Hello, and welcome to the Capital Limited Q4 2021 trading update call. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Jamie Boyton, Chairman, Giles Everist, CFO, and Conor Rowley, IR. Jamie, please begin your meeting.
Thank you very much and welcome everyone to the FY 2021 and the Q4 trading update. Obviously this is an update on trading conditions and revenue. Just worth flagging that we will announce or advise the market shortly on our reporting date for the full year results. Last year, we released on the 18th of March, just as a guide. I'll update the market with that date shortly. That will include guidance for the 2022 financial year. Today, I'm gonna be focusing in on the 2021 trading conditions and revenue statement for Q4. Look, it was an absolutely outstanding year for Capital. We recorded revenue for the full year of $226.8 million, which is a 68% increase on 2020.
For Q4, we recorded our third consecutive record quarterly revenue of $66.5 million. That was an 8% increase on Q3, but an incredible 92% increase on the previous corresponding Q4 in 2020. Look, an absolutely outstanding set of numbers. Just to also point out, we ended up at 226.8, which is just beyond the upper end of our most recent guidance. We did start the year guiding the market to revenue of $185 million-$195 million. That was upgraded twice during the year. Even after those two upgrades at the end of the year, just marginally above the twice upgraded guidance. Again, really pleased with the numbers.
When we look back on the year, obviously three operating businesses. Two of them performed exceptionally well. I have to say broadly in line with our expectations. Specifically, our mining business, predominantly driven by the Sukari load and haul contract. That contract ramped up in line with our expectations but ahead of our contractual terms and has had an outstanding result for the year and placed us very well for 2022 and beyond. Our lab business, which is quite a young business and is really experiencing quite strong growth, exponential growth really at the moment, also performed very well, but in line with management expectations.
The key driver over the course of 2021 for the sequential revenue upgrades has been the drilling business, which has surprised us positively on the upside over the course of the year. There has been a lot of presentations from the company over the last couple of years, where we've highlighted the disconnect that we've seen in the market between the level of commodity prices and capital markets activities. Both of which are strong lead indicators for the service providers and both of which have been trading at decade highs. Yet conversely, global exploration activity is actually trading about half of where it was a decade ago. It even dropped in 2020, albeit due to the impact of COVID.
We've seen this disconnect in the market and 2021 or even Q4 2020 and 2021 has all been about a reversal, or a narrowing of that disconnect. As I said earlier, changes are even a surprise to us just how strong the demand has come through. On the Drilling side, Q4 utilization was 79% for the full year, across our fleet of 109 rigs is 75%. Again, just to give some context, I mean, the earlier 2020 utilization was 59% on a fleet of 94. It's a huge increase in utilization, which is just really indicative of the demand that we're seeing in the market.
We closed the year with 109 rigs, but we also have another three that have arrived in country. These rigs have gone to West Africa, and they're in the process of being commissioned, as I speak. Other highlights just within the Mining and Laboratories business. Just worth pointing out that we've been engaged in a diversification, revenue diversification strategy in terms of our service offering over the last number of years. In 2021, the non-drilling revenue contributed to 22% of our total revenue. It was only 9% back in 2020. Again, just an incredibly strong increase. It was actually 26% of revenue in the fourth quarter. I think it's worth mentioning our safety record yet again.
Another outstanding result on all our safety metrics. LTI- free across 11 of our sites through the year and six have remained LTI- free in excess of three years. Again, against any of our peers, well above our peers in terms of our safety performance. I think it's particularly relevant this year because not only did we enter a large-scale new stream of business with our load and haul contract at Sukari, where we employed over 400 people. Across the broader business, we added about 1,000 people to the headcount. It's an incredible result that we actually improved our safety performance, bringing on, essentially doubling our headcount. Obviously the culture, safety culture in this company, we're very pleased and very proud of what we've achieved there.
In this release, we've highlighted a few recent contract announcements. There's a couple of things I'd just like to point out that we recently announced a new three-year surface production drilling contract with AngloGold Ashanti at the Geita Gold Mine in Tanzania. We reported that the anticipated revenue over the next three years is $33 million. Significant in that the two longest term contracts that Capital has is the Sukari Gold Mine, we've been operating since 2005, and at the Geita Gold Mine, where we've been operating since 2006.
Both of those sites have recently, in the last 12 months, also had contract renewals that are taking us out to 2023, 2024, which means at which stage we will have been operating at these sites for 20 consecutive years. Very proud of the continued renewals, which is obviously a very strong sign of Capital's performance. We've had this across multiple other contracts, Tasiast, which we announced. We've had the grade control contract extended there. We've been there since 2010. We've had another contract extension for our underground grade control drilling with Resolute at the Syama Mine. Again, very pleased to see further renewals and further extensions.
Also we've just reached in today's release we've announced new contracts one with Firefinch which is a customer of ours in Mali at the Morila Gold Mine. We're now drilling at the Goulamina Lithium Mine which is a joint venture project between Firefinch and Ganfeng China's or the world's largest lithium producer. It's one of the top undeveloped lithium deposits globally. We've also announced today a contract with Tembo at the Kabanga Nickel Project in Tanzania which has just in this past week seen an investment from the world's biggest mining company BHP. This is nickel in Tanzania and is actually the first large scale job of Capital way back in 2005.
Again, very encouraging that we're seeing some commodity diversification into nickel and lithium to supplement existing operations where we have exposure to copper in Saudi Arabia and obviously many of the projects exposed to the gold exposure. MSALABS some significant milestones in the fourth quarter, and I think the most important one to note is that we formed a solid partnership with Chrysos, so we've got a PhotonAssay unit that is really been quite disruptive to the traditional fire assay market. We commissioned in the fourth quarter the first PhotonAssay unit ever commissioned globally outside of Australia, where the technology was developed, and that was with Barrick at the Bulyanhulu Gold Mine.
We have further units, one arriving in Canada this month in Val-d'Or, and another unit arriving in March this year at the Morila Gold Mine, which, as I mentioned earlier, owned by Firefinch. MSALABS just going from strength to strength. Another highlight of the results is our direct investment portfolio. Look at an outstanding result in the second half. We had solid gains in the first half. Second half, we're reporting today the listed portfolio has increased by 135% over the period. The total value of the listed investments at the end of December was $51.9 million versus $21.6 million at the end of the first half.
The investment portfolio, again, it was a strategy that we put in place in 2019. In particular, we saw again, a disconnect in the market in terms of improving, commodity markets, yet capital markets hadn't responded, improving valuations. We put capital to work, and that has really paid dividends, not only in terms of the investment portfolio, but generated a lot of business for Capital, over the last couple of years, and a lot of long-term contracts and some very solid relationships. As we look to the outlook, as we said in the intro, strongest quarterly revenues in the group's history. We really are seeing a shortage in supply in many facets, particularly in drilling and laboratories. Demand is very strong.
Commodity prices, as we've entered 2022, have continued their upward trend. Nickel is now at decade highs. Tin price is high, lithium price is high, gold price is starting to move up. The macro environment is incredibly supportive and financings for 2021 were up about 80% on 2020. Continue to have a very supportive macro environment. On the mining side, the development pipeline is maturing quite nicely. Obviously, longer lead times on mining, but there is multiple companies now going through final DFS's, which obviously then lead to financing and then into earthmoving. We're optimistic about that pipeline as it develops through this cycle. Look, strength across all of our business units, and continues to give us confidence to invest in the business.
As I said earlier, revenue guidance and it will be announced alongside our full- year results, along with any dividend declaration. Look, on that, I'll hand over to the moderator for Q&A. Thanks very much.
Our first question comes from the line of Richard Hatch from Berenberg. Please go ahead.
Morning, Jamie. Thanks a lot for the call, and congrats on a cracking end to the year. Lovely to see it. I've got just three questions, please. The first one is just on the Drilling business and the current sort of conditions and run rate. I mean, ARPU $184 thousand and utilization rate sitting at 79%. I mean, that's really strong, especially if you compare it versus Q4 2020, which you talked to. I mean, what kind of outlook can you provide for us on that ARPU and that utilization rate, please? Are we getting to that point in the cycle where now the pricing pressure starts to really kick in, and you can grind those prices higher?
Look, I mean, they both utilize that. We've put up some slides in earlier presentations. I think, you know, previous peak cycle utilization is around these numbers, 79%, 80%. We have pushed the business, when you have the right asset mix, we've been as high as 85%, even high 80%s utilization. I think in this band of 75%-80%, and I think up or around the 180 mark, they're numbers we continue to be pretty comfortable with, but I won't get drawn too much more just obviously for guidance reasons. What I would say to your question is that the market, the pricing power is certainly more so in the hands of the contractors. Demand is extremely strong.
We need to balance that, Richard, against obviously you're starting to see a little bit of cost inflation. You certainly want to be retaining key staff in this type of market. Certainly we're in a very positive environment for pricing. We have seen pricing improve across the majority of the exploration and delineation contracts when they are renewed.
Okay. Thanks, Jamie. I mean, just on that inflation point, can you perhaps just expand a bit on that? You know, where you're seeing it, kind of, what levers you've got to keep sort of some kind of defense on your margin?
Look, I mean, the defense on the margin really will be I think you probably get pricing gains offset a little bit by inflation cost, right? So, again, I won't get drawn too granularly on the margins guidance-wise, but, you know, I'd expect them to move pretty much in sync. A good example is a lot of these long-term contracts we have rise and fall mechanisms built into them for cost inflation. So prices get adjusted to reflect cost inflation. So there is a large degree of protection across all the major long-term contracts. Look, most of the inflation is obviously stating the obvious with global supply chains. There's inflation across the supply chain. But I have to say we've managed that exceptionally well. There's inflation across wages, as you would expect as the cycle matures. Again, none of this is, it's manageable is what I would say, Hatchy.
Yeah. Got it. Okay, cool. The other two are just, I mean, the investment portfolio, clearly that's been a real winner this year in terms of performance. How do you think about how you crystallize value from that? You know, some companies on the street that have a similar, well, not as good, but an investment portfolio where the value isn't really attributed by the market, and, like you don't get value for it either. How do you think about crystallizing value from some of those investments?
Well, you know, I think it's a really good question. I'd argue pretty strongly that the value of the investment portfolio has not really been reflected in the value of Capital's equity. I think probably testament to that is that the board has recently approved a buyback of our own stock because we identified the fact that we think there's a lot of latent value in Capital's stock. In terms of the portfolio itself, look, it was a more aggressive strategy back a couple of years ago, but we do continue to look for new opportunities. What we have done over the past 12 to 18 months is consolidate those positions. The portfolio is more concentrated than it was.
What we're really trying to target is assets that we think focus on projects that have got the ability to go through the development phase. A good example, one of our headline holdings is Predictive Discovery, and maiden resource delineated at 3.6 million ounces. We think, you know, this has unequivocally got the potential to be a very large goldmine. Look, I hope it's one of those things, Richard, that over time the market will attribute some value, having seen the gains that have been registered. Obviously we have an investment committee process around it, and when we think the time is right, we may crystallize some of those gains. We have crystallized some of those gains over the course of the last two years.
Yeah. Good one. Okay, last one is just on BD. Obviously the Sukari contract has done very well. Congrats. Can you just talk about, you know, what you're seeing in the load and haul business development space? Should we be expecting to see, you know, the company look to try and put another contract win on the table, at some point this year? Or can you just give us a bit of how competitive is the environment? Can you just give us a bit of sort of color on what's going on there?
It moves with a longer cycle than drilling. You know, your labs business and your drilling business move a lot quicker. Actually, we did an exercise recently looking across the awards that have happened in the last, let's call it 14 months or so, and there's only been about six or so actually of significance, and one of them was Sukari. When you look at it on a market share basis, in the markets in which we operate, we've got a reasonably good hit rate. Look, I'm not gonna guide as to when we think the next one will come, and we have actually declined on a few that haven't quite worked for us in terms of the right profile.
What I would say is that I think we're seeing at the moment a record number of companies that are reaching that DFS. Well, as I said in the preamble, going through the final DFSes. I could list 10 off the top of my head right now that are gonna move into financing and then move into construction. Back to where I started the answer, it's a longer lead time, but the pipeline ahead of us is quite broad.
Gotcha. All right. Good stuff. Sounds good, Jamie. Congrats. Well done. Nice work. Keep it up.
Thank you, mate.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. Our next question comes from the line of Mark Simpson from Excellent Investing. Please go ahead.
Hi, Jamie. Congratulations on another brilliant quarter. First up from me, on the last conference call, you spoke about net debt, and you said you thought it was likely to peak around, say, 2021 H1, reduced in H2. Obviously, you can't share actual details, but can you give some guidance on that? Is it reduced in H2?
Giles, can I let you field that?
Yeah, certainly. Look, as you say, we can't guide you to that. Look, what we said at the end of the first half is that, you know, we've got good, strong cash flows, that our CapEx profile was heavily front-loaded towards the H1. You know, our expectation at that time was to be good EBITDA to cash conversion with a lower CapEx profile. Quid pro quo, yes, one would expect the debt profile to come down.
Thank you. In this update, you mentioned sort of three rigs undergoing commissioning at the moment. In the previous update, you said, I think it was sort of like seven rigs on order for 2022 at the time. Can you give some guidance? Are these additional to those three? I think some were going to long-term contracts and some were going on spec.
The three that I'm referencing, we expected to finish the year at 112. We've finished the year at 109 in the delta of the three rigs that are 2021 CapEx that have actually arrived in country but just haven't been turned on yet. We call it the best of both world. In terms of the rig growth for 2022, the previous comments, we have pre-ordered rigs. There are other rigs on the way. Again, sorry to keep putting this line out. We don't wanna be specific about numbers because it can feed through to guidance a little too easily. But to answer your question, that three is separate to the previous comment.
Okay. Thank you. Then on— obviously, the share buyback is very, kind of, welcome, but the company still sort of trades at quite a material discount to, like, both listed peers and broker targets. You know, would you look to extend that buyback if that discount remains, obviously the current $2 million sort of, you know, isn't particularly material in terms of reducing the share count and adding to EPS?
Would we look to? Without being definitive about it, yes, we would look to.
Great. Thank you. That's all for me.
As there are no further questions.
Thanks, Mark.
I'll hand it back to the speakers.
All right. Well, very good. Well, thanks everyone for the questions. We'll as I said in the introduction, we will update the market shortly with respect to the date of the release of the full year results, which will include the guidance moving forward. Thanks again everyone for dialing in. Thank you.
This concludes the conference call. Thank you all for attending. You may now disconnect your lines.