Capstone Copper Q2 Earnings Call Highlights

Key Points

• Record financial performance: Capstone Copper’s adjusted EBITDA reached a record $354 million in Q2 2026, up 64% year over year, while net debt fell to $675 million and leverage declined to 0.5 times EBITDA. The company reaffirmed its full-year production, cost and capital-spending guidance.
• Mantoverde drove operating gains: The mine produced 22,485 tonnes of copper at a record-low C1 cost of $1.97 per pound. Capstone plans to reduce acid-intensive heap-leach activity while offsetting lower cathode output with sulfide production, and expects its optimized project to support higher throughput beginning in 2027.
• Growth plans remain on track: Capstone expects to make a final investment decision on the Santo Domingo project in the fourth quarter, while advancing expansions at Mantoverde and Mantos Blancos and improvements at Pinto Valley.

Capstone Copper TSE: CS reported record quarterly adjusted EBITDA for the seventh consecutive quarter in the second quarter of 2026, supported by improved copper production, strong realized copper prices and operating performance at its Chilean and Mexican mines.

The company produced 51,800 tonnes of copper during the quarter at consolidated C1 cash costs of $2.82 per pound. President and CEO Cashel Meagher said the quarter reflected the company’s objective of delivering operational stability and cash generation between periods of larger growth investments.

“Improved production, combined with exceptionally strong commodity prices, drove record EBITDA for the seventh consecutive quarter,” Meagher said. Capstone reaffirmed its full-year 2026 production, cost and capital-expenditure guidance.

Record financial results and lower debt

SVP and CFO Raman Randhawa said London Metal Exchange copper prices averaged $6.05 per pound during the second quarter, up from $5.83 per pound in the first quarter. Capstone realized an average copper price of $6.22 per pound, producing gross margins of $3.40 per pound, or 55%.

Adjusted EBITDA rose 8% from the first quarter and 64% year over year to a record $354 million. Adjusted net income attributable to shareholders was also a record at $97.6 million, or $0.13 per share.

Consolidated net debt declined by $63 million from the prior quarter to $675 million, bringing the year-to-date reduction to more than $100 million. Randhawa attributed the decrease primarily to strong operating cash flow and higher realized copper prices. The company ended the quarter with more than $1 billion of available liquidity, including $367 million in cash and cash equivalents and $715 million available under its corporate revolving credit facility.

Capstone’s net debt-to-EBITDA ratio fell to 0.5 times at quarter-end. Randhawa said the company plans to continue deleveraging through internally generated cash flow before making a final investment decision on its Santo Domingo project.

Mantoverde leads operating performance

Mantoverde produced 22,485 tonnes of copper at a record-low combined C1 cash cost of $1.97 per payable pound. Average plant throughput reached a record 36,300 tonnes per day, 13% above design capacity, while recoveries averaged 90.2%.

Chief Operating Officer James Whittaker said copper grades averaged 0.61% during the quarter, below expectations after additional water at the bottom of the pit required the company to stockpile some material for drying and use lower-grade stockpile feed. The company added wells and pumps and expects grades to improve during the second half.

Capstone temporarily reduced certain heap-leach activity at Mantoverde because higher-calcium-carbonate oxide ore requires more sulfuric acid to process. The company said it will reduce cathode production by about 5,000 tonnes in the second half while avoiding approximately 200,000 tonnes of sulfuric-acid purchases at spot prices. It expects to offset that reduction with roughly 5,000 tonnes of incremental sulfide production, leaving consolidated copper output unchanged while improving cash flow.

Randhawa said about 80% of Capstone’s sulfuric-acid consumption for the remainder of 2026 is fixed at approximately $190 per tonne, compared with spot prices of roughly $450 to $470 per tonne. During the question-and-answer session, he said the revised Mantoverde plan would reduce expected acid consumption to approximately 400,000 tonnes this year from a typical 600,000 tonnes.

The company also advanced its Mantoverde Optimized project, which is intended to raise sustained sulfide throughput to approximately 45,000 tonnes per day. Remaining tie-ins are scheduled for a 15-day maintenance shutdown in September, followed by a ramp-up in the fourth quarter. Capstone said the project remains on schedule and on budget, with the higher throughput rate expected to be sustained beginning in early 2027.

Whittaker added that the Mantoverde Pyrite Augmentation Project is expected to cut sulfuric-acid requirements by about 20% and add approximately 3,500 tonnes of annual heap-leach copper production. The project is expected to be completed in early 2028 at an estimated $45 million capital cost, to be incurred next year.

Other operations and growth projects

Mantos Blancos produced 12,483 tonnes of copper at C1 cash costs of $3.93 per payable pound. Throughput averaged 20,900 tonnes per day, above design rates. Capstone said sulfide grades of 0.66% were consistent with mine sequencing, with the lowest grades of the year expected in the second and third quarters.

The company submitted an environmental impact assessment application for the next phase of Mantos Blancos during the quarter and expects to publish a pre-feasibility study by year-end. The study is expected to address increased concentrator throughput and potential cathode production from historical tailings re-leaching.

Pinto Valley produced 10,047 tonnes of copper at C1 cash costs of $4.17 per payable pound. Capstone plans a 10-day shutdown in the third quarter to address constraints at the filter plant and primary crusher. Meagher said the company expects the work to position the operation closer to 50,000 tonnes per day afterward and aims to reach its nameplate rate in the mid-50,000-tonne-per-day range over the following year.

Cozamin produced 5,745 tonnes of copper at C1 cash costs of $1.52 per payable pound, aided by higher silver by-product credits. Meagher said Capstone continues to evaluate its portfolio, including the potential rationalization of Cozamin, but said the company would not divest the asset unless a sale offered greater value than retaining its future cash flows.

Santo Domingo decision expected in fourth quarter

Capstone said it remains on track for a sanctioning decision on Santo Domingo in the fourth quarter. The company is advancing detailed engineering toward 60% completion, evaluating financing alternatives and continuing discussions regarding infrastructure opportunities, including regional port arrangements.

Meagher said Santo Domingo is intended to materially improve Capstone’s consolidated production and cost profile, though he emphasized that the company’s growth strategy also includes the Mantoverde Optimized project, the Mantos Blancos expansion and other district-scale opportunities in Chile and Arizona.

Separately, SVP of Risk, ESG and General Counsel Wendy King said Capstone’s 2025 sustainability report showed a 22% year-over-year reduction in recordable injuries and 80% conformance with the Global Industry Standard on Tailings Management in 2025, compared with 48% in 2024. The company also reached new three-year collective bargaining agreements with unions at Mantos Blancos, following an earlier agreement at Mantoverde.

About Capstone Copper (TSE:CS)

Capstone Copper 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.

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