Good morning and thank you for the introduction. Thank you everyone for dialing in today. I've got Ryan Tennis with me on the call. He'll be managing the Q&A session a little later. He's the Head of our IR based in London. I'm dialing in today from Hong Kong. Obviously, the purpose of the call is to run through the first quarter trading update, which we released a little over a week ago on the 21st of April. It was a record quarter for the group. We'll spend about 10 minutes-1 5 minutes going through the slide deck. We'll move into a Q&A session. I'll kick off.
Just taking you directly to slide three, again, for those that of you that are new to Capital on today's call, we have three operating businesses, specifically Capital Drilling, Capital Mining and MSALABS. The drilling business is the longest established, the original business of Capital, from 2005. We operate a fleet of about 137 rigs across Africa, the Middle East and North America, with a full range of drilling services from exploration through to production. Capital Mining are a more recent initiative. We started the mining business in 2019. We moved that into a scale operation in 2020 that offers load and haul services predominantly, and we're currently operating two contracts, one in Egypt and one in Pakistan.
The third operating business is MSALABS, which operates a network of laboratories across Africa, the Middle East, and the Americas. 33 laboratories at last count. A very high growth business. And that business has been with us now for about five years or six years as well. Broadly speaking, you're looking at revenue splits between the three operating businesses of about 60% comes from our drilling business, which is quite steady growth. Our mining business represents currently about 20% of our revenue, and MSALABS is a further 20% of our revenue. We also have the investment arm, Capital DI, which has been particularly successful utilizing our distribution network and our network on the ground, particularly in Africa and the Middle East, to identify early stage opportunities.
We've had some fantastic success with that business. Then to round out the portfolio, we have Capital Innovation. Capital Innovation is our internal arm that is scoped with identifying, testing and commercializing new technology, and bringing it onto our platform. We've had a number of success stories there, most prominent with MSALABS, and the PhotonAssay technology. We're a premium provider to the mining industry. We pride ourselves on our modern fleet, we very proud of the investment that we make in our assets, the highest of quality assets. We have a demonstrable track record of renewals. Typically, contract durations for our drilling business, by way of example, range between three years and five years.
There are a number of sites where we've now been operating for 20+ years . We have industry-leading health and safety standards. This premium offering that we provide to the mining industry is reflected in the client base that we've attracted to our business with some of the biggest gold mining and mining companies in general in the world utilizing our services. Map of our established operations. The business started life in Africa, has expanded into the Middle East and in more recent times into the Americas. I won't speak to all the numbers, but it's a broad footprint.
In terms of revenue split, you're talking 85%, 80%-85% coming out of Africa and the Middle East, while our America's operation is a lot newer in its growth trajectory. Talking to the revenues, couple of things to bring out. We released our first quarter numbers on the 21st, as I said in the introduction. Our headline revenue was $101.7 million, which was up 42% on the first quarter of last year. We had $62.8 million coming from our drilling business, which showed 9% growth. We had $18 million coming out of our mining business, which was off almost a negligible base, shall we say, in the first quarter of last year.
Our laboratory business generated revenue of $ 20.9 million, which is up 55% on the first quarter of last year. Across all units, all operating businesses, it was an outstanding performance. Obviously 2025, the top right chart, just draw your attention to that, was a transition year, impacted by the cessation of two of our mining contracts in the fourth quarter of 2024. Now we started the first, redeployed that equipment and started the first of our current two mining contracts in the second quarter of last year. As you can see in the bottom right, as that mining revenue came back into our business, we resumed growth. More recently, we started our second mining contract with the Sukari Gold Mine.
It's the second time we've been contracted there. We worked there from January 2021 through to 2024. Now we've just been recontracted to do another waste stripping operation. Those two contracts kicking in along with the growth, particularly in the lab business, has driven a record first quarter of revenue for the company. Top right, you can see our revenue guidance, which I'll go into in the outlook statement. After a flat year of revenue in 2025, we're back on a very strong growth trajectory in 2026. Following on from that is obviously we're getting an inflection in the group's operating margins and an inflection in the group's return on capital. Obviously, the mining equipment is a fairly substantive capital base.
To get that back in the field, and generating revenue and returns is obviously having a big impact there. Certainly again, I'll cover more in the outlook statement. We're back on a very positive trajectory, and the first quarter was very pleasing for our performance. A little more on the Capital DI, which is our mining venture capital fund, where the portfolio, as at the 31st of March, was down marginally on the 31st of December 2025, impacted as were all equity portfolios by the activities in the Middle East. The portfolio itself has had an outstanding performance. It's generated a cumulative return of over 60% since we commenced its investing activity back in 2019.
We've been very successful in identifying, through our networks and our operating capability, a number of early-stage opportunities that are going through the development path, with mines to be developed in the future. I think it's actually a pretty outstanding success rate in terms of identifying the right assets that have got the potential to turn into substantive long-life gold mines. A slide on the macro, obviously extremely supportive conditions in the markets in which we operate. The principal commodities exposure for Capital is gold, followed by copper. Obviously, I think everyone's acutely aware of what the gold price has, how it's performed over the last 18 months or so.
Bottom left is very important for us because there's been an absolute surge in the level of capital markets activity, which brings a lot of demand to the service providers. That capital markets activity tends to be concentrated in the smaller cap and the mid-tiers, what that does do just to the broad demand profile of the industry, it really drives demand for laboratory services and drilling services in particular. Top right, we've obviously had this slide in our packs before, is talking to the market conditions. I think the point that we always reference is that if you look back at the last cycle peak, it was 2012. That's quite a long time between drinks, so to speak. It's 14 years now.
We still haven't seen the spending levels get back to those levels despite gold trading at historic highs, despite capital market activity being at historic highs, particularly on the ASX. Again, they're highly supportive indicators for the demand profile. Again, I'll cover in the outlook, but certainly we think we've got a number of very strong years of demand ahead of us. Here we just highlight Capital's valuation gap against our peers. On a blended basis, we're trading with our investment portfolio about 2.8 times EV/EBITDA based on consensus for FY 2026. You can see that places us at a discount against our drilling peers, our mining peers, and most substantially against our lab peers.
The lab companies themselves trade at quite distinctly different margins to the drilling peers and mining peers, predominantly because they are lighter, capital lighter businesses. What was particularly pleasing about our MSALABS is incredibly strong revenue growth in 2025, which drove the inflection for the business from the investment cycle and loss-making investment cycle into profitability in the second half. This year, expecting continued growth in that business and continued profitability in that business. We're certainly hopeful that that will start to reflect in our sum of the parts valuation. Guidance and outlook. This is reiterating previous guidance where group revenue of between $ 410 million and $440 million. The first quarter results put us on track with that.
The MSALABS, we've guided $ 85 million-$95 million, which is up from, I think, about $73 million last year, and a CapEx number of $55 million-$ 65 million. We have announced a number of multiple significant long-term high-quality contracts, keeping with the thematic of the business looking for long-term contracts with Tier 1 or Tier 2+ assets. And we've made announcements across all of our operating businesses, including five-year grade control drilling contract at the Koné Mine in Côte d'Ivoire with Montage, a laboratory contract also with Montage at the Koné Mine in Côte d'Ivoire. We've announced a new lab build at Newfoundland, underpinned by Equinox in Canada. And that has actually now started receiving samples.
On the mining side, we announced the contract I previously referenced, a second waste mining contract with AngloGold Ashanti at the Sukari Gold Mine in Egypt. We're seeing demand as strong as we have seen it in the past decade. Inquiries across all of our business units. Starting to see, as a result of that, some rate increases coming into the market as what has been a somewhat oversupplied market in the last few years, that demand is really taking up that supply, and I think we're moving into a supply constrained market.
Just to remind people, when we raised capital late last year, the premise of that was that we saw a very strong pipeline ahead of us, and we saw that this would become a supply constrained market and we took action to really give us the sales, the capacity to purchase equipment, to manage this demand that we've started to actually see come through in our, in our announcements. I just draw your attention to this chart. I find this particularly interesting with reference to the previous cycle boom, which was, as I said, you know, with the peak or the concluding years of the previous cycle, 2011-2012.
You can see the previous peak, the sector that we face, the mining sector, was still.
Sorry, Jamie, you've just frozen there. Let me just take down your camera.
... notice there was just the amount of free cashflow, which is unprecedented in this sector. Our clients are experiencing absolute record operating margins, record cash flows, and we are starting to see the impact of that come through significant increases in their budget, significant increases in tendering activity. You know, as I alluded to earlier, we feel very confident about the outlook for the next few years based on this demand profile. The investment case, it's an integrated business model. We supply the full range of services. You know, our model is to establish ourselves with a beachhead at an operating mine site and deliver multiple services to that customer. It's a Tier 1 client portfolio. We've got a very strong history of generating above sector returns and margins.
As I showed in that slide earlier, we're moving back into that phase of our growth profile. Certainly strategically positioned across the mining cycle with early stage exposure right through to production, and as per the earlier slide, looking at us against our peers, significant valuation upside on a peer comp basis. It's on that basis I'll hand over to Ryan for the Q&A.
Thanks, Jamie. We've had a few questions from some viewers. Could you please provide some commentary on the impact of higher fuel prices that we are experiencing?
It's negligible for us. Fuel as a percentage of revenue is less than 1%. In almost the absolute majority, very high majority of our contracts, they are on a basis that the client is paying for the fuel. We're seeing very little impact on our profitability by fuel. We did see a small increase in our travel costs. As you would expect, there's been a lot of rerouting of travel for our workforce in recent times. That has seen a small increase, but again, they're pretty insignificant and certainly not impacting the earnings profile.
Thanks.
Sorry, my computer has just gone a bit funny on me, but hopefully I'm coming back.
We can still hear you, Jamie.
Okay. Very good.
Jamie, can you please provide some commentary around our operations at Reko Diq?
Well, obviously there's been a lot of press of late around Barrick's position on Reko Diq. We've been operating that mining contract now since the second quarter of last year. We also carry out water bore activities as well as some exploration drilling. We've had no impact on our performance versus our tender and our budget. It is performing in line, well in line, with our expectations. You know, there are security protocols in place that have had minimally, you know, some impact, but insignificant impact to some of the activities. We did make, post the initial, post our initial contract award and announcement, we announced a variation where we actually saw an increase in our scope.
Overall, our contract is looking like, based on what we initially executed, looking to be a bit larger than we initially anticipated. However, that will probably reflect itself, if anything, in an extension or a longer time period as opposed to a larger value on a month by month basis. As I said earlier, the contract is performing in line with our tenderer and our budgets.
Thanks. Could you please provide some commentary on the impact of Capital on the increasing conflict in Mali?
It's very small for us. We only have a one residual drilling job, which is actually due to wind down tomorrow actually. It's on April 30. We've been redeploying assets regionally in the West African region. In terms of, you know, revenue exposure and people and asset exposure, it's very, very low for us. I'm curious as to if that might explain some of the recent weakness in our share price and perhaps an understanding that, or, you know, a previous understanding that we had a much bigger exposure there.
I would also note, you know, look, it's not a positive situation that's unfolding there, but by the same token, you've seen a number of the companies that operate over there, I've noticed Toubani Resources and Resolute Mining in the last 48 hours making announcements, where their operations have been unimpacted. I have to say for the years that we were operating there in a more substantive capacity, we had very little impact on operations. As I said in the start of the question, very low level of exposure for Capital now.
Thanks. Another question on the investments. What is the EV/EBITDA when stripping out the investment portfolio? Secondly, is there a plan to hold these investments long-term, or do you see some realization?
Let me answer the second. actually, Ryan, why don't you answer the first one. What, what is it?
It's 3.7 times.
3.7 times. Thank you. In terms of the strategy around the investments, we're typically earlier stage than most other resource investors and resource funds in particular. By virtue of the network that we've got on the ground, and particularly with the geologists network we've got, we have an edge, I would say, in identifying these opportunities early. In terms of the profile, it's a very concentrated portfolio. The way we tend to invest is, identify opportunities that we think are interesting. They typically are quite small entry points when we first get exposed. As the geology, the results start to come through, we understand the geology better and decide at that point, do we scale up or do we exit?
That's resulted in quite a concentrated portfolio. The book that we have now is dominated by Wia and Asara. In the case of Wia, I mean, it's going through a DFS stage, and we will continue to support the company. That's gonna be a very low-cost, long-life mine. In the case of Asara, look, we're optimistic that there's gonna be a substantive increase in their resource base. I think it's got the potential, it's demonstrating the potential that there could be another goldmine there. At the moment, you know, our policy, our stance at the moment is to hold these positions and because we think there's substantial upside in them.
Thanks, Jamie. That is all the questions we have today. Thank you all for attending.
That's great. Jamie, Ryan, thank you very much indeed for updating investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good morning to you all.
Thank you.