Capstone Copper Reports Fourth Quarter 2023 Results
NEWS RELEASE
TSX:CS ● ASX:CSC ● capstonecopper.com
1
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section.
2 Production guidance as most recently disclosed in the Company's MD&A for the three and nine months ended September 30, 2023.
February 22, 2024
Capstone Copper Reports Fourth Quarter 2023 Results
All amounts in US$ unless otherwise indicated
Vancouver, British Columbia – Capstone Copper Corp. (“Capstone” or the “Company”) (TSX: CS) (ASX:
CSC) today reported financial results for the three months and year ended December 31, 2023 (“Q4 2023”).
Copper production in Q4 totaled 44,103 tonnes at C1 cash costs 1 of $2.67 per payable pound of copper
produced. Link HERE for Capstone’s Q4 2023 webcast presentation.
John MacKenzie, CEO of Capstone, commented, "Last year set us up for transformational growth in 2024.
We completed construction at our flagship Mantoverde Development Project ("MVDP") in Chile, advanced
key studies to support our future growth, and our operations delivered their strongest quarter to finish off the
year. In the first half of 2024, we will be focused on the ramp-up of MVDP and maintaining consistently
strong production across our portfolio. In the second half of 2024, we will be focused on generating record
copper production and cash flow."
Q4 2023 OPERATIONAL AND FINANCIAL HIGHLIGHTS
• Achieved production guidance 2 for the year ended December 31, 2023, with consolidated copper
production of 164,353 tonnes. Consolidated copper production for Q4 2023 was 44,103 tonnes at C1
cash costs1 of $2.67/lb, which consisted of 15,933 tonnes at Pinto Valley, 11,587 tonnes at Mantos
Blancos, 10,019 tonnes at Mantoverde, and 6,564 tonnes at Cozamin.
• Net loss of $19.5 million, or $(0.02) per share for Q4 2023 compared to net loss of $28.4 million, or
$(0.03) per share for Q4 2022.
• Adjusted net income attributable to shareholders1 of $10.8 million, or $0.02 per share for Q4 2023. Q4
2023 adjusted net income attributable to shareholders 1 is lower than Q4 2022 adjusted net income
attributable to shareholders1 of $60.4 million due to lower copper volumes sold.
• Adjusted EBITDA1 of $88.3 million for Q4 2023 compared to $81.3 million for Q4 2022. The increase
in Adjusted EBITDA 1 is driven by a higher copper price of $3.69/lb compared to $3.45/lb (prior to
unrealized provisional pricing adjustments), partially offset by lower copper sold (43.3 thousand tonnes
in Q4 2023 versus 44.7 thousand tonnes in Q4 2022).
• Operating cash flow before changes in working capital of $80.4 million in Q4 2023 compared to
$76.1 million in Q4 2022.
• At the Mantoverde Development Project ("MVDP"), construction of all elements required to commence
commissioning activities were completed by year end 2023. MVDP will continue to systematically
commission the concentrator plant with first saleable concentrate expected in Q2 2024. Project total
capital remains unchanged at $870 million. Focus is on a safe, efficient and phased project
commissioning and ramp-up.
• Expected 2024 consolidated copper production growth of 25% driven by the ramp up of MVDP,
resulting in 2024 guidance of 190,000 to 220,000 tonnes of copper at 17% lower C1 cash costs 1 of
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section. 2
$2.30/lb to $2.50/lb. Total 2024 sustaining and expansionary capital expenditure guidance is $275
million, plus an additional $180 million for capitalized stripping.
• Total available liquidity1 of $352.8 million as at December 31, 2023, composed of $126.8 million o f
cash and short-term investments, and $226.0 million of undrawn amounts on the corporate revolving
credit facility. Subsequent to year- end, the Company completed a Share Offering that will increase
available liquidity through net proceeds to the Company of approximately $253 million (C$342 million).
OPERATIONAL OVERVIEW
Refer to Capstone's Q4 2023 MD&A and Financial Statements for detailed operating results.
Q4 2023 Q4 2022 2023 2022
Copper production (000s tonnes)
Sulphide business
Pinto Valley 15.9 15.0 55.1 56.8
Cozamin 6.6 5.8 24.3 24.5
Mantos Blancos 9.7 10.0 38.0 29.0
Total sulphides 32.2 30.8 117.4 110.3
Cathode business
Mantos Blancos 1.9 4.2 11.5 12.2
Mantoverde3 10.0 10.5 35.4 36.3
Total cathodes 11.9 14.7 46.9 48.5
Consolidated 44.1 45.5 164.3 158.8
Copper sales
Copper sold (000s tonnes) 43.3 44.7 160.2 159.9
Realized copper price1 ($/pound) 3.74 3.74 3.84 3.76
C1 cash costs1 ($/pound) produced
Sulphides business
Pinto Valley 2.36 2.48 2.79 2.63
Cozamin 1.76 1.40 1.74 1.24
Mantos Blancos 2.58 1.82 2.74 2.16
Total sulphides 2.30 2.07 2.56 2.20
Cathode business
Mantos Blancos 3.32 2.69 3.11 3.41
Mantoverde 3.68 3.65 3.83 3.63
Total cathodes 3.62 3.37 3.66 3.58
Consolidated 2.67 2.50 2.88 2.63
3 Mantoverde production shown on a 100% basis.
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section. 3
Consolidated Production
Q4 2023 copper production of 44.1 thousand tonnes was 3% lower than Q4 2022 primarily as a result of lower
oxide production at Mantos Blancos driven by lower dump throughput, grade and recoveries.
Q4 2023 C1 cash costs 1 of $2.67/lb were 7% higher than $2.50/lb Q4 2022 mainly impacted by 3% lower
production ($0.19/lb), partially offset by lower operational costs (-$0.02/lb).
Pinto Valley Mine
Copper production of 15.9 thousand tonnes in Q4 2023 was 6% higher than in Q4 2022. Lower mill throughput
during the quarter (Q4 2023 - 53,134 tonnes per day ("tpd") versus Q4 2022 - 55,222 tpd), resulting from
unplanned 97 hours of downtime, was offset by higher grades (Q4 2023 – 0.36% versus Q4 2022 - 0.32%)
due to mining in the higher grade Castle Dome area of the mine. Recoveries were slightly lower compared to
the same period last year (Q4 2023 - 86.5% versus Q4 2022 - 86.9%).
C1 cash costs 1 of $2.36/lb in Q4 2023 were 5% lower than Q4 2022 of $2.48/lb primarily due to higher
capitalized stripping (-$0.34/lb), higher gold by -product credits (-$0.21/lb) and higher production (- $0.16/lb),
partially offset by increases in operating costs driven by higher contractor spend, electricity cost, ball mill liner
cost and mechanical parts costs ($0.53/lb), stockpile drawdown ($0.04/lb) and higher treatment costs on
higher volume of copper sold ($0.03/lb).
Mantos Blancos Mine
Q4 2023 production was 11.6 thousand tonnes, composed of 9.7 thousand tonnes from sulphide operations
and 1.9 thousand tonnes of cathode from oxide operations, 18% lower than the 14.2 thousand tonnes
produced in Q4 2022. The lower production was driven primarily by lower dump throughput tied to power
outage and issues in leach pumping system, and lower grade and recoveries impacting cathode production.
The mill throughput of 13,814 tpd in Q4 2023 was impacted by mill downtime caused by a planned repair that
lasted three days and additional maintenance of the concentrator plant that lasted five days (power outage
and pinion shaft bearing assessment). A plan to address the plant stability is underway that includes improved
maintenance and optimization of the concentrator and the tailings system. Mantos Blancos 2024 sustaining
capital guidance includes approximately $35 million to achieve sustainable nameplate operating rates. During
the first half of 2024, the focus will be on receiving and installing the engineering and infrastructure upgrades
in the tailings dewatering area of the plant in the second quarter. The Company expects Mantos Blancos to
achieve its nameplate operating throughput rates late in the second quarter.
Combined Q4 2023 C1 cash costs 1 were $2.71/lb ($2.58/lb sulphides and $3.32/lb cathodes) compared to
combined C1 cash costs 1 of $2.09/lb in Q4 2022, 30% higher than the same period last year mainly due to
lower production ($0.48/lb), an increase in contracted services and labour costs mainly driven by unfavourable
foreign exchange rate and inflation impact ($0.13/lb), spare parts spend ($0.12/lb), plant maintenance and
spare parts spend ($0.18/lb), partially offset by lower key consumable prices (- $0.29/lb) (realized acid prices
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section. 4
averaged $153/t in Q4 2023 versus $273/t in Q4 2022 and diesel price averaged $0.82/l in Q4 2023 versus
$0.97/l in Q4 2022).
Mantoverde Mine
Q4 2023 copper production of 10.0 thousand tonnes was 5% lower compared to 10.5 thousand tonnes in Q4
2022. Heap recoveries were lower (64.6% in Q4 2023 versus 77.0% in Q4 2022), which was partially offset
by higher dump throughput as a catch-up of September's lower throughput due to a temporary sulphuric acid
supply shortage at a Chilean smelter.
Q4 2023 C1 cash costs1 were $3.68/lb, 1% higher than $3.65/lb in Q4 2022 due to an increase in contracted
services, explosive consumption, spare parts spend and labour cost mainly driven by higher mine movement
($0.74/lb) and lower production (0.12/lb), partially offset by lower key consumable prices (-$0.83/lb). Realized
sulphuric acid prices averaged $174/t in Q4 2023 versus $253/t in Q4 2022, whilst energy prices averaged
$0.21/kWh in Q4 2023 versus $0.17/kWh in Q4 2022 and diesel price averaged $0.83/l in Q4 2023 versus
$0.94/l in Q4 2022.
Cozamin Mine
Q4 2023 copper production of 6.6 thousand tonnes was 14% higher than the same period prior year mainly
on higher mill throughput (3,786 tpd in Q4 2023 versus 3,430 tpd in Q4 2022). Grades were higher than the
same period last year due to mining sequence (1.95% in Q4 2023 versus 1.89% in Q4 2022). Recoveries
were consistent quarter over quarter.
Q4 2023 C1 cash costs 1 were 26% higher than the same period last year mainly due to inflationary price
increases on the main consumables, unfavourable foreign exchange rate, start of paste plant operations,
which resulted in an increase in labour, contractor and cement costs, changes in mining method and additional
bolting requirements ($0.51/lb) and higher treatment costs ($0.07/lb), partially offset by hi gher copper
production (-$0.17/lb) and higher by-product credits due to higher silver prices (-$0.06/lb).
Mantoverde Development Project
Construction of all elements of the MVDP that were required to commence commissioning were completed
during the fourth quarter of 2023. Commissioning activities are underway, and the Company is focused on a
safe, efficient and phased project commissioning and ramp- up. MVDP is expected to enable the mine to
process 231 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 (nominal 32,000 ore
tonnes per day) and tailings storage facility, and the expansion of the existing desalination plant and other
minor infrastructure.
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
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section. 5
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 Ausenco during the execution phase. The
contract with Ausenco includes the project commissioning and ramp-up.
Key milestones during the commissioning and ramp-up include:
1. First ore to the primary crusher – completed in Q4 2023
2. First ore to the grinding circuit – on track for Q1 2024
3. First saleable concentrate – on track for Q2 2024
4. Achievement of nameplate operating rates – expected during Q3 2024
As of December 31, 2023, cash capital spent at MVDP totaled $809 million versus the project capital estimate
of $870 million.
A virtual tour of MVDP can be viewed at https://vrify.com/decks/12698-mantoverde-development-project
MVDP Optimized FS and Phase II
The Company is currently analyzing the next expansion of the sulphide concentrator. 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 tonnes per day (an increase of
over 40% above the base case nameplate throughput capacity). Capstone continues to work with Ausenco's
engineering team to develop the MVDP Optimized Feasibility Study, including evaluating the costs and
timelines of debottlenecking the minor components of the plant to meet the potential increased throughput
target. Completion of the optimized feasibility study is expected in the first half of 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 additional approximately 1.0 billion tonnes
of resources not in reserves.
Santo Domingo Feasibility Study Update
The Company has continued updating the Feasibility Study ("FS") with contributions from third parties.
Ausenco is optimizing the process configuration and updating the Technical Report to take into consideration
recently produced metallurgical testwork data, updated mine plan with a lower strip ratio and a modernized
milling and flotation circuit with a lower overall footprint and operating cost compared with the previous design.
One of the key improvements is the definition of an iron concentration circuit that can produce two different
qualities of product: a bulk 65% grade iron concentrate and a premium 67% iron concentrate. The Technical
Report is expected to be delivered in the first half of 2024.
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section. 6
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 which can then be consumed internally to further significantly
lower operating costs in the cathode process at Mantoverde.
The cobalt recovery process comprises a pyrite flotation step to recover cobaltiferous pyrite from MVDP tails
and redirect it to the dynamic heap leach pads, which will be upgraded to a bio- leach configuration through
the addition of an aeration system. 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.
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 initiated a Feasibility
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.
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. Constructive discussions with key district stakeholders advanced during the quarter.
Chilean Tax Reform
In August 2023, Chile passed the Mining Royalty into law to be effective on January 1, 2024, replacing the
prior Specific Tax on Mining Activity. As a change in tax law is accounted for in the period of enactment, rather
than from its effective date, the Company recorded an initial deferred income tax charge and a corresponding
increase to deferred income tax liabilities during Q3 2023.
The Mining Royalty contains two components, an 1% ad- valorem component on net copper revenues and a
mine operating margin "(MOM") component based on rates ranging from 8% to 26%.
The Mining Royalty includes a maximum limit to the total tax burden, consisting of (1) corporate income tax,
(2) Mining Royalty (both ad- valorem and MOM components) and (3) imputed withholding taxes. The Mining
Royalty establishes that when the sum of the three components exceeds 46.5% of MOM, then the Mining
Royalty is to be adjusted in such a way that it does not exceed the limit.
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section. 7
The Mining Royalty is not expected to have an impact on the Santo Domingo mine, which has 15 years of tax
stability post commencement of commercial production as a result of Decree Law No. 600 ("DL 600") during
which time it will remain subject to the prior Specific Tax on Mining. Furthermore, given the Company's growth
projects in Chile, we do not expect to incur cash withholding taxes for several years, although, the deduction
is available when calculating the cap under the new Mining Royalty.
Management and Board of Director Additions
Effective January 15, 2024, Oscar Flores joined Capstone as General Manager, Mantoverde. Previous
General Manager, Pablo Asiain, will be retiring effective March 31, 2024. During this transition period, Mr.
Flores and Mr. Asiain will work closely together to transfer knowledge and responsibilities to ensure operational
continuity during the MVDP commissioning and ramp-up. Mr. Flores is a Mining Engineer with over 25 years
of progressive experience, including past general management positions with Kinross, A MSA, Anglo
American, and Codelco in Chile, along with New Gold in Mexico, Australia, and Canada.
Effective January 8, 2024, Gordon Bell joined Capstone's Board of Directors as a new Independent Director.
He was most recently Vice Chairman for the Mining and Metals Group of RBC Capital Markets before his
retirement from RBC Capital Markets in 2022. Previously Mr . Bell was the Global Head for RBC's Mining &
Metals group, leading the expansion and growth of the firm's Mining and Metals practice domestically as well
as in London, Australia and Asia. Mr. Bell has global expertise in corporate strategy, debt and equity financing,
shareholder engagement, and mergers and acquisitions. He received a Bachelor of Science in Mining
Engineering from Queens University in Kingston, Ontario and an MBA from Washington University in St. Louis,
Missouri.
2024 Outlook
Guidance for 2024 on production, C1 cash costs1, and capital expenditures that was previously disclosed on
January 24, 2024 remains unchanged. Capstone expects to produce between 190 to 220 thousand tonnes of
consolidated copper in 2024, at C1 cash costs 1 of $2.30 to $2.50 per payable pound of copper produced.
Capstone first half (H1), second half (H2) 2024, and full year 2024 production and cost guidance are as follows:
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section. 8
H1 2024 H2 2024 Full Year 2024 Guidance
Copper
Production
(‘000s
tonnes)
C1 Cash
Costs1
(US$ per
payable lb
Cu
P d d)
Copper
Production
(‘000s
tonnes)
C1 Cash
Costs1
(US$ per
payable lb
Cu
P d d)
Copper
Production
(‘000s
tonnes)
C1 Cash
Costs1
(US$ per
payable lb
Cu
P d d) Sulphides Business
Pinto Valley 28 – 30 $2.60 – $2.80 30 – 34 $2.40 – $2.60 58 – 64 $2.50 – $2.70
Cozamin 11 – 12 $1.90 – $2.10 11 – 12 $1.85 – $2.05 22 – 24 $1.85 – $2.05
Mantoverde2 –3 –3 25 – 35 $1.45 – $1.75 25 – 35 $1.45 – $1.75
Mantos Blancos 20 – 24 $2.55 – $2.75 23 – 25 $1.90 – $2.10 43 – 49 $2.10 – $2.30
Total Sulphides 59 – 66 $2.45 – $2.65 89 – 106 $2.00 – $2.20 148 – 172 $2.10 – $2.30
Cathode Business
Mantoverde2 18 – 20 $3.35 – $3.55 18 – 20 $3.10 – $3.30 36 – 40 $3.20 – $3.40
Mantos Blancos 3 – 4 $2.85 – $3.05 3 – 4 $2.10 – $2.30 6 – 8 $2.45 – $2.65
Total Cathodes 21 – 24 $3.25 – $3.45 21 – 24 $2.90 – $3.10 42 – 48 $3.10 – $3.30
Consolidated
Copper
Production
80 – 90 $2.65 – $2.85 110 – 130 $2.10 – $2.30 190 – 220 $2.30 – $2.50
2 Mantoverde production shown on a 100% basis
3 Production and C1 cash costs1 guidance not provided during the ramp-up of Mantoverde Development Project in H1 2024.
Key C1 Cash costs input assumptions:
CLP/USD: 875:1 MXN/USD: 18:1 Silver: $23/oz Molybdenum: $18/lb Gold: $1,850/oz
In 2024, the Company plans to a spend a total of $275 million in sustaining and expansionary capital
expenditures at its operating mines and the Santo Domingo Project, as follows:
Pinto
Valley
Cozamin Mantoverde
*
Mantos
Blancos
Santo
Domingo
Total
Capital Expenditure ($ millions)
Sustaining Capital1 70 25 40 60 0 195
Expansionary Capital1 0 0 65 0 15 80
Total Capital Expenditures 70 25 105 60 15 275
* Mantoverde capital expenditures shown on a 100% basis.
In addition, the Company plans to spend a total of $180 million in capitalized stripping at its three open pit
mines.
Pinto Valley Mantoverde* Mantos Blancos Total
Capital Expenditure ($ millions) 40 75 65 180
Finally, the Company plans to spend $15 million in brownfield and greenfield exploration activities in 2024.