Capstone Copper Corp. [TSX-CS] reported results of consolidated copper production for 2023 and provided operations and capital expenditure guidance for 2024.
Capstone achieved its production guidance for the year ended December 31, 2023. Consolidated copper production was 164,353 tonnes at C1 cash costs of approximately $2.85 to $2.90 per payable pound of copper. For Q4 2023, consolidated copper production was 44,103 tonnes at C1 cash costs of approximately $2.65 to $2.70 per payable pound of copper.
John MacKenzie, CEO of Capstone, commented, “The fourth quarter was our best of the year, with consolidated production up 10% and cash costs down approximately 7% quarter-over-quarter, setting us up well for a strong 2024. We expect this year to be a tale of two halves, with H2 providing a glimpse of our new run-rate production and cost performance following the ramp-up of the Mantoverde Development Project (MVDP). In the first half of 2024, in addition to the ramp-up at MVDP, we will also be focused on maintaining consistently strong production at Pinto Valley and achieving the installed throughput capacity at Mantos Blancos.”
Pinto Valley: An increase in copper production compared to 2023 is forecasted based on higher mill availability. Copper grades and recoveries are expected to be relatively consistent year-over-year. Production is weighted towards the second half of the year driven by higher copper grades.
Cozamin: Production is expected to be similar compared to 2023. Costs in 2024 are forecasted to be higher than those in 2023 driven by a higher proportion of cut-and-fill mining methods compared to longhole stoping, along with a stronger Mexican peso.
Mantoverde: Production volumes at Mantoverde are forecasted to significantly increase in 2024 driven by the ramp-up of MVDP. The company has not provided sulphide production or C1 cash cost guidance for the first half of the year during the commissioning and ramp-up period. MVDP is based on a conventional flowsheet and the Company expects a typical project ramp-up led by Ausenco and Capstone’s operating team. First ore was fed through the primary crushing circuit during Q4 2023. First ore to the grinding circuit is expected during Q1 2024. First saleable concentrate is expected during Q2 2024.
For the second half of the year, Capstone has provided Mantoverde sulphides copper production guidance of 25 to 35 thousand tonnes of copper. Capstone expects the sulphide concentrator to achieve its nameplate operating throughput rates during Q3 2024.
Cathode production is expected to be consistent year-over-year, with a decline in costs driven by lower sulphuric acid prices and an allocation of certain overhead costs to the sulphide business.
Mantos Blancos: Production volumes at Mantos Blancos are forecasted to increase in 2024 due to higher mill throughput. During the first half of 2024, the focus will be on receiving and installing the engineering and infrastructure upgrades in the tailings dewatering area of the plant. The company expects Mantos Blancos to achieve its nameplate operating throughput rates late in the second quarter. Sulphide costs are expected to decrease in the second half of the year driven by higher production volumes.
In 2024, the company plans to spend a total of $275 million in sustaining and expansionary capital expenditures at its operating mines and the Santo Domingo Project. This is broken down into $195 million on sustaining capital and $80 million on expansionary capital, of which $65 million relates to MVDP. The MVDP total capital cost estimate of $870 million is unchanged. The sustaining and expansionary capital expenditures guidance includes $60 million of spending related to ESG initiatives, largely related to strengthening tailings storage facilities at Pinto Valley, Mantoverde, and Mantos Blancos, as well as improving tailings stewardship as the company works towards implementing the Global Industry Standard for Tailings Management by year end 2028. Mantos Blancos sustaining capital spend includes approximately $35 million to achieve sustainable nameplate operating rates, including $15 million identified above related to tailings.
At Santo Domingo, the company plans to spend $15 million in 2024 to complete the Feasibility Study, which will be released by mid-2024. During 2024, the company plans to progress project partnership discussions and its financing strategy. A potential project sanctioning decision is not anticipated prior to mid-2025.
In addition, the company plans to spend a total of $180 million in capitalized stripping at its three open pit mines. A portion of waste material mined at the Mantos Blancos and Mantoverde mines in 2024 is considered eligible for capitalization as a stripping asset under Capstone’s accounting policies. In the Mantoverde and Mantos Blancos technical reports dated November 29, 2021, the costs associated with mining this waste material were considered to be operating costs. Total tonnes mined and rehandled have not changed significantly compared to the technical reports, only the classification between operating costs and capitalized stripping.
Finally, the company plans to spend $15 million in brownfield and greenfield exploration activities in 2024. The brownfields exploration is focused on resource conversion at Pinto Valley, Mantoverde, and Mantos Blancos. The greenfield exploration relates to expansionary work at Mantoverde.
In early trading January 24, 2024, shares of Capstone gained $0.39 to $6.63.