Capstone Copper Reports Fourth Quarter 2023 Results
All amounts in US$ unless otherwise indicated
Q4 2023 OPERATIONAL AND FINANCIAL HIGHLIGHTS
-
Achieved production guidance2 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 atPinto 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 shareholders1 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 EBITDA1 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 costs1 of
$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 atDecember 31, 2023 , composed of$126.8 million of 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$342 million ).
1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures” section.
2 Production guidance as most recently disclosed in the Company's MD&A for the three and nine months ended
OPERATIONAL OVERVIEW
Refer to Capstone's Q4 2023 MD&A and Financial Statements for detailed operating results.
|
Q4 2023 |
Q4 2022 |
2023 |
2022 |
Copper production (000s tonnes) |
|
|
|
|
Sulphide business |
|
|
|
|
|
15.9 |
15.0 |
55.1 |
56.8 |
Cozamin |
6.6 |
5.8 |
24.3 |
24.5 |
Mantos Blancos |
9.7 |
10.0 |
38.0 |
29.0 |
Total sulphides |
32.2 |
30.8 |
117.4 |
110.3 |
Cathode business |
|
|
|
|
Mantos Blancos |
1.9 |
4.2 |
11.5 |
12.2 |
Mantoverde3 |
10.0 |
10.5 |
35.4 |
36.3 |
Total cathodes |
11.9 |
14.7 |
46.9 |
48.5 |
Consolidated |
44.1 |
45.5 |
164.3 |
158.8 |
Copper sales |
|
|
|
|
Copper sold (000s tonnes) |
43.3 |
44.7 |
160.2 |
159.9 |
Realized copper price1 ($/pound) |
3.74 |
3.74 |
3.84 |
3.76 |
C1 cash costs1 ($/pound) produced |
|
|
|
|
Sulphides business |
|
|
|
|
|
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.
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 costs1 of
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
C1 cash costs1 of
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
Combined Q4 2023 C1 cash costs1 were
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
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 costs1 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 (
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
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 – on track for Q1 2024
- First saleable concentrate – on track for Q2 2024
- Achievement of nameplate operating rates – expected during Q3 2024
As of
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.
Mantoverde - Santo Domingo Cobalt Study
A district cobalt plant for 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
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
PV District Growth Study
The company continues to review and evaluate the consolidation potential of the
Chilean Tax Reform
In
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)
The Mining Royalty is not expected to have an impact on the
Management and Board of Director Additions
Effective
Effective
2024 Outlook
Guidance for 2024 on production, C1 cash costs1, and capital expenditures that was previously disclosed on
|
H1 2024 |
H2 2024 |
Full Year 2024 Guidance |
|||
|
Copper
|
C1 Cash
|
Copper
|
C1 Cash
|
Copper
|
C1 Cash
|
Sulphides Business |
||||||
|
28 – 30 |
|
30 – 34 |
|
58 – 64 |
|
Cozamin |
11 – 12 |
|
11 – 12 |
|
22 – 24 |
|
Mantoverde2 |
–3 |
–3 |
25 – 35 |
|
25 – 35 |
|
Mantos Blancos |
20 – 24 |
|
23 – 25 |
|
43 – 49 |
|
Total Sulphides |
59 – 66 |
|
89 – 106 |
|
148 – 172 |
|
|
|
|
|
|
|
|
Cathode Business |
||||||
Mantoverde2 |
18 – 20 |
|
18 – 20 |
|
36 – 40 |
|
Mantos Blancos |
3 – 4 |
|
3 – 4 |
|
6 – 8 |
|
Total Cathodes |
21 – 24 |
|
21 – 24 |
|
42 – 48 |
|
|
|
|
|
|
|
|
Consolidated Copper Production |
80 – 90 |
|
110 – 130 |
|
190 – 220 |
|
2 Mantoverde production shown on a 100% basis
3 Production and C1 cash costs1 guidance not provided during the ramp-up of
Key C1 Cash costs input assumptions:
CLP/USD: 875:1 |
MXN/USD: 18:1 |
Silver: |
Molybdenum: |
Gold: |
||||||||||||
In 2024, the Company plans to a spend a total of
|
Pinto
|
Cozamin |
Mantoverde* |
Mantos
|
Santo
|
Total |
Capital Expenditure ($ millions) |
|
|
|
|
|
|
Sustaining Capital1 |
70 |
25 |
40 |
60 |
0 |
195 |
|
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
|
|
Mantoverde* |
Mantos Blancos |
Total |
Capital Expenditure ($ millions) |
40 |
75 |
65 |
180 |
Finally, the Company plans to spend
FINANCIAL OVERVIEW
Please refer to Capstone's Q4 2023 MD&A and Financial Statements for detailed financial results.
($ millions, except per share data) |
Q4 2023 |
Q4 2022 |
2023 |
2022 |
Revenue |
353.7 |
362.1 |
1,345.5 |
1,296.0 |
|
|
|
|
|
Net (loss) income |
(19.5) |
(28.4) |
(124.7) |
136.1 |
|
|
|
|
|
Net (loss) income attributable to shareholders |
(12.3) |
(20.9) |
(101.7) |
122.2 |
Net (loss) income attributable to shareholders per common share - basic ($) |
(0.02) |
(0.03) |
(0.15) |
0.20 |
Net (loss) income attributable to shareholders per common share - diluted ($) |
(0.02) |
(0.03) |
(0.15) |
0.19 |
|
|
|
|
|
Adjusted net income1 |
10.8 |
60.4 |
0.3 |
70.6 |
Adjusted net income attributable to shareholders per common share - basic and diluted |
0.02 |
0.09 |
— |
0.11 |
|
|
|
|
|
Operating cash flow before changes in working capital |
80.4 |
76.1 |
204.8 |
184.8 |
|
|
|
|
|
Adjusted EBITDA1 |
88.3 |
81.3 |
260.3 |
356.7 |
|
|
|
|
|
Realized copper price1 ($/pound) |
3.74 |
3.74 |
3.84 |
3.76 |
($ millions) |
|
|
Total assets |
5,873.9 |
5,380.9 |
Total non-current financial liabilities |
1,205.3 |
709.5 |
Net debt1 |
(927.2) |
(483.1) |
Attributable net (debt)/cash1 |
(776.6) |
(339.9) |
CONFERENCE CALL AND WEBCAST DETAILS
Capstone will host a conference call and webcast on
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.
A replay of the conference call will be available until
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
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, 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
COMPLIANCE WITH NI 43-101
Unless otherwise indicated,
Disclosure Documents include the National Instrument 43-101 compliant technical reports titled "NI 43-101 Technical Report on the
The disclosure of Scientific and Technical Information in this document was reviewed and approved by
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 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
Adjusted net income attributable to shareholders
Adjusted net income attributable to shareholders is a non-GAAP measure of Net (loss) income 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 (loss) income 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 (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 income 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 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.
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647-273-7351
jannett@capstonecopper.com
437-788-1767
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