Capstone Copper (CS) Q2 2024 earnings summary

Executive summary

• Q2 2024 copper production reached 40,937 tonnes, up 4% year-over-year, with strong operational performance at Pinto Valley and Cozamin, and Mantoverde ramp-up on track and on budget.

• H1 2024 production guidance was achieved, with consolidated Q2 sales of 39,748 tonnes and costs slightly above guidance due to a two-month delay at Mantos Blancos.

• Mantoverde Development Project produced its first saleable copper concentrate in June 2024; ramp-up to nameplate production expected in Q3 2024.

• Updated feasibility study for Santo Domingo enhances project economics, outlining a $2.3B initial capex, after-tax NPV of $1.7B, IRR 24%, and 19-year mine life.

• Acquisition of Sierra Norte supports district consolidation, adding 100 million tons of historical resource and expanding future feed sources.

Financial highlights

• Realized copper price was $4.53/lb in Q2 2024, above the LME average of $4.42/lb, up 18% sequentially.

• Adjusted EBITDA for Q2 was $123.1 million, up 54% quarter-over-quarter and over 180% year-over-year, driven by higher copper prices and lower costs.

• Net income attributable to shareholders was $29.3 million ($0.04/share), with adjusted net income of $20.9 million ($0.03/share).

• Available liquidity as of June 30, 2024, was $539 million, including $139 million in cash and $400 million undrawn from a $700 million credit facility.

• Net debt remained stable at $741 million.

Outlook and guidance

• 2024 consolidated copper production guidance reiterated at 190,000–220,000 tonnes, trending toward the lower end; C1 cash costs expected at $2.30–$2.50/lb, trending toward the higher end due to Mantos Blancos delay.

• Large step change in consolidated unit cost expected in H2 as Mantoverde ramps up to lowest cost production.

• Commercial production at Mantoverde expected in Q3, with C1 cost reporting to begin as 75% nameplate capacity is reached.

• Feasibility study for Mantoverde Optimized project to be released this quarter, targeting an additional 20,000 tonnes of copper.

• Additional $15 million in capital approved for Santo Domingo to advance engineering.