Have a $12.00 target. GLTA
CAPSTONE COPPER CORP. First Copper Concentrate At MVDP A Milestone; Ramp-up On
Track And On Budget
Our take: Positive
Capstone announced that it achieved a key commissioning milestone of first
saleable copper concentrate production in Q2/24 at its MVDP property in
Chile, which we view as in line with our expectations but a positive de-risking
event for the ramp-up of MVDP, a cornerstone asset. The company reported
that remaining milestones remained unchanged, including achievement of
nameplate capacity, targeted recoveries, and targeted concentrate grades in
Q3/24, and that the ramp-up is on track and on budget. We reiterate our
Outperformer rating.
Key Points
Production Ramp-up: Management expects sulphide production of 25kt to
35kt of copper in concentrate during H2/24. We model H2/24 production of
29.8kt copper in concentrate, in the middle of the guidance range. On a
consolidated basis, we model 2025 production of 263kt at $2.29/lb cash cost
compared to 2024 production of 205kt at $2.37/lb cash cost, highlighting
strong production growth and an improved cost profile.
Upcoming Events: The company plans to release an updated feasibility
study for its Santo Domingo project in July and, later in Q3/24, a feasibility
study for the Mantoverde Optimized project that guides the next phases of
production growth at the property. We continue to expect Santo Domingo
updated capex of $2.0B to $2.5B for an upsized project and MVDP
Optimized capex of around $150M. We view MVDP Optimized as a low-
capex and logical expansion of MVDP Phase 1 to be approved by the board
in 2025.