Capstone Copper: 2024 Output Falls Short, but 2025 Holds Promise

Capstone Copper Corp. (TSX:CS) (ASX:CSC) reported its 2024 production results and guidance for 2025, with a mixed bag of outcomes. The company's 2024 output fell slightly below its guidance range, primarily due to ramp-up delays at Mantos Blancos and Mantoverde projects. However, Capstone remains optimistic about its future prospects, with a projected increase in copper production for 2025.

Capstone's 2024 consolidated copper production reached a record high of 184,458 tonnes, a 12% increase over 2023. The primary driver behind this growth was the ramp-up of the Mantoverde Development Project (MVDP), which produced first copper concentrate in late June. Despite the ramp-up delays, the company's output in 2024 still marked a significant improvement over the previous year.

Capstone's 2024 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. The company's Q4 2024 production was also a record, with 53,942 tonnes of consolidated copper produced at C1 cash costs of approximately $2.55 to $2.60 per payable pound of copper.

Capstone's 2024 output fell slightly below its guidance range, largely attributable to ramp-up delays at Mantos Blancos and Mantoverde. The company had initially guided for 190,000 to 220,000 tonnes of copper production in 2024. However, the ramp-up delays pushed the actual output to 184,458 tonnes. Capstone's 2024 C1 cash costs also came in slightly higher than expected, at approximately $2.75 to $2.80 per payable pound of copper.

Looking ahead to 2025, Capstone expects a significant increase in copper production, with forecasted production volumes of 220,000 to 255,000 tonnes of copper. This projected increase is driven by several key factors:

1. Ramp-up of Mantoverde Development Project (MVDP): The MVDP is expected to contribute significantly to the increased production in 2025, with a commensurate decrease in unit costs, driving a significant increase in cash flow generation.
2. Mantos Blancos ramp-up: Mantos Blancos is expected to continue its ramp-up in 2025, with higher mill throughput boosting copper production.
3. Mantoverde Optimized brownfield expansion project: Capstone plans to advance its Mantoverde Optimized brownfield expansion project after receipt of a DIA permit amendment, which is expected around the middle of 2025. This project aims to increase the sulphide concentrator's throughput from 32,000 to 45,000 ore tpd, extending the mine life to 25 years.
4. Santo Domingo project: Capstone also plans to continue progressing financing and partnership discussions at its fully permitted Santo Domingo project, which has a strong after-tax net present value of $1.72 billion and a 24.1% internal rate of return.

Capstone's projected increase in copper production for 2025 is in line with or higher than other major copper producers. For instance, BHP Group expects copper production to increase by around 15% in the 2025 financial year, while Glencore anticipates a 10% to 15% increase in copper production over the same period. Capstone's expected growth is driven by its strategic focus on expanding production and optimizing its operations, positioning the company well for future growth in the copper market.

In conclusion, Capstone Copper's 2024 output fell slightly below its guidance range, primarily due to ramp-up delays at Mantos Blancos and Mantoverde projects. However, the company remains optimistic about its future prospects, with a projected increase in copper production for 2025. Investors should monitor Capstone's progress on key projects and ensure they are on track to meet production targets in the coming years. Additionally, investors should consider the broader market conditions and commodity prices, as these factors can impact the company's ability to meet production targets.