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Capstone Copper Achieves Commercial Production at Mantoverde

Capstone Copper recently announced significant developments at its Mantoverde project, including the achievement of commercial production and an optimistic feasibility study. However, 2024 copper production is projected to be at the lower end of expectations, raising concerns.

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AI Rating:   5

Capstone Copper has made notable advancements at its Mantoverde development project, achieving commercial production as of September 21. This is positive news that indicates the operational viability of the site. However, the company anticipates consolidated copper production for 2024 to be on the lower end of the projected range, between 190,000 and 220,000 metric tons. This outlook suggests potential challenges in meeting production goals, which could influence investor sentiment negatively.

Moreover, the company’s C1 cash costs are expected to trend slightly above the stated guidance of US$2.30 to US$2.50 per payable pound. This increased cost expectation may raise concerns regarding overall profitability, particularly if copper prices experience fluctuations.

On a more positive note, the recently released feasibility study indicates a capital-efficient expansion plan intended to grow the sulfide concentrator's throughput capacity from 32,000 metric tons per day to 45,000 metric tons per day, with the potential to add 20,000 metric tons of copper production annually. This expansion underscores the long-term potential of the Mantoverde project and represents a boost in contained copper reserves, which have increased by 40 percent. The study projects an after-tax net present value of US$2.9 billion at an 8 percent discount, enhancing investor confidence in the project’s future.

Additionally, over the next five years, Mantoverde is expected to produce an average of 135,000 metric tons of copper and 37,000 ounces of gold annually at a low cash cost of US$1.81 per payable pound of copper. These figures are promising for potential revenue generation and suggest improved profit margins.

Overall, while Capstone Copper has made strong strides in production and reserve increases, the forecasted lower production in 2024 and higher cash costs present complications that could weigh on investor expectations.

Stocks:  CS