Capital Limited hits record Q2 revenue as mining and laboratories accelerate

Capital Limited's second quarter delivered strong growth across all three operating divisions, taking first-half revenue ahead of management's expectations.

Group revenue reached a quarterly record of $117.3 million, up 34.2% year on year and 15.3% against the first quarter. That lifted unaudited revenue for the first half of 2026 to $219.0 million, 37.6% above the same period last year.

The headline growth is clearly encouraging. However, investors should note that one-off termination and demobilisation costs relating to discontinued drilling contracts in Mali and the USA will largely offset the first-half operational outperformance.

Capital Limited's key Q2 figures

Metric	Q2 2026	Q2 2025	Year-on-year change
Group revenue	$117.3 million	$87.4 million	34.2%
Drilling and associated revenue	$68.0 million	$63.0 million	7.9%
Mining revenue	$25.5 million	$7.0 million	264.3%
MSALABS revenue	$23.8 million	$17.4 million	36.8%
Fleet utilisation	72%	74%	Down 2 percentage points
ARPOR	$218,000	$198,000	10.1%

All revenue figures are unaudited.

Drilling remains the largest division, but mining and MSALABS provided most of the acceleration. Mining revenue increased more than threefold from a relatively low prior-year base, helped by activity at Reko Diq and the faster-than-expected ramp-up of the new waste mining contract at Sukari.

MSALABS, Capital's geochemical laboratory business, also maintained strong momentum. Revenue rose 36.8% year on year and laboratory utilisation improved to 55%, from 50% in Q2 2025 and 53% in Q1 2026.

Drilling revenue rises despite portfolio changes

Capital Drilling generated revenue of $68.0 million, up 8.3% quarter on quarter and 7.9% year on year.

Fleet utilisation increased from 70% in Q1 to 72%, although it remained below the 74% achieved a year earlier. The average number of utilised rigs was 97, compared with 99 in Q2 2025, while the closing fleet reduced to 131 rigs from 138 at the end of Q1.

The more positive indicator was average revenue per month per operating rig, known as ARPOR. This increased to $218,000, up 10.1% year on year and 8.5% quarter on quarter. In simple terms, Capital produced more revenue from each operating rig, helping the division grow despite having fewer rigs in use than a year ago.

The company also reported several contract developments. It won an exploration drilling contract with Skylark Minerals in Côte d'Ivoire and commenced work at projects in Guinea, Egypt, Côte d'Ivoire and Tanzania.

However, Capital has discontinued drilling at Sadiola in Mali and Nevada Gold Mines in the USA.

Sadiola had been performing well, but operations were increasingly affected by political unrest and new local content regulations. Several rigs are now being moved to the recently commenced Predictive Discovery contract in Guinea.

Capital described Nevada Gold Mines as operationally and economically challenging. That contract has ended, with some assets being reassigned and rigs configured specifically for US regulations being sold.

Redirecting equipment towards higher-returning work could improve the quality of future revenue. The near-term drawback is that the exits bring non-recurring costs, which management expects to absorb much of the wider first-half outperformance.

Mining becomes a much bigger contributor

Mining was the standout growth division, with Q2 revenue rising 264.3% to $25.5 million. First-half mining revenue reached $43.5 million, compared with just $7.6 million in H1 2025.

Operations at Reko Diq performed in line with Capital's contract, and the company's operating position at the site has not changed. This is worth watching because Barrick's management considers it necessary to slow development activity and continue reviewing the project until mid-2027, with reduced capital spending.

Capital said it remains a key contractor and continues to support operations under its existing contract. That provides some reassurance, but the broader slowdown creates uncertainty investors should not ignore.

At Sukari, the picture is more straightforwardly positive. The waste mining contract has outperformed since commencing in Q1, with additional equipment expected to be commissioned during Q3.

MSALABS has several routes to growth

MSALABS delivered Q2 revenue of $23.8 million, taking first-half revenue to $44.7 million. This was 44.7% higher than H1 2025.

The division has established a joint venture with Mari Minerals to provide assaying services in Pakistan. Assaying is the laboratory process used to determine the composition or quality of mineral samples. Construction of the first laboratory is expected to begin in Q3, with operations targeted by the end of 2026.

Three other laboratories are under construction in Côte d'Ivoire and Armenia, with all expected to be commissioned in the second half. Capital has also expanded its Marsa Alam laboratory in Egypt.

This provides visible expansion potential, although new laboratories still need to be commissioned successfully and attract sufficient activity. Management expects both the new sites and improving utilisation at existing facilities to support the division during H2.

Investment portfolio adds value and risk

Capital's listed and unlisted investments were valued at $116.5 million on 30 June, up from $97.5 million at the end of 2025.

The portfolio produced realised and unrealised gains of $7.4 million during H1, representing a 7.6% return. Capital highlighted that the VanEck Junior Gold Miners UCITS ETF fell 14.1% over the same period. It also made net investment purchases of $11.6 million, mainly linked to equity raises by WIA Gold and Asara Resources.

That performance is impressive, but the portfolio is concentrated in a small number of holdings, particularly WIA Gold, Asara Resources and Apollo Minerals. Its value can therefore move materially with individual company developments and commodity-market sentiment.

Guidance is unchanged despite the strong first half

Capital reiterated full-year revenue guidance of $410 million to $440 million.

With $219.0 million already generated in H1, the company needs second-half revenue of between $191 million and $221 million to land within that range. Management has not raised guidance, despite describing first-half revenue as stronger than expected.

Investors should also avoid treating the revenue growth as a direct guide to profit growth. The announcement did not disclose profit, margins, cash flow or the precise value of the NGM and Sadiola exit costs.

What should investors take away?

This was a strong trading update at the revenue level. Mining is scaling rapidly, MSALABS is growing and drilling revenue increased despite lower year-on-year utilisation. Higher revenue per operating rig also suggests improved commercial performance within the drilling fleet.

The main concern is the gap that may emerge between revenue progress and near-term earnings. Demobilisation costs will largely offset the better operational result in H1, while Reko Diq's slower development backdrop and concentration within the investment portfolio add further uncertainty.

Even so, Capital enters the second half with unchanged guidance, new laboratories approaching commissioning and drilling equipment being redirected towards potentially higher-returning contracts. The key test will be whether those portfolio changes translate into stronger profitability once the one-off exit costs have passed.