All amounts in US$ unless otherwise
indicated
Capstone Copper Corp. (“Capstone” or the “Company”) (TSX:
CS) (ASX: CSC) today reported financial results for the nine months
and quarter ended September 30, 2024 (“Q3 2024”). Copper production
in Q3 2024 totaled 47,460 tonnes at C1 cash costs1 of $2.83 per
payable pound of copper produced. Link HERE for Capstone’s Q3 2024
webcast presentation.
John MacKenzie, CEO of Capstone, commented, "The third quarter
marked an important step in the transformation of our business,
with tangible delivery on our peer leading growth. Our operations
in Chile exhibited meaningful milestones at both our flagship
Mantoverde Development Project (where we achieved commercial
production) and at Mantos Blancos (which has now demonstrated that
it is capable of delivering its nameplate capacity). We expect Q4
to be our strongest quarter of the year, providing a glimpse of the
future Capstone with a larger production base and lower unit
operating costs. During the past few months, we also released
studies for our Mantoverde Optimized and Santo Domingo projects,
and announced a leadership succession plan, all of which have
positioned us extremely well for our next phase of growth."
Q3 2024 OPERATIONAL AND FINANCIAL HIGHLIGHTS
- The Mantoverde Development Project ("MVDP") achieved
commercial production in September, as the mine advances
commissioning and continues to ramp up to full production levels.
The first two shipments of copper concentrates were made during the
quarter and met all required specifications. Project capital for
the MVDP came in line with the revised budget at $870 million.
- Consolidated copper production for Q3 2024 was 47,460 tonnes
at C1 cash costs1 of $2.83/lb. Consolidated copper production
consisted of 17,481 tonnes at Mantoverde, 13,980 tonnes at Pinto
Valley, 9,974 tonnes at Mantos Blancos, and 6,025 tonnes at
Cozamin. Total Q3 2024 copper sold of 44,684 payable tonnes was
approximately 1,500 tonnes below payable production, largely driven
by the initial build up of copper concentrates inventory at
Mantoverde during the MVDP ramp-up.
- Net income attributable to shareholders of $12.5 million, or
$0.02 per share for Q3 2024 compared to net loss attributable
to shareholders of $32.9 million, or $(0.05) per share for Q3 2023,
primarily due to the higher copper production and higher realized
copper price of $4.24/lb compared to $3.77/lb.
- Adjusted net income attributable to shareholders1 of $25.4
million, or $0.03 per share for Q3 2024, compared to adjusted
net loss attributable to shareholders1 of $15.8 million in Q3
2023.
- Adjusted EBITDA1 nearly doubled to $120.8 million for Q3
2024 compared to $62.8 million for Q3 2023. The increase in
Adjusted EBITDA1 is primarily driven by a higher copper production
and realized copper price.
- Operating cash flow before changes in working capital of
$116.9 million in Q3 2024 compared to $59.2 million in Q3
2023.
- Net debt1 of $750.7 million as at September 30, 2024 was
largely unchanged compared to net debt of $741.3 million as at June
30, 2024 with the majority of the MVDP capital spend complete.
Total available liquidity1 of $515.6 million as at September 30,
2024, comprising $138.6 million of cash and short-term
investments, and $377.0 million of undrawn amounts on the corporate
revolving credit facility.
- The Company notes that 2024 consolidated production is
expected to finish at the low end of the guidance range of
190,000 to 220,000 tonnes of copper. 2024 consolidated C1 cash
costs1 guidance has been revised to $2.60/lb to $2.80/lb mainly
due to the ramp-ups at Mantoverde and Mantos Blancos occurring
later in the year than was expected when guidance was issued in
January 2024.
- Capstone released a Feasibility Study on the next stage of
growth for the Santo Domingo copper-iron-gold project that
includes a strong $1.72 billion after-tax net present value and a
24.1% internal rate of return, with an initial capital cost of $2.3
billion. Over the first seven years of the mine plan, production is
expected to average 106,000 tonnes of copper and 3.7 million tonnes
of iron concentrate at first quartile C1 cash costs1 of $0.28 per
payable pound of copper produced.
- Capstone acquired 100% of Sierra Norte, located 15 km
from Santo Domingo, for $40 million in shares. This acquisition
provides a potential future sulphide feed source to extend the
higher-grade copper sulphide life at Santo Domingo.
- Subsequent to quarter-end, the Company announced the results of
a Feasibility Study for its Mantoverde Optimized
brownfield expansion project. Mantoverde Optimized is a capital
efficient expansion of the existing sulphide concentrator from
throughput of 32,000 to 45,000 ore tpd. The study increased
sulphide reserves from 236 million at 0.60% copper to 398 million
tonnes at 0.49% copper and 0.10 g/t gold which extended the mine
life to 25 years. MV Optimized is a high return and low risk
expansion project that is expected to bring on an additional 20,000
tonnes per annum of copper for approximately $146 million of
initial expansionary capital.
- Subsequent to quarter-end, the Company announced its
leadership succession plan. At the next Annual General
Meeting on May 2, 2025, John MacKenzie will transition from CEO and
be nominated to the role of Non-Executive Chair of the Board, with
Cashel Meagher succeeding him as CEO and also to be nominated as a
member of the Board, while James Whittaker will become COO. Founder
of Capstone Mining and current Chair of Capstone, Darren Pylot,
will step down from the Board after more than 20 years of combined
service to the Company.
1 These are Non-GAAP performance measures.
Refer to the section titled “Non-GAAP and Other Performance
Measures”.
OPERATIONAL OVERVIEW
Refer to Capstone's Q3 2024 MD&A and Financial Statements
for detailed operating results.
Q3 2024
Q3 2023
2024 YTD
2023 YTD
Copper production (tonnes)
Sulphide business
Pinto Valley
13,980
13,657
45,646
39,157
Cozamin
6,025
5,876
18,183
17,776
Mantos Blancos
8,246
9,138
25,579
28,338
Mantoverde2
8,139
—
8,197
—
Total sulphides
36,390
28,671
97,605
85,271
Cathode business
Mantos Blancos
1,728
2,997
5,432
9,597
Mantoverde2
9,342
8,582
27,481
25,382
Total cathodes
11,070
11,579
32,913
34,979
Consolidated
47,460
40,250
130,518
120,250
Copper sales
Copper sold (tonnes)
44,684
38,699
125,428
116,910
Realized copper price1 ($/pound)
4.24
3.77
4.20
3.87
C1 cash costs1 ($/pound)
produced
Sulphide business
Pinto Valley
2.92
2.83
2.63
2.96
Cozamin
1.82
1.85
1.83
1.73
Mantos Blancos
3.40
2.85
3.26
2.80
Mantoverde
2.52
—
2.52
—
Total sulphides
2.76
2.63
2.64
2.65
Cathode business
Mantos Blancos
3.44
2.75
3.33
3.07
Mantoverde
3.00
3.74
3.50
3.89
Total cathodes
3.07
3.48
3.47
3.67
Consolidated
2.83
2.88
2.85
2.96
2 Mantoverde production shown on a 100%
basis.
Consolidated Production
Q3 2024 copper production of 47,460 tonnes was 18% higher than
Q3 2023 primarily as a result of sulphide production starting at
Mantoverde. MVDP continues to ramp-up towards full production
levels and at various points during Q3 2024, mine operations,
crushing, grinding, flotation and tailings, all operated at or
above design capacity.
Q3 2024 C1 cash costs1 of $2.83/lb were 2% lower than $2.88/lb
Q3 2023 mainly due to higher production (-$0.19/lb), partially
offset by lower capitalized stripping costs ($0.13/lb).
Pinto Valley Mine
Copper production of 14.0 thousand tonnes in Q3 2024 was 2%
higher than in Q3 2023 due to higher grades (Q3 2024 – 0.37% versus
Q3 2023 - 0.34%) as a result of mining in a higher-grade area of
Castle Dome and a high grade area of Jewel Hill, partially offset
by lower mill throughput during the quarter (Q3 2024 - 44,915 tpd
versus Q3 2023 - 47,426 tpd), resulting from an unplanned 10 days
of downtime during the quarter related to a conveyor belt rip and
electrical faults.
C1 cash costs1 of $2.92/lb in Q3 2024 were 3% higher than Q3
2023 of $2.83/lb primarily due to increases in operating costs
($0.15/lb) driven by contractor and mechanical parts spend in the
mill, electricity cost, labor cost, lower by-product credits
($0.12/lb) and higher treatment costs ($0.06/lb), partially offset
by higher production volume (-$0.07/lb) and capitalized stripping
(-$0.17/lb).
Mantos Blancos Mine
Q3 2024 production was 10.0 thousand tonnes, composed of 8.2
thousand tonnes from sulphide operations and 1.7 thousand tonnes of
cathode from oxide operations, which was 18% lower than the 12.2
thousand tonnes produced in Q3 2023. Sulphide production declined
in Q3 2024 due to lower grades, partially offset by higher
recoveries. Lower cathode production was impacted by lower dump
grades and throughput.
In July, a successful two-week planned shutdown was completed
which included the installation of a new holding tank and
additional pumps in the tailings area in order to address
deficiencies identified preventing the sustained achievement of the
20ktpd capacity from the sulphide operations. Following the plant
ramp-up period in August, ore throughput averaged 18,062 tpd
through to the end of Q3, with plant throughput meeting or
exceeding the nameplate capacity of 20,000 tpd on 23 operating
days. The overall variability of the milling process has been
significantly reduced and higher throughput is expected in Q4.
Combined Q3 2024 C1 cash costs1 of $3.41/lb ($3.40/lb sulphides
and $3.44/lb cathodes) were 21% higher compared to combined C1 cash
costs1 of $2.82/lb in Q3 2023, mainly due to lower production
($0.63/lb) and increase in mine expense ($0.12/lb) partially offset
by lower acid and energy consumption due to lower production
(-$0.16/lb).
Mantoverde Mine
The Company achieved commercial production at MVDP in September
2024. In making this determination, management considered a number
of factors, including completion of substantially all the
construction development activities in accordance with design and a
production ramp-up period during which mill throughput, in terms of
tonnes of ore, equalled an average of 75% of nameplate capacity
over a 30-day period. With this achievement, on September 30, 2024
substantially all of Construction-in-Progress was reclassified to
Plant & Equipment. Depletion and amortization will commence on
October 1, 2024.
Q3 2024 copper production of 17.5 thousand tonnes, composed of
8.1 thousand tonnes of copper from sulphide operations and 9.3
thousand tonnes of cathode, was 104% higher compared to 8.6
thousand tonnes in Q3 2023. Heap production increased in Q3 2024
given higher grades (0.36% in Q3 2024 versus 0.32% in Q3 2023) and
recoveries (76.1% in Q3 2024 versus 66.5% in Q3 2023). The new
concentrator (MVDP) continued its ramp-up in Q3, resulting in 8.1
thousand tonnes of copper production from sulphide operations,
driven by average mill throughput of 18.4 ktpd, copper grades of
0.71%, and recoveries of 68.2%. The quarter included an approximate
two-week shutdown in August driven by the achievement of Facility
Practical Completion and the average mill throughput in September
was 26,200 tpd. While physical recoveries in Q3 were 68.2%, this
includes gain/(draw) on inventory, sampling error, and analytical
error. The implied metallurgical recovery, determined based on
assays measured on the feed, concentrate and tailings samples
obtained with the slurry samplers, indicate overall metallurgical
recoveries for the quarter of 78.2%, with implied recoveries above
80% observed in August and September.
Q3 2024 C1 cash costs1 were $2.78/lb, 26% lower than $3.74/lb in
Q3 2023 due to higher production (-$1.21/lb), lower energy prices
(-$0.16/lb) which averaged $0.10/kWh in Q3 2024 versus $0.17/kWh in
Q3 2023, and lower acid consumption (-$0.11/lb), partially offset
by an increase in contracted services, spare parts and labour cost
mainly driven by higher mine movement ($0.52/lb).
Cozamin Mine
Q3 2024 copper production of 6.0 thousand tonnes was 2% higher
than the same period prior year, mainly on higher mill throughput
(3,609 tpd in Q3 2024 versus 3,567 tpd in Q3 2023) driven by mine
sequence. Grades and recoveries were consistent quarter over
quarter.
Q3 2024 C1 cash costs1 were $1.82/lb, 2% lower than $1.85/lb in
the same period last year, mainly due to higher production in Q3
2024 than the same period last year on higher grades, higher silver
by-product volume and price (40%), offset by higher operating costs
(9%) mainly on contractors due to change in mine method and
manpower for bonus profit sharing effect.
Mantoverde Development Project
MVDP achieved commercial production in September, and the mill
continues to advance commissioning and ramp up to full production
levels. MVDP involved the addition of a sulphide concentrator
(nominal 32,000 ore tonnes per day ("tpd")) and tailings storage
facility, and the expansion of the existing desalination plant and
other minor infrastructure.
In 2024, Capstone has been focused on a safe, efficient and
phased project commissioning and ramp-up. All key milestones have
been achieved during the commissioning and ramp-up including:
- First ore to the primary crusher – completed in Q4 2023
- First ore to the grinding circuit – completed in Q1 2024
- First saleable concentrate – completed in Q2 2024
- Achievement of nameplate operating rates and Facility Practical
Completion – completed in Q3 2024
- First two shipments of copper concentrates - delivered in Q3
2024
During Q3, MVDP achieved Facility Practical Completion with
Ausenco which was followed by a planned two-week shutdown for
vendor maintenance and project handover in August. On September 21,
2024, the MVDP achieved commercial production defined as the
achievement of reaching a minimum of 30 consecutive days of
operations during which the mill operated at an average of 75% of
nameplate throughput of 32,000 ore tonnes per day. The average mill
throughput for September was 26,200 tpd, which included an exit
rate with the last 7 days averaging 32,400 tpd.
During Q4, the goal is to continue to improve runtime, overall
average throughput, and recoveries.
The MVDP project capital spent was $870 million since inception
and came in line with the revised budget, which was reclassified to
available for use property, plant and equipment at September 30,
2024 upon achieving the commercial production milestone.
As MVDP has achieved commercial production, we expect our
quarterly finance expense to increase by approximately $25 million
beginning in the fourth quarter of 2024 as the capitalization of
finance charges relating to MVDP will cease. Similarly, we expect
our annualized depletion and amortization to increase by
approximately $80 million.
MV Optimized Feasibility Study
The Company announced its Mantoverde Optimized ("MV-O")
Feasibility Study ("FS") on October 1, 2024. The project is a
capital-efficient expansion of Mantoverde's sulphide concentrator,
increasing throughput from 32,000 to 45,000 ore tpd and extending
the mine life to 25 years. With an updated sulphide Mineral Reserve
of 398 million tonnes at a copper grade of 0.49% (compared to 236
million tonnes at 0.60% copper previously), the project will yield
an additional 368,000 tonnes of copper and 215,000 ounces of gold,
with an initial expansionary capital investment of $146 million and
an implied capital intensity of approximately $7,500 per tonne of
incremental annual copper equivalent production. The Feasibility
Study includes average annual production over the next five years
of 135,000 tonnes of copper and 37,000 ounces of gold at C1 cash
costs1 of $1.81 per pound of copper. Capstone anticipates starting
construction after receiving environmental permit approval,
expected in H1 2025. The MV-O FS also features a robust after-tax
NPV(8%) of $2.9 billion for Mantoverde operation on a 100%-basis
based on a long-term copper price of $4.10/lb and gold price of
$1,800/oz.
Given the above, the Mantoverde Phase II opportunity will
evaluate the addition of an entire second processing line, possibly
a duplication of the first line, to process some of the
approximately 0.2 billion tonnes of Measured & Indicated and
0.6 billion tonnes of Inferred sulphide resources not in
reserves.
Santo Domingo Feasibility Study & Sierra Norte
Acquisition
Capstone announced the results of an updated Feasibility Study
for its 100%-owned Santo Domingo copper-iron-gold project in Region
III Chile, 35km northeast of Mantoverde on July 31, 2024. The
updated FS outlines the next phase of transformational growth for
the Company in the world-class Mantoverde-Santo Domingo District.
Santo Domingo completed the updated FS with Ausenco.
The 2024 FS for Santo Domingo outlines a robust copper-iron-gold
project with an after-tax NPV (8%) of $1.7 billion and an after-tax
internal rate of return of 24.1%. Total initial capital cost of
$2.3 billion drives a capital intensity of approximately $21,900
per tonne of annual copper equivalent production over the life of
mine. Over the first seven years of the mine plan, production is
expected to average 106,000 tonnes of copper and 3.7 million tonnes
of iron ore magnetite at first quartile cash costs of $0.28 per
payable pound of copper produced. Over Santo Domingo's 19-year mine
life, production is expected to average 68,000 tonnes of copper and
3.6 million tonnes of iron ore magnetite at first quartile cash
costs of $0.33 per payable pound of copper produced.
The 19-year Santo Domingo mine life is supported by an increased
Mineral Reserve estimate of 436 million tonnes (compared to 392
million tonnes previously) at a copper grade of 0.33%, iron ore
grade of 26.5%, and a gold grade of 0.05 grams per tonne. Increased
Measured and Indicated (“M&I”) Mineral Resources total 547
million tonnes (compared to 537 million tonnes previously) at a
copper grade of 0.31% and a gold grade of 0.04 grams per tonne,
including 506 million tonnes with an iron grade of 25.8%.
The feasibility study updated the level of engineering to
Association for the Advancement of Cost Engineering ("AACE") Class
3. Further detailed engineering will increase the precision of
capital estimates to AACE Class 2 over the next couple of
quarters.
During the quarter, Capstone acquired 100% of the shares of
Compania Minera Sierra Norte, S.A. ("Sierra Norte") for $40 million
in share consideration. Sierra Norte is located approximately 15
kilometers northwest of the Santo Domingo Project and represents an
opportunity to potentially be a future sulphide feed source for
Santo Domingo, extending the higher grade copper sulphide life.
The Company plans to progress several value enhancement
initiatives within the Mantoverde-Santo Domingo (“MV-SD”) district
that are not incorporated in the Santo Domingo 2024 Feasibility
Study, or the recently announced base case MV Optimized plan.
Copper Oxides Opportunity
Capstone plans to progress drilling and studies regarding the
processing of oxide material from Capstone’s neighbouring Santo
Domingo and Sierra Norte projects by capitalizing on Mantoverde’s
excess SX/EW capacity to extract copper from Santo Domingo’s oxide
material. To date, oxide materials have been recognized in the
shallower portions of the Santo Domingo, Iris Norte, and Estrellita
sulphide ore bodies. Currently, these oxides are considered as
waste material in the recently announced Santo Domingo 2024
Feasibility Study. Meanwhile, only approximately two thirds of
processing capacity is being used at Mantoverde’s SX-EW cathode
copper plant. Exploration efforts at Santo Domingo will target a
potential 80-100 million tonnes of oxide material, which could add
up to 10 thousand tonnes per annum of copper production.
Exploration Opportunities in the MV-SD
District
Capstone has significant untapped exploration potential within
MV-SD district. The Mantoverde Optimized plan was prepared without
any expansionary drilling campaign since 2019. At Mantoverde, there
are 0.2 billion tonnes of Measured & Indicated and 0.6 billion
tonnes of Inferred sulphide resources not in reserves. At Santo
Domingo, there are 0.1 billion tonnes of Measured & Indicated
and 0.2 billion tonnes of Inferred sulphide resources not in
reserves. The recently acquired Sierra Norte property also
represents an opportunity to potentially be a future feed source in
the district. Capstone intends to progress its exploration strategy
to service its two eventual processing centers between Mantoverde
and Santo Domingo, in addition to continuing to evaluate the
potential for Mantoverde Phase II which could include the addition
of an entire second processing line at Mantoverde.
Mantoverde - Santo Domingo Cobalt Study
A district cobalt plant for the MV-SD district is designed to
unlock cobalt production while reducing sulphuric acid consumption
and increasing heap leach copper production. The cobalt recovery
process comprises a pyrite flotation step to recover cobaltiferous
pyrite from the tailings streams at Mantoverde and Santo Domingo
and redirect it to the dynamic heap leach pads, which will be
upgraded to a bioleach configuration through the addition of an
aeration system as part of MV Optimized. The pyrite oxidizes in the
leach pads and the solubilized cobalt is recovered via an ion
exchange plant treating a bleed stream from the copper solvent
extraction plant. The approach has been successfully demonstrated
at the bench scale, and onsite piloting commenced in January 2024
at Mantoverde.
As currently envisioned, a smaller capacity countercurrent
ion-exchange plant will initially treat cobalt by-product streams
from Mantoverde producing up to 1,500 tonnes per annum of cobalt,
and following sanctioning of the Santo Domingo project, the
facility will be expanded to accommodate by-product streams from
Santo Domingo. In line with this, Santo Domingo has initiated a
Feasibility Study to assess the optimum process configuration for
the pyrite flotation and pumping transportation facilities needed
to transport pyrite concentrate to Mantoverde’s leach facilities.
This information will be part of the MV-SD cobalt study expected in
2025.
At a combined MV-SD target of 4,500 to 6,000 tpa of mined cobalt
production, this would be one of the largest and lowest cost cobalt
producers in the world, outside of Indonesia and the Democratic
Republic of the Congo ("DRC").
PV District Growth Study
The company continues to review and evaluate the consolidation
potential of the Pinto Valley district. Opportunities under
evaluation include a potential mill expansion and increased
leaching capacity supported by optimized water, heap and dump
leach, and tailings infrastructure. District consolidation could
unlock significant ESG opportunities and may transform our approach
to create value for all stakeholders in the Globe-Miami
District.
Leadership Succession Plan
As previously announced the following leadership changes will
take effect at the next Annual General Meeting of the Company on
May 2, 2025:
- John MacKenzie will transition from Chief Executive Officer and
will be nominated to the role of Non-Executive Chair of the
Capstone Board of Directors;
- Cashel Meagher, current President and Chief Operating Officer,
will succeed Mr. MacKenzie as CEO of Capstone, and will also be
nominated as a member of the Board;
- James Whittaker, current Senior Vice President, Head of Chile,
will succeed Mr. Meagher as COO. This facilitates a flattening of
the organizational structure with all mine general managers
reporting directly to the COO;
- Darren M. Pylot, founder of Capstone Mining Corp. and current
Chair of the Board, will end his term on the Board after over 20
years with Capstone Mining Corp. as a founder and CEO, and
subsequently as Chair of the Board of Capstone.
In addition, commencing in Q4 2024, Daniel Sampieri, Director,
Investor Relations & Strategic Analysis, will lead the investor
relations function as Jerrold Annett, former SVP Strategy &
Capital Markets, has retired from the Company. Capstone's Board and
management would like to thank Jerrold for his five years of
service and significant contributions to the Company.
Corporate Exploration Update
Cozamin: Exploration drilling continued in Q3 2024 at
Cozamin targeting step-outs up-dip and down-dip from the Mala Noche
West Target and also down-dip of other historical Mala Noche Vein
workings. Drilling is currently being conducted with one
underground rig positioned at the level 19.1 cross-cut, a second
underground rig positioned at the level 12.7 cross-cut, and one
surface rig being added to the program in Q4 2024.
Copper Cities, Arizona: On January 20, 2022, Capstone
Mining announced that it had entered into an access agreement with
BHP Copper Inc. ("BHP") to conduct drill and metallurgical
test-work at BHP's Copper Cities project ("Copper Cities"), located
approximately 10 km east of the Pinto Valley mine. This access
agreement was recently extended to July 2025. Drilling with two
surface rigs twinning historical drill holes was completed in 2022
with metallurgical testing continuing in 2024. As explained in the
PV District Growth Study section, district consolidation
opportunities are being evaluated.
Mantoverde, Santo Domingo, and Mantos Blancos, Chile:
Preparations for the exploration drilling program at Mantoverde is
ongoing and drilling is now expected to begin in Q4 2024. The
program will target first the areas closer to MV Optimized pit
focusing on improving copper grades and mineralization continuity
within and nearby the pit boundaries. Infill drilling was conducted
during Q3 2024 in Mantos Blancos in Phases 15 and 16 and
exploration drilling began in Veronica Oxides target.
2024 Guidance
The Company notes that 2024 consolidated copper production is
expected to finish at the low end of the guidance range of
190-220kt. 2024 consolidated C1 cash costs1 guidance has been
revised to $2.60 to $2.80 per payable pound of copper produced
mainly due to the ramp-ups at Mantoverde and Mantos Blancos
occurring later in the year than was expected when guidance was
issued in January 2024.
Pinto Valley and Cozamin are trending in line with respect to
their full year production and C1 cash costs1 guidance ranges as
announced in January 2024. Mantoverde is trending to the low end of
its production guidance range, and above the high end of its C1
cash costs1 guidance range due to the start of the MVDP ramp-up
occurring later in the year than was expected when guidance was
issued in January. Mantos Blancos is trending below its production
guidance range and above its C1 cash costs1 guidance range due to
longer equipment procurement and installation timelines for the
20ktpd debottlenecking in addition to additional maintenance spend
for unplanned downtime.
FINANCIAL OVERVIEW
Please refer to Capstone's Q3 2024 MD&A and Financial
Statements for detailed financial results.
($ millions, except per share data)
Q3 2024
Q3 2023
2024 YTD
2023 YTD
Revenue
419.4
322.2
1,152.3
991.8
Net income (loss)
17.0
(42.3
)
38.7
(105.2
)
Net income (loss) attributable to
shareholders
12.5
(32.9
)
37.0
(89.4
)
Net income (loss) attributable to
shareholders per common share - basic and diluted ($)
0.02
(0.05
)
0.05
(0.13
)
Adjusted net income (loss)1
25.4
(15.8
)
41.9
(10.5
)
Adjusted net income (loss) attributable to
shareholders per common share - basic and diluted
0.03
(0.02
)
0.06
(0.02
)
Operating cash flow before changes in
working capital
116.9
59.2
282.0
124.3
Adjusted EBITDA1
120.8
62.8
324.1
172.2
Realized copper price1
($/pound)
4.24
3.77
4.20
3.87
($ millions)
September 30, 2024
December 31, 2023
Net debt1
(750.7)
(927.2)
Attributable net (debt)/cash1
(598.9)
(776.6)
CONFERENCE CALL AND WEBCAST DETAILS
Capstone will host a conference call and webcast on Thursday,
October 31, 2024 at 5:00 pm Eastern Time / 2:00 pm Pacific Time
(Friday, November 1, 2024, 8:00 am Australian Eastern Daylight
Time). Link to the audio webcast:
https://app.webinar.net/P6EqjwqrkgL
Dial-in numbers for the audio-only portion of the conference
call are below. Due to an increase in call volume, please dial-in
at least five minutes prior to the call to ensure placement into
the conference line on time.
Toronto: 1-437-900-0527 Australia: 61-280-171-385 North America
toll free: 1-888-510-2154
A replay of the conference call will be available until November
7, 2024. Dial-in numbers for Toronto: 1-289-819-1450 and North
American toll free: 1-888-660-6345. The replay code is 11379#.
Following the replay, an audio file will be available on Capstone’s
website at
https://capstonecopper.com/investors/events-and-presentations/.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document may contain “forward-looking information” within
the meaning of Canadian securities legislation and “forward-looking
statements” within the meaning of the United States Private
Securities Litigation Reform Act of 1995 (collectively,
“forward-looking statements”). These forward-looking statements are
made as of the date of this document and the Company does not
intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable
securities legislation.
Forward-looking statements relate to future events or future
performance and reflect our expectations or beliefs regarding
future events. Our Sustainable Development Strategy goals and
strategies are based on a number of assumptions, including, but not
limited to, the biodiversity and climate-change consequences;
availability and effectiveness of technologies needed to achieve
our sustainability goals and priorities; availability of land or
other opportunities for conservation, rehabilitation or capacity
building on commercially reasonable terms and our ability to obtain
any required external approvals or consensus for such
opportunities; the availability of clean energy sources and
zero-emissions alternatives for transportation on reasonable terms;
availability of resources to achieve the goals in a timely manner,
our ability to successfully implement new technology; and the
performance of new technologies in accordance with our
expectations.
Forward-looking statements include, but are not limited to,
statements with respect to the estimation of Mineral Resources and
Mineral Reserves, the success of the underground paste backfill and
tailings filtration projects at Cozamin, the timing and cost of the
Mantoverde Development Project ("MVDP"), the timing and results of
the Optimized Mantoverde Development Project ("MV Optimized FS")
and Mantoverde Phase II study, the timing and results of PV
District Growth Study (as defined below), the timing and results of
Mantos Blancos Phase II Feasibility Study, the timing and success
of the Mantoverde - Santo Domingo Cobalt Feasibility Study, the
timing and results of the Santo Domingo FS Update and success of
incorporating synergies previously identified in the Mantoverde -
Santo Domingo District Integration Plan, the timing and results of
exploration and potential opportunities at Sierra Norte, the
realization of Mineral Reserve estimates, the timing and amount of
estimated future production, the costs of production and capital
expenditures and reclamation, the timing and costs of the Minto
obligations and other obligations related to the closure of the
Minto Mine, the budgets for exploration at Cozamin, Santo Domingo,
Pinto Valley, Mantos Blancos, Mantoverde, and other exploration
projects, the timing and success of the Copper Cities project, the
success of our mining operations, the continuing success of mineral
exploration, the estimations for potential quantities and grade of
inferred resources and exploration targets, our ability to fund
future exploration activities, our ability to finance the Santo
Domingo development project, environmental and geotechnical risks,
unanticipated reclamation expenses and title disputes, the success
of the synergies and catalysts related to prior transactions, in
particular but not limited to, the potential synergies with
Mantoverde and Santo Domingo, the anticipated future production,
costs of production, including the cost of sulphuric acid and oil
and other fuel, capital expenditures and reclamation of Company’s
operations and development projects, our estimates of available
liquidity, and the risks included in our continuous disclosure
filings on SEDAR+ at www.sedarplus.ca. The impact of global events
such as pandemics, geopolitical conflict, or other events, to
Capstone is dependent on a number of factors outside of our control
and knowledge, including the effectiveness of the measures taken by
public health and governmental authorities to combat the spread of
diseases, global economic uncertainties and outlook due to
widespread diseases or geopolitical events or conflicts, supply
chain delays resulting in lack of availability of supplies, goods
and equipment, and evolving restrictions relating to mining
activities and to travel in certain jurisdictions in which we
operate. In certain cases, forward-looking statements can be
identified by the use of words such as “anticipates”,
“approximately”, “believes”, “budget”, “estimates”, “expects”,
“forecasts”, “guidance”, “intends”, “plans”, “scheduled”, “target”,
or variations of such words and phrases, or statements that certain
actions, events or results “be achieved”, “could”, “may”, “might”,
“occur”, “should”, “will be taken” or “would” or the negative of
these terms or comparable terminology.
In certain cases, forward-looking statements can be identified
by the use of words such as “anticipates”, “approximately”,
“believes”, “budget”, “estimates”, expects”, “forecasts”,
“guidance”, intends”, “plans”, “scheduled”, “target”, or variations
of such words and phrases, or statements that certain actions,
events or results “be achieved”, “could”, “may”, “might”, “occur”,
“should”, “will be taken” or “would” or the negative of these terms
or comparable terminology. In this document certain forward-looking
statements are identified by words including “anticipated”,
“expected”, “guidance” and “plan”. By their very nature,
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, amongst
others, risks related to inherent hazards associated with mining
operations and closure of mining projects, future prices of copper
and other metals, compliance with financial covenants, inflation,
surety bonding, our ability to raise capital, Capstone Copper’s
ability to acquire properties for growth, counterparty risks
associated with sales of our metals, use of financial derivative
instruments and associated counterparty risks, foreign currency
exchange rate fluctuations, market access restrictions or tariffs,
changes in general economic conditions, availability and quality of
water, accuracy of Mineral Resource and Mineral Reserve estimates,
operating in foreign jurisdictions with risk of changes to
governmental regulation, compliance with governmental regulations
and stock exchange rules, compliance with environmental laws and
regulations, reliance on approvals, licences and permits from
governmental authorities and potential legal challenges to permit
applications, contractual risks including but not limited to, our
ability to meet the requirements under the Cozamin Silver Stream
Agreement with Wheaton Precious Metals Corp. ("Wheaton"), our
ability to meet certain closing conditions under the Santo Domingo
Gold Stream Agreement with Wheaton, acting as Indemnitor for Minto
Metals Corp.’s surety bond obligations, impact of climate change
and changes to climatic conditions at our operations and projects,
changes in regulatory requirements and policy related to climate
change and greenhouse gas ("GHG") emissions, land reclamation and
mine closure obligations, introduction or increase in carbon or
other "green" taxes, aboriginal title claims and rights to
consultation and accommodation, risks relating to widespread
epidemics or pandemic outbreaks; the impact of communicable disease
outbreaks on our workforce, risks related to construction
activities at our operations and development projects, suppliers
and other essential resources and what effect those impacts, if
they occur, would have on our business, including our ability to
access goods and supplies, the ability to transport our products
and impacts on employee productivity, the risks in connection with
the operations, cash flow and results of Capstone Copper relating
to the unknown duration and impact of the epidemics or pandemics,
impacts of inflation, geopolitical events and the effects of global
supply chain disruptions, uncertainties and risks related to the
potential development of the Santo Domingo development project,
risks related to the Mantoverde Development Project, increased
operating and capital costs, increased cost of reclamation,
challenges to title to our mineral properties, increased taxes in
jurisdictions the Company operates or is subject to tax, changes in
tax regimes we are subject to and any changes in law or
interpretation of law may be difficult to react to in an efficient
manner, maintaining ongoing social licence to operate, seismicity
and its effects on our operations and communities in which we
operate, dependence on key management personnel, Toronto Stock
Exchange ("TSX") and Australian Securities Exchange ("ASX") listing
compliance requirements, potential conflicts of interest involving
our directors and officers, corruption and bribery, limitations
inherent in our insurance coverage, labour relations, increasing
input costs such as those related to sulphuric acid, electricity,
fuel and supplies, increasing inflation rates, competition in the
mining industry including but not limited to competition for
skilled labour, risks associated with joint venture partners and
non-controlling shareholders or associates, our ability to
integrate new acquisitions and new technology into our operations,
cybersecurity threats, legal proceedings, the volatility of the
price of the common shares, the uncertainty of maintaining a liquid
trading market for the common shares, risks related to dilution to
existing shareholders if stock options or other convertible
securities are exercised, the history of Capstone Copper with
respect to not paying dividends and anticipation of not paying
dividends in the foreseeable future and sales of common shares by
existing shareholders can reduce trading prices, and other risks of
the mining industry as well as those factors detailed from time to
time in the Company’s interim and annual financial statements and
MD&A of those statements and Annual Information Form, all of
which are filed and available for review under the Company’s
profile on SEDAR+ at www.sedarplus.ca. Although the Company has
attempted to identify important factors that could cause our actual
results, performance or achievements to differ materially from
those described in our forward-looking statements, there may be
other factors that cause our results, performance or achievements
not to be as anticipated, estimated or intended. There can be no
assurance that our forward-looking statements will prove to be
accurate, as our actual results, performance or achievements could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on our
forward-looking statements.
COMPLIANCE WITH NI 43-101
Unless otherwise indicated, Capstone Copper has prepared the
technical information in this document (“Technical Information”)
based on information contained in the technical reports, Annual
Information Form and news releases (collectively the “Disclosure
Documents”) available under Capstone Copper’s company profile on
SEDAR+ at www.sedarplus.ca. Each Disclosure Document was prepared
by or under the supervision of a qualified person (a “Qualified
Person”) as defined in National Instrument 43-101 – Standards of
Disclosure for Mineral Projects of the Canadian Securities
Administrators (“NI 43-101”). Readers are encouraged to review the
full text of the Disclosure Documents which qualifies the Technical
Information. Readers are advised that Mineral Resources that are
not Mineral Reserves do not have demonstrated economic viability.
The Disclosure Documents are each intended to be read as a whole,
and sections should not be read or relied upon out of context. The
Technical Information is subject to the assumptions and
qualifications contained in the Disclosure Documents.
Disclosure Documents include the National Instrument 43-101
compliant technical reports titled "NI 43-101 Technical Report on
the Cozamin Mine, Zacatecas, Mexico" effective January 1, 2023, “NI
43-101 Technical Report on the Pinto Valley Mine, Arizona, USA”
effective March 31, 2021, “Santo Domingo Project, NI 43-101
Technical Report and Feasibility Study Update, Atacama Region,
Chile” effective July 31, 2024, and "Mantos Blancos Mine NI 43-101
Technical Report Antofagasta / Región de Antofagasta, Chile" and
"Mantoverde Mine and Mantoverde Development Project NI 43-101
Technical Report Chañaral / Región de Atacama, Chile", both
effective November 29, 2021.
The disclosure of Scientific and Technical Information in this
document was reviewed and approved by Peter Amelunxen, P.Eng.,
Senior Vice President, Technical Services (technical information
related to project updates at Santo Domingo and Mineral Resources
and Mineral Reserves at Mantoverde), Clay Craig, P.Eng., Director,
Mining & Strategic Planning (technical information related to
Mineral Reserves at Pinto Valley and Cozamin), and Cashel Meagher,
P.Geo., President and Chief Operating Officer (technical
information related to Mineral Reserves and Resources at Mantos
Blancos) all Qualified Persons under NI 43-101.
Non-GAAP and Other Performance Measures
The Company uses certain performance measures in its analysis.
These Non-GAAP performance measures are included in this document
because these statistics are key performance measures that
management uses to monitor performance, to assess how the Company
is performing, and to plan and assess the overall effectiveness and
efficiency of mining operations. These performance measures do not
have a standard meaning within IFRS and, therefore, amounts
presented may not be comparable to similar data presented by other
mining companies. These performance measures should not be
considered in isolation as a substitute for measures of performance
in accordance with IFRS.
Some of these performance measures are presented in Highlights
and discussed further in other sections of the document. These
measures provide meaningful supplemental information regarding
operating results because they exclude certain significant items
that are not considered indicative of future financial trends
either by nature or amount. As a result, these items are excluded
for management assessment of operational performance and
preparation of annual budgets. These significant items may include,
but are not limited to, restructuring and asset impairment charges,
individually significant gains and losses from sales of assets,
share based compensation, unrealized gains or losses, and certain
items outside the control of management. These items may not be
non-recurring. However, excluding these items from GAAP or Non-GAAP
results allows for a consistent understanding of the Company's
consolidated financial performance when performing a multi-period
assessment including assessing the likelihood of future results.
Accordingly, these Non-GAAP financial measures may provide insight
to investors and other external users of the Company's consolidated
financial information.
C1 Cash Costs Per Payable Pound of Copper Produced
C1 cash costs per payable pound of copper produced is a measure
reflective of operating costs per unit. C1 cash costs is calculated
as cash production costs of metal produced net of by-product
credits and is a key performance measure that management uses to
monitor performance. Management uses this measure to assess how
well the Company’s producing mines are performing and to assess the
overall efficiency and effectiveness of the mining operations and
assumes that realized by-product prices are consistent with those
prevailing during the reporting period.
All-in Sustaining Costs Per Payable Pound of Copper
Produced
All-in sustaining costs per payable pound of copper produced is
an extension of the C1 cash costs measure discussed above and is
also a non-GAAP key performance measure that management uses to
monitor performance. Management uses this measure to analyze
margins achieved on existing assets while sustaining and
maintaining production at current levels. Consolidated All-in
sustaining costs includes sustaining capital and corporate general
and administrative costs.
Net debt / Net cash
Net debt / Net cash is a non-GAAP performance measure used by
the Company to assess its financial position and is composed of
Long-term debt (excluding deferred financing costs and purchase
price accounting ("PPA") fair value adjustments), Cost overrun
facility from MMC, Cash and cash equivalents, Short-term
investments, and excluding shareholder loans.
Attributable Net debt / Net cash
Attributable net debt / net cash is a non-GAAP performance
measure used by the Company to assess its financial position and is
calculated as net debt / net cash excluding amounts attributable to
non-controlling interests.
Available Liquidity
Available liquidity is a non-GAAP performance measure used by
the Company to assess its financial position and is composed of RCF
credit capacity, the $520 million Mantoverde DP facility capacity,
Cash and cash equivalents and Short-term investments. For clarity,
Available liquidity does not include the Mantoverde $60 million
cost overrun facility from MMC nor the $260 million undrawn portion
of the gold stream from Wheaton related to the Santo Domingo
development project as they are not available for general
purposes.
Adjusted net income (loss) attributable to
shareholders
Adjusted net income (loss) attributable to shareholders is a
non-GAAP measure of Net income (loss) attributable to shareholders
as reported, adjusted for certain types of transactions that in our
judgment are not indicative of our normal operating activities or
do not necessarily occur on a regular basis.
EBITDA
EBITDA is a non-GAAP measure of net income (loss) before net
finance expense, tax expense, and depletion and amortization.
Adjusted EBITDA
Adjusted EBITDA is non-GAAP measure of EBITDA before the pre-tax
effect of the adjustments made to net income (loss) (above) as well
as certain other adjustments required under the RCF agreement in
the determination of EBITDA for covenant calculation purposes.
The adjustments made to Adjusted net income (loss) attributable
to shareholders and Adjusted EBITDA allow management and readers to
analyze our results more clearly and understand the cash-generating
potential of the Company.
Sustaining Capital
Sustaining capital is expenditures to maintain existing
operations and sustain production levels. A reconciliation of this
non-GAAP measure to GAAP segment MPPE additions is included within
the mine site sections of this document.
Expansionary Capital
Expansionary capital is expenditures to increase current or
future production capacity, cash flow or earnings potential. A
reconciliation of this non-GAAP measure to GAAP segment MPPE
additions is included within the mine site sections of this
document.
Realized copper price (per pound)
Realized price per pound is a non-GAAP ratio that is calculated
using the non-GAAP measures of revenue on new shipments, revenue on
prior shipments, and pricing and volume adjustments. Realized
prices exclude the effects of the stream cash effects as well as
TC/RCs. Management believes that measuring these prices enables
investors to better understand performance based on the realized
copper sales in the current and prior period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241031874423/en/
Daniel Sampieri, Director, Investor Relations & Strategic
Analysis 437-788-1767 dsampieri@capstonecopper.com
Michael Slifirski, Director, Investor Relations, APAC Region
(+61) 412-251-818 mslifirski@capstonecopper.com
Capstone Copper (TSX:CS)
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