Capstone Copper Provides the Mantoverde-Santo Domingo District Integration Plan
All amounts in US$ unless otherwise indicated
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MV-SD District Synergies (Graphic: Business Wire)
Please click the following link to view a 3D virtual tour presentation of the MV-SD District Integration Plan and respective synergies, further outlined herein:
Base Case Plan
Our Base Case plan includes the completion and successful ramp-up of MVDP, a sanctioning decision followed by construction of the
Future Growth Plan
Our Future Growth plans include Mantoverde Phase II, which envisions an expansion of the sulphide concentrator to process part of the 77% of resources not included in Phase I, processing
MV-SD District Integration Synergies:
Water and Power Infrastructure – A plan to expand the existing Mantoverde desalination plant to 840 litres per second (“l/s”), utilization of existing water pipelines, and upgraded energy transmission capacity provides the infrastructure foundation to support our district growth opportunities. We are currently expanding the desalination capacity to 380 l/s to supply sufficient water requirements for MVDP with expected completion by year-end 2022. The expansion to 840 l/s is expected to reduce net capex by
$25-30 millionby utilizing existing pipeline infrastructure and lower operating costs by $4-6 millionper year while also reducing our environmental footprint by not requiring the previously planned desalination plant at the Santo Domingoport. Additionally, a $20 millionupgrade to the existing power infrastructure is expected to further lower operating costs by $1-2 millionper year, while also allowing us to fully control our own energy distribution needs at our mine sites. The upgrade will provide approximately 50 Megawatts of excess transmission capacity to the port beyond the requirements from the current pipeline of projects and will enable optionality for future growth.
Port Infrastructure – Opportunity to reduce Mantoverde’s concentrate trucking costs by
$10 millionper year by using the planned Santo Domingoport (the “Port”), located 65 kilometres from Mantoverde versus Puerto Angamos, 475 kilometers away. The planned Santo Domingoport is expected to have sufficient scale to handle capesize vessels suitable for large cargo, including Santo Domingocopper concentrate, iron ore, district cobalt production, and the potential for sulphuric acid handling. Additionally, the Port could handle Mantoverde’s copper cathode production which could lower transportation costs by approximately $2 millionper year. Designing the Port presents an opportunity to engineer a world-class asset that meets the highest environmental standards, in-line with our overall environmental, social, and governance (“ESG”) strategy. The port framework agreement with Puerto Abierto S.A., a wholly owned subsidiary of Puerto Ventanas S.A., remains in-place and the rail and iron ore pipeline trade-off studies are ongoing.
Integrated Operations – Potential to lower MV-SD district operating costs by
$20-30 millionby streamlining the organizational chart across both operations, increasing purchasing power given district scale, and standardizing equipment to promote productivity gains. Decades of technical and operating experience in Chileprovide a unique opportunity to significantly de-risk the execution of Santo Domingowith a proven project delivery team from Mantos Blancos and Mantoverde.
Santo Domingo Oxides – Potential addition of 8,000-10,000 tpa of copper production over the first 10 years of production, by leaching copper oxides at
Santo Domingoand processing the concentrated solutions at Mantoverde’s underutilized SX-EW facility. The potential increase in production is expected to come from Santo Domingo’s oxide mineralization, much of which is in the pre-strip, providing an operating cost advantage.
Cobalt Opportunity – Ability to reduce operating costs by approximately
$45 millionper year by building the cobalt and sulphuric acid production facility at Mantoverde that will process cobaltiferous pyrite produced by both Mantoverde and Santo Domingo. The benefits would be realized through the neutralization of a weak acid by-product stream from the cobalt operation at the Mantoverde heap and dump leach operation, as well as through the elimination of port and trucking costs related to sulphuric acid use at Mantoverde. The plan would target an increase in district cobalt production by approximately 1,500 to 2,000 tpa from Mantoverde to a total of 6,000 to 6,500 tpa, which would make MV-SD one of the world’s largest and lowest-cost sustainable cobalt producers outside of the Democratic Republic of Congoand China.
Withholding Tax – Potential to realize tax synergies between
$150-200 millionby re-investing cash flows to support our overall growth plan in Chile.
Capstone Copper’s strategy is to unlock transformational copper production growth while executing on cost and operational improvements through innovation, optimization and safe and responsible production throughout our portfolio of assets. We focus on profitability and disciplined capital allocation to surface stakeholder value. We are committed to creating a positive impact in the lives of our people and local communities, while delivering compelling returns to investors by sustainably producing copper to meet the world’s growing needs.
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 and the impacts of the ongoing and evolving COVID-19 pandemic and the evolving geopolitical environment. Forward-looking statements include, but are not limited to, statements with respect to the execution of our future growth projects, our financial liquidity and development of our projects, 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 construction of the paste backfill and dry stack tailings plant at Cozamin, the success and timing of the
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”. The forward-looking statements in this document are necessarily based on a number of estimates and assumptions that, while considered reasonable by the Company as at the date of such statements, are inherently subject to the business, economic and competitive uncertainties and contingencies. The Company has based these forward-looking statements on the Company’s current expectations and projections about future events. 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, 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, 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 completion test 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
CAUTIONARY NOTE TO
COMPLIANCE WITH NI 43-101
Unless otherwise indicated, Capstone has prepared the technical information in this document (“Technical Information”) based on information contained in the technical reports, news releases and other public filings (collectively the “Disclosure Documents”) available under Capstone Copper Corp.’s company profile on SEDAR at www.sedar.com. Each Disclosure Document was prepared by or under the supervision of a qualified person (a “Qualified Person”) as defined in National Instrument 43-101. For readers to fully understand the information in this document, readers are encouraged to review the full text of the Disclosure Documents, including the qualifications, assumptions and exclusions that relate to the Technical Information set out in this document, 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 “Santo Domingo Project, Region III,
The disclosure of Scientific and Technical Information in this document was reviewed and approved by
ALTERNATIVE PERFORMANCE MEASURES
This document refers to certain non-GAAP financial performance measures, including “C1 cash cost”, “cash cost”, “EBITDA”, “adjusted EBITDA”, “operating cash flow before changes in working capital”, “adjusted net (loss) income”, “net debt”, “net cash”, “all-in sustaining costs”, “all-in costs”, “available liquidity”, “expansionary capital” and “sustaining capital” are Alternative Performance Measures. Alternative performance measures are furnished to provide additional information. These non-GAAP performance measures are included in this presentation because these statistics are key performance measures that management uses internally to monitor performance, to assess how the Company is performing, to plan and to 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. For full information, please refer to the Company’s latest Management Discussion and Analysis published on its Financial Reporting webpage or on SEDAR (the “MD&A”)
C1 Cash Cost per pound: 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 overall efficiency and effectiveness of the mining operations and assumes that realized by-product prices are consistent with those prevailing during the reporting period.
EBITDA: EBITDA is net income before net finance expense, tax expense, and depletion and amortization.
Adjusted EBITDA: Adjusted EBITDA is EBITDA before the pre-tax effect of the adjustments made to adjusted net (loss) income (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 (loss) income and Adjusted EBITDA allow management and readers to analyze our results more clearly and understand the cash generating potential of the Company.
Operating cash flow before change in working capital: Operating Cash Flow before changes in working capital per common share is a performance measure used by the Company to assess its ability to generate cash from its operations, while also taking into consideration changes in the number of outstanding shares of the Company.
Adjusted net (loss) income: Adjusted net (loss) income is net income 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.
Net debt / net cash: Net debt / Net cash is a 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), due to related parties, cash and cash equivalents and short-term investments.
All-in sustaining costs: 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 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.