TD target price increased from C$0.75 to C$0.90Capstone Mining Corp. (CS-T) C$0.71 Q1/16 - Results Benefit from Copper Hedges Event Last night, Capstone reported its Q1/16 financial results. Management is hosting a conference call today: 11:30 a.m. ET (416-764-8688 or 888-390- 0546). Impact: SLIGHTLY POSITIVE Capstone reported Q1/16 adjusted earnings loss of -$0.00 per share, which is above the consensus estimate of a loss of -$0.02 and our estimate of -$0.04. The earnings beat relative to our estimates was driven by higher realized copper prices and hedge gains, along with lower TC/RCs. Overall, we view Q1/16 results as neutral, with capex and CFPS broadly in line with our estimates. Q1 production (pre-released on April 5) totalled 54.1mmlb copper at consolidated cash costs of $1.72/lb, in line with our expectation of $1.70/lb. The company reiterated its 2016 guidance of 108,000t (238.1mmlb) of copper +/-5% at C1 cash costs of $1.45–$1.55/lb, along with capital expenditures of $83.1mm and greenfield exploration expenditures of $5.5mm. Fully loaded ‘all-in’ costs, which include royalties, sustaining capex, G&A, interest, and taxes are expected to average $2.05–$2.15/lb (unchanged). We have updated our estimates to reflect lowering treatment and refining cost assumptions in 2016 and 2017, and slightly increased our production estimates for Minto in Q1/17. The net impact has increased our EPS and CFPS estimates for 2017. TD Investment Conclusion We are maintaining our BUY rating and increasing our target price to C$0.90 from C$0.75. We are encouraged to see the continued operational improvements achieved at the Pinto Valley operation. Although the company suffered a small setback at Cozamin in Q1, we continue to expect 2016 to be a better year for the overall company operationally, driven by throughput gains at Pinto Valley, higher grades at Minto North, and a return to more normalized mining rates at Cozamin