Capstone Copper Corp.

Good morning. My name is Colin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Capstone Mining Q2 2021 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press star, followed by two. Thank you. Mr. Annette, you may begin your conference. Good morning.

I'd like to welcome everyone on the call today. Please note that the news release and regulatory filings announcing Capstone's 2021 second quarter financial and operational results are available on our website and on CDAR. If you're logged into the webcast, we will be advancing slides of today's presentation, which is also available on our website. Joining me on the call today are our President and CEO, Darren Pilot, our Chief Financial Officer, Raman Randhawa, and our Chief Operating Officer, Brad Mercer. Following our brief remarks, there will be an opportunity for questions. Please note that the comments made on the call today will contain forward-looking information within the meaning of applicable securities laws. This information, by its nature, is subject to risks and uncertainties, and actual results may differ materially from the views expressed today. For further information on the risks and uncertainties pertaining to our business, please see Capstone's most recent filings, which are available on our website and on CDAR. And finally, I'll just note that all amounts we will discuss today are in U.S. dollars, unless otherwise specified. Now I'll turn the call over to Darren Pilot.

Thank you, Gerald, and good morning, everyone. I'd like to start on the cover page of this presentation showing our tailings thickeners at Pinto Valley. The focus over the past several months has been to complete phase two of our PV3 optimization project, with the majority of this year's work at the back end of our operation. These upgrades will improve reliable throughput and water recovery capability, thereby decreasing water consumption. Turning now to slide number six, I'd like to mention our 2020 sustainability report, which we published recently and is available to download from the responsibility section of our website. This is Capstone's fifth annual sustainability report, and it follows on the summary report for the period of 2018 to June 2020, which we published last year. The report was prepared in accordance with the core option of the Global Reporting Initiative standards and discusses how our approach and long-standing commitment to sustainable mining practices continue to guide our vision of a responsible copper-focused mining company capable of generating value for all of our stakeholders. Our cross-functional ESG committee is currently developing our long-term ESG strategy to formalize our contributions to the United Nations Sustainable Development Goals, and we expect to incorporate this strategy into our 2021 sustainability report to be published next year. We're very proud of this achievement and commend our ESG team for their diligent work. We look forward to seeing their work reflected in our future results and ESG reporting initiatives going forward. Moving now to slide seven. During Q2 of this year, we produced 43.3 million pounds of copper at cash costs of $1.91 per pound, thanks to a record production quarter at our Cozum and mine and a strong quarter at Pinto Valley. in the context of a significant scheduled downtime as we focused on phase two PV3 optimization work. As of now, though, all the major work has been completed, and with that, we expect a strong second half to the year. I'm very pleased with Cozumel's performance as it was the first full quarter at expanded production rates of 3,800 tons per day, and the mine achieved the highest quarterly production in its history of 13.8 million pounds of copper in the quarter at a dollar per pound cash cost, which is at the low end of our cost guidance. Over now to slide number eight. Q2 financial performance was another record-setting quarter in Capstone's history, with 128 million in adjusted EBITDA and 110 million in adjusted after-tax operating cash flow. Our cash balance has significantly increased to $172 million at quarter end, and it's incredible to look back a year ago and see what a difference a year makes. We have added $336 million of cash onto our balance sheet over the past 12 months, or $1.03 per share. Slide number nine now, and as I mentioned, this was a record quarter for Capstone, and this wouldn't have been possible if we hadn't invested into our future during the tough years of 2019 and 20. Both our mines are now operating at optimized levels and well-timed in this $4 copper environment. At Santa Domingo, we are making great progress on infrastructure sharing, capital reduction, and financing discussions, and we expect to have an announcement on this during the third quarter. Over now to slide number 10. Q2 EBITDA of $128 million, Beat Street Consensus of $100 million, and first half tax operating cash flow of $205 million demonstrates our cash generation capability as we approach a permitted transformational growth phase with San Domingo Construction next year. On slide 11, to put things into perspective, This chart shows this year's operating cash flow performance on June 30th compared to our historical quarterly results.