PROD. TRACKING LOWER END OF GUIDANCE; MVDP NAMEPLATE ANTICIPATED BY END OF Q3
THE TD COWEN INSIGHT
Capstone reported its Q2 results yesterday after market-close. All in all, Q2 was largely
a neutral quarter with perhaps the biggest news, the updated Santo Domingo feasibility study, pre-released. CS sees SD potentially reaching FID by late next year, representing the next leg of long term growth while the Mantoverde sulphide ramp-up in H2/24 will provide immediate copper growth.
Impact: NEUTRAL
Capstone reported Q2/24 adjusted EBITDA of $123mm, versus our estimate of $112mm and consensus of $114mm with the differential attributable to slightly lower than expected operating costs.
Overall production in the quarter totaled 41kt broadly in line with our estimate of
42kt with the company's H1 result of 83kt meeting its H1 guidance range of 80-90kt. Consolidated C1 costs of $2.84/lb Cu were essentially in line with our estimate of $2.87/lb and consensus at $2.83/lb.
Management reiterated its 2024 full-year guidance ranges of 190-220kt copper at cash costs of $2.30-2.50/lb while adding that production is trending towards the lower end, and cash costs towards the upper end, flagging the slower-than expected ramp-up at Mantos Blancos.
MVDP - Recall that first saleable copper was produced at the project in late-June. Nameplate operating rates (~32ktpd) are expected to be reached within the current quarter as the ramp-up progresses. July saw steady progress with some daily throughput rates exceeding nameplate. The focus now is on improving runtime while exhibiting strong recoveries. Management continues to expect to bring the project in on-budget at $870mm as it nears completion.
Santo Domingo - On Wednesday evening Capstone released the initial results of the updated feasibility study at Santo Domingo (note). The company has also approved an additional $15mm in capex to support the advancement of detailed engineering at the project. Consistent with past commentary, management reiterated that it is seeking a 30% partner at SD, and will commence the partnership evaluation process upon the release of the technical report (expected before mid-September). Management is targeting a tentative timeline of commencing project financing discussions early next year with an FID in H2/25.
Other growth initiatives — The MV-Optimized FS and Phase II technical report is
currently being prepared, examining an expansion of the sulphide concentrator as well an optimization of the heap leach and SX facilities. The PV Growth study is also in progress, examining a mill expansion and increased leaching capacity as well as district consolidation.