Capstone Copper (CS) Q2 2024 earnings summary

Executive summary

• Q2 2024 copper production reached 40,937 tonnes, meeting H1 guidance and up 4% year-over-year, with C1 cash costs of $2.84/lb, 6% lower than Q2 2023, though slightly above guidance.

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

• Updated feasibility study for Santo Domingo highlights robust economics: $2.3B capex, $1.7B after-tax NPV, 19-year mine life, and low C1 costs due to iron byproduct; plans to seek a 30% partner and advance financing in 2025.

• 2024 guidance reiterated, trending toward lower end of production and higher end of cost ranges due to Mantos Blancos delays.

• Acquisition of Sierra Norte for $40M in shares supports district consolidation and future feed sources.

Financial highlights

• Q2 2024 revenue was $393.1M, with copper sales of 39,748 tonnes and realized copper price of $4.53/lb, above LME average.

• Adjusted EBITDA was $123.1M, up 54% quarter-over-quarter and 186% year-over-year, driven by higher copper prices and lower costs.

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

• Operating cash flow before working capital changes was $102.9M.

• Net debt stable at $741M as of June 30, 2024, with available liquidity of $539M ($139M cash/short-term investments, $400M undrawn credit).

Outlook and guidance

• 2024 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.

• Mantoverde ramp-up to nameplate capacity expected in Q3 2024; Mantos Blancos throughput improvements ongoing with full 20ktpd capacity targeted.

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

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

• Upcoming catalysts include Mantoverde ramp-up, MV Optimized Feasibility Study, and preparation for Santo Domingo sanctioning decision.