Capstone Copper Reports Third Quarter 2022 Results
NEWS RELEASE
TSX:CS ● capstonecopper.com
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 1
October 31, 2022
Capstone Copper Reports Third Quarter 2022 Results
All amounts in US$ unless otherwise indicated
Vancouver, British Columbia – Capstone Copper Corp. (“Capstone” or the “Company”) (TSX:CS) today
announced production and financial results for the quarter ended September 30, 2022 (“Q3 2022”). Quarterly
consolidated copper production totaled 45,700 tonnes at C1 cash costs1 of $2.76 per payable pound of copper
produced. Link HERE for Capstone’s Q3 2022 management’s discussion and analysis (“MD&A”) and financial
statements and HERE for the webcast presentation.
John MacKenzie, CEO of Capstone commented, “Our Q3 results represent our second full quarter of
combined operations as Capstone Copper and I'm very pleased with the integration efforts to date. Despite
continued inflationary pressures felt across the industry, we kept costs in -line quarter over quarter and are
seeing key input costs, part icularly sulphuric acid, trend lower and which we expect to realize in 2023. We
remain well positioned with a strong balance sheet and the right team to complete the construction of our
world-class Mantoverde Development Project by the end of 2023, drivin g our next phase of near -term
transformational growth.”
Q3 2022 OPERATIONAL AND FINANCIAL HIGHLIGHTS
• Net income of $37.5 million, or $0.05 per share. Adjusted net loss 1 of $19.3 million or $(0.02) per
share for Q3 2022, down $48.0 million, or $0.11 per share compared to the same quarter last year due
to a declining copper price, an incremental $22.5 million in realized provisional pricing losses and
inflationary pressures on costs.
• Adjusted EBITDA1 of $34.1 million which includes a realized provisional pricing loss of $32.5 million
relating to Q2, compared to Adjusted EBITDA 1 of $72.3 million in Q3 2021 which included a realized
provisional pricing loss of $10 million. The decrease is driven by a declining realized copper price
($3.29/lb in Q3 2022 compared to $4.15/lb in Q3 2021) and inflationary pressures on costs, particularly
sulphuric acid and diesel fuel costs.
• Operating cash flow before changes in working capital of $13.9 million in Q3 2022 compared to
$67.1 million in Q3 2021. The decrease is related to the decline in realized copper prices, increase in
operating costs, and higher cash taxes in Mexico.
• Consolidated copper production of 45.7 thousand tonnes at C1 cash costs 1 of $2.76/lb of copper
produced for Q3 2022, which consisted of 14.1 thousand tonnes at Pinto Valley, 6.4 thousand tonnes
at Cozamin, 13.6 thousand tonnes at Mantos Blancos, and 11.6 thousand tonnes at Mantoverde.
• Total available liquidity1 of $711 million as at September 30, 2022, comprised of $196 million of cash
& short-term investments, $405 million of undrawn amounts on our $500 million corporate revolving
credit facility as well as $110 million of undrawn amounts on our $520 Mantoverde Development
Project facility.
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 2
• Proactive measures taken during the third quarter to protect downside risk with additional 2023 copper
hedges as we complete the construction of Mantoverde next year. In total , 85 thousand tonnes of
copper production in 2023 is hedged at a weighted average copper price of $3.45/lb. In addition, we
commenced a quotational period (“QP”) hedging program, which will mitigate the QP price risk and
assist in achieving realized copper prices closer to LME average in future quarters.
• Mantos Blancos Concentrator Debottlenecking Project ("MB -CDP") averaged above the designed
throughput level over 20 out of 27 planned operating days in October, with copper recoveries in line
with expectations.
• Mantoverde Development Project remains on schedule and on target. Major construction is
progressing well on the primary crusher, grinding and flotation area. Overall project completion was
67% as of the end of September 2022.
• Mantoverde - Santo Domingo ("MV-SD") District Integration Plan will outline the approach Capstone
Copper is taking to maximize value creation (including synergies) across the district. The integration
plan describing the optimized flowsheet will be presented during the Chile anal yst tour and Investor
Day during the week of November 14th.
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 3
OPERATIONAL OVERVIEW
Refer to Capstone’s Q3 2022 MD&A and Financial Statements for detailed operating results.
Q3 2022 Q3 2021 2022 YTD 2021 YTD
Copper production (000s tonnes)
Sulphides business
Pinto Valley 14.1 13.7 41.8 43.6
Cozamin 6.4 6.4 18.7 17.8
Mantos Blancos 9.6 — 19.0 —
Total sulphides 30.1 20.1 79.5 61.5
Cathode business
Mantos Blancos 4.0 — 8.0 —
Mantoverde2 11.6 — 25.8 —
Total cathodes 15.6 — 33.8 —
Consolidated 45.7 20.1 113.3 61.5
Copper sales
Copper sold (000s tonnes) 44.2 17.9 115.2 59.8
Realized copper price1 ($/pound) 3.29 4.15 3.76 4.35
C1 cash costs1 ($/pound) produced
Sulphides business
Pinto Valley 2.60 2.44 2.67 2.22
Cozamin 1.20 0.93 1.19 0.95
Mantos Blancos 2.17 — 2.34 —
Total sulphides 2.17 1.96 2.25 1.85
Cathode business
Mantos Blancos 3.87 — 3.80 —
Mantoverde 3.87 — 3.62 —
Total cathodes 3.87 — 3.66 —
Consolidated 2.76 1.96 2.68 1.85
2 Mantoverde production shown on a 100% basis.
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 4
Consolidated Production
Q3 2022 copper production was 127% higher than Q3 2021 primarily as a result of including production for
the Mantos Blancos and Mantoverde mines.
Q3 2022 C1 cash costs 1 of $2.76/lb and 2022 YTD C1 cash costs 1 of $2.68/lb are a mix of sulphide and
cathode business units compared to 2021 which was predominately sulphide production. Cathode production
is from copper oxide ore that requires sulphuric acid leaching, solvent extraction and electrowinning (SX-EW)
to produce copper cathodes which are a finished copper product for the market. Sulphuric acid prices of
$255/tonne (average) in 2022 represent an historic high, and thus negatively impacted cash costs YTD.
Sulphide production requires a mill that utilizes a grinding and flotation process to recover sulphide minerals
in a copper concentrate saleable as an int ermediate product to smelters and refiners. Capstone's low -cost
sulphide production is growing significantly with the Mantoverde Development Project to be completed and in
ramp-up late next year.
2022 YTD consolidated production of 113.3 thousand tonne s of copper is higher than the 61.5 thousand
tonnes in 2021 YTD, primarily as a result of the addition of Mantos Blancos and Mantoverde production.
Pinto Valley Mine
Copper production of 14.1 thousand tonnes in Q3 2022 was 3% higher than Q3 2021. Higher grades (Q3 2022
– 0.34% versus Q3 2021 - 0.33%) and recoveries (Q3 2022 - 89.1% versus Q3 2021 - 88.0%) were partially
offset by lower throughput during the quarter (Q3 2022 - 48,143 tpd versus Q3 2021 - 49,100 tpd) as a result
of unplanned downtime in the tailings thickener and water pumping infrastructure.
2022 YTD production was 4% lower than the same period last year primarily attributed to slightly lower grades
(2022 YTD – 0.33% versus 2021 YTD – 0.34%), lower recoveries (2022 YTD - 86.3% versus 2021 YTD -
87.3%) as well as lower mill throughput (51,088 tpd in 2022 YTD versus 52,089 tpd in 2021 YTD).
Q3 2022 C1 cash costs1 of $2.60/lb in Q3 2022 were higher than Q3 2021 of $2.44/lb primarily due to increases
in operating costs ($0.29/lb) and treatment and refining costs ($0.12/lb), partially offset by higher capitalized
stripping costs (-$0.16/lb) and higher copper production (-$0.07/lb).
2022 YTD C1 cash costs1 of $2.67/lb were $0.45/lb higher compared to the same period last year of $2.22/lb
primarily due to increased operating costs from inflationary pressures on diesel, power, grinding media; and
higher spend on rental equipment, mining equipment tools, contract ors and dust suppression ($0.31/lb) and
an increase in treatment and refining costs ($0.11/lb), partially offset by higher capitalized stripping costs.
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 5
Cozamin Mine
Copper production of 6.4 thousand tonnes was consistent with the same period in the prior year. Q3 2022
throughput of 3,829 tpd, grades of 1.86% and recoveries of 96.8% were also consistent with Q3 2021.
2022 YTD production was 5% higher than the same period last year and attributed to the higher mining rates
as the mine uses the availability of the Calicanto ramp increasingly compared to the prior year and higher
throughput as a result of upgrades to the mill in Q1 2022 (3,803 in 2022 YTD versus 3,678 in 2021 YTD),
higher grades (2022 YTD – 1.86% versus 2021 YTD – 1.84%).
Q3 2022 C1 cash costs1 of $1.20/lb were 29% higher than the same period last year mainly due to a decrease
in by-product credits ($0.22/lb) as a result of lower zinc production as well as lower silver production and
prices.
2022 Y TD C1 cash costs 1 of $1.19/lb were 25% higher than the same period last year primarily due to
inflationary price increases in steel (grinding media), explosives and insurance premiums, planned higher
spend on mechanical parts to increase equipment availabi lity and reliability ($0.20/lb), lower zinc by -product
credits due to planned lower zinc production, as well as lower silver prices ($0.12/lb) and higher treatment and
refining costs ($0.03/lb), partially offset by higher copper production (-$0.04/lb).
The paste backfill and dry stack tailings project continues to make good progress and will facilitate the mine's
planned long-term sustainability with project completion expected in Q4 and ramp-up in the first half of 2023.
To date, we have invested $41 million of a total $55 million budget for the project.
Mantos Blancos Mine
Q3 2022 production was 13.6 thousand tonnes, 9.6 thousand tonnes of copper in concentrate and 4.0
thousand tonnes of cathode. Q3 2022 throughout of 14,334 tpd was 6% lower than the previous quarter due
to several unplanned downtime events impacting performance. Offsetting lower throughput was strong mill
copper recovery of 79.3% compared to 69.7% in the previous quarter and a higher mill feed grade of 0.92%
versus 0.90% in Q2. The Mantos Blancos mill operated above the designed 20,000 tpd throughput level over
20 out of 27 planned operating day, with copper recoveries in line with expectations.
2022 YTD production (including the nine days in March 2022 after clo sing of the Transaction) was 27.0
thousand tonnes, 19.0 thousand tonnes of copper in concentrate and 8.0 thousand tonnes of cathode.
Combined Q3 2022 C1 cash costs 1 were $2.68/lb - $2.17/lb sulphides and $3.87/lb cathodes. The sulphide
cash costs are expected to decline with the ramp -up of the MB -CDP to full capacity in Q4 2022 and copper
cathode costs are currently being impacted by the high cost of acid which averaged $261/tonne delivered in
Q3 2022. Sulphuric acid prices are showing signs of significant decline in 2023 with contract prices moving
towards a range of $120/tonne to $140/tonne.
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 6
Combined 2022 YTD C1 cash costs1 were $2.78/lb - $2.34/lb sulphides and $3.80/lb cathodes.
Mantoverde Mine
Q3 2022 production was 11.6 thousand tonnes.
2022 YTD production (including the nine days in March 2022 after closing of the Transaction) was 25.8
thousand tonnes of copper cathode. The MVDP remains on schedule and on budget. Major construction is
progressing well on the primary crushing, grinding and flotation areas. Overall project completion was 67% as
of the end of September 2022.
Q3 2022 C1 cash costs 1 were $3.87/lb which were also impacted by the high cost of acid, at an average of
$266/tonne.
2022 YTD C1 cash costs1 were $3.62/lb, at the lower end of guidance range.
Mantoverde Development Project
Construction of the MVDP located at the existing Mantoverde (oxide) operation continues to progress well.
The MVDP is expected to enable the mine to process 235 million tonnes of copper sulphide reserves over a
20-year expected mine life, in addition to existing oxide reserves. The MVDP involves the addition of a sulphide
concentrator (12.3 million tonnes per year) and tailings storage facil ity, and the expansion of the existing
desalination plant.
Upon completion, the Company expects the MVDP to increase production from approximately 49,000 tonnes
of copper (cathodes only) in our current guidance for the period from April to December 2022 (annualized) to
~120,000 tonnes of copper (copper concentrate and cathodes) post project completion in 2024. In parallel,
C1 cash costs1 are expected to decrease from $3.60/lb to $3.80/lb in current guidance for the period from April
to December 2022 to below $2.00/lb in 2024 after project completion and ramp up. The decline in expected
costs will be driven by the mine's transition to becoming a primary producer of copper concentrate. The mine
will also benefit from the production of approximately 31,000 ou nces of gold per year that will generate by -
product credits. Upon completion of MVDP, approximately 75% of Mantoverde's production will come from the
lower-cost sulphide copper.
MVDP is progressing under a lump-sum turn-key engineering, procurement and construction (EPC) contract
with Ausenco Limited, a multi-national EPC management company, with broad international experience in the
design and construction of copper concentrator projects of this scale in the international market. The execution
plan includes a Capstone Copper owner’s team working with the contractors during the execution phase.
As of September 30, 2022, the MVDP had achieved overall progress of 67% and construction progress of
37%. The schedule remains intact and the target for constructio n completion remains late 2023. Work
completed in Q3 2022 included:
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 7
• Assembly and commissioning of the first electric rope shovel with commissioning of a second shovel
planned for mid-Q4 2022;
• Arrival of the SAG and ball mill shells in Chile and transport to the mine site has commenced with all
other components already on site; and
• Began structural and mechanical assembly in the primary crusher, grinding and flotation area.
As of September 30, 2022, the cost of the different components of the project, including the lump-sum turnkey
EPC continue on track and on target. The total project capital remains at $825 million and spend-to date totals
$490 million.
The EPC contract total budget is approximately $525 million of which $294 million has b een spent to date.
The nature of the lump sum turn -key contract with Ausenco has the majority of the capital cost as lump sum
of the total projected capital cost of $825 million. In addition, major mining equipment for approximately $140
million was price fixed prior to the elevated inflationary pressures observed this year.
Mantoverde Phase II
Mantoverde is currently analyzing the next expansion of the sulphide concentrator. Alternatives are being
considered to expand the plant capacity by either the addition of a new ball mill and secondary equipment or
a complete new processing line, to process part of the 77% of resources not utilized by Phase I of the MVDP.
A conceptual study will be developed during the second half of 2022 to ass ess the best options for the next
stage of MVDP which will be incorporated into a feasibility study targeted for H2 2023.
Mantos Blancos Concentrator Debottlenecking Project
The MB -CDP is expected to increase throughput capacity at t he sulphide concentrator plant from 11,000
tonnes per day ("tpd') to 20,000 tpd (or from 4.2 million tonnes per year to 7.3 million tonnes per year). This
will more than replace declining oxide production levels at Mantos Blancos.
The ramp -up continued du ring the quarter with increased focus on achieving operational stability of the
auxiliary systems such as the electrical and tailing systems. Mill throughput continues to improve and the plant
has averaged above the design throughput level over 20 out of 2 7 planned operating days in October, with
copper recoveries in line with expectations. Technical reviews of the year -to-date performance of Ball Mill 8
indicate that it is performing at higher than expected milling efficiencies, indicating that concentrator throughput
greater than the nominal 20,000 tpd may be sustainable with minimal capital expenditure. The ramp -up to
20,000 tpd is targeted to be completed by year-end.
Mantos Blancos Phase II
Mantos Blancos is currently analyzing the potential to increase the throughput of the Mantos Blancos sulphide
concentrator plant from 7.3 million tonnes per year to 10.0 million tonnes per year using existing underutilized
1 These are alternative performance measures. Refer to the section entitled “Alternative Performance Measures” in the Cautionary Notes 8
ball mills and process equipment. As part of the Mantos Blancos Phase II Project, we are also evaluating the
potential to extend the life of copper cathode production. The Advanced Basic Engineering Study is expected
to be released in H1 2023, and the environmental DIA application was submitted in August 2022.
Santo Domingo
Since closing of the Transaction, the Santo Domingo team has been integrated into the larger Capstone
Copper team in Chile. The integrated project team is focused on identifying and evaluating the optimal
integrated devel opment plan for the Mantoverde - Santo Domingo district. The Mantoverde operation is
located approximately ~35km southwest of the Santo Domingo project. The Company expects the integrated
district plan to study alternatives and identify the best path forwa rd to develop the copper (sulphides and
oxides), gold, iron, and cobalt across both properties. An integrated development approach is focused on
maximizing potential synergies associated with the proximity of Santo Domingo to the existing Mantoverde
operation, existing infrastructure (including a desalination plant, roads, power, and pipelines), and integration
of other assets, such as the Santo Domingo port contract with Puerto Abierto S.A. and the rail option currently
being assessed for products/supply transportation.
The potential synergies the Company expects to be maximized through an optimal integrated district
development plan include the following:
1. Infrastructure synergies (including desalination plant, power, pipelines, port)
2. Integrated mine and process approach
3. Construction and supply chain synergies
4. Cobalt and sulphuric acid enhancements
5. Recovery of Mantoverde cobalt
6. Use of excess solvent extraction and electrowinning ("SX-EW") capacity
The revenue -enhancing opportunities include using exc ess electrowinning capacity at Mantoverde to
potentially process Santo Domingo oxide material. An updated base case copper/iron Santo Domingo
feasibility study including district integration synergies will be released in 2023.
Santo Domingo contains oxide mineralization, which is located above the sulphide ore body and is part of the
Santo Domingo and Iris Norte pre -stripping material. During Q3 2022, the Company continued with the
exploratory oxide metallurgical program, which is now expected to be completed in Q4 2022. Preliminary
metallurgical test results suggest the possibility to process the leach solution from Santo Domingo's oxides at
Mantoverde's existing SX -EW plant. Subject to further positive results, the Company pl ans to complete an
oxide drill program in the near future and the results, including an optimized flowsheet, are expected to be
incorporated into an updated Santo Domingo feasibility study to be released in H1 2024.