Capstone Copper Reports First Quarter 2024 Results
All amounts in US$ unless otherwise indicated
Q1 2024 OPERATIONAL AND FINANCIAL HIGHLIGHTS
-
Consolidated copper production for Q1 2024 was 42,121 tonnes at C1 cash costs1 of
$2.88 /lb, which consisted of 15,672 tonnes atPinto Valley , 10,967 tonnes at Mantos Blancos, 9,476 tonnes at Mantoverde, and 6,006 tonnes at Cozamin. -
Net loss attributable to shareholders of
$4.8 million , or$(0.01) per share for Q1 2024 compared to net loss attributable to shareholders of$20.0 million , or$(0.03) per share for Q1 2023. -
Adjusted net loss attributable to shareholders1 of
$4.5 million , or$(0.01) per share for Q1 2024. Q1 2024 adjusted net loss attributable to shareholders1 is lower than Q1 2023 adjusted net income attributable to shareholders1 of$17.5 million due to lower realized copper price. -
Adjusted EBITDA1 of
$80.1 million for Q1 2024 compared to$66.0 million for Q1 2023. The increase in Adjusted EBITDA1 is driven by higher copper sold (41.0 thousand tonnes in Q1 2024 versus 37.5 thousand tonnes in Q1 2023), partially offset by a lower realized copper price of$3.86 /lb compared to$4.12 /lb (prior to unrealized provisional pricing adjustments). -
Operating cash flow before changes in working capital of
$62.1 million in Q1 2024 compared to$41.7 million in Q1 2023. -
At the
Mantoverde Development Project ("MVDP"), the Company has continued to systematically commission the concentrator plant with first saleable concentrate expected in Q2 2024. First ore was introduced to the grinding circuit during March, which represents the completion of a key commissioning event. Project total capital remains unchanged at$870 million . Capstone is focused on a safe, efficient and phased project commissioning and ramp-up. -
In
February 2024 , the Company andOrion Fund JV Limited ,Orion Mine Finance Fund II LP andOrion Mine Finance (Master) Fund I-A LP (collectively, “Orion”) closed a bought deal financing with a syndicate of underwriters ("the Offering"). In connection with the Offering, 56.5 million common shares were issued by the Company with a value ofC$6.30 per common share raising total proceeds, net of transaction costs, of$252.9 million . As part of the Offering, Orion completed a secondary sale of 11.9 million common shares. -
On
February 2, 2024 , the Company's secondary listing on theAustralian Securities Exchange commenced trading under the ticker symbol "CSC". -
On
April 5, 2024 , the Company and Orion announced that Orion entered into a block trade agreement to sell 62.4 million CHESS depository interests (“CDIs”) of Capstone (or the equivalent of 62.4 million fully paid Common Shares of Capstone) at a price ofA$9.50 per CDI, for gross proceeds to Orion of approximatelyA$592.8 million . Post transaction, Orion owns 90.5 million common shares, representing approximately 12.0% of the outstanding common shares of Capstone. -
Net debt1 decreased significantly from
$927.2 million as atDecember 31, 2023 , to$740.2 million as atMarch 31, 2024 . Total available liquidity1 of$539.8 million as atMarch 31, 2024 , composed of$131.8 million of cash and short-term investments, and$408.0 million of undrawn amounts on the corporate revolving credit facility. -
The Company reiterates the 2024 guidance of 190,000 to 220,000 tonnes of copper at C1 cash costs of
$2.30 /lb to$2.50 /lb, including the H1 and H2 guidance ranges previously disclosed. Total 2024 sustaining and expansionary capital expenditure guidance of$275 million , plus an additional$180 million for capitalized stripping, is also reaffirmed. -
The company envisions commencing in H2 2024 an initial two-year
$25 million exploration program at Mantoverde aimed at: i) targeting higher copper grades; ii) increasing reserves and resources near the Mantoverde pits; and iii) testing high priority district targets in the northern part of the Mantoverde land package.
1 These are Non-GAAP performance measures. Refer to the section titled "Non-GAAP and Other Performance Measures". |
OPERATIONAL OVERVIEW
Refer to Capstone's Q1 2024 MD&A and Financial Statements for detailed operating results.
|
Q1 2024 |
Q1 2023 |
Copper production (tonnes) |
|
|
Sulphide business |
|
|
|
15,672 |
12,841 |
Cozamin |
6,006 |
5,239 |
Mantos Blancos |
9,163 |
10,847 |
Total sulphides |
30,841 |
28,927 |
Cathode business |
|
|
Mantos Blancos |
1,804 |
3,275 |
Mantoverde2 |
9,476 |
8,532 |
Total cathodes |
11,280 |
11,807 |
Consolidated |
42,121 |
40,734 |
Copper sales |
|
|
Copper sold (000s tonnes) |
40,996 |
37,456 |
Realized copper price1 ($/pound) |
3.85 |
4.17 |
C1 cash costs1 ($/pound) produced |
|
|
Sulphides business |
|
|
|
2.53 |
3.09 |
Cozamin |
1.93 |
1.72 |
Mantos Blancos |
2.98 |
2.46 |
Total sulphides |
2.55 |
2.61 |
Cathode business |
|
|
Mantos Blancos |
3.43 |
3.36 |
Mantoverde |
3.82 |
4.02 |
Total cathodes |
3.76 |
3.83 |
Consolidated |
2.88 |
2.96 |
2 Mantoverde production shown on a 100% basis. |
Consolidated Production
Q1 2024 consolidated production of 42,121 tonnes of copper was 3% higher than 40,734 tonnes in Q1 2023, due to higher production at
Q1 2024 C1 cash costs1 of
Q1 2024 production was 22% higher than Q1 2023 due to significantly higher mill feed grade (0.36% in Q1 2024 versus 0.30% in Q1 2023) and higher recoveries (87.7% Q1 2024 versus 86.8% Q1 2023).
Q1 2024 C1 cash costs1 of
Q1 2024 production of 11.0 thousand tonnes, composed of 9.2 thousand tonnes from sulphide operations and 1.8 thousand tonnes of cathodes from oxide operations, was 22% lower than Q1 2023 on lower mill throughput (14,214 tpd in Q1 2024 versus 16,023 in Q1 2023) primarily due to a planned mill shutdown in February in order to prepare for installation of new equipment needed to achieve 20,000 tpd capacity and lower feed grades as a result of mine sequence (0.87% in Q1 2024 versus 0.94% in Q1 2023). To a lesser extent, the results were also impacted by unplanned maintenance. Cathode production in Q1 2024 was 45% lower than Q1 2023 due to lower throughput in line with the 2024 plan.
Combined Q1 2024 C1 cash costs1 of
Q1 2024 production of 9.5 thousand tonnes was 11% higher than Q1 2023 due to higher heap grades as a result of mine sequence (0.36% in Q1 2024 versus 0.31% in Q1 2023) and higher recoveries (74.9% in Q1 2024 versus 69.0% in Q1 2023) due to higher solubility ratio of the processed mineral. Heap throughput in Q1 2024 was consistent with the same period last year. Dump production in Q1 2024 was 26% lower than Q1 2023 mainly on lower grades and recoveries due to mine sequence.
Q1 2024 C1 cash costs1 were
Q1 2024 production was 15% higher than Q1 2023 due to higher grades (1.98% in Q1 2024 versus 1.77% in Q1 2023) consistent with the mine plan. Throughput and recoveries were consistent with the same period last year.
Q1 2024 C1 cash costs1 were 12% higher than the same period last year primarily due to the change in mining method which resulted in an increase in contractor utilization (
During Q1 2024, the Company advanced commissioning activities at the
MVDP is expected to enable the 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 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 – completed in 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
MV Optimized Feasibility Study and Phase II
The Company is currently analyzing 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 tonnes per day. Capstone is working with
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
The Company has continued updating the Feasibility Study ("FS") with contributions from international third parties, including Ausenco and Knight Piesold, and is progressing as planned towards releasing the updated FS 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
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,
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
Management Additions
Effective
Environmental, Social and Governance ("ESG") Highlights
At Mantos Blancos, 100% of the 2023 electricity use was covered by renewable electricity certified sources. The Company is working towards transitioning to 50% renewable electricity in
Mantoverde and Mantos Blancos received ISO 50001 Energy Efficiency Management System certification.
Greenhouse gas emissions and Energy Management teams were formed at all sites to lead the development of operating level greenhouse gas emissions and energy reduction plans.
Corporate Exploration Update
Cozamin: Infill drilling at Mala Noche Main Vein West Target was conducted in Q1 2024 utilizing one underground rig positioned at the level 19.1 cross-cut. The initial mineral resource estimate for this target is planned for
Copper Cities,
Mantoverde,
The Company envisions commencing in H2 2024 an initial two-year
2024 Guidance
The Company reiterates its 2024 consolidated production, C1 cash costs1, and capital expenditures (including capitalized stripping) guidance of 190-220kt of copper,
MVDP remains on track and on budget, with first saleable concentrate expected in Q2 2024 and the achievement of nameplate operating rates expected during Q3 2024.
FINANCIAL OVERVIEW
Please refer to Capstone's Q1 2024 MD&A and Financial Statements for detailed financial results.
($ millions, except per share data) |
Q1 2024 |
Q1 2023 |
||
Revenue |
339.9 |
|
335.6 |
|
|
|
|
||
Net loss |
(5.8 |
) |
(29.0 |
) |
|
|
|
||
Net loss attributable to shareholders |
(4.8 |
) |
(20.0 |
) |
Net loss attributable to shareholders per common share - basic and diluted ($) |
(0.01 |
) |
(0.03 |
) |
|
|
|
||
Adjusted net (loss) income1 |
(4.5 |
) |
17.5 |
|
Adjusted net (loss) income attributable to shareholders per common share - basic and diluted |
(0.01 |
) |
0.03 |
|
|
|
|
||
Operating cash flow before changes in working capital |
62.1 |
|
41.7 |
|
|
|
|
||
Adjusted EBITDA1 |
80.1 |
|
66.0 |
|
|
|
|
||
Realized copper price1 ($/pound) |
3.85 |
|
4.17 |
|
($ millions) |
|
|
||
Net debt1 |
(740.2 |
) |
(927.2 |
) |
Attributable net (debt)/cash1 |
(590.8 |
) |
(776.6 |
) |
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 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
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 (loss) income attributable to shareholders
Adjusted net (loss) income attributable to shareholders is a non-GAAP measure of Net 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 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 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 (loss) 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
dsampieri@capstonecopper.com
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