Capstone Mining Corp. [CS-TSX] on Wednesday October 28 released better-than-expected Q3 2020 results, including adjusted EBITDA that was 30% above street estimates.
Capstone’s portfolio includes the Pinto Valley copper mine, Arizona, and the Cozamin copper-silver mine, Mexico. Capstone also holds a 70% interest in Santo Domingo, a large scale, fully-permitted, copper-iron-gold project in Chile, in partnership with Korea Resources.
The better-than-expected Q3 results were driven by the performance of the Cozamin mine, which reported the lowest quarterly cash cost (US$0.36/lb) in its history. During Q3, the mine benefitted from an optimized mine plan focused on higher copper grades (1.77%, and higher throughput (3,090 tpd), resulting in higher production (10.6 million lbs), higher by-product credits on strong silver prices in addition to higher silver grades (46.5 g/t) and recoveries of 79%, as well as lower cash costs.
In Q3, Capstone produced 38.5 million lbs of copper at a consolidated cash cost of US$1.82 per payable pound produced.
Year to date consolidated production of 112.5 million lbs of copper and consolidated cash costs of US$1.91/lb is on track with the company’s full year guidance of 140-155 million lbs at cash costs of US$1.85-US$2.0/lb.
“We are two months away from the start of a high growth phase for the company, enhanced by innovation that will see us delivering 40% more production at 20% lower costs by 2023,” said Capstone President and CEO Darren Pylot.
Capstone recently said proven and probable mineral reserves at Cozamin have increased by 97% from a previous December, 2019 estimate and now stand at 10.2 million tonnes, grading 1.79% copper.
The company said it remains on track to ramp up to a milled throughput rate of 1.35 million tpa by Q2 2021. During the three years after the expansion in the milling rate is complete, average annual copper and silver production at Cozamin will increase by 70% to 61.4 million ounces and 43% to 1.75 million ounces, respectively.
Copper grades are also expected to increase by 31%. Additionally, average annual costs (net of by-products) are expected to fall 23% from current levels to US$0.67 cents per payable pound of copper.
Despite strong Q3 results, Capstone shares fell 6.25% or 11 cents to $1.65.