met and we can still make the strong return.
Thanks. One final one just on MSALABS margins. Is something like ALS still a suitable comparison? How do you think about margins in that business?
Look, in MSA margins in that business, you know, on a real near-term basis, as I commented on, the margins will be lower, reflective of the ramp-up profile for this year, particularly across the commercial lab suite. Casting the net sort of, wider and looking further afield, the margins on that business will be on a Chrysos-led laboratory setup with a decent level of utilization. I think we can expect lease-adjusted margins there on an EBITDA basis of around 20%, which look on a business that's outside of the Chrysos lease itself is pretty capital light. It doesn't have a notable appreciation cost.
That 20% EBITDA Adjusted, lease-adjusted margin, you know, is essentially the EBIT margin for that business, which is broadly in line with the rest of the group. I think also just notably there, 'cause it is a capital-like business, lower capital intensity, what that means for, you know, the business will have much stronger returns as a result. Just doesn't have the capital employed, but it does have a comparable EBIT.
Brilliant. Thanks. I think that is it. I think we can wrap it up there if Peter or Jim want to give some final comments. Thank you, Peter.
Peter, over to you. I'll let you close out the PowerPoint.
Okay. Thank you everyone for joining. Thanks, Conor, for just facilitating through those questions. I'm really happy with where we've finished up in 2022. I think another exceptionally good year in the market. It's demonstrated the underlying capability of the group and the ability to just adjust as we need to. I think, you know, where we've seen the move towards some of the battery metals during the year, that'll continue. You know, there are lots of opportunities. We've built some, you know, real capability in that space. Some of the spodumene and others for lithium are, you know, certainly challenging to drill, but we've, you know, built capability there that I think we're, you know, really confident that we can continue to roll out in other places. We've seen that in a couple of other contracts.
I think, you know, the other area that I'm, you know, super excited about is the MSALABS growth. I think we're on a fantastic trajectory, and we'll continue to see that going as I talked about earlier. Finally, just really to wrap up the last two bits really on the mining business. There are great opportunities in front of us where, you know, we're very confident on a couple of those. Looking forward to coming back to the group and being able to, you know, being able to share those over the next few months or so.
Then really around the innovation, I think that it really puts some focus on an area that Capital has been very good in for a long time, but it now puts some structure and discipline around how we do that, and I'm confident that'll drive as well. Thank you all for your time, and thank you for your questions. Look forward to meeting with a number of you over the next week or so, and then also talking with you when we next to our call. Thank you.
Thank you.
Thank you.