All amounts in US$ unless otherwise
indicated
Capstone Copper Corp. (“Capstone” or the “Company”) (TSX:
CS) (ASX: CSC) today reported financial results for the six months
and quarter ended June 30, 2024 (“Q2 2024”). Copper production in
Q2 2024 totaled 40,937 tonnes at C1 cash costs1 of $2.84 per
payable pound of copper produced. Link HERE for Capstone’s Q2 2024
webcast presentation.
John MacKenzie, CEO of Capstone, commented, "We had another
solid quarter in Q2 as we executed on our operating plans and
delivered strong financial results. At our Mantoverde Development
Project, we are making excellent progress ramping up to nameplate
production levels, which will be transformational to our results
moving forward. Yesterday we released an updated feasibility study
for our fully-permitted Santo Domingo project, which sits 35km
northeast of Mantoverde, and represents the next major phase in our
plan to create a world class district in the Atacama region of
Chile. With the updated study in hand, we now plan to progress
financing and partnership discussions at Santo Domingo, while
advancing work on the detailed engineering."
Q2 2024 OPERATIONAL AND FINANCIAL HIGHLIGHTS
- Consolidated H1 2024 copper production of 83,058 tonnes
achieved guidance of 80,000 to 90,000 tonnes.
Consolidated copper production for Q2 2024 was 40,937
tonnes at C1 cash costs1 of $2.84/lb, which consisted of 15,994
tonnes at Pinto Valley, 10,070 tonnes at Mantos Blancos, 8,721
tonnes at Mantoverde, and 6,152 tonnes at Cozamin.
- Net income attributable to shareholders of $29.3 million, or
$0.04 per share for Q2 2024 compared to net loss attributable
to shareholders of $36.5 million, or $(0.05) per share for Q2 2023,
primarily due to the higher realized copper price of $4.54/lb
compared to $3.76/lb (prior to unrealized provisional pricing
adjustments) and the inclusion of a $53.9 million provision related
to the Minto obligation in Q2 2023.
- Adjusted net income attributable to shareholders1 of $20.9
million, or $0.03 per share for Q2 2024, adjusted net loss
attributable to shareholders1 of $12.2 million in Q2 2023,
primarily due to a higher realized copper price.
- Adjusted EBITDA1 of $123.1 million for Q2 2024 compared
to $43.4 million for Q2 2023. The increase in Adjusted EBITDA1 is
primarily driven by a higher realized copper price of $4.54/lb
compared to $3.76/lb (prior to unrealized provisional pricing
adjustments).
- Operating cash flow before changes in working capital of
$102.9 million in Q2 2024 compared to $22.0 million in Q2
2023.
- Net debt1 of $741.3 million as at June 30, 2024 was
largely unchanged compared to net debt of $740.2 million as at
March 31, 2024. Total available liquidity1 of $538.7 million as at
June 30, 2024, comprised of $138.7 million of cash and short-term
investments, and $400.0 million of undrawn amounts on the corporate
revolving credit facility.
- First saleable copper concentrate was produced at the
Mantoverde Development Project ("MVDP") in June, as the mine
advances commissioning and continues ramp up to full production
levels. Achievement of nameplate operating rates is expected within
the third quarter. Total capital for the MVDP remains unchanged at
$870 million.
- The Company reiterates 2024 guidance of 190,000 to 220,000
tonnes of copper at C1 cash costs of $2.30/lb to $2.50/lb.
Copper production is trending toward the lower end of the range,
while cash costs are trending toward the higher end.
- Subsequent to quarter-end, the Company announced the results of
an updated Feasibility Study for its Santo Domingo development
project in Chile. The updated Feasibility Study outlines a $2.3
billion initial capital project with an after-tax NPV(8%) of
$1.7 billion that represents the next phase of transformational
growth in our world-class Mantoverde-Santo Domingo District.
- In July 2024, the Company entered into a binding share
purchase agreement with Inversiones Alxar S.A. and Empress COPEX
S.A. to acquire 100% of the shares of Compania Minera Sierra Norte,
S.A. for $40 million which is payable in
shares.
1 These are Non-GAAP performance measures.
Refer to the section titled “Non-GAAP and Other Performance
Measures”.
OPERATIONAL OVERVIEW
Refer to Capstone's Q2 2024 MD&A and Financial Statements
for detailed operating results.
Q2 2024
Q2 2023
2024 YTD
2023 YTD
Copper production (tonnes)
Sulphide business
Pinto Valley
15,994
12,632
31,666
25,532
Cozamin
6,152
6,661
12,158
11,861
Mantos Blancos
8,170
8,405
17,333
19,205
Mantoverde2
58
—
58
—
Total sulphides
30,374
27,698
61,215
56,598
Cathode business
Mantos Blancos
1,900
3,267
3,704
6,567
Mantoverde2
8,663
8,322
18,139
16,822
Total cathodes
10,563
11,589
21,843
23,389
Consolidated
40,937
39,287
83,058
79,987
Copper sales
Copper sold (000s tonnes)
39,748
40,755
80,744
78,211
Realized copper price1 ($/pound)
4.53
3.71
4.18
3.93
C1 cash costs1 ($/pound)
produced
Sulphides business
Pinto Valley
2.46
2.98
2.50
3.03
Cozamin
1.74
1.63
1.83
1.67
Mantos Blancos
3.43
3.18
3.18
2.77
Total sulphides
2.58
2.72
2.57
2.66
Cathode business
Mantos Blancos
3.15
3.08
3.32
3.22
Mantoverde
3.68
3.92
3.75
3.97
Total cathodes
3.58
3.68
3.67
3.76
Consolidated
2.84
3.01
2.87
2.99
2 Mantoverde production shown on a 100%
basis.
Consolidated Production
Q2 2024 copper production of 40,937 tonnes was 4% higher than Q2
2023 primarily as a result of higher production at Pinto
Valley.
Q2 2024 C1 cash costs1 of $2.84/lb were 6% lower than $3.01/lb
Q2 2023 mainly due to higher production (-$0.09/lb) and lower
operational costs (-$0.14/lb).
Pinto Valley Mine
Copper production of 16.0 thousand tonnes in Q2 2024 was 27%
higher than in Q2 2023 due to higher mill throughput during the
quarter (Q2 2024 - 55,420 tpd versus Q2 2023 - 44,336 tpd), due to
a reduction in mechanical downtime, and higher grades (Q2 2024 –
0.36% versus Q2 2023 - 0.34%) due to mining in the higher-grade
Castle Dome area of the mine. Recoveries were consistent quarter
over quarter.
C1 cash costs1 of $2.46/lb in Q2 2024 were 17% lower than Q2
2023 of $2.98/lb primarily due to higher production volume
(-$0.57/lb) and capitalized stripping (-$0.13/lb), partially offset
by increases in operating costs driven by higher production,
related to contractor spend, electricity cost, ball mill liner
cost, explosive cost and mechanical parts, stockpile drawdown and
higher treatment costs.
Mantos Blancos Mine
Q2 2024 production was 10.1 thousand tonnes, composed of 8.2
thousand tonnes from sulphide operations and 1.9 thousand tonnes of
cathode from oxide operations, which was 14% lower than the 11.7
thousand tonnes produced in Q2 2023. Sulphide production declined
in Q2 2024 despite record throughput, due to lower grades and lower
recoveries as a result of a short-term localized geotechnical issue
that impacted mine sequencing. Lower production was also impacted
by lower dump throughput in line with the 2024 plan.
The activities for the sulphide operations to reach 20ktpd on a
sustainable basis are progressing despite an approximate two-month
delay relative to our prior plan due to longer equipment lead
times. As a result, in June, daily ore throughput averaged 17ktpd
and the variability of the milling process has been significantly
reduced. During Q3 2024, the installation and commissioning of a
new holding tank and additional pumps in the tailings area, as well
as other infrastructure improvements, will further enhance the
throughput levels at the concentrator plant and is expected to
allow the achievement of the 20ktpd capacity consistently.
Combined Q2 2024 C1 cash costs1 were $3.38/lb ($3.43/lb
sulphides and $3.15/lb cathodes) were 7% higher compared to
combined C1 cash costs1 of $3.15/lb in Q2 2023, mainly due to lower
production ($0.51/lb), partially offset by a decrease in mine
movement (-$0.17/lb) and lower acid consumption driven by the lower
dump throughput (-$0.15/lb).
Mantoverde Mine
Q2 2024 copper production of 8.7 thousand tonnes was 4% higher
compared to 8.3 thousand tonnes in Q2 2023. Higher grades processed
at the heap operations, related to mining sequence, were partially
offset by lower heap recoveries (71.7% in Q2 2024 versus 73.4% in
Q2 2023). Moreover, the new concentrator (MVDP) produced its first
copper concentrate in June 2024.
Q2 2024 C1 cash costs1 were $3.68/lb, 6% lower than $3.92/lb in
Q2 2023 due to higher production (-$0.19/lb), lower energy prices
(-$0.35/lb) and lower acid consumption (-$0.23/lb), partially
offset by an increase in contracted services, spare parts spend and
labour cost mainly driven by higher mine movement ($0.50/lb).
Energy prices averaged $0.09/kWh in Q2 2024 versus $0.22/kWh in Q2
2023.
Cozamin Mine
Q2 2024 copper production of 6.2 thousand tonnes was 7% lower
than the same period prior year, mainly on lower mill throughput
(3,551 tpd in Q2 2024 versus 3,792 tpd in Q2 2023) driven by mine
sequence. Grades and recoveries were consistent quarter over
quarter.
Q2 2024 C1 cash costs1 were $1.74/lb, 7% higher than $1.63/lb in
the same period last year, mainly due to lower Cu production in Q2
2024 than last year (7%), in addition to an increase in paste back
fill plant expenses from the previous year in manpower and
contractors for full operations ($0.18/lb), partially offset by
higher by-product credits due to higher silver prices
(-$0.07/lb).
Mantoverde Development Project
Construction of all elements of the MVDP that were required to
commence commissioning was completed by end of year 2023. The MVDP
enables the Mantoverde mine to process 236 million tonnes of copper
sulphide reserves over a 20-year expected mine life, in addition to
existing oxide reserves. The 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. Key milestones during the
commissioning and ramp-up include:
- 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 – expected within Q3
2024
During Q2, steady progress was made commissioning the new
concentrator and first saleable copper concentrate was produced in
June, as previously announced.
So far in July, we have seen continued and steady progress as
the Mantoverde operation ramps up to nameplate production levels.
The focus is largely related to improving runtime, while also
increasing throughput and recoveries. We have already seen daily
throughputs above the nameplate capacity, and expect to reach
sustained nameplate operating throughput rates, while exhibiting
strong recoveries, within the third quarter.
As of June 30, 2024, cash capital spent on the MVDP totalled
$842 million, under the project capital estimate of $870
million.
A virtual tour of MVDP can be viewed at
https://vrify.com/decks/12698-mantoverde-development-project
MV Optimized Feasibility Study and Phase II
The Company is currently preparing a technical report with
respect to the next expansion of the sulphide concentrator and the
optimization of the heap leach and solvent extraction facilities.
Capstone has identified that the desalination plant capacity and
major components of the comminution and flotation circuits of the
MVDP can sustain an average annual throughput of approximately
45,000 ore tpd, while copper cathode production can be increased,
and acid consumption decreased, through conversion of the dynamic
heap leach facility to a bio-leach facility. Capstone is working
with Ausenco and Global Resource Engineering Ltd on the MV
Optimized Feasibility Study, including evaluating the costs and
timelines of debottlenecking the minor components of the plant to
meet the potential increased throughput target. The MV Optimized
Feasibility Study is expected to be released during Q3 2024.
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 0.3 billion tonnes of Measured & Indicated and
0.6 billion tonnes of Inferred sulphide resources not in
reserves.
Santo Domingo Feasibility Study Update
On July 31, 2024, 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. The
updated feasibility study outlines the next phase of
transformational growth for the Company in the world-class
Mantoverde-Santo Domingo District.
The 2024 feasibility study for Santo Domingo outlines a robust
copper-iron-gold project with an after-tax net present value at an
8% discount rate of $1.72 billion and an after-tax internal rate of
return of 24.1%. 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 the Santo
Domingo 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 updated
Mineral Reserve estimate of 436 million tonnes at a copper grade of
0.33%, iron ore grade of 26.5%, and a gold grade of 0.05 grams per
tonne. Updated Measured and Indicated (“M&I”) Mineral Resources
total 547 million tonnes 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%.
Subsequent to the quarter-ended June 30, 2024, the Company
entered into a binding share purchase agreement (the "SPA") with
Inversiones Alxar S.A. and Empress COPEX S.A., collectively the
"sellers" to acquire 100% of the shares of Compania Minera Sierra
Norte, S.A. ("Sierra Norte"). 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.
Under the terms of the SPA, Capstone will pay the sellers $40
million in share consideration. Closing is expected within
one-week.
For more details, please refer to the Santo Domingo Feasibility
Study press release announced on July 31, 2024.
Mantoverde - Santo Domingo Cobalt Study
A district cobalt plant for Mantoverde - Santo Domingo may allow
for low-cost by-product cobalt production while producing a
by-product of sulphuric acid to be consumed internally to
significantly lower operating costs in the cathode process at
Mantoverde.
The cobalt recovery process comprises a pyrite flotation step to
recover cobaltiferous pyrite from the MVDP and MSD tailings
streams. The pyrite is then redirected to the dynamic heap leach
pads which are upgraded to a bio-leach configuration (as part of
the MV-Optimized study). The pyrite bio-oxidizes in the leach pads
and the solubilized cobalt is recovered via an ion exchange plant
that treats a bleed stream from the copper solvent extraction
plant. The approach has been successfully demonstrated at the bench
and pilot scale.
Engineering has commenced for a small plant treating only
Mantoverde pyrite concentrates to produce up to 1,500 tonnes per
annum ("tpa") of contained cobalt. In line with this, Santo Domingo
has started a parallel study to assess, as part of the copper/iron
circuit overall layout optimization being conducted by Ausenco, 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 by the end of 2024.
At a combined MV-SD target of 4.5 to 6.0 thousand 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
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.
Environmental, Social and Governance ("ESG")
Highlights
Pinto Valley has signed the Copper Mark Letter of Commitment
formalizing its participation in the Copper Mark assurance
process.
The Company published its first Modern Slavery Report in May
2024.
Corporate Exploration Update
Cozamin: Exploration drilling recommenced Q2 2024 at
Cozamin with a $2.3M (14,800 meter) program 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, with a second underground rig positioned
at the level 12.7 cross-cut and one surface rig being added to the
program in Q3 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:
Infill drilling was conducted during Q2 2024 in both Mantoverde and
Mantos Blancos pits. Exploration drilling is expected to start at
Mantos Blancos during Q3 2024 with a $1.4M program aiming to test
Veronica oxide target and potential mineralized extension in
Nora-Quinta area.
2024 Guidance
The Company reiterates its 2024 consolidated copper production
and C1 cash costs1 guidance of 190-220kt and $2.30 to $2.50 per
payable pound, respectively. Capstone notes that production is
trending toward the lower end of the guidance range, while cash
costs are trending toward the upper end of the range, primarily due
to a slower ramp-up to 20ktpd capacity at Mantos Blancos in
addition to higher cathode costs.
In order to advance its copper growth strategy, the company has
approved an additional $15 million in capital expenditures at Santo
Domingo to continue to advance detailed engineering.
FINANCIAL OVERVIEW
Please refer to Capstone's Q2 2024 MD&A and Financial
Statements for detailed financial results.
($ millions, except per share data)
Q2 2024
Q2 2023
2024 YTD
2023 YTD
Revenue
393.1
333.9
733.0
669.5
Net income (loss)
27.5
(33.9
)
21.7
(62.9
)
Net income (loss) attributable to
shareholders
29.3
(36.5
)
24.5
(56.5
)
Net income (loss) attributable to
shareholders per common share - basic and diluted ($)
0.04
(0.05
)
0.03
(0.08
)
Adjusted net income (loss)1
20.9
(12.2
)
16.4
5.2
Adjusted net income (loss) attributable to
shareholders per common share - basic and diluted
0.03
(0.02
)
0.02
0.01
Operating cash flow before changes in
working capital
102.9
22.0
165.1
65.1
Adjusted EBITDA1
123.1
43.4
203.2
109.3
Realized copper price1
($/pound)
4.53
3.71
4.18
3.93
($ millions)
June 30, 2024
December 31, 2023
Net debt1
(741.3
)
(927.2
)
Attributable net (debt)/cash1
(589.8
)
(776.6
)
CONFERENCE CALL AND WEBCAST DETAILS
Capstone will host a conference call and webcast on Thursday,
August 1, 2024 at 5:00 pm Eastern Time / 2:00 pm Pacific Time
(Friday, August 2, 2024, 7:00 am Australian Eastern Standard Time).
Link to the audio webcast: https://app.webinar.net/rvoN9NB96e0
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: 416-764-8650 Vancouver: 778-383-7413 Australia:
613-627-2402 North America toll free: 888-664-6383
A replay of the conference call will be available until August
8, 2024. Dial-in numbers for Toronto: (+1) 416-764-8677 and North
American toll free: 888-390-0541. The replay code is 142180#.
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, Region III,
Chile, NI 43-101 Technical Report” effective February 19, 2020, 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 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 project updates at Santo Domingo and Mineral
Reserves and Resources at Mantos Blancos and Mantoverde) 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/20240801926697/en/
Jerrold Annett, SVP, Strategy and Capital Markets 647-273-7351
jannett@capstonecopper.com
Daniel Sampieri, Director, Investor Relations & Strategic
Analysis 437-788-1767 dsampieri@capstonecopper.com
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