Capstone Copper Q3 Earnings Call Highlights

Key Points

• Record profitability: Capstone Copper posted adjusted EBITDA of $358.3 million in Q3, up 44% year over year, supported by higher copper prices and contributions from Chilean operations and Cozamin. The company generated nearly $280 million in operating free cash flow through the first nine months.
• Production and costs under pressure: Q3 copper production totaled 45,218 tonnes, but maintenance disruptions at Pinto Valley, deferred work, and higher diesel and sulfuric-acid prices are expected to push 2026 results toward the low end of production guidance and high end of cost guidance.
• Growth projects advance: Mantoverde’s expanded concentrator began ramp-up after completing tie-ins, with throughput exceeding its 45,000-tonne-per-day design rate in initial testing. Capstone delayed its Santo Domingo investment decision to Q1 2027 and expects its Cozamin sale to generate up to $385 million.

Capstone Copper TSE: CS reported record adjusted EBITDA for an eighth consecutive quarter in the third quarter of 2026, supported by higher copper prices and contributions from its Chilean operations and Cozamin mine in Mexico, while maintenance activity and input-cost inflation affected production and costs.

The company produced 45,218 tonnes of copper during the quarter at consolidated C1 cash costs of $2.95 per pound. President and CEO Cashel Meagher said Capstone expects to finish 2026 at the low end of its production guidance range and the high end of its cost guidance range, citing unplanned maintenance at Pinto Valley, deferred maintenance work, reduced cathode output at Mantoverde and higher diesel and sulfuric-acid costs.

Capstone generated nearly $280 million in free cash flow from operations through the first nine months of the year, Meagher said. The company also increased its capital-expenditure guidance by $40 million, largely due to higher capitalized stripping costs associated with diesel prices and changes to Mantoverde’s mine sequence.

Financial results and balance sheet

Chief Financial Officer Raman Randhawa said London Metal Exchange copper prices averaged $3.40 per pound in the quarter, up 6% from $3.05 per pound in the second quarter. Capstone realized an average copper price of $3.61 per pound.

Adjusted EBITDA reached a record $358.3 million, increasing 1% from the prior quarter and 44% from a year earlier. Adjusted net income attributable to shareholders was $93.8 million, or $0.12 per share.

Randhawa said rising energy costs, particularly diesel, have increased annualized costs by approximately $80 million, or $0.16 per pound, compared with 2025. Sulfuric-acid prices have approximately doubled, although the company has sought to reduce exposure through fixed-price contracts.

Capstone ended the quarter with more than $1 billion of available liquidity, including $263 million of cash and $826 million available under its corporate revolving credit facility. Consolidated net debt declined to $564 million, bringing the net debt-to-EBITDA ratio to 0.4 times. The company expects that ratio to fall to about 0.2 times by year-end following the expected closing of its Cozamin sale.

Mantoverde ramp-up advances

Mantoverde produced 20,806 tonnes of copper in the third quarter at combined C1 cash costs of $1.77 per payable pound. The operation’s concentrator averaged throughput of 33,000 tonnes per day despite a 15-day shutdown in September for tie-ins related to the Mantoverde Optimized project.

The tie-ins have been completed, and Capstone began commissioning and ramping up the expanded concentrator in October. The company said it recorded an individual daily throughput rate above 53,000 tonnes and averaged about 47,000 tonnes per day over the final two weeks referenced during the call, above the project’s nominal 45,000-tonne-per-day design rate.

Meagher cautioned that throughput could vary as operations continue, while Chief Operating Officer Jim Whittaker said the immediate focus is sustaining consistent performance and optimizing recoveries. The company expects recoveries in the high-80% range through the remainder of the year.

Capstone temporarily paused certain heap-leach production at Mantoverde in response to elevated acid prices, prioritizing lower-cost sulfide production. Heap-leach output resumed in September as the mine moved into oxide ore requiring less acid.

The company expects to begin seeing increased leach production from its BIOX project near the end of the second quarter of 2027. A separate $45 million pyrite-augmentation project is expected to begin operating in early 2028. Peter Amelunxen, senior vice president of technical services, said the two initiatives could reduce heap-leach acid consumption by roughly 20% to 25%.

Pinto Valley maintenance weighs on output

Pinto Valley produced 6,358 tonnes of copper at C1 cash costs of $6.11 per payable pound in the third quarter. The operation underwent a 16-day shutdown in September to rebuild its filter plant and address primary-crusher constraints.

The primary crusher entered commissioning on Oct. 21, but additional repairs were identified. Whittaker said the repairs were expected to be completed by Nov. 2, with the circuit set to restart the following week. The company is targeting availability rates of 90% and expects to assess the operation’s new performance baseline after the work is complete.

Meagher said the company aims to exit 2026 at about 50,000 tonnes per day of throughput at Pinto Valley before progressing toward its current configuration’s estimated nameplate capacity of about 56,000 tonnes per day.

Mantos Blancos produced 12,011 tonnes of copper at C1 cash costs of $3.96 per payable pound. Heavy rainfall modestly affected grades, though Capstone expects higher grades in the fourth quarter. Cozamin produced 6,044 tonnes at C1 cash costs of $1.64 per payable pound, aided by higher silver by-product prices.

Portfolio changes and Santo Domingo timing

Capstone announced in September that it would sell Cozamin to Luca Mining for up to $385 million in consideration, including $275 million in upfront cash. The company expects the transaction to close in the fourth quarter and said the divestiture will enable greater focus on growth projects in Chile and the United States.

The company also acquired the San Pietro project, adding approximately 16,000 hectares to its land position in Chile’s Atacama region. Meagher said the acquisition provides additional mineral inventory and exploration potential within Capstone’s broader Mantoverde-Santo Domingo district strategy.

Capstone now expects a sanctioning decision for the Santo Domingo project in the first quarter of 2027, rather than late 2026. Management said the additional time will allow it to advance detailed engineering toward approximately 60% completion, evaluate desalination and port bids, and continue assessing whether to use existing regional port infrastructure or build its own.

Meagher said the company expects to provide further narrative and results from exploration across the district before year-end, though exploration success is not required for a Santo Domingo investment decision.

About Capstone Copper (TSE:CS)

Capstone Copper Corp. is an Americas-focused copper mining company headquartered in Vancouver, Canada. Capstone's operating portfolio of assets includes the Pinto Valley copper mine located in Arizona, USA, the Cozamin copper-silver mine located in Zacatecas, Mexico, the Mantos Blancos copper-silver mine located in the Antofagasta region, Chile, and the Mantoverde copper-gold mine, located in the Atacama region, Chile. Capstone's growth pipeline includes the fully permitted Santo Domingo copper-iron-gold project, located approximately 35 kilometres northeast of Mantoverde in the Atacama region, Chile, as well as a portfolio of exploration properties in the Americas.

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