A close up of a magnifying glass rests on top of a bar graph that shows declining sales or performance over a quarterly basis. The image is photographed using a very shallow depth of field.

Capital Drilling Limited (LON:CAPD), which leases drilling rigs to mining companies, said the recent upsurge in the gold price is good news for the company.

With roughly 90% of the company’s revenues linked to gold exploration activities, the company’s prospects are looking bright, particularly in view of its strategic expansion into West Africa, which has several relatively underdeveloped gold deposits.

In its results statement covering the first half of the year the company said fleet utilisation in the period rose to 52% from 46% the year before; the average fleet size (i.e. number of drilling rigs) in the period dipped to 91 from 94.

Revenue edged up to US$54.8mln from US$54.5mln the year before. Capital Drilling added it has a solid pipeline of new contracts for the second half of 2019, and reiterated its full-year revenue guidance range of US$110-US$120mln for 2019.

Profit before tax jumped to US$7.59mln from US$4.98mln in the first half of 2018.

Margins were stable at 23%, the company revealed.

Cash from operations improved to US$10.5mln from US$7.2mln the previous year, due to improved working capital management and despite outflows associated with establishing operations in Burkina Faso and mobilisation for a new contract in Mali.

Net asset value per share increased to 58.3 cents from 52.2 cents the previous year.

The interim dividend was nudged up to 0.7 cents from 0.6 cents.

“Our strategic expansion into West Africa continues to yield results which will diversify our revenue base. Our increased presence in the region, together with business development activity undertaken during the half has developed a solid pipeline of new contracts, including a number of new clients and further expansion of operations into Burkina Faso and Nigeria. This positions the company well for the remainder of the year, with the majority of these contracts expected to contribute to revenue from late Q3,” said Jamie Boyton, the executive chairman of Capital Drilling.

“We continue to target mine-site based contracts and it is extremely pleasing to have announced the award of a further three long-term contracts during the period. Encouragingly, MSALAB’s three-year laboratory management contract with Kinross (Mauritania) sees the investment into developing infrastructure to grow the business coming to fruition. Capital Drilling now has a solid portfolio of eight long-term mine-site based contracts, providing revenue stability across the cycle,” Boynton added.

The share price of Capital Drilling was up 6% at 58.8p.