Capstone Mining: Recent project developments
Capstone Mining is a well-known producer of copper and silver. Their mines are located in the US, Mexico, and Chile. The Arizona-based Pinto Valley has been functioning since 1975.
Capstone Mining Corp (TSX:CS) has produced over four billion pounds of copper and is currently the second-largest employer in the district. Pinto Valley contributes $270M annually to Arizona’s economy.
PV3 Optimization and PV4 Study
The PV3 Optimization program worth $31M focused on innovation as well as a series of low-capital, quick payback projects and upgrades to tailings thickeners and tailings pumping stations. The project has improved the productivity of the mine and the mill. The mine has also received a new US Forest Service Mine Plan of Operations that allows them to operate until 2039.
With the new PV4 Study, the organization will further evaluate the mine’s long-term growth potential by using measured and indicated resources (inclusive of reserves) with a total of 1.36 billion tonnes at 0.30% copper. The study includes a series of different technological innovations such as Jetti Catalytic Leach Technology, Coarse Particle Flotation (CPF) Technology, and Pyrite Agglomeration.
The Jetti Catalytic Leach Technology will open opportunities to increase cut-off grades to the meal and further increase tonnage under leach. Better mining rates, higher mill grades, and increased leaching are also possible. This test will run throughout the first half of 2022.
The Coarse Particle Flotation (CPF) Technology, on the other hand, has the potential to increase copper recoveries and provide flexibility to increase mill throughput. The expected increase is to the tune of at least 6%. Moreover, Pyrite Agglomeration aims to dump leaching operations by diverting acid-generating minerals such as chalcopyrite. It is important to note that this is a low-capital project – the estimated cost is around 7 million USD.
The organization is targeting 65,000 to 70,000 tpd improvements for these advancements. The company is exploring cheaper and low-cost advancements that will further improve the mill. For the time being, Pinto Valley is looking into Autonomous Trucking.
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Other operations of Capstone Mining
Capstone Copper currently has four other operations, namely: Cozamin, Mantos Blancos, Mantoverde, and Santo Domingo. Cozamin is a mine located in Zacatecas City, Mexico. It started operating in 2007 and has contributed to the copper price cycle. Capstone is evaluating ore-sorting technology and is also trying to create a new mine plan by 2023.
Mantos Blancos is located in Antofagasta, a region in Chile. They are currently mining and processing sulfide and oxide ores, producing around 40 to 50 thousand tonnes of copper in concentrates and cathodes on a yearly basis. The expansion project for Mantos Blancos was completed in 2021 and the company was able to increase the capacity of the mine from 11 thousand tonnes per day to 20 thousand tonnes per day.
Mantoverde is located in Atacama, Chile. As of now, it has four functioning pits which contain both sulfide and oxide ores. However, Mantoverde only mines and processes oxide ore. They are able to produce at least 40 thousand tonnes per annum of high-purity copper cathodes. The MV Development Project or MVDP is worth $784 million and is fully financed. By the time the expansion project is completed, they are expecting an increase in the production to the tune of 22 thousand tonnes of copper in 2024.
This project will involve an additional sulfide concentrator and tailings storage facility. Since the water supply in Chile is unreliable, one of the main aims of this project is to be able to provide consistent and expandable levels of water. The study for this project was completed in June 2018. They are currently studying a new expansion (MV Phase II Expansion) and are expected to produce 30 thousand tonnes of copper per annum by 2026.
The Santo Domingo mine is located in Chile as well. They are currently looking at the ‘Cobalt option’. Capstone started testing in 2021 and was able to complete pilot scale testing of the cobalt recovery process. The first of two stages of this option started in September 2021 and is expected to end in March 2022.
Stock Information
Capstone’s shares are listed on the Toronto Stock Exchange under the symbol “CS”. Four mines of the company are currently producing copper concentrate, copper cathode, silver, zinc, gold, and other minerals. Capstone will most likely need equity financing or more debt for its capex.
According to John MacKenzie, CEO of Capstone, “Capstone delivered a solid quarter and, despite inflationary pressures that have impacted the global mining industry, we generated approximately $115 million of adjusted EBITDA in the quarter. We are now seeing signs of declining sulphuric acid and diesel prices, and are benefitting from a weaker Chilean Peso. Our balance sheet remains strong with total expanded liquidity of $720 million providing good flexibility for the advancement of our transformational growth pipeline. We reiterate our production and cost guidance for the year. We are pleased with construction progress at the Mantoverde Development Project (“MVDP”) which is currently over 60% complete, and the project remains on schedule and on budget.”
In the second quarter of 2022, the organization’s net income is $92.0 million or $0.11 per share. The company has decided to take the following proactive measures: reduction of capital guidance by $40 million (Santo Domingo and Pinto Valley), initiation of operating cost reduction reviews at all mine sites, elimination of the higher-cost Glencore debt facility, capital allocation focused on completion of MVDP, and additional key input costs for acid, fuel, and freight which will start by the Q3 of 2022. The MVDP remains on schedule and on budget.
