Commodities | Aug 06 2026
Capstone Copper’s June quarter and growth potential suggest the miner belies its inclusion in the Small Cap Index.
- Capstone Copper posts solid, in-line June quarter
- Mantoverde the standout, with problems at Pinto Valley
- Mantoverde Optimisation offers further growth potential
- Buy ratings galore
By Greg Peel
Capstone Copper's June quarter marked its seventh consecutive quarter of record adjusted earnings, Morgans notes, underscoring the consistency of earnings growth and leverage to the copper cycle.
Copper production of 51.8kt was in line with consensus, and adjusted earnings of US$354m beat consensus by 4%. Group C1 cash costs of US$2.82/lb were in line. Net debt fell -8.6% quarter on quarter to US$674.9m.
The 70% owned Mantoverde mine in Chile proved the standout performer, beating on volumes and costs on record sulphide output above design throughput.
Capstone's other assets were affected by unplanned downtime (Pinto Valley, Arizona) and cost inflation from elevated diesel and sulphuric acid prices (Pinto Valley, Mantos Blancos in Chile, and Cozamin in Mexico), but performance still met forecasts given Mantoverde, its highest-volume, lowest-cost asset, delivered.
Continued filter-plant issues and unplanned maintenance have delayed the operational recovery at Pinto Valley, with a September shutdown now required to address the primary crusher and filtration constraints.
Mantoverde Optimisation
Morgans points out Mantoverde only becomes more dominant to group performance post the Mantoverde Optimisation (MV-O) tie-in in the September quarter.
Consensus assumes no material volume ramp-up at Mantoverde in 2026 following the MV-O tie-in, with benefits flowing through from the March quarter 2027.
Having seen Mantoverde run above nameplate for the full quarter, Morgans sees scope for second half 2026 volumes to outperform if the tie-in and ramp-up succeed.
Debottlenecking completed in the quarter related to the MV-O tie in (pumps, tanks, motors, piping) has already lifted its throughput with spare crushing, grinding and flotation capacity able to now be utilised.
Morgans believes guidance of 36ktpd production assumed for the December quarter, against 40ktpd achieved in June, looks conservative.
Consensus sits at the bottom of Capstone’s guidance range on volumes and the top on costs, appropriately conservative given Pinto Valley's persistent underperformance and sector-wide input cost inflation.
Regarding inflation, at Mantoverde no further spot acid purchases are planned this year, achieved by stockpiling higher acid-intensity ore rather than processing it now.
Other Assets
At Pinto Valley, Morgans sees the September shutdown as critical to the asset’s future reliability. Both the crusher mainframe and filter plant are being fully rebuilt, replacing decades-old infrastructure that has driven the bulk of unplanned shutdowns recently.
Morgans expects the rebuild to materially de-risk Pinto Valley's operating reliability from October onward, if successful.
Regarding Cozamin, management confirmed this asset may be outgrown by the larger Chilean and Arizona portfolio pipeline and remains under strategic evaluation.
However, a sale would require value at least comparable with retaining the remaining cash flows, Macquarie believes, suggesting portfolio rationalisation rather than a balance-sheet-driven disposal.
Macquarie outlines several potential catalysts ahead for Capstone, being the Mantos Blancos Phase 2 study (due in the December quarter), a Santo Domingo (Chile) sanctioning decision (December quarter), MV-O ramp-up (December quarter), Santo Domingo port partnership opportunity (timing uncertain), and the potential sale of Cozamin (timing uncertain).
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