Good morning, everyone. My name is Jamie Boynton, I'm the Executive Chairman of Capital Limited. With me today, I have Rick Robson, CFO for the group, and Connor Rowley, Head of Corporate Development and Investor Relations. I just want to welcome you all today to our 2024 results presentation. I'm going to talk for about 10 minutes to recent developments and results, and then I'll hand over to Rick to run through the company's numbers before we move to a Q&A session. If I could ask if we could start by just going to slide three, please. I won't spend a lot of time on the numbers today because I'll ask Rick to go through that in more detail. Obviously, we provided a company update on the 10th of March, a couple of weeks ago, which included revised guidance for revenue, in particular for 2025.
When we look at 2024, we did have a very good year with respect to revenue growth, hit a record number for the company of $348 million, which is a 9% increase year on year. Obviously, we had weaker EBITDA, a drop in EBITDA, cash from operations, and in profits. What I plan to do today is just to put some context around that development and how we see the business looking as we pass through the first half of this year into the second half and obviously beyond. As I said, I won't spend too much further time on the numbers. I'll let Rick handle that in his section. If we could please move to slide four. In general, I'm going to be talking, and the slide deck is obviously available on our website and the LSE.
For the next 10 minutes or so, I'll be talking broadly between slides four to seven. I want to start by just putting some context around our reduced profitability in light of higher revenue in 2024. To do so, I will focus on a few key areas or a few key divisions of Capital. Starting with our mining business, our activities on our two mining contracts, specifically the Sukari Gold Mine contract and secondly, the Ivindo contract in Gabon with Fortescue, they both came to a conclusion effectively in the third quarter of last year. Now, the Sukari contract was expected. It was a fixed-term volume or a fixed-volume contract. We actually did receive an extension on that. It was due to end in the second quarter and ended up ending in the third quarter.
However, at the same time as that contract came to its natural conclusion, we received notification that our Gabon contract was being terminated earlier than expected, which was due to a client reprioritization of their focus, where they're focusing now on exploration and delineation drilling activities to expand the resources base. Effectively, both of those contracts came off at the same time. There are obviously costs associated with that, with the conclusion of those contracts. That is the first thing that had an impact on our profitability as we rounded out the second half of the year. The second, and as we look into 2025 and beyond, I'll talk to the recently announced LOI with the Reko Diq contract in that part of today's briefing. With respect to MSA Labs, we actually slowed the growth rate down in the back half of the year.
One of the key things that was a delay in our first round of guided revenue was that the Nevada Gold Mines laboratory, the phase one commissioning, happened about six months later than we originally anticipated. Coupled with that, a number of our commercial labs were taking longer than anticipated to reach commercial utilization rates. Again, MSA for the year, slightly below our revenue guidance, behind on profitability and a slower growth rate as we slowed down in the second half to consolidate our existing activities. The third contributor to the performance in the second half was the ramp-up of activities with our drilling contract with Nevada Gold Mines in the United States in Nevada.
As we ramped that contract up, we had quite higher than what I would call usual staff turnover as we established those operations and just a slower ramp-up in general of rigs coming on stream. All those three factors obviously drove a slightly softer revenue than anticipated. Our final revenue number of $348 million, the bottom range of our guidance was $350 million. We actually got pretty close on the revenue, but obviously profitability was impacted with those delayed ramp-ups. Along at the same time, we've made a number of non-cash impairments that have impacted the earnings in the second half of the year.
Now, the balance, I should point out that where we've had delays and so forth is with respect to these growth businesses, MSA, Nevada Drilling, and our core drilling business has continued to perform in line with our expectations and very strongly through 2024, and we're expecting that to continue through 2025. As we look into 2025, using that same structure, I'll run through where we're expecting this business to move in the years ahead. First, again, I'll start with mining. As you can see in this slide, we have talked to the letter of intent for a major mining contract at Reko Diq. This contract is with Barrick. The Reko Diq project will be within the top 10 copper projects globally with an extended 40-year plus mine life.
It's a fantastic opportunity for us to get involved at the very initial stages of that project. The contract itself is in the advanced stages of contract negotiations or final stages, really, of Ts and Cs, and we expect that to be signed in the very near term. What this means for the business is that mining revenue will come back into the business likely in the second quarter of this year, not too far away. It will come in with a ramp-up schedule as it gradually ramps up over the course of 2025 before it hits full run rate in 2026. This contract is absorbing all of our fleet that we've moved across from our operations in Gabon and the majority of the fleet that we had on site at Sukari.
Effectively, when you look at the mining business, which is around about $60 million worth of revenue, that has come off stream in late Q3. We have a hiatus in Q4 and Q1 before that gradually coming back on stream in the second quarter and beyond. In fact, the timing of Reko Diq with that fleet, those contracts coming to a conclusion and being redeployed, is actually very pleasing that we found such a substantive opportunity so close to those other opportunities or contracts coming to a conclusion. Secondly, I'll move on to MSA Labs and what we're looking at for 2025. The largest single laboratory operation that we will have within that business is the Nevada Gold Mines. Now, phase one was commissioned late in the year in the fourth quarter, and that's gradually ramping up.
We're expecting to see a much improved and more significant contribution from that in 2025. I'd note also that phase two is at very advanced stages of discussion, design, and we would expect that to come on stream in the second quarter of next year. We have, again, not dissimilar to the profile of our mining activities, the single largest lab contract in a ramp-up phase over this year, hitting full run rates into next year. We've made some pretty significant changes to the management teams and management structures across both Capital and MSA. Particularly with MSA, we've brought in quite a bit of industry talent, including adding BD capabilities. The key thing for us here is we've rolled out a network of labs quite aggressively, and it is now a focus on driving business development and driving utilisation through those labs.
Within today's announcement, we are guiding revenue for MSA of $50-$60 million in 2025. I should point out that that's a roughly 30% increase on 2024. After a rather subdued 2024, we are now expecting to see accelerated growth coming back into that business. We are very confident with that number, and we've seen quite a significant improvement in that business's performance, excuse me, in the past few months. The third topic covered is our drilling activities in the U.S.A. I would say not as advanced as we have seen with MSA in terms of improved performance. However, we again, we've made management changes, particularly operational management changes to our business in Nevada. In March, we have increased the number of rigs that are operating, and it's in fact the highest number of rigs we've had operating at site.
This will continue to get a lot of management attention, particularly just in the coming quarter or so, to start to optimise that and to see an improved performance from the Nevada drilling. Beyond Nevada drilling, again, same thematic that I led into that the rest of the drilling business is performing very well with a very solid demand profile, as you would expect with gold and copper trading at these sorts of levels. I just might say I've covered a lot of the topics that are in this current slide that we're looking at. I will come on to the cash flow generation a little later. If I could ask you to please move to slide five. This, again, goes to somewhat of the thematic that I just discussed.
You've seen the group has achieved very strong revenue growth from 2020 to 2024, 27% CAGR in revenue. We've got a dip coming into 2025 for the reasons that I've explained. With the ramp-ups of the mining contract, MSA Labs, and what we think will be broadly across our drilling business, we're looking at an indicative exit run rate that should be equal to or higher than 2024. It really is a story of two halves for the business as we go through this high ages in which we're currently going through. If I could ask you to move to slide six, please. I think on slide six, I've covered a lot of these points. Again, you can just see what we're expecting in terms of the business to inflect moving into the second half of this year.
If I could ask you to move on to slide seven, covers the same thematic, how we expect that to translate into return on capital. The business has had an outstanding return on capital for a number of years now, and 2024 dropped into 14.3%. We have gone through a significant capital investment cycle, and this year is really about focusing on our operational delivery to start to get those margins back up and to start to get our return profile back up. Before I hand over to Rick, I'd just like to conclude that this year is about project execution. It's about getting the capital at work to be performing for our business. We are guiding, and there is an outlook statement later for revenues of $300 million-$320 million.
We're guiding to capital expenditure of $45 million-$55 million, which is a significant drop over the last couple of years. We've actually now invested over the last five years a little over $300 million in capital across our businesses. The platform is extremely well established. This year is about getting that platform to perform back at the levels that we are familiar with and the type of consistency we've seen in the past. I'm going to hand over to Rick now. If you could briefly go through the financials, please.
Thanks, Jamie. If we could go to slide nine, please. Thank you. Revenue previously announced at $348 million, and then I've skipped to the end part, ended at $18.3 million, which is in line with our company update a few weeks ago.
What I thought it's worth doing is just explaining a little bit about the more underlying profitability of the business, particularly with reference to the exceptionals that we are annotating on the page. Firstly, one of the exceptionals is the ERP cost. This has been adjusted for previously. We continue to develop our ERP in the background, and this is in a rollout phase still with more to come in 2025. The adjustment for 2024 was about $2.7 million in that regard. Sticking with the EBITDA line, second exceptional of note was the VAT receivables. These are non-cash adjustments to our profitability of $2.5 million for 2024, where we've effectively increased the provisions against VAT receivables on the books. A lot of those VAT receivables were aged balances, and we particularly referenced Mali in the company update.
We continue to monitor events in Mali, and with an aged balance and a sort of elevation of geopolitical risk, the board took the decision to make the provision for the VAT receivable there. Safe to say that we continue to operate in the country, and we still plan and have budgeted for continued profitability from Mali in the future. Those two adjustments I've just referenced are in the EBITDA line. There is a third exceptional bucket, if you like, that gets reflected at the operating profit level, so the EBIT level. That is an impairment that we booked against certain laboratory assets in the business, particularly Mali, again, in light of the events in the country and underperformance of that particular laboratory to date.
That being an impairment is below the EBITDA line reflected in the EBIT line, giving us that $47.3 million EBIT for 2024, down 22% year on year, and then the margin 14% down from 19%. Moving below the EBIT to the effective tax rate, I think this will be a question that comes up. We have seen a higher effective tax rate in 2024 at about 58% if we adjust for these exceptionals and our investment gains. Look, it's reflected with greater portion coming from higher tax jurisdictions, but it's combined, particularly with the tax losses from our new startups. An elevated effective tax rate for 2024. Looking forward, we expect that elevated tax rate to continue in the first half, certainly, and we expect returns to normalized levels over the course of the second half of 2025. Let's go to the next slide, please.
Just looking at cash flows, I won't go into great detail. Safe to say within our cash from operations is the working capital movement. That was a neutral impact for the year. Basically had receivables increase as a result of accrued revenue, particularly given the settlement Jamie spoke of with the Ivindo, but also offset by deferred income from various mobilization payments on projects. I think on the investing cash flows, just a point to note. We've seen a decrease on the investing cash flows, clearly flattered by the sale of investment in the years, the sale of our stake in Predictive during the year. We have seen the cash CapEx come off year on year, and I'll come on to talk more about CapEx in due course. Next slide, please.
I'm not going to go into great detail on the balance sheet, but I will just cover off the debt position. We've seen our gross debt is about $112 million of gross debt, RCF at $60 million. We drew down on the RCF during the year to take it up to $60 million at the end. Importantly, we funded some of our CapEx with the OEM facilities, particularly with Epiroc and Sandvik, funding the rig CapEx mainly in respect of US rigs. We've seen that sort of combined debt piece go up to $34 million. A component of the increase there.
$5 million of the debt is related to properties that we purchased, one being the yard we now operate out of in the U.S. in Elko, and the second being a laboratory property purchased during the year, which became operational and is ramping up currently. Next slide, please. This is our traditional waterfall showing many of the sort of captions I've discussed. You can see the CapEx here. This is the total CapEx for the group. It is a gross CapEx figure. This is the cash CapEx that I previously talked about, plus the OEM finance CapEx, totaling $68 million for the year. Previous in 2023 was $69 million. Also worth noting just on the trailing EBITDA multiple, we are up at 0.95 now, well within sort of covenant levels.
As a comparison, that was up from about 0.8 times at the end of 2023. Next slide, please. Just in respect of the CapEx, as I mentioned, within our CapEx for the year of $67 million is the OEM finance rigs plus the properties that we purchased. The two of those together total about $29 million of CapEx, if you like, in the year. The cash CapEx there, which ties back to the cash flow, is $38.5 million. Guidance-wise, we guided early in the year at $45 million-$55 million. Three main components there: the sustaining CapEx on our fleet, which we traditionally have each year, plus MSA CapEx, which is the rollout of the Nevada Gold Mines, particularly some of the phase two operation.
What we're looking at there is some MSA, you can see in the red bar, it's about just around the double figure million mark. Growth CapEx also includes the spend relating to Reko Diq. Contextually, obviously, we are redeploying the fleets, but we do have one or two items to purchase and some work to do before we send some of the main heavy mining equipment to Pakistan. Next slide, please. I won't cover this off too extensively other than to say we held the dividend flat at $0.013 in line with the interim dividend and within our policies of up to 20% of net operating profit after tax. Next slide, slide 15. Outlook and guidance. James, for the group, the revenue there, $300 million-$320 million. Jamie's spoken of the $50 million-$64 million MSA Labs as a component of that.
CapEx guidance, I've just talked to. We've gone a little further this year and just broken out drilling, MSA Labs, and mining just in the context of the new project at Reko Diq. Pass back to you, Jamie or Connor, for questions.
Yeah, I think we can hand over to the question time. I think that the one thing that is worth stressing with the outlook, that I'm going to state the obvious here, that the gold price and the copper price is providing an incredibly supportive backdrop. There has been quite a significant increase in capital markets activity, initially on the ASX and then more recently on the TSX, which is always a very good lead indicator for demand in the junior end, which obviously improves the supply-demand balance for us as a service provider.
Quite a few mines coming on stream in Africa and quite a developed pipeline in our traditional business, although we are also seeing some tendering opportunities now in our US business as well. It really is a fantastic demand backdrop for this business. We think the prospects, when you look at the 10-year history of the capital expenditure or 20-year history of the capital expenditure cycle, the exploration expenditure cycle, you are still seeing spending that is well below previous peaks, which certainly indicates that there's a lot of catch-up to come to really be able to satisfy the capital requirements for mine builds in the future. A very positive macro backdrop for our business. I'll now hand over to Q&A.
We will now start the Q&A.
If you wish to ask a question, please submit questions through the webcast page using the Ask a Question button. I will now hand over to Connor Rowley, Corporate Development and Investor Relations, to address the written questions. Please go ahead.
Thank you. Yeah, I'll try and split these questions up by division as usual. Thanks for all the questions coming in. There's some duplicates, so I may not read them out verbatim. If we start with mining, I think, and Reko Diq, there's two questions on Reko Diq. The first one is, you've got the letter of intent. Have the investments to refurbish the equipment begun? You mentioned equipment arriving on site in H1 2025. Is a letter of intent sufficient to begin relocating that equipment to the site?
Selective refurbishments have begun.
The first of the fleets that are expected to go across to the project is the fleet from Gabon, which is very young, literally about one year old. There is not a lot of work required on that part of the fleet. Is a letter of intent sufficient? It is sufficient to start booking ships and so on. We are very confident with our position with Barrick. Yes, it is enough for us to start the planning process, absolutely.
Thanks. Secondly, this question is just on Reko itself. Reko presents a major growth opportunity. Can you expand on how you are setting business up to take advantage of this?
How we are setting the specific operation up or the business? Is that clear from the question?
I think it is a question more broadly about Reko Diq and the opportunity there.
Yeah.
As I said earlier, it will be among the top 10, I think number nine on some of the numbers I've seen. Copper mines in the world will be 40-year mine life, one of the lowest cash costs, it's got an enormous amount of gold byproducts or credits. It is somewhat analogous in the way we're structuring our business to run it is the team that have executed at the Sukari mining contract and the Gabon mining contract. That team is on the ground already looking at site preparation, etc. We've already been running our operations in MENA with a lot of our Egyptian staff. We got up to 800 people in Egypt at its peak, and a lot of them are going to be involved in this project. I should also point out we have operated in Pakistan back in the late 2000s.
In fact, we have a number of Pakistan staff from that previous time when we operated at this project. We have been back at this project now for just over a year doing exploration delineation drilling. We have a lot of people familiar with the assets that we are deploying, a lot of people familiar with working in the country. I hope that answers the question. We are very confident in our execution on this project.
Thanks. Maybe just a quick one on Belinga. The question is on that termination. Were there any fees payable from FMG around that termination?
The short answer is yes, which is a typical contractual provision on our part to have early termination payments for exactly this type of event where plans change. We appreciate that.
Yes, the position there was we had an agreed settlement with Belinga in respect to those early termination payments. Since the year-end, it has been paid.
Thanks. Moving over to NGM, and a few questions on this. Can you give a bit more color about how labor costs and turnover and delays, etc., have trended at that drilling contract versus the original expectations and sort of what that means for margins going forward? Then just a follow-on from that, Jamie, you mentioned there was additional management attention required. Does this mean that you need to build the business in North America further to get that more efficient scale?
The labor costs themselves are broadly consistent with what we had budgeted. We haven't really had any surprises with respect to labor costs. We obviously did a lot of due diligence before we went in there.
As you would expect, there's a higher labor cost as a percentage of revenue than other parts of the world in which we operate. Turnover was, in the early phases, particularly higher than we anticipated. We have certainly seen a dramatic reduction in turnover in recent months, but we've got an extraordinarily low turnover number across Capital. For a business with 2,800-odd people, our turnover rates are low single digits, which is outstanding. We have not had that level of success in the U.S. thus far with turnover. As I said, it is unequivocally on an improving trend. Connor, the last part of the question again, please.
Just you mentioned a high level of management oversight, sort of the indirect cost association. Does this mean the business needs to grow further from NGM in North America to sort of give that operational leverage?
The initial approach to Nevada Gold Mines, which included the purchase of a pretty substantial property, capital expenditure to make sure that we hit the ground with the adequate resources. Therefore, yes, I mean, some more scale there would be supportive of that. To be frank, our focus right now is on optimizing productivity. We're still not quite at the levels that we are comfortable with that we would like to see with our productivity. Frankly, the operating leverage will come from improving productivity. Now, whenever we start a new drilling contract, there is a period of time that it takes to familiarize yourself with ground conditions, supply chain, labor, etc. I would say that we are seeing improving trends, but still work to do.
Thanks. I think I'll move over to MSA Labs.
This question, in the annual report, we show a loss on earnings in MSA Labs for 2024. With the increase in revenue in 2025, does this mean the business moves into profitability or a cost rising again with revenues?
No, we are expecting that the business will move into profitability in the second half. The early signs in the first couple of months of this year are particularly positive. It is tracking actually slightly ahead of our budgets. We have done quite a significant, as I alluded to earlier, some management changes, a number of cost initiatives, cost-saving initiatives. Simplistically, what is this now about? The platform is very well established. We need to drive utilization through our fixed asset base. That is taking place. As I said earlier, we have increased our business development capability in North America in particular.
Our African operations have actually been particularly pleasing in the last couple of months. Yeah, not expecting to see a significant increase in the cost base as we drive utilization, expecting that to feed through into profitability.
Thanks. There's another one on MSA Labs. I guess expanding on your point in terms of focus on profitability. Previously, we were placing Chrysos units where we were already established with Capital or building in key geographic locations. Does this consolidating of the existing platform mean a shift in the strategy for you or just a pause?
I'd say a pause. There's two parts to MSA. There's the mine site laboratories, and the commercial labs. We've had quite a level of success with our mine site laboratories. The commercial laboratories, to the point earlier, is about driving utilization. I'd say there's been a pause in H2.
The opportunities actually in front of MSA now are as strong as I've seen them. Coupling what will be a number of new opportunities and new laboratory opportunities, which I hope that we'll be announcing in the coming months, is obviously the ramp-up at Nevada Gold Mines. That is a significant standalone single operation. I was actually there last week. That will be the most material contributor to MSA Labs. There's a ramp-up there this year as well as, I think, a recommencement of the rollout of labs with the right opportunities.
Thanks. Just to follow up on that, there's a commercial labs question about adoption rates. Have you seen there seems to be very positive feedback about the Christos technology. How have you found adoption rates, esp
ecially across the commercial labs? Slower than we expected.
I remain in extremely high conviction that there is a direction of travel here in the industry that there is going to be widespread adoption of the Christos technology. I think where we've been, and we have said this in previous releases, perhaps a little overoptimistic is just the timing because the amount of test work that goes into bringing a new ore body on stream, doing test work between traditional fire assay and Christos technology, and looking for variances in the results, and looking for they're essentially looking for a very close correlation between the two before they migrate. That process itself, I think we underestimated the time that it takes.
The fact that it's being adopted and used by all the major gold companies now and increasingly accepted or trialed by your mid-tiers and even some of the juniors now coming on board, we remain very confident about that technology.
Thanks. A couple more on MSA Labs as well. What is the relationship with Christos and how has that been in terms of matching our rollout?
The relationship with Christos is solid. In terms of matching our rollout, if I'm understanding the question correctly, the rollout schedule is slightly behind. That comes back to the earlier part of the question where we talked about we had a bit of a pause in the second half of last year. The pipeline for the rollout has improved in recent months. We continue to work very closely. In fact, I was speaking with their CEO only yesterday.
Continue to work closely with them, good relationship with them, and exploring opportunities.
Thanks. One more on MSA Labs. When we look forward to sort of a mature business, what do you expect in terms of operating margins and returns for the business?
We have stated that our goal here is we expect $80 million plus in revenue. We initially expected that in 2025, but now that's really because of the pause and because of the delay in Nevada Gold Mines. What was the $80 million plus in 2025 is now an $80 million plus in 2026. We think once it's mature, we should have adjusted even our margins between 15-20%. That's certainly the margins that we're targeting. Sorry, the other part of the question, Connor, or have I covered that? Oh, returns, pardon me.
I mean, could you perhaps with your modeling, what sort of returns are you expecting, Connor, when those margins are at the levels that we expect to attain? Or have I lost Connor? It would appear.
Might have lost Connor.
Yeah. It would appear that.
I think trying to put a number on it's a little difficult, but it'd be north of the 20% mark, I think, which is what we sort of enjoyed as a business in the past. Contextually, that's a capital-lighter business than the drilling side of it. Those margins on an adjusted EBITDA basis of 15%-20%, given it's more capital-light, and that margin includes the cash cost of the lease, that sort of broadly speaking drops through to that operating margin, that EBIT margin. On a ROCE perspective, we expect it to be quite compelling.
As I say, north of the group's normal ROCE likelihood, that's the 10% mark.
Thanks. I think I was lost for a second. Moving on to a couple of finance ones. I guess, Rick, on the impairments, could you just give a sense of why the impairments around Marley Labs, for example, were made now versus before? There is a question of why we aren't impairing the Gabon mining assets after that contract, but I guess that might be an easy one to cover off.
Yeah. On Marley, I mean, look, it's been on a sort of watching brief for some time. People will have noted the sort of various ups and downs in terms of mining companies doing their sort of fiscal arrangements with the government and making various large-sized payments and that working through.
I think one of the notable exceptions to that is Barrick at this point. I think, look, we're in the country drilling, as I've mentioned. The two sites where we are drilling are those companies have done their deals with the government, and we continue to operate on site. I think just as a general backdrop, as I say, the board will continue to monitor that. I think the sort of prospect for the laboratory business in Mali was, if anything, deteriorating over the course of the year. We took that decision to impair that sort of asset base at the year-end while we sort of revisit the options with respect to what we can do next. Sorry, what was the second part, Connor?
Just any intention to impair the Gabon mining assets now they're not productive?
No intention.
I mean, the Gabon mining assets are on their way, if not have arrived in Pakistan. That Gabon mining fleet is being moved almost wholesale to Pakistan. No impairment indicator raised there given the anticipated contract on site in Reko Diq.
Thanks. A couple of questions, Jamie, I think, on the investment portfolio. There is one on the sort of the deal around Predictive, but I'm not sure we can actually make a comment there given they're not involved. Also a question on Sanu. Maybe it's just an opportunity for you to give an update on that portfolio.
Okay. Obviously, we liquidated the Predictive position to Perseus in, I think it was August. We've done particularly well on that position. We've retained an option in the event of corporate activity.
We do believe we've held a view that it's a near tier one asset and the best of the undeveloped gold assets in Africa and that it will lead to corporate activity. That's our view. Therefore, we've retained an option that in the event of corporate activity, we share in the upside. We've had a huge amount of success. We put a position on in Sanu, which is also actually in Guinea in the fourth quarter of last year, and that's gone from 5 to 35. I think the other highlight is actually Wia. We hold about a 17% position of Wia. That's a particularly pleasing one in that we were actually involved in the project generation. That was an ASX shell. We were involved in helping structure the board, acquire the properties. That's now sitting at 2.1 million ounces.
I feel very confident that we've been pre-discovery on Predictive, which will unequivocally be a gold mine, and pre-discovery on Wia, which I believe will be a gold mine. Our network on the ground, our ability to identify opportunities, identify good management teams, continues to perform well. I mean, obviously, being very helped by commodity prices, to say the least. We're still seeing a lot of opportunities despite the capital markets becoming more available to many of these companies raising money. We're finding now that the brand has established itself that people are reaching out to us to help them and to be involved with them because of the track record of our investments thus far. Hope that answers it.
Yes. Thanks. There is another question just on recycling. Obviously, we've had a big monetization event this year with Predictive.
How do you think about sort of the next steps with the rest of the portfolio?
How do I think about the next steps? In a broader scheme of things, our investment case has to obviously work on a standalone basis, but we also come at it from a provider of capital angle and a provider of services angle. In a lot of cases, we've helped, as I said in some previous examples, we've helped with board appointments. When we think that aspects like being able to probably not help as much strategically or financially, it becomes just a services arrangement. That is one criteria. The other criteria is just looking at stating the obvious. As with any investment, it's just looking at the potential of that investment.
We will assess each and every one of them on its merits as we continue to manage the portfolio. I know it's a rather fluffy description, but it's just standard portfolio management with these positions.
Thanks. Going back to the financials, this question maybe for Rick is, how do we think about leverage in this business and the outlook for that?
Yeah. I think leverage-wise, we're at the top end of where we want to be, quite frankly. We're working to reduce those levels over the course of this year. Obviously, the decline in profitability hasn't helped from a net debt to EBITDA basis. We'll work to reduce the debt over the course of the year.
I think outlook here, look, I mean, as the business gets back to that sort of, let's say, more traditional margins and follows the guidance beyond this year, I think we'll maintain a sort of sensible level of leverage in the business. As I say, today, we're probably at the top end of where we want to be.
Thanks. Maybe one for both of you. It might be a difficult one to answer, so maybe it's just a more general answer. Looking at the book value of our fixed assets of our fleet, obviously, the depreciated assets within that. The question is approximately what would be the replacement cost of the fleet now?
I think that's probably a hard number to come up with on the fly, but maybe some comments about current replacement costs of fleet versus where it sits in our book.
I mean, it's a tough number to come up with on the fly, but I'll give it an attempt. I mean, there's 130-odd rigs across the business, the mining assets. I'd be pretty confident a ballpark replacement cost if we had to buy everything brand new now would be $300 million, if not a little higher than $300 million.
Thanks. I think we're just finishing a couple of strategic ones. The question just on the change in senior management a few weeks ago. Is there any sort of immediate plan to appoint a new CEO, or are we happy with the current management team as is for the near future?
No immediate plans. Happy with the current management team. Obviously, we're going through a difficult period with transition of management, but one thing I am particularly comfortable with is that the team, our executive leadership team, is extremely stable.
As I've plugged back into the role as Executive Chairman, I'm facing the same individuals who have actually been very successful in their delivery in prior iterations. No immediate plans to appoint a CEO is the answer.
Thanks. I think we've just finished on one last one, just I guess generally, with US drilling and sort of MSA Labs, those are where we've had the issues and diversification geographically. Are we considering refocusing on Africa, or is the geographic expansion still the strategy?
The geographic expansion, selective geographic expansion remains the strategy. I think it's critical to point out that it's a client expansion as well. Why have we gone to Reko Diq? It's a tier one asset owned by one of currently our largest customers, Barrick. Why did we go to Nevada?
It was at the request of Barrick, who are the operator of Nevada Gold Mines. We're confident we'll stay the course with the geographic expansion. It is better for portfolio diversification because we do operate in some countries that are, I think, perceived on the higher risk countries. That strategy will remain in place. It's about executing on that strategy.
Thanks. I'm sorry. One very final one has come in. Centamin Sukari was obviously a very big project for us. It's now changed to AngloGold. Has anything changed in that transition for us?
Nothing at this stage that I can—nothing at this stage. I think we got asked this question a lot. Obviously, Sukari and Centamin have been one of our biggest customers since the inception of the company. Particularly in London, it got a lot of focus because Centamin was obviously listed there.
The two longest-term contracts and, in fact, our largest drilling contract is at the Geita Gold Mine, which is owned by AngloGold Ashanti. With the acquisition of Sukari, we have now become one of the largest contractors globally to AngloGold Ashanti. We have relationships going back 20 years with AngloGold Ashanti. In fact, caught up with them a couple of weeks ago in Toronto. No changes to the way they are running the asset at this stage. For us to be—for that long-term customer of ours to be acquired by another long-term customer of ours, we are very comfortable with that transition.
Okay. Thanks very much. I think I have covered all the questions. Apologies if I have missed any, but my email is at the back of the presentation. Jamie, I will hand to you for any closing comments. I think we have covered it.
I would just like to thank everyone for dialing in. We certainly look forward to an improved performance, particularly as the year progresses. We are certainly hopeful to be able to announce the contract conclusion with Reko in the near term. Thank you for your continued support, and look forward to speaking again. Thank you very much.