Capstone Copper Reports Third Quarter 2024 Results

All amounts in US$ unless otherwise indicated

VANCOUVER, British Columbia–(BUSINESS WIRE)–Capstone Copper Corp. (“Capstone” or the “Company”) (TSX: CS) (ASX: CSC) today reported financial results for the nine months and quarter ended September 30, 2024 (“Q3 2024”). Copper production in Q3 2024 totaled 47,460 tonnes at C1 cash costs¹ of $2.83 per payable pound of copper produced. Link HERE for Capstone’s Q3 2024 webcast presentation.

John MacKenzie, CEO of Capstone, commented, “The third quarter marked an important step in the transformation of our business, with tangible delivery on our peer leading growth. Our operations in Chile exhibited meaningful milestones at both our flagship Mantoverde Development Project (where we achieved commercial production) and at Mantos Blancos (which has now demonstrated that it is capable of delivering its nameplate capacity). We expect Q4 to be our strongest quarter of the year, providing a glimpse of the future Capstone with a larger production base and lower unit operating costs. During the past few months, we also released studies for our Mantoverde Optimized and Santo Domingo projects, and announced a leadership succession plan, all of which have positioned us extremely well for our next phase of growth.”

Q3 2024 OPERATIONAL AND FINANCIAL HIGHLIGHTS

• The Mantoverde Development Project (“MVDP”) achieved commercial production in September, as the mine advances commissioning and continues to ramp up to full production levels. The first two shipments of copper concentrates were made during the quarter and met all required specifications. Project capital for the MVDP came in line with the revised budget at $870 million.
• Consolidated copper production for Q3 2024 was 47,460 tonnes at C1 cash costs¹ of $2.83/lb. Consolidated copper production consisted of 17,481 tonnes at Mantoverde, 13,980 tonnes at Pinto Valley, 9,974 tonnes at Mantos Blancos, and 6,025 tonnes at Cozamin. Total Q3 2024 copper sold of 44,684 payable tonnes was approximately 1,500 tonnes below payable production, largely driven by the initial build up of copper concentrates inventory at Mantoverde during the MVDP ramp-up.
• Net income attributable to shareholders of $12.5 million, or $0.02 per share for Q3 2024 compared to net loss attributable to shareholders of $32.9 million, or $(0.05) per share for Q3 2023, primarily due to the higher copper production and higher realized copper price of $4.24/lb compared to $3.77/lb.
• Adjusted net income attributable to shareholders¹ of $25.4 million, or $0.03 per share for Q3 2024, compared to adjusted net loss attributable to shareholders¹ of $15.8 million in Q3 2023.
• Adjusted EBITDA¹ nearly doubled to $120.8 million for Q3 2024 compared to $62.8 million for Q3 2023. The increase in Adjusted EBITDA¹ is primarily driven by a higher copper production and realized copper price.
• Operating cash flow before changes in working capital of $116.9 million in Q3 2024 compared to $59.2 million in Q3 2023.
• Net debt¹ of $750.7 million as at September 30, 2024 was largely unchanged compared to net debt of $741.3 million as at June 30, 2024 with the majority of the MVDP capital spend complete. Total available liquidity¹ of $515.6 million as at September 30, 2024, comprising $138.6 million of cash and short-term investments, and $377.0 million of undrawn amounts on the corporate revolving credit facility.
• The Company notes that 2024 consolidated production is expected to finish at the low end of the guidance range of 190,000 to 220,000 tonnes of copper. 2024 consolidated C1 cash costs¹ guidance has been revised to $2.60/lb to $2.80/lb mainly due to the ramp-ups at Mantoverde and Mantos Blancos occurring later in the year than was expected when guidance was issued in January 2024.
• Capstone released a Feasibility Study on the next stage of growth for the Santo Domingo copper-iron-gold project that includes a strong $1.72 billion after-tax net present value and a 24.1% internal rate of return, with an initial capital cost of $2.3 billion. Over the first seven years of the mine plan, production is expected to average 106,000 tonnes of copper and 3.7 million tonnes of iron concentrate at first quartile C1 cash costs¹ of $0.28 per payable pound of copper produced.
• Capstone acquired 100% of Sierra Norte, located 15 km from Santo Domingo, for $40 million in shares. This acquisition provides a potential future sulphide feed source to extend the higher-grade copper sulphide life at Santo Domingo.
• Subsequent to quarter-end, the Company announced the results of a Feasibility Study for its Mantoverde Optimized brownfield expansion project. Mantoverde Optimized is a capital efficient expansion of the existing sulphide concentrator from throughput of 32,000 to 45,000 ore tpd. The study increased sulphide reserves from 236 million at 0.60% copper to 398 million tonnes at 0.49% copper and 0.10 g/t gold which extended the mine life to 25 years. MV Optimized is a high return and low risk expansion project that is expected to bring on an additional 20,000 tonnes per annum of copper for approximately $146 million of initial expansionary capital.
• Subsequent to quarter-end, the Company announced its leadership succession plan. At the next Annual General Meeting on May 2, 2025, John MacKenzie will transition from CEO and be nominated to the role of Non-Executive Chair of the Board, with Cashel Meagher succeeding him as CEO and also to be nominated as a member of the Board, while James Whittaker will become COO. Founder of Capstone Mining and current Chair of Capstone, Darren Pylot, will step down from the Board after more than 20 years of combined service to the Company.

1 These are Non-GAAP performance measures. Refer to the section titled “Non-GAAP and Other Performance Measures”.

OPERATIONAL OVERVIEW

Refer to Capstone’s Q3 2024 MD&A and Financial Statements for detailed operating results.

	Q3 2024	Q3 2023	2024 YTD	2023 YTD
Copper production (tonnes)
Sulphide business
Pinto Valley	13,980	13,657	45,646	39,157
Cozamin	6,025	5,876	18,183	17,776
Mantos Blancos	8,246	9,138	25,579	28,338
Mantoverde2	8,139	—	8,197	—
Total sulphides	36,390	28,671	97,605	85,271
Cathode business
Mantos Blancos	1,728	2,997	5,432	9,597
Mantoverde2	9,342	8,582	27,481	25,382
Total cathodes	11,070	11,579	32,913	34,979
Consolidated	47,460	40,250	130,518	120,250
Copper sales
Copper sold (tonnes)	44,684	38,699	125,428	116,910
Realized copper price1 ($/pound)	4.24	3.77	4.20	3.87
C1 cash costs1 ($/pound) produced
Sulphide business
Pinto Valley	2.92	2.83	2.63	2.96
Cozamin	1.82	1.85	1.83	1.73
Mantos Blancos	3.40	2.85	3.26	2.80
Mantoverde	2.52	—	2.52	—
Total sulphides	2.76	2.63	2.64	2.65
Cathode business
Mantos Blancos	3.44	2.75	3.33	3.07
Mantoverde	3.00	3.74	3.50	3.89
Total cathodes	3.07	3.48	3.47	3.67
Consolidated	2.83	2.88	2.85	2.96
2 Mantoverde production shown on a 100% basis.

Consolidated Production

Q3 2024 copper production of 47,460 tonnes was 18% higher than Q3 2023 primarily as a result of sulphide production starting at Mantoverde. MVDP continues to ramp-up towards full production levels and at various points during Q3 2024, mine operations, crushing, grinding, flotation and tailings, all operated at or above design capacity.

Q3 2024 C1 cash costs¹ of $2.83/lb were 2% lower than $2.88/lb Q3 2023 mainly due to higher production (-$0.19/lb), partially offset by lower capitalized stripping costs ($0.13/lb).

Pinto Valley Mine

Copper production of 14.0 thousand tonnes in Q3 2024 was 2% higher than in Q3 2023 due to higher grades (Q3 2024 – 0.37% versus Q3 2023 – 0.34%) as a result of mining in a higher-grade area of Castle Dome and a high grade area of Jewel Hill, partially offset by lower mill throughput during the quarter (Q3 2024 – 44,915 tpd versus Q3 2023 – 47,426 tpd), resulting from an unplanned 10 days of downtime during the quarter related to a conveyor belt rip and electrical faults.

C1 cash costs¹ of $2.92/lb in Q3 2024 were 3% higher than Q3 2023 of $2.83/lb primarily due to increases in operating costs ($0.15/lb) driven by contractor and mechanical parts spend in the mill, electricity cost, labor cost, lower by-product credits ($0.12/lb) and higher treatment costs ($0.06/lb), partially offset by higher production volume (-$0.07/lb) and capitalized stripping (-$0.17/lb).

Mantos Blancos Mine

Q3 2024 production was 10.0 thousand tonnes, composed of 8.2 thousand tonnes from sulphide operations and 1.7 thousand tonnes of cathode from oxide operations, which was 18% lower than the 12.2 thousand tonnes produced in Q3 2023. Sulphide production declined in Q3 2024 due to lower grades, partially offset by higher recoveries. Lower cathode production was impacted by lower dump grades and throughput.

In July, a successful two-week planned shutdown was completed which included the installation of a new holding tank and additional pumps in the tailings area in order to address deficiencies identified preventing the sustained achievement of the 20ktpd capacity from the sulphide operations. Following the plant ramp-up period in August, ore throughput averaged 18,062 tpd through to the end of Q3, with plant throughput meeting or exceeding the nameplate capacity of 20,000 tpd on 23 operating days. The overall variability of the milling process has been significantly reduced and higher throughput is expected in Q4.

Combined Q3 2024 C1 cash costs¹ of $3.41/lb ($3.40/lb sulphides and $3.44/lb cathodes) were 21% higher compared to combined C1 cash costs¹ of $2.82/lb in Q3 2023, mainly due to lower production ($0.63/lb) and increase in mine expense ($0.12/lb) partially offset by lower acid and energy consumption due to lower production (-$0.16/lb).

Mantoverde Mine

The Company achieved commercial production at MVDP in September 2024. In making this determination, management considered a number of factors, including completion of substantially all the construction development activities in accordance with design and a production ramp-up period during which mill throughput, in terms of tonnes of ore, equalled an average of 75% of nameplate capacity over a 30-day period. With this achievement, on September 30, 2024 substantially all of Construction-in-Progress was reclassified to Plant & Equipment. Depletion and amortization will commence on October 1, 2024.

Q3 2024 copper production of 17.5 thousand tonnes, composed of 8.1 thousand tonnes of copper from sulphide operations and 9.3 thousand tonnes of cathode, was 104% higher compared to 8.6 thousand tonnes in Q3 2023. Heap production increased in Q3 2024 given higher grades (0.36% in Q3 2024 versus 0.32% in Q3 2023) and recoveries (76.1% in Q3 2024 versus 66.5% in Q3 2023). The new concentrator (MVDP) continued its ramp-up in Q3, resulting in 8.1 thousand tonnes of copper production from sulphide operations, driven by average mill throughput of 18.4 ktpd, copper grades of 0.71%, and recoveries of 68.2%. The quarter included an approximate two-week shutdown in August driven by the achievement of Facility Practical Completion and the average mill throughput in September was 26,200 tpd. While physical recoveries in Q3 were 68.2%, this includes gain/(draw) on inventory, sampling error, and analytical error. The implied metallurgical recovery, determined based on assays measured on the feed, concentrate and tailings samples obtained with the slurry samplers, indicate overall metallurgical recoveries for the quarter of 78.2%, with implied recoveries above 80% observed in August and September.

Q3 2024 C1 cash costs¹ were $2.78/lb, 26% lower than $3.74/lb in Q3 2023 due to higher production (-$1.21/lb), lower energy prices (-$0.16/lb) which averaged $0.10/kWh in Q3 2024 versus $0.17/kWh in Q3 2023, and lower acid consumption (-$0.11/lb), partially offset by an increase in contracted services, spare parts and labour cost mainly driven by higher mine movement ($0.52/lb).

Cozamin Mine

Q3 2024 copper production of 6.0 thousand tonnes was 2% higher than the same period prior year, mainly on higher mill throughput (3,609 tpd in Q3 2024 versus 3,567 tpd in Q3 2023) driven by mine sequence. Grades and recoveries were consistent quarter over quarter.

Q3 2024 C1 cash costs¹ were $1.82/lb, 2% lower than $1.85/lb in the same period last year, mainly due to higher production in Q3 2024 than the same period last year on higher grades, higher silver by-product volume and price (40%), offset by higher operating costs (9%) mainly on contractors due to change in mine method and manpower for bonus profit sharing effect.

Mantoverde Development Project

MVDP achieved commercial production in September, and the mill continues to advance commissioning and ramp up to full production levels. MVDP involved the addition of a sulphide concentrator (nominal 32,000 ore tonnes per day (“tpd”)) and tailings storage facility, and the expansion of the existing desalination plant and other minor infrastructure.

In 2024, Capstone has been focused on a safe, efficient and phased project commissioning and ramp-up. All key milestones have been achieved during the commissioning and ramp-up including:

• First ore to the primary crusher – completed in Q4 2023
• First ore to the grinding circuit – completed in Q1 2024
• First saleable concentrate – completed in Q2 2024
• Achievement of nameplate operating rates and Facility Practical Completion – completed in Q3 2024
• First two shipments of copper concentrates – delivered in Q3 2024

During Q3, MVDP achieved Facility Practical Completion with Ausenco which was followed by a planned two-week shutdown for vendor maintenance and project handover in August. On September 21, 2024, the MVDP achieved commercial production defined as the achievement of reaching a minimum of 30 consecutive days of operations during which the mill operated at an average of 75% of nameplate throughput of 32,000 ore tonnes per day. The average mill throughput for September was 26,200 tpd, which included an exit rate with the last 7 days averaging 32,400 tpd.

During Q4, the goal is to continue to improve runtime, overall average throughput, and recoveries.

The MVDP project capital spent was $870 million since inception and came in line with the revised budget, which was reclassified to available for use property, plant and equipment at September 30, 2024 upon achieving the commercial production milestone.

As MVDP has achieved commercial production, we expect our quarterly finance expense to increase by approximately $25 million beginning in the fourth quarter of 2024 as the capitalization of finance charges relating to MVDP will cease. Similarly, we expect our annualized depletion and amortization to increase by approximately $80 million.

MV Optimized Feasibility Study

The Company announced its Mantoverde Optimized (“MV-O”) Feasibility Study (“FS”) on October 1, 2024. The project is a capital-efficient expansion of Mantoverde’s sulphide concentrator, increasing throughput from 32,000 to 45,000 ore tpd and extending the mine life to 25 years. With an updated sulphide Mineral Reserve of 398 million tonnes at a copper grade of 0.49% (compared to 236 million tonnes at 0.60% copper previously), the project will yield an additional 368,000 tonnes of copper and 215,000 ounces of gold, with an initial expansionary capital investment of $146 million and an implied capital intensity of approximately $7,500 per tonne of incremental annual copper equivalent production. The Feasibility Study includes average annual production over the next five years of 135,000 tonnes of copper and 37,000 ounces of gold at C1 cash costs¹ of $1.81 per pound of copper. Capstone anticipates starting construction after receiving environmental permit approval, expected in H1 2025. The MV-O FS also features a robust after-tax NPV(8%) of $2.9 billion for Mantoverde operation on a 100%-basis based on a long-term copper price of $4.10/lb and gold price of $1,800/oz.

Given the above, the Mantoverde Phase II opportunity will evaluate the addition of an entire second processing line, possibly a duplication of the first line, to process some of the approximately 0.2 billion tonnes of Measured & Indicated and 0.6 billion tonnes of Inferred sulphide resources not in reserves.

Santo Domingo Feasibility Study & Sierra Norte Acquisition

Capstone announced the results of an updated Feasibility Study for its 100%-owned Santo Domingo copper-iron-gold project in Region III Chile, 35km northeast of Mantoverde on July 31, 2024. The updated FS outlines the next phase of transformational growth for the Company in the world-class Mantoverde-Santo Domingo District. Santo Domingo completed the updated FS with Ausenco.

The 2024 FS for Santo Domingo outlines a robust copper-iron-gold project with an after-tax NPV (8%) of $1.7 billion and an after-tax internal rate of return of 24.1%. Total initial capital cost of $2.3 billion drives a capital intensity of approximately $21,900 per tonne of annual copper equivalent production over the life of mine. Over the first seven years of the mine plan, production is expected to average 106,000 tonnes of copper and 3.7 million tonnes of iron ore magnetite at first quartile cash costs of $0.28 per payable pound of copper produced. Over Santo Domingo’s 19-year mine life, production is expected to average 68,000 tonnes of copper and 3.6 million tonnes of iron ore magnetite at first quartile cash costs of $0.33 per payable pound of copper produced.

The 19-year Santo Domingo mine life is supported by an increased Mineral Reserve estimate of 436 million tonnes (compared to 392 million tonnes previously) at a copper grade of 0.33%, iron ore grade of 26.5%, and a gold grade of 0.05 grams per tonne. Increased Measured and Indicated (“M&I”) Mineral Resources total 547 million tonnes (compared to 537 million tonnes previously) at a copper grade of 0.31% and a gold grade of 0.04 grams per tonne, including 506 million tonnes with an iron grade of 25.8%.

The feasibility study updated the level of engineering to Association for the Advancement of Cost Engineering (“AACE”) Class 3. Further detailed engineering will increase the precision of capital estimates to AACE Class 2 over the next couple of quarters.

During the quarter, Capstone acquired 100% of the shares of Compania Minera Sierra Norte, S.A. (“Sierra Norte”) for $40 million in share consideration. Sierra Norte is located approximately 15 kilometers northwest of the Santo Domingo Project and represents an opportunity to potentially be a future sulphide feed source for Santo Domingo, extending the higher grade copper sulphide life.

The Company plans to progress several value enhancement initiatives within the Mantoverde-Santo Domingo (“MV-SD”) district that are not incorporated in the Santo Domingo 2024 Feasibility Study, or the recently announced base case MV Optimized plan.

Copper Oxides Opportunity

Capstone plans to progress drilling and studies regarding the processing of oxide material from Capstone’s neighbouring Santo Domingo and Sierra Norte projects by capitalizing on Mantoverde’s excess SX/EW capacity to extract copper from Santo Domingo’s oxide material. To date, oxide materials have been recognized in the shallower portions of the Santo Domingo, Iris Norte, and Estrellita sulphide ore bodies. Currently, these oxides are considered as waste material in the recently announced Santo Domingo 2024 Feasibility Study. Meanwhile, only approximately two thirds of processing capacity is being used at Mantoverde’s SX-EW cathode copper plant. Exploration efforts at Santo Domingo will target a potential 80-100 million tonnes of oxide material, which could add up to 10 thousand tonnes per annum of copper production.

Exploration Opportunities in the MV-SD District

Capstone has significant untapped exploration potential within MV-SD district. The Mantoverde Optimized plan was prepared without any expansionary drilling campaign since 2019. At Mantoverde, there are 0.2 billion tonnes of Measured & Indicated and 0.6 billion tonnes of Inferred sulphide resources not in reserves. At Santo Domingo, there are 0.1 billion tonnes of Measured & Indicated and 0.2 billion tonnes of Inferred sulphide resources not in reserves. The recently acquired Sierra Norte property also represents an opportunity to potentially be a future feed source in the district. Capstone intends to progress its exploration strategy to service its two eventual processing centers between Mantoverde and Santo Domingo, in addition to continuing to evaluate the potential for Mantoverde Phase II which could include the addition of an entire second processing line at Mantoverde.

Mantoverde – Santo Domingo Cobalt Study

A district cobalt plant for the MV-SD district is designed to unlock cobalt production while reducing sulphuric acid consumption and increasing heap leach copper production. The cobalt recovery process comprises a pyrite flotation step to recover cobaltiferous pyrite from the tailings streams at Mantoverde and Santo Domingo and redirect it to the dynamic heap leach pads, which will be upgraded to a bioleach configuration through the addition of an aeration system as part of MV Optimized. The pyrite oxidizes in the leach pads and the solubilized cobalt is recovered via an ion exchange plant treating a bleed stream from the copper solvent extraction plant. The approach has been successfully demonstrated at the bench scale, and onsite piloting commenced in January 2024 at Mantoverde.

As currently envisioned, a smaller capacity countercurrent ion-exchange plant will initially treat cobalt by-product streams from Mantoverde producing up to 1,500 tonnes per annum of cobalt, and following sanctioning of the Santo Domingo project, the facility will be expanded to accommodate by-product streams from Santo Domingo. In line with this, Santo Domingo has initiated a Feasibility Study to assess the optimum process configuration for the pyrite flotation and pumping transportation facilities needed to transport pyrite concentrate to Mantoverde’s leach facilities. This information will be part of the MV-SD cobalt study expected in 2025.

At a combined MV-SD target of 4,500 to 6,000 tpa of mined cobalt production, this would be one of the largest and lowest cost cobalt producers in the world, outside of Indonesia and the Democratic Republic of the Congo (“DRC”).

PV District Growth Study

The company continues to review and evaluate the consolidation potential of the Pinto Valley district. Opportunities under evaluation include a potential mill expansion and increased leaching capacity supported by optimized water, heap and dump leach, and tailings infrastructure. District consolidation could unlock significant ESG opportunities and may transform our approach to create value for all stakeholders in the Globe-Miami District.

Leadership Succession Plan

As previously announced the following leadership changes will take effect at the next Annual General Meeting of the Company on May 2, 2025:

• John MacKenzie will transition from Chief Executive Officer and will be nominated to the role of Non-Executive Chair of the Capstone Board of Directors;
• Cashel Meagher, current President and Chief Operating Officer, will succeed Mr. MacKenzie as CEO of Capstone, and will also be nominated as a member of the Board;
• James Whittaker, current Senior Vice President, Head of Chile, will succeed Mr. Meagher as COO. This facilitates a flattening of the organizational structure with all mine general managers reporting directly to the COO;
• Darren M. Pylot, founder of Capstone Mining Corp. and current Chair of the Board, will end his term on the Board after over 20 years with Capstone Mining Corp.

Contacts

Daniel Sampieri, Director, Investor Relations & Strategic Analysis

437-788-1767

[email protected]

Michael Slifirski, Director, Investor Relations, APAC Region

(+61) 412-251-818

[email protected]

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