Capstone Copper Q2 2026 Earnings Report

Capstone Copper EPS Results

• Actual EPS: C$0.19
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Capstone Copper Revenue Results

• Actual Revenue: $1.05 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Capstone Copper Announcement Details

• Quarter: Q2 2026
• Date: 7/30/2026
• Time: After Market Closes
• Conference Call Date: Thursday, July 30, 2026
• Conference Call Time: 5:00PM ET

Capstone Copper (TSE:CS) Corp is a company that mines, explores, and develops mineral properties in the Americas. Specifically, the group has operating mines in the US, Mexico, and Canada, and development projects in Chile and Canada. Capstone's main focus is copper, but the company also produces zinc, lead, molybdenum, silver, and gold.

Capstone Copper Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record financial performance continued: Q2 copper production reached 51.8 thousand tonnes, adjusted EBITDA rose 64% year over year to $354 million, and adjusted net income attributable to shareholders was $97.6 million. Net debt fell to $675 million, reducing net leverage to 0.5x, while liquidity exceeded $1 billion.
• Positive Sentiment: Management reaffirmed 2026 production, cost, and capital expenditure guidance, with stronger second-half output expected from higher grades and throughput at Mantoverde. Mantoverde delivered record throughput and low unit costs, while Cozamin tracked toward the upper end of its production guidance.
• Positive Sentiment: Mantoverde Optimized remains on schedule and budget, with remaining tie-ins planned for September and ramp-up expected in Q4; sustained sulfide throughput of approximately 45,000 tonnes per day is targeted in early 2027. The proposed $45 million Pyrite Augmentation Project is expected to cut acid requirements by 20% and add about 3,500 tonnes of annual copper production.
• Neutral Sentiment: To manage elevated sulfuric acid prices, Capstone is temporarily reducing higher-cost heap-leach feed, lowering expected cathode output by roughly 5,000 tonnes while reallocating ore to the sulfide circuit, keeping consolidated copper production broadly neutral. Pinto Valley remains below potential, with a September shutdown targeting its filter plant and primary crusher, while a Santo Domingo sanctioning decision and updated project CapEx are expected in Q4.

Presentation

[Operator]

Welcome to Capstone Copper's Second Quarter 2026 Results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, July 30th, 2026. I would now like to turn the call over to Daniel Sampieri. Please go ahead.

[Daniel Sampieri, VP of Investor Relations at Capstone Copper]

Thank you, operator. Thank you everyone for joining us today to discuss our second quarter results. Please note that the news release and regulatory filings are available on our website and on SEDAR+ files. If you are logged into the webcast, we will advance the slide to today's presentation, which are also available in the investors section of our website. I am joined today by our President and CEO, Cashel Meagher, our SVP and Chief Operating Officer, James Whittaker, our SVP and Chief Financial Officer, Raman Randhawa, and our SVP, Risk, ESG, and General Counsel, Wendy King. During the Q&A session at the end of the call, we will also be joined by our Head of Technical Services, Peter Amelunxen, who is available for questions. Please note that comments made on the call today will contain forward-looking information within the meaning of applicable securities laws.

[Daniel Sampieri, VP of Investor Relations at Capstone Copper]

This information, by its nature, is subject to risks and uncertainties. Actual results may differ materially from the views expressed today. For further information, please see Capstone's most recent filings, which are available on our website at www.capstonecopper.com. Finally, I'll just note that all amounts we will discuss today are in U.S. dollars unless otherwise specified. It is now my pleasure to turn the call over to our President and CEO, Cashel Meagher.

[Cashel Meagher, President and CEO at Capstone Copper]

Thank you, Daniel. Hello to all of you dialing in from Americas, the Americas, Europe, Australia, and around the globe. Today, we are pleased to present our second quarter 2026 results and achievements. At the beginning of this year, I spoke about 2026 being a year of operational stability and cash generation between periods of transformational growth. Q2 delivered exactly that, as highlighted on slide five. Our operations delivered consolidated copper production of 51.8 thousand tonnes at consolidated C1 cash costs of $2.82 per pound in Q2. Improved production, combined with exceptionally strong commodity prices, drove record EBITDA for the seventh consecutive quarter. This performance was underpinned by record throughput and record low cash costs at Mantoverde, strong throughput at Mantos Blancos, and consistently solid execution at Cozamin, with reliability initiatives underway at Pinto Valley. We have reaffirmed our 2026 guidance.

[Cashel Meagher, President and CEO at Capstone Copper]

As we execute on our operational targets, we remain focused on advancing our growth pipeline to increase production and lower costs. Near-term growth is driven by our MV-O project, which remains on schedule and on budget. Longer term, we recently submitted an EIA permit application at Mantos Blancos and progressed Santo Domingo towards a sanctioning decision, which continues to be expected in Q4. We are also prioritizing absolute cost reduction projects like the Mantoverde Pyrite Augmentation Project, designed to reduce sulfuric acid requirements while increasing copper production. We continued to strengthen our financial position in Q2 and intend to deleverage further through internally generated cash flows over the course of this year, ensuring we are well-positioned to invest in accretive growth opportunities. As we increase production to meet growing demand for copper, we remain committed to doing so responsibly, as highlighted in our recently published 2025 sustainability report.

[Cashel Meagher, President and CEO at Capstone Copper]

Our people remain at the core of everything we do, enabling Capstone to safely deliver results. At Mantoverde and Mantos Blancos, we have recently negotiated new three-year collective bargaining agreements with all unions, providing important stability as we continue to operate and advance growth in Chile. Since 2022, our company has matured, and we have delivered improved output from a diversified base of four operations in top-tier mining jurisdictions. As we look towards the future, our near-term growth pipeline enables Capstone to deliver the copper the world needs. With that, I'll pass over to Raman for our financial results.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Thank you, Cashel. We are now on slide six. In Q2, we recorded copper production of 51.8 thousand tonnes, marking improved output over the previous quarter. LME copper prices averaged $6.05 per pound in the quarter, up 4% compared to $5.83 per pound in Q1, and we realized a higher copper price of $6.22 per pound. After subtracting C1 cash cost of $2.82 per pound, we delivered strong gross margins of $3.40 per pound or 55% in Q2, despite global inflationary pressures. Record adjusted EBITDA of $354 million increased 8% quarter-over-quarter and 64% year-over-year. This marks our seventh consecutive quarter of record EBITDA, driven by solid operations and strong copper prices. Lastly, we reported record adjusted net income attributable to shareholders of $97.6 million, or $0.13 per share in Q2.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Another quarter of record financial results builds on success of Q1 and forms a strong foundation for H2 2026. As highlighted on slide seven, we finished Q2 with a consolidated net debt of $675 million, which represents a reduction of $63 million from the prior quarter and over $100 million year-to-date. The decrease was primarily attributable to strong operating cash flows, supported by higher realized copper prices. Turning to slide eight, our available liquidity at quarter end was greater than $1 billion, including $367 million of cash and cash equivalents and $715 million of undrawn amounts on our corporate RCF. The decrease in our absolute net debt, combined with a record EBITDA, drove a further reduction in our net leverage with a net debt to EBITDA ratio of 0.5x at the end of Q2.

[Raman Randhawa, SVP and CFO at Capstone Copper]

This is down significantly from the peak during construction of Mantoverde Development Project. The improvements made to net debt leverage liquidity since completing MVDP is aligned with our commitment to strengthening the balance sheet between periods of growth. The chart on the right-hand side of the page highlights our trailing 12-month EBITDA growth since 2023. At these copper prices, we expect EBITDA to continue to increase with Mantoverde Optimized coming online. On the far right, we have profiled our future growth with expected EBITDA close to $3 billion with both MV Optimized and Santo Domingo run rate production. We have a strong platform to deliver peer-leading growth of approximately 70% compared to our 2025 production once both projects reach full rates. On to slide nine. We present a snapshot of the year so far, as well as our expectations for the second half.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Our consolidated operations delivered solid results in H1, enabling us to reaffirm our consolidated 2026 production, cost, and CapEx guidance. We are particularly pleased to see Mantoverde, Mantos Blancos performing well following project ramp-ups, with both on track towards full-year guidance. These two assets combined have generated approximately 70% consolidated EBITDA year-to-date. As a testament to the benefits of a diversified portfolio of assets, Cozamin is tracking towards the upper end of its site-level production guidance range, partially balancing Pinto Valley, which is tracking towards the lower end. In the second half, we are expecting even stronger production, primarily driven by higher sulfide grades and throughput at Mantoverde. Stability in our operations allowed us to progress and execute a number of key catalysts during H1.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Throughout the remainder of the year, we look forward to delivering reliable copper production and strong cash flow generation while continuing to advance our growth opportunities. On to slide 10. We highlight some of the proactive steps we have taken to protect margins and maximize cash flow amidst the current inflationary environment. More importantly, copper markets have remained strong. Our operating locations and robust supply chains have ensured continued supply security. To mitigate diesel volatility in the second half, we took advantage of a temporarily lower price to hedge 40% of the Chilean exposure at $0.82 per liter versus current spot of approximately $0.93 per liter and 50% of our U.S. Valley diesel exposure at $0.93 per liter versus current spot of approximately $1.28 per liter.

[Raman Randhawa, SVP and CFO at Capstone Copper]

With these protections in place, our exposure to diesel price volatility through the second half of 2026 has been significantly reduced, as shown on the sensitivities on the slide. We view our cathode business as incremental, with most of our cash flow generated by the sulfides. This gives us valuable flexibility in how we respond to input cost pressures. Given the current elevated sulfuric acid prices, we leverage mine site flexibility to temporarily reduce higher calcium carbonate ore feed to the Mantoverde heap leach, which will lower our cathode production by approximately 5,000 tons and eliminate the requirement to purchase approximately 200,000 tons of sulfuric acid as spot in H2. We reallocated the resource to lower cost sulfide business, which will contribute to additional sulfide production of approximately 5,000 tons, and is thus net neutral to consolidate copper production and a plus to optimized cash flow.

[Raman Randhawa, SVP and CFO at Capstone Copper]

The rest of the cathode business, including the dump leaches, is unchanged and continues to generate cash. For the remainder of the year, approximately 80% of our acid consumption is fixed at a price of approximately $1.90 per ton, compared to spot prices around $450-$470 per ton. The Pyrite project will improve economics of our oxide business going forward to reduce acid requirements and provide incremental copper production. Given first half cost performance and our expectations for a higher proportion of lower cost sulfide production in the second half, we are reaffirming our 2026 cost guidance. With that, I'll hand it over to Jim for the operations.

[James Whittaker, SVP and COO at Capstone Copper]

Thanks, Raman. We are now on slide 12. We will start with our Mantoverde operation. For Q2, total production yielded 22,485 tons of copper at a record low combined C1 cash cost of $1.97 per payable pound. Plant throughput averaged a record 36.3 thousand tons per day for the quarter, 13% above our design capacity, despite completing five days of planned maintenance during April. We are also pleased to see strong recoveries maintained at an average of 90.2% for the quarter. Copper grades averaged 0.61% in Q2, which is slightly below our expectations for the year. At the bottom of the Mantoverde pit, we experienced more water than predicted this quarter, requiring some material from the lower benches to be placed on the stockpiles to dry, which resulted in some lower grade stockpile material being utilized.

[James Whittaker, SVP and COO at Capstone Copper]

The team responded quickly to add wells and pumps, which increased the extraction rate. With that infrastructure in place, we expect grades to improve at Mantoverde in the second half. As Raman noted, we responded to elevated sulfuric acid prices by temporarily pausing heap leach production at Mantoverde. The oxide ore we were mining over the last few months had higher calcium carbonate content, which requires more acid to process. We stockpiled it with the option to leach it at a later date once acid prices normalize. Starting in August, we are into oxide ore with lower calcium carbonate grades, requiring significantly less acid. We expect to resume heap leaching at that point, albeit at lower levels than previous expected, with little ramp-up time required.

[James Whittaker, SVP and COO at Capstone Copper]

Taken together, record throughput, strong recoveries, and flexibility in our mine planning enabled Mantoverde to deliver a 24% improvement in unit costs, in addition to improved production compared to last quarter. Moving to slide 13. This quarter, we made good progress on the Mantoverde Optimized Project. During our five-day planned maintenance down in April, we were also able to unlock higher throughputs by eliminating certain bottlenecks. This included improving the capacity of the rougher concentrate and regrind tanks, as well as the complete replacement of key pumps and water systems. The remaining project tie-ins will be completed during an extended 15-day maintenance period in September, followed by a ramp-up period in Q4. Our expectations around capital costs and timelines are unchanged, with the increased sulfide throughput capacity of approximately 45,000 tons per day expected to be sustained starting in early 2027.

[James Whittaker, SVP and COO at Capstone Copper]

On slide 14, we are excited to highlight the Mantoverde Pyrite Augmentation Project, which will incorporate a new pyrite recovery circuit into the existing concentrator plant. This project is designed to reduce Mantoverde's sulfuric acid requirements by a material 20% while increasing heap leach copper production by approximately 3,500 tons per year. At an assumed sulfuric acid price of $200-$450 per ton, this results in cost savings of approximately $18 million-$40 million per year. We expect this project to be completed in early 2028 for an estimated CapEx of $45 million, which will be incurred next year. The net present value of this project is around $200 million, assuming copper prices of $5 per pound and sulfuric acid prices of $200 per ton. However, this increases significantly to approximately $350 million at spot prices.

[James Whittaker, SVP and COO at Capstone Copper]

The project boasts a very high NPV-to-CapEx ratio of approximately four times at longer-term prices and seven times at spot. Building the pyrite plant also enables the opportunity to produce cobalt at Mantoverde in the future. The cobalt project is currently in the feasibility stage. Especially within the context of current inflationary environment, we will continue to prioritize projects like this that not only improve unit costs by proxy of increased production, but also reduce absolute costs. Turning to slide 15, Mantos Blancos continued to deliver on plan in Q2. Total sulfide and cathode production yielded 12,483 tons of copper at C1 cash costs of $3.93 per payable pound. Throughput averaged above design rates at 20,900 tons per day in Q2. Sulfide copper grades of 0.66% were in line with mine sequencing, with the lowest grades of the year expected in Q2 and Q3.

[James Whittaker, SVP and COO at Capstone Copper]

We continue to expect higher copper grades to return in 2027. Unit costs at Mantos Blancos were impacted by higher diesel and sulfuric acid prices, in addition to higher maintenance spend to improve availabilities. Consistent operating performance at Mantos Blancos enabled the delivery of key growth catalysts this quarter, including submitting an EIA permit application for the next phase of Mantos Blancos. We expect to release a pre-feasibility study by the end of the year, including details of the increased throughput from the concentrator plant and increasing cathode production via historical tailings releaching. Moving to Pinto Valley on slide 16, which produced 10,047 tons of copper at C1 cash cost of $4.17 per payable pound during Q2. Pinto Valley delivered incremental throughput improvements over Q1, and we see a clear path for future gain.

[James Whittaker, SVP and COO at Capstone Copper]

The planned 10-day shutdown in Q3 directly targets the main areas that have constrained plant performance this year, the filter plant and the primary crusher, which we expect to position Pinto Valley for more stable operations. This investment in reliability is supported by our broader people strategy and asset management framework designed to deliver sustained improvements in mill availability. On the people side, this includes reducing turnover and strengthening training, while on the asset side, this includes improving maintenance practices. Once again, Cozamin delivered another quarter of strong, consistent results in Q2, as shown on slide 17. The operation produced 5,745 tons of copper at C1 cash costs of $1.52 per payable pound. Cash costs in Q2 came in towards the low end of the guidance range, driven by higher silver by-products. With that, I'd like to pass it to Wendy.

[Wendy King, SVP, Risk, ESG, and General Counsel at Capstone Copper]

Thank you, Jim. In Q2, we've released our 2025 sustainability report, detailing the meaningful progress we made on our sustainable development strategy, as highlighted on slide 18. We were particularly proud of the improvements to safety, driven by the implementation of a new HSE roadmap, including a 22% reduction in recordable injuries year-after-year. We are also tracking well towards our GISTM implementation across all tailings storage facilities by 2028, achieving 80% conformance in 2025 compared to 48% in 2024. In 2025, we strengthened our climate governance and risk assessment by expanding Scope 3 data collection towards our goal of disclosing Scope 3 emissions for all sites by the end of this year. Our workforce grew to over 8,000 employees in 2025, with increased representation of women and reduced turnover, reflecting our ongoing commitment to an inclusive, stable and engaged workplace.

[Wendy King, SVP, Risk, ESG, and General Counsel at Capstone Copper]

As Cashel mentioned, that stability was reinforced this quarter with new three-year collective bargaining agreements reached with both unions at Mantos Blancos. Following the Mantoverde agreement earlier this year, all of our Chilean operations now have labor stability for the next three years. Going forward, the Mantoverde Pyrite Augmentation Project that Jim discussed also delivers meaningful sustainability benefits. Less pyrite sent to our tailings facility, more copper from the heap leach, and fewer trucks on the road delivering sulfuric acid to site. At Capstone, we recognize that mining is a long-term business. We are committed to responsibly delivering copper production growth by continuing to embed sustainability throughout our organization. I will pass it back to Cashel.

[Cashel Meagher, President and CEO at Capstone Copper]

Thanks, Wendy. Moving to slide 20. This quarter, we continued to make steady progress towards a sanctioning decision at Santo Domingo, expected in Q4 of this year. In terms of the remaining work streams prior to FID, we are progressing detailed engineering to approximately 60% completion. We are evaluating the optimal financing strategy for the project, and we are advancing potential infrastructure opportunities. Our balance sheet is already in great shape, but we will continue deleveraging through internally generated cash flows prior to a sanctioning decision. Santo Domingo is a transformational growth project that will deliver material improvements to our consolidated production and cost profile. With that said, Capstone's growth story is not dependent on a single project. Our growth pipeline includes brownfield and greenfield projects built around assets we know well, jurisdictions where we have deep operating experience, established infrastructure, and strong community relationships.

[Cashel Meagher, President and CEO at Capstone Copper]

We are committed to demonstrating an executable path to meaningful production growth while prioritizing disciplined capital allocation and sustainable free cash flow. On slide 21, we highlight some of the key catalysts we look forward to delivering in pursuit of this goal throughout the second half. Mantoverde Optimized is our nearest-term opportunity to deliver value by upgrading the plant to sustain sulphide throughput of 45,000 tonnes per day at a low capital intensity. As MV-O moves closer to completion, we have initiated our next brownfield expansion by submitting an EIA permit for Mantos Blancos in Q2. We look forward to further defining this opportunity with the release of a study by the end of the year. Slide 22 reinforces our multi-layered growth trajectory, driven by organic brownfield expansions. The Santo Domingo project, district-scale opportunities in Chile and Arizona, and exploration upside across the portfolio.

[Cashel Meagher, President and CEO at Capstone Copper]

This is not growth for the sake of being bigger. These are low-risk, accretive opportunities to deliver value in the same top-tier mining jurisdictions as our existing operations

[Cashel Meagher, President and CEO at Capstone Copper]

Importantly, our growth pipeline is well-aligned with the copper outlook, reinforcing the importance of continuing to accelerate growth to deliver value. Our capital allocation priorities remain consistent: sustain and continue to optimize our existing operations, invest in high-return growth projects, and maintain a strong balance sheet. Capstone is well-positioned as we enter a period where execution can directly translate into value. We have near-term operational momentum, a permitted growth pipeline, and district-scale functionality, which provides a strong foundation for Capstone to provide the copper the world needs now and into the future. With that, we're ready to take some questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Orest Wowkodaw of Scotiabank. Your line is already open.

[Orest Wowkodaw, Analyst at Scotiabank]

Great. Thanks very much. Congrats on the improved operating performance. It's great to see. The question around this pyrite project at Mantoverde, looking at the economics here, it seems like it's a no-brainer. I'm just curious on what the plan is for 2027, given that this project won't be online until early 2028. Would you think about curtailing, if acid pricing stays elevated, should we expect you to curtail cathode, at least the heap leaching, through 2027 until this is ready? How are you thinking about that transition period?

[Raman Randhawa, SVP and CFO at Capstone Copper]

Hey, Orest, I can probably take that one on. When we look at our cathode production, there is a certain amount of oxides when you think about it, that are in the mixed pits, so you're mining through them to get to the sulfide. That's incremental oxide feed. Basically, we will be running the cathode business when you look into 2027, because that's a cutoff grade question that you triangulate with the calcium carbonate. A lot of our material is actually low calcium carbonate, and if you're mining through it anyways, once we know the price of acid and start looking at that later in the year, and the copper price, we can do a balancing act to make sure that's profitable. What this has proven is we have that flexibility.

[Raman Randhawa, SVP and CFO at Capstone Copper]

If we were in a oxide-only pit and it had a higher calcium carbonate, there's no point in sending the trucks and shovels there. You might as well divert them to the sulfides, which gives us more flexibility. Our mill, as you noted when you started, is running very well. We can run higher than nameplate a little bit and push more on the sulfide, which is way more cash flow positive than into a oxide-only pit.

[Orest Wowkodaw, Analyst at Scotiabank]

Okay. Is there any opportunities to reduce acid consumption at Mantos Blancos?

[Raman Randhawa, SVP and CFO at Capstone Copper]

Give that to Peter.

[Peter Amelunxen, Head of Technical Services at Capstone Copper]

Yeah. We're evaluating it right now, Orest. The Mantos Blancos doesn't have a heap leach. It's a run-of-mine leach that generally consumes less acid anyway. We're in the process of optimizing that as well. Another thing that is currently in, we're workshopping is acid swaps, for example. Some acid's been pre-purchased, so we're looking at different opportunities.

[Cashel Meagher, President and CEO at Capstone Copper]

Yeah, just to add to that, Orest, there is that future opportunity of leaching at Mantos Blancos, so the coarse tails from the ripios. In that process, we'll evaluate any of these initiatives we have, keep in mind, that's likely a chloride leach, so requires some testing to see if there's some compatibility or not.

[Orest Wowkodaw, Analyst at Scotiabank]

Fair enough. Just finally, if I can, what kind of timing do you think we can expect for an exploration update at Mantoverde?

[Cashel Meagher, President and CEO at Capstone Copper]

Yeah. I think what it is we've concentrated a lot of the drilling to date, I guess, on the near pit inferred. I think we've said the middle of next year is when we consolidate those mine plans. There'll probably be some conversion of inferred indicated, therefore we'll evaluate its inclusion in the life of mine process. Outside of that, we've got a few drills running up to the north, when we consolidate a bunch of results, we'll put those out. Maybe not necessarily the next quarter, but the quarter after that, we'll probably have enough meat on the bone to be able to guide what our exploration plans for the region are and what the results are to date.

[Orest Wowkodaw, Analyst at Scotiabank]

Okay, great. Thanks very much.

[Operator]

Your next question comes from Fahad Tariq of Jefferies. Your line is already open.

[Fahad Tariq, Analyst at Jefferies]

Hi, thanks for taking my question. At Mantoverde, is there an opportunity to displace more than 5,000 tons from the oxides to the sulfides, or is it constrained by the 15-day tie-in in the third quarter?

[Cashel Meagher, President and CEO at Capstone Copper]

No, not really. That sort of movement is sort of built in with the mine, and we're being somewhat, what I would call, conservative on what the throughput capabilities are. We've now disclosed what the production rates were, obviously, in June, and we are seeing similar performance through July. We're optimistic that perhaps the ramp-up will go faster than what we've built into our guidance, number one, and therefore it's really up to the cadence of the mill to be able to accept more tonnage than necessarily the 45,000 tons a day and in a faster ramp-up. Obviously, internally, we're very optimistic that that is indeed possible, and that's where we would see an uptick beyond that 5,000 replacement of sulfide over cathode and the opportunity therein.

[Cashel Meagher, President and CEO at Capstone Copper]

We've always sort of kept that in our back pocket as a contingency in our guidance or, in this case, as we remain within guidance, opportunity against guidance.

[Fahad Tariq, Analyst at Jefferies]

Got it. Okay. Maybe just switching to Santo Domingo, any update that you can provide on any potential discussions on a tolling agreement with companies that own the port and how we should be thinking about the CapEx? I would imagine the CapEx estimate is going to come, I think, in the third quarter before sanctioning in the fourth quarter, but please let me know if the timeline is different.

[Cashel Meagher, President and CEO at Capstone Copper]

Yeah. Look, we have a dual process. We continue negotiating with port holders within the region to be able to optimize the project makeup. That continues, what I would characterize as, very well. With respect to the CapEx, I think what we would see is just the CapEx update would come in the fourth quarter in parallel and with sort of that FID announcement. We're sort of working towards what we call 60% detailed engineering, and it's sort of at that time we can provide that certainty of CapEx for the project going ahead.

[Fahad Tariq, Analyst at Jefferies]

Great. That's it for me. Thank you.

[Operator]

Your next question comes from George Eadie of UBS Financial. Your line is already open.

[George Eadie, Analyst at UBS Financial]

Yeah. Hey, team. Nice update here. Can I ask again on the 200,000 tons reduction in acid at Mantoverde, what are the trade-offs there operationally to reduce this, I guess, and does it have any impact specifically on recovery too?

[Cashel Meagher, President and CEO at Capstone Copper]

No, it doesn't. It's just a cost per pound calculation. The way it works is some of the material that has the higher carbonate consumes more acid. Therefore, that cost to produce a pound exceeds the value of selling a pound. Really, that's how simple it is. What it means is, some of those trucks that would've been moving that material to sustain production at the heap leach are just simply assigned to the capacity that we know exists within the sulfide plant. Therefore, we're just pulling those tons from there. The benefit, of course, in the short term is those tons have a higher margin. Therefore, lower the cost overall.

[Cashel Meagher, President and CEO at Capstone Copper]

In the long term, we still remain encouraged by our optionality with the oxide production and cathode production, especially now with the addition of this Pyrite Augmentation, which will reduce the overall cost structure therein. Then I'd add, there will be another step change in the future. We mentioned it in the phone call where we're working on a feasibility study to add another byproduct credit to further enhance the economics of the oxide material to produce cathode, which is to produce a saleable form of cobalt. So we're excited about that. So next year, that'll be another increment of cost reduction in our C1 to produce the copper.

[George Eadie, Analyst at UBS Financial]

Okay. No, that's clear. Thanks. Just back to Mantoverde Optimized again, just the comments early 2027 and the sort of commentary before, could we realistically see that 45,000 tonnes per day rate average in one quarter next year? Is that reasonable? I guess with the tie-in, will you get more color or I guess conviction in how that ramp-up will go once you've done the tie-in as well this quarter?

[Cashel Meagher, President and CEO at Capstone Copper]

Yeah. Look, we're on time. The project's working as designed. Again, when we stated our guidance at the start of the year, we were always a little conservative in the ramp-up rate. If I'm to take the current performance of the plant, as what we experienced in June and seems to be what we experienced in July, I'd be now more positive that we'll be able to ramp it up before the end of the year to 45,000 tonnes a day. We're not going to restate our guidance or that sort of contingency. That's sort of where we're sort of sitting. What we built into that guidance as the midpoint for Mantoverde itself was a throughput rate of 36,000 tonnes a day. In June, as we disclosed, we were at 40,000 tonnes a day. We're very close to the nameplate already.

[Cashel Meagher, President and CEO at Capstone Copper]

Which gives us encouragement that there might be possibility in the future to exceed what we've designed it for, the 45,000 tons a day. The proof is in the pudding. We've got to run it through to see what it'll do.

[George Eadie, Analyst at UBS Financial]

No, that's clear. Good stuff. Thanks.

[Operator]

Your next question comes from Marcio Farid of Goldman Sachs. Your line is already open.

[Marcio Farid, Analyst at Goldman Sachs]

Yes. Thank you, operator. Good evening, everyone. Thanks for the time, and congrats on the quarter. Definitely, a good operational set-up there. I want to spend some time on the Mantoverde. Clearly, running above nameplate capacity for the full quarter, and with an exit rate, I think in June, at above 40,000 tons per day, it's quite remarkable. Just trying to understand what sort of level of throughput you think you can maintain going into the second half of the year. If you look at the guidance for the year in terms of grades at just above 0.7%, obviously, that implies some step up from the first half and you sort of maintain the expectation for grade for the year as well.

[Marcio Farid, Analyst at Goldman Sachs]

Just wondering if there is a scenario here we see stronger throughput combined with stronger grades into the second half of the year, which could fall very well for overall output as well. Thank you.

[James Whittaker, SVP and COO at Capstone Copper]

Hi, Marcio. How are you doing? Good question. Hi, Jim here. You're exactly right, actually, on what you explained. The project is going really well. We budgeted $176 million, we're at about $142 million committed, so the project burn rate's going very well. We're on track. We have the shutdown plan for September, and that should put us in a strong position to be able to ramp up the plant very quickly. As Cashel mentioned, we have all the indications that we'll be able to push that as much as possible. I think in our estimations, we're pointing around 41,000 average for the first quarter. We're going to be trying to hit that as soon as possible. We are planning an increase in grade in the fourth quarter. We'll be going from 0.7 in Q3 up to 0.79 in Q4. That's our current plan.

[James Whittaker, SVP and COO at Capstone Copper]

Recovery should basically be in line with plan. Yeah, you're right. Yes, we are very optimistic about Q4 this year.

[Marcio Farid, Analyst at Goldman Sachs]

Great. Thank you. Just one on Santo Domingo. How should we think about potential hedging before CapEx is committed? Is there any plan to do some sort of hedging, both on either byproducts or on the cost side or on copper, per se, to reduce risks going into the CapEx plan? Thank you.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Yeah. Good question. As we get closer to FID, we can look at hedging. When you look at our balance sheet, and we're running multiple different scenarios, but at lower copper price environment, it still shows our balance sheet's in a strong spot. As you can tell, we're de-levering. Our target was 1x and we're at 0.5x, and we got another few quarters here to go underneath our belt. We'll be in a very strong spot. I think it gives us the ability to make that decision if we like. Where copper is trading right now, we're very comfortable with the balance sheet and then we'll consider at that time if we want to layer in some protection.

[Marcio Farid, Analyst at Goldman Sachs]

Sounds good. Would Cozamin, or is Cozamin part of that kind of portfolio or balance sheet protection as well?

[Raman Randhawa, SVP and CFO at Capstone Copper]

That's kind of trading. If you look at it, that just kind of reduces your equity intake. It's not a requirement for funding Santo Domingo.

[Marcio Farid, Analyst at Goldman Sachs]

Thank you. That's great. Thank you.

[Operator]

Your next question comes from Rafael Barcellos of Bradesco BBI company. Your line is already open.

[Rafael Barcellos, Analyst at Bradesco BBI]

Hello, thanks for taking my question. I've just one question. Pinto Valley is an operation that has proven to be more challenging than initially thought, right? I just wanted to get your thoughts on when we should see the asset delivering a more normalized run rate, and even what would be your thoughts for operational performance for 2027? On top of that, if there's any sort of strategic optionalities in both Pinto Valley and Cozamin. Thank you.

[Cashel Meagher, President and CEO at Capstone Copper]

Yeah. Hi. Look, we've been working on the asset integrity and plant availability and utilization at Pinto Valley for some time now. We had identified last year, some critical elements that required upgrading, replacement, specifically revolving around the copper filtration system and the primary crusher. Our ambition was to address those in May, but there were some manufacturing delays in the filtration components, we only want to take the plant down once. We deferred it to September. Unfortunately, there was some production interruptions unplanned. What I'd say is, we've done a tremendous amount of work on inspection and evaluation of the integrity of the asset.

[Cashel Meagher, President and CEO at Capstone Copper]

We're going to address a lot of the deficiencies in this shutdown in September. It also gives us a tremendous opportunity to inspect, validate our assumptions, and lay out a plan for Pinto Valley after that. Our expectation is we'll be up, and we'll be closer to 50,000 tons a day beyond that correction or that shutdown. That's sort of where we're going to take off from. We believe over the next year, we'll be able to get it up to its nameplate. Its nameplate is probably in the mid-50s. That's our goal there. We're very encouraged. There's light at the end of the tunnel. We really wished we had been able to address these issues in May, we're going to address them in September, and we're looking forward to continuing with it.

[Cashel Meagher, President and CEO at Capstone Copper]

What I'll say about a strategic process on Cozamin versus Pinto Valley, Pinto Valley is a billion ton deposit at over 0.3% copper. It actually comes over in its life of mine over the next five to six years, incrementally higher grade year-over-year. We look forward to getting the asset to its full capability and increasing production from that asset, total tons of copper year-over-year, and driving down the unit costs with it. We think it's still very core to Capstone.

[Rafael Barcellos, Analyst at Bradesco BBI]

Perfect. Thank you.

[Operator]

Your next question comes from Daniel Morgan of Barrenjoey. Your line is already open.

[Daniel Morgan, Analyst at Barrenjoey]

Hi, Cashel and team. Just on at Mantoverde, it is pleasing to see that that is running well, the sulfide portion. If you can run above nameplate, if that is possible once Mantoverde optimizes on, is there flex in the rest of the operation to actually handle that, like the mining rates or any other constraints that might come to mind? Thank you.

[Cashel Meagher, President and CEO at Capstone Copper]

I suppose it depends how high it goes, but we feel. On average, I believe our allowance is up to 55,000 tons a day under the permit. That would be an ultimate constraint. The other constraints are simply, mine planning, sequencing, and how much material movement there is. We believe that there is opportunity to exceed the 45,000 tons a day with the current assets we utilize or the current mine fleet to keep up with it. Certainly, there is capacity in our tailings management system. We also have a number of stockpiles of low grade with which we have optimized grade in the past and going forward in the future. Then we could decide incrementally to present those in if we needed to reduce truck kilometer counts. As you point out, Dan, that would be a terrific problem to work on.

[Cashel Meagher, President and CEO at Capstone Copper]

We look forward to that.

[Daniel Morgan, Analyst at Barrenjoey]

Thank you. Maybe just obviously acid, the question, I guess twofold, just about the market itself and then what you're doing about it. What is happening to the acid market in Chile right now is obviously Middle Eastern events has impacted global supply. Is there also a feeling that other miners are taking actions like you to reduce acid use and maybe we're seeing some impact on production in the industry? Part two, how do you think about acid purchases for 2027? Thanks.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Good question. Chile's subject to global pricing, as you know. I quoted you a spot price of like $450, $470 a ton. To be honest, not a lot of people are buying at those prices, just like us, have we reduced 200,000 tons of exposure. You are seeing some of those actions taken which are reducing some of that cathode production that would have been purchasing and the flip side of that is that that's a bonus to copper price, right? It's lower cathode or lower acid purchases means holding copper prices stronger and supports it. 2027, I think there's hopefully a pathway here to resolution towards the end of the year. Really, acid prices does not really get set in this market till later in the year, really November, December.

[Raman Randhawa, SVP and CFO at Capstone Copper]

You don't even have to fix it then, you can keep negotiating into the new year. I think it'll be a moving target. I'm hoping for, a lot of the forecasts are calling for the prices to ease as we see some resolution here.

[Daniel Morgan, Analyst at Barrenjoey]

Okay. Thank you so much for your perspectives, Cashel and team.

[Operator]

Your next question comes from Anita Soni of CIBC. Your line is already open.

[Anita Soni, Analyst at CIBC]

Hi, good evening. Thanks for taking my question. I was just trying to figure out, I'm really just trying to nail down exactly what's happening with the cathodes here at Mantoverde. If I could get a little bit more color. Is the idea that you're going to stop producing cathodes at this point or just play it by ear? I think Orest was asking a little bit about this, what does 2027 look like in terms of your cathode output? How exactly is this going to reduce the sulfuric acid consumption that you're producing your own and then won't need to buy out in the market, or you're reducing just in terms of the kind of ore you're processing? Thanks.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Yeah, it's a good question. In simple terms, the cathode, now that we have the sulfide, is an incremental business unit. We have that flexibility to figure out what throughput we want to send to the heaps. We have some dump leach, which is always going to make money, we have the heap leach. With the heap leach, you get a copper grade, but you also get a calcium carbonate grade. We played with a cutoff of what we want to place there to make sure it's economic and generates cash. Some of the pits, if they're oxide only and high calcium carbonate, we've diverted those trucks onto the sulfide, and the mill's running well. The offset is we're getting higher sulfide production and cut back on our cathode and reduced our exposure to acid.

[Raman Randhawa, SVP and CFO at Capstone Copper]

The pyrite that you speak about will generate a pyrite that will be put into the heap leach agglomerator. That'll reduce our acid required on the heap leach by at least 20%. If we used to consume 400,000 tons of acid a year, is a rough number for the heap, it'll be 80% of that number. The other way to see it is we're acid-proofing ourselves. When you look at the sticker price of acid in the market, take 80% of that because we're going to have a 20% reduction of what we need.

[Anita Soni, Analyst at CIBC]

Okay. Sorry, can you just reiterate how much acid you're consuming, maybe in dollar amounts, just at spot prices or even in the tons would be great.

[Raman Randhawa, SVP and CFO at Capstone Copper]

At Mantoverde, typically, we consume about 600,000 tons a year. With our forecast, we've reduced that to 400,000 tons. Our price is about $190 a ton, is what we fixed, and the market price is around $450.

[Anita Soni, Analyst at CIBC]

Say that again, $190 and $450, right? Okay. Okay.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Yep.

[Anita Soni, Analyst at CIBC]

You assumed the budget was for $190 and currently the spot is $450.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Yeah, we've also fixed at $190. We're not buying anything at $450.

[Anita Soni, Analyst at CIBC]

Okay. How long does that fixed rate last?

[Raman Randhawa, SVP and CFO at Capstone Copper]

For all of this year.

[Anita Soni, Analyst at CIBC]

Okay. Next year you're exposed to spot.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Yeah, next year we'll go through the same, by then, like I was mentioning on the last question, the forecast out, so forecast it should normalize, assuming some resolution in the Strait of Hormuz.

[Anita Soni, Analyst at CIBC]

Yeah. Thank you. That's it. Oh, actually, you know what? I have another question. On M&A. I just wanted to get an idea of what your current thinking is about divestitures. I know that there's been some chatter about Cozamin. Given obviously its consistency, I just wanted to understand why you're thinking about divesting that asset, and then wondering if you're looking at other assets in nearby jurisdictions.

[Cashel Meagher, President and CEO at Capstone Copper]

Yeah. You function or you operate a business as a portfolio, and you're always evaluating the components of the portfolio of when it's optimum to either move off them or invest in them. The growth profiles that we have are brownfields and greenfields opportunities around Pinto Valley and also around Mantos Blancos and Mantoverde. Obviously the big addition, which we intend on allocating capital to Santo Domingo at the end of this year, have us looking at the rationalization of sustaining a business between 15,000 and 20,000 tons of copper per year in Mexico at an isolated mine. The mine has been absolutely tremendous over the last 10 years. It's been a very consistent producer. Much of the residual resource lies also in zinc, and it's a slightly different combination for a copper equivalent going forward outside of the next four or five years.

[Cashel Meagher, President and CEO at Capstone Copper]

To us, it's maybe our portfolio is outgrowing the size of what Cozamin is. Now, with that being said, we wouldn't obviously divest it if we felt that the value of seeing it through to its end of mine life, we can assure ourselves now of those cash flows, and why would we sell it if that's the case? We have that strategic consideration, where we're evaluating the possibility. If someone was to buy it, then maybe we would sell it. It's like a portfolio rationalization. One of the things you keep in mind is what is the present market and what is the present value of a copper pound.

[Cashel Meagher, President and CEO at Capstone Copper]

Obviously, if you were sitting here this time last year, the copper price was lower, but it has been sustained over $6 for some time now, and that operation will cash flow really well this year. It is an ongoing continuous discussion that we have at our executive level of what we do with all our assets and where we allocate our capital. I guess it is a wait-and-see story.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Anita, just on the absolute numbers on the acid, just for reference, if we had bought 600,000 at budget was 190, that would be $114 million of acid spent in Mantoverde. We are currently going to spend 400 at 190, that is $76 million. If we had continued with plan A, with that additional cathode, we would have had the same tonnage in acid at a blended price, and we would have spent $166 million because we would have bought 200,000 extra tons at spot prices. Really, it is a saving of $90 million in absolute.

[Anita Soni, Analyst at CIBC]

Okay. Thank you. One final follow-up on that. What kind of recovery rates is that run of mine getting within the mill? If I was trying to model that.

[Raman Randhawa, SVP and CFO at Capstone Copper]

The dump recovery, I think it is 40%, 40%-45%.

[Cashel Meagher, President and CEO at Capstone Copper]

Yeah, low 40s.

[Raman Randhawa, SVP and CFO at Capstone Copper]

Yeah.

[Anita Soni, Analyst at CIBC]

Okay. Thank you.

[Operator]

Ladies and gentlemen, as a reminder, if you have a question, please press star one. There are no further questions at this time. I would hand over the call to Cashel Meagher for closing comments. Please go ahead.

[Cashel Meagher, President and CEO at Capstone Copper]

Thank you, operator. With Mantoverde Optimized tie-ins ahead and sanctioning decision on Santo Domingo expected in Q4, second half is set to be an exciting one for Capstone. We look forward to updating you in October with our Q3 results. Till then, stay safe and feel free to reach out to Daniel, Michael, or Claire if you have any further questions. Thank you for your continued support, and have a good day or a good evening.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Participants

Executives

• Daniel Sampieri, VP of Investor Relations
• Cashel Meagher, President and CEO
• Raman Randhawa, SVP and CFO
• James Whittaker, SVP and COO
• Wendy King, SVP, Risk, ESG, and General Counsel
• Peter Amelunxen, Head of Technical Services

Analysts

• Orest Wowkodaw, Analyst at Scotiabank
• Fahad Tariq, Analyst at Jefferies
• George Eadie, Analyst at UBS Financial
• Marcio Farid, Analyst at Goldman Sachs
• Rafael Barcellos, Analyst at Bradesco BBI
• Daniel Morgan, Analyst at Barrenjoey
• Anita Soni, Analyst at CIBC