MIDAS SHARE TIPS UPDATE: Our precious metals mining tip Capital produces a golden glow
Gold was trading at just over $1,500 (£1,100) a troy ounce in January 2020. Six months later, the price had risen to $1,800 an ounce and today it is flirting with $1,900 as investors look to gold as a bulwark against economic uncertainty and rising inflation.
Capital Ltd is a prime beneficiary of optimism about the precious metal. Offering a range of mining services to gold producers, the company recently reported its best ever first quarter. The second quarter, to June 30, is likely to be even better.
Demand is at record levels and brokers expect full-year sales to rise more than 40 per cent to $192million, with underlying profits equally well ahead at around $50million.
Glowing: Midas recommended Capital in May 2020 when the price was 61p – the shares have since risen 34 per cent
Midas recommended Capital in May 2020 when the price was 61p. The shares have since risen 34 per cent to 82p and should deliver further growth.
Capital specialises in helping mining giants such as Barrick Gold and Anglo Gold Ashanti to drill. The business has moved into related areas too, including earthmoving and geological analysis.
Earthmoving is big business and Capital won its biggest ever deal last December, a $250million four-year contract from London-listed Centamin.
Midas verdict: Mining is a cyclical business but chairman Jamie Boyton has worked hard to shield Capital from the inevitable ups and downs. Contracts are long term and there is good growth potential across the business, especially as Capital considers moving into other commodities besides gold. At 82p, the shares should continue to deliver gains.
Traded on: Main market Ticker: CAPD Contact: capdrill.com or +230 464 3250