Capstone Copper Corp.

Good afternoon, ladies and gentlemen, and welcome to the Q1 2025 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 1, 2025. I would now like to turn the conference over to Daniel Sapieri. Please go ahead.

Thank you, operator. I'd like to welcome everyone to Capstone Copper's Q1 2025 conference call. Thanks for joining us today. Please note that the news release and regulatory filings announcing Capstone Copper's 2025 first quarter financial and operational results are available on our website and on CDAR+. If you are logged into the webcast, we will advance the slides of today's presentation, which are also available in the Investors section of our website. I am joined today by our CEO, John McKenzie, our President and Chief Operating Officer, Kashil Maher, our SVP and Chief Financial Officer, Raman Randhawa, and our SVP Risk, ESG, and General Counsel, Wendy King, our Head of Chile, Jim Whitaker, and our Head of Technical Services, Peter M. Ellingson, are also available at the end of the call for questions. Following our brief remarks, there will be an opportunity for questions. Please note that comments made today on the call 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 at www.capstonecopper.com and on CDAR+. And finally, I'll just note that all amounts we will discuss today are in U.S. dollars, unless otherwise specified. It is now my pleasure to turn the call over to John McKenzie.

Thank you, Daniel. And hello to all of you dialing in from the Americas, Europe, Australia, and around the globe. We're pleased to present our first quarter 2025 results and achievements. Over the past three years, we've been in a period of significant transition at Capstone, building and ramping up mines and establishing standardized processes and systems. Today, amidst heightened global economic uncertainty, we're positioned well with our ramp-ups behind us and no major expansionary projects underway.

To date,

We've not seen any material direct impact on our business from tariffs. We continue to see strong physical demand for copper in the current markets and believe that the medium and long-term fundamentals for the copper markets remain extremely attractive. However, the uncertain outlook for global growth in the short term reinforces the importance of our ongoing focus on safety, operational execution, and maintaining a strong financial position. Over the remainder of this year, we're looking forward to demonstrating reliable copper production, lower costs, and increased cash flow generation while continuing to advance our production growth projects. Starting with slide five. In Q1, our operations delivered consolidated copper production of 53.8,000 tons at consolidated C1 cash costs of $2.59 per pound, which was in line with our expectations amidst the maintenance-heavy quarter and an unplanned nationwide power outage in Chile. In Q1, we continue to realize the benefits associated with the ramp-ups at Montevideo and Montes Blancos, with record sulfide production of 46,000 tons. This represents a 50% increase compared to Q1 last year. We've been pleased to see the performance at both assets meeting and exceeding expectations post-ramp-up. I know that our teams are eager to continue demonstrating the ongoing potential of these mines, including at Monteverde, where we remain hard at work preparing to execute on our Monteverde optimized project. At Pinza Valley, the challenges we experienced in the latter half of 2024 impacted the beginning of Q1. However, our team worked hard to remedy the situation by mid-quarter. We remained focused on the implementation of our asset integrity program, to deliver stable operations and to achieve the design throughput capacity. And at Cozumel, we saw another steady quarter with strong production and low unit costs. On the corporate side, we're pleased to announce inclusion in the ASX 200 index during the quarter, recognizing the continued success of our secondary listing in Australia after commencement of trading last year. We also took steps to improve our balance sheet strength and flexibility this quarter, completing an upsized offering of $600 million in senior unsecured notes. Our balance sheet is in excellent shape, and we're committed to deleveraging further through internally generated cash flows. Turning to slide six, this year represents an inflection point for Capstone, confirmed by our reiterated annual guidance. In 2025, We continue to target 220 to 255,000 tons of copper production at cash costs between $2.20 to $2.50 per pound. This represents significantly higher production and lower cash costs compared to 2024. The chart on the right-hand side of the page illustrates our EBITDA sensitivity at various copper prices based on the midpoints of our 2025 guidance, as well as upside related to MVO and Sanso Domingo at run rate production. This level of EBITDA generation will enable us to focus on generating cash to deliver our balance sheet, which will enhance our financial position and provides a strong platform to weather any macroeconomic volatility. And with that, I'll pass over to Raman for our financial results.

Thank you, John. We are now on slide seven. In Q1, we recorded copper production of 53.8,000 tons, reflecting record sulfide production driven by the growing production from the Manta Verde sulfide concentrator. Strong copper sales, along with a higher realized copper price of $4.36 per pound, drove record quarterly revenue of $533 million. LME copper prices averaged $4.24 per pound in the quarter, up 2% compared to $4.17 in Q4. Despite volatility in LME copper prices of late, they currently sit at a similar level, just below $4.20 per pound. During Q1, we observed a significant premium emerge for the U.S. COMEX benchmark price. A small portion of our production in the form of PV and the valley cathodes in the U.S. benefits from this premium, while the majority of our copper production is priced based on the LME. T1 cash cost of $2.59 per pound decreased by 10% compared to Q1 2020. This was driven by the ramp-up of our mantle-buried sulfide operation, which contributes some of our lowest-cost production, as well as Mantle's Blankos operating at nameplate capacity, which led to sulfide cash costs decreasing from $2.55 per pound in Q1 2024 to $2.23 per pound in Q1 2025. As a result, in Q1, we realized strong gross margins of $1.77 per pound, or 41%. Adjusted EBITDA in Q1 of $179.9 million, more than doubled year-over-year by higher realized copper prices and the higher copper production. And lastly, we reported adjusted net income attributable to shareholders of $8.1 million, or one cent per share, in Q1 2025. Now that we have ramped up Mento Verde and Mentos Blancos, we booked depreciation of $120 million this quarter, which is a more appropriate run rate level when compared to the $68 million we recorded in Q1 2024. Meanwhile, now that we have seized capitalized interest expense to the Mento Verde development project, we also booked finance expenses of $37 million compared to only $10 million last year. Of the $37 million, approximately $15 million are reoccurring non-cash expenses like accretion of liabilities. Moving on to slide eight. Topical this quarter was of course a discussion around tariffs and the resulting impact in various areas of the global economy. While the situation continues to evolve, first we want to highlight that to date we have experienced no impact to our revenue as a result of tariffs. Meanwhile, currently the direct impact to our consolidated operating costs is expected to be minimal. Pinto Valley is our only operating asset in the U.S. We have provided a breakdown of operating cost drivers at the site. After the review, we performed to determine the potential impact of tariffs. As can be seen, significant proportion of our costs, such as labor, diesel, contractors and services, and power, are not directly impacted by tariffs. Certain spare parts and grinding meter examples of types of purchases that could be exposed. We estimate that the proposed tariffs announced today could have potential to increase the cost of goods that Pinto Valley purchased in the U.S. by approximately 5% or 10 to 15 cents per pound of PV, reflecting the potential pass-through of tariffs incurred by suppliers. Efforts are underway to evaluate alternative options to mitigate these potential impacts. And on a consolidated basis, this would imply an impact of less than 1% or 2 cents per pound. We will continue to monitor global inflationary impacts. But at this time, we see ourselves tracking within our 2025 cash cost guidance range. Moving on to slide nine. On the left-hand side, we summarize our available liquidity, which as at March 31st, 2025, was greater than $1 billion, including $345 million of cash in short-term investments and $700 million of undrawn amounts in our corporate revolving credit facility. We finished the quarter with a net debt of $7.88 $788 million, which modestly increased from $742 million at year-end, driven by a working capital draw of $46 million, largely related to a build-up of accounts receivable, in addition to non-reoccurring payments of $35 million for the final installment payment relating to the 2021 consolidation of the 100% interest in the Santa Domingo decorous, and $10 million to repurchase a portion of the royalty of Santa Domingo. In Q1, we have continuous year net leverage decline with a net debt to EBITDA ratio of 1.3x at the end of Q1 compared to 1.5x at year end. Moving on to slide 10 now. Towards the end of March, we announced an upsized offering of $600 million of 6.75% senior unsecured notes due 2033. This was part of a debt refinancing transaction which achieved the objective of replacing our higher cost amortizing and very restrictive Mantua Verde project debt facility with a lower cost, longer term, senior unsecured note, while also increasing our pro forma liquidity. The new high-yield bond closed on March 25th. We anticipate refinancing the Mantua Verde project finance facility to close in Q2. As a result, at the end of Q1, we repaid our corporate revolving credit facility in full. We expect to refinance Mantel Verde project facility during Q2 with the intention of repaying our 70% share out of cash and a redraw on the RCF. Meanwhile, we expect our partner MMC to refinance their portion of that facility with a new loan at the asset level. Overall, this refinancing lowers our cost of debt capital and turns out our debt maturity is creating a simplified structure. Now I'll hand it over to Cashel for the operations review.

Thanks, Roland. We're now on slide 11. where we'll first run through our Chile operations. Overall, we're excited to see our recently ramped up projects operating in line with our expectations. Unfortunately, in February, there was a nationwide power outage in Chile, which resulted in downtime at both Mento Verde and Mentos Blancos. We are fortunate that the impact was limited to around two days, thanks to the hard work from our teams in Chile. Additionally, both assets had five days of planned maintenance in February. which is already a short month. In total, this resulted in about seven days of impact at both mines during the quarter, which explains the pullback in throughput for February. On operating days, we were pleased to see both Mento Verde and Mentos Blancos executing according to plan and look forward to seeing performance continue to improve throughout this year. Starting with Mento Verde, we achieved Continued improvements in sulfide production and costs driven by the ramp-up of our Mento Verde sulfide concentrator. Total production yielded a record 22,540 tonnies of copper at C1 cash costs of $2.46 per payable pound, including a lower $1.53 per payable pound from the sulfides. Plant throughput averaged above 31,000 tonnies per day during the quarter, with rates in January and March exceeding the nameplate capacity, partially offset by lower rates in February, as previously outlined. Copper grades averaged 0.71% in the quarter, while sulfide copper recoveries continued their upward trajectory, averaging around 82.3% in Q1. As mentioned, in February, we completed a planned five-day shutdown, which included liner change-outs, on our mills, but we also continue to make further minor modifications to the flotation area to improve recoveries. Currently, our focus is on operator training to respond to different ore characteristics as it is fed through the mill. We see ourselves starting to achieve our design recoveries within the second quarter. Q1 was expected to be the lightest quarter due to maintenance. As such, we expect copper production and cash costs to improve throughout the course of the year. As John mentioned, our team is also eagerly awaiting the opportunity to execute on our Mantoverde optimized project. We are advancing detailed engineering and preparing to start the project as quickly as possible once we receive a DIA permit amendment, which is expected around the middle of the year. We've been encouraged so far by individual peak daily throughputs in excess of 45,000 tonnies per day, and we look forward to de-bottlenecking the plant to achieve these rates consistently. Our Mantos Blancos asset maintained momentum going into 2025, as highlighted on slide 12. Total sulfide and cathode production yielded 13,846 tonnies of copper at C1 cash costs of $2.43 per payable pound. Production and cash costs both improved significantly quarter over quarter, driven by successful ramp-up of the concentrator in 2024. We have now sustained an average throughput of 20,000 tennies per day at Mansel-Splanko since November, excluding February due to the maintenance and power outage impacts. It's great to see the overall variability of the milling process having been significantly reduced at this asset. We also benefited from strong grades to start 2025 at an average grade of 0.89% in Q1. Pinto Valley produced 10,886 tons of copper at elevated C1 cash costs of 384 per payable pound during Q1, as shown on slide 13. As we discussed on our Q4 conference call, Pinto Valley experienced setbacks in the latter half of 2024 that continued into the first part of Q1. As a result, throughput averaged 50,000 tonnies per day in Q1, then planned downtime due to electrical and mechanical issues that resulted in one of our six ball mills being down for the first half of the quarter. We were able to remedy these issues mid-Q1 and finished off the quarter with all mills turning and an average throughput in excess of 53,000 tonnies per day in March. We are committed to the implementation of our asset integrity program with the goal of improving the reliability of the plant to drive higher production and lower costs. We continue to expect copper production to be weighted towards the second half of the year, driven by grades and throughput, with lower first quarter as a result of the previously mentioned maintenance. Moving to slide 14, Cozumel delivered another solid quarter, producing 6,524 tons of copper at C1 cash costs of $1.28 per payable pound. In Q1, Cozumel cash costs benefited from improved contractor utilization, higher silver byproducts, and a weaker Mexican peso, and lower treatment charges, which continue to represent a tailwind for the remainder of 2025. Now over to Wendy for the sustainability review.

Thank you, Cashel. We're now on slide 15 with a review of the progress we made on our sustainability priorities and targets to start off 2025. In Q1, we signed a 35-year water agreement with ICANSA to secure long-term water supply by reusing treated wastewater from Anafagasta. The project will also reduce marine discharge and increase water recycling and is expected to be operational in 2028. We continue to refine our approach to sustainability by adopting a water stewardship policy aligned with ICMM water stewardship framework, as well as a tailings leaching and waste rock management policy, expanding the scope of Capstone's tailing management framework. These policies represent an important element of improving governance and accountability across all of our sites. This quarter, we continue to advance towards our sustainable development strategy goal of implementing the global industry standard for tailings management across all of our TSFs by year-end 2028. We are tracking well compared to our internal forecast. In the area of climate, I'm particularly pleased by the installation of a solar array at our Pinto Valley mine, replacing some of our diesel generators with a renewable source of power. Additionally, at our Chile operations, 100% of our electricity used in 2024 was covered by renewable energy certified sources, as defined by the International Renewable Energy Certificate standard. We had many opportunities to interact with our local communities and stakeholders this quarter, especially at Manta Verde, Pinto Valley, and Santo Domingo. These initiatives are aligned with our newly adopted social performance standard, which governs community engagement across the company. And with that, I'd like to pass it back to John.

Thanks, Wendy.

Turning to slide 16, our goal this year is to realize the benefits from the projects we completed in 2024, while we focus on operational execution and strengthening of the balance sheet. This will provide us with a strong foundation to execute on our next phases of organic growth, as and when it makes sense for our company. We've outlined our sector-leading growth plans on the slide and some of the additional upside within our portfolio. Our first priority for growth is the Monteverde Optimized Project, an outstanding project with high returns, quick payback, and low capital intensity of only $7,500 per tonne. We plan to finance this project through internally generated cash flows. This is the type of project we believe we can and should execute in almost any economic environment. We intend to proceed with this project following the receipt of a DIA permit amendment filed in mid-2024 which we continue to expect around the middle of this year. At Santo Domingo, we continue to progress with the assessment of the optimal financing structure for the project, including running a process to bring in a minority partner at the asset level. We're very encouraged by the progress we've seen so far. Beyond these projects, we're spoiled for choice with optionality across our portfolio of low-risk, high-return projects. This includes another brownfield expansion at Montes Blancos, flexibility in the MVSD district to unlock more copper and potentially byproduct cobalt production, and the potential development of another major copper district around our Pinta Valley mine in Arizona. Moving to slide 17, we want to articulate the path forward for Santo Domingo as it pertains to what we need to see before a potential sanctioning decision. Our main goal with these criteria is to ensure we execute on the project when it makes sense for capstone, while maintaining optionality and continuing to increase the value of the project. First, as I've mentioned on the last slide, we believe a minority interest sell-down, possibly similar to what we were able to achieve with our 30% partner at Monteverde, is an attractive solution that balances the risks of the project. We're running a process, and it continues to progress well. with parties in Phase 2 of the process attending site during the past few months. Once this process has run its course, we then look to ensure the optimal financing structure for the project, and we've already received early indications for a project finance facility of $1.1 to $1.3 billion. Before a potential sanctioning decision at Santo Domingo, we want to ensure our balance sheet is well prepared to support a new growth project. For us, This means our assets operating at or near full production levels, strong liquidity, and net debt to EBITDA leverage below one times. We made good progress on our balance sheets in Q1 and are focused on continued strengthening throughout 2025. Our fourth criteria is ensuring that the scope of the project is appropriately defined and optimized. We're targeting to achieve at least 40% detailed engineering this year, while we continue to advance various options to optimize key infrastructure and increase the value of the project with incremental upside opportunities, including potential additional copper production from Sierra Norte and oxide production. And as you've said on previous conference calls, we're also very mindful of the overall macroeconomic environment, which has come into increased focus today. The way we see it right now, That opens up a potential sanctioning window for Santo Domingo, starting around the middle of 2026. Santo Domingo represents a transformative opportunity for capstone, with the potential to take our production up to approximately 400,000 tons of copper per annum, at even lower consolidated costs, and with a capital intensity that compares favorably across our industry. With that, I'll turn to slide 18 to conclude today's presentation. This quarter, we've begun to realize the benefits from the first phase of the transformation of capstone copper with tangible delivery on our peer leading growth. Our focus on operational execution and balance sheet strength and flexibility means we're well prepared for the future. We're extremely well positioned to become a leading, long life, low cost copper producer, playing an important role in supporting the world's decarbonization and electrification efforts.

With that, we're now ready to take questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand is being raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys.

One moment, please, for your first question. Your first question comes from Orit Walcado from Scotch Bank.

Hi, good afternoon. on Mantoverde, it's nice to see the throughput performance reach nameplate, I guess, two out of the three months. What about recoveries? I mean, you're tracking kind of low 80s versus design of 87 to 91. I realize recovery has always sort of come last in terms of the de-bottlenecking optimization, but what do you think the timeline is to achieve that design recovery on a sustainable basis?

Yeah. Thanks, Aris, for that question. And, um, It's something we've obviously, it's now the major focus. I think we're very comfortable with the throughput rates. So obviously, as you said, the next phase is getting the recoveries right. And I think we're looking by the middle of this year to be up at design recovery. But perhaps if I can pass across to Castle just to flesh that out a little bit.

Yeah, it's a good observation, Urs, exactly in line with what John said. We believe in Q2 we're making good progress towards the recoveries. I sort of will point out that we have been milling transition ore, and perhaps it was smoothed in the original model, so we're getting... a little bit higher oxide as a component, which is biasing down that, but we're working through that ore now. And so we see naturally that maybe an 82.3 is actually a bit higher when you put it in respect to sulfide, 100% sulfide-type ores versus a little bit of mix in the upper benches on a couple of our satellite pits. So the team has said they've worked their way through that, and we continue with an education process with our operators on the different types of ores and reagent mixes, and we continue to work on our operational controls within the mill, and so we're seeing improvements. So like John said, we see ourselves sort of getting there in the middle of this year. Thank you.

And just as a follow-up, I think John said you're now targeting Santo Domingo FID potentially by mid-26. If I'm not mistaken, that's probably a six-month pushback from previous expectations. Could there be further room to defer that just given the uncertain copper environment and macroeconomic uncertainty? Have you thought about actually just parking it for another year and just harvesting free cash flow?

Yeah. I think, Oris, the way we look at it is, you know, we don't want to have multiple projects running at a time. So our next project is Montevideo Optimized. The returns on that project are unbelievably good. And, you know, the cash it generates for us is fantastic. So, you know, we basically, we've got everything waiting for that. We're just waiting for the permits and we expect to get that, I think, sort of as we've said, mid-year. Um, we expect that to be sort of roughly in the region of, you know, sort of nine to 12 month execution period. And I think Castle mentioned, we've already actually had some days of throughput at around 45,000 tons a day. So, you know, it's just making, getting the equipment there to allow us to do that on a sustainable basis. Um, so, you know, I'd be pretty uncomfortable about starting another project while we, you know, focusing our efforts on a ramp-up of a project. It's obviously a much smaller, much simpler project than Montevideo Optimized. So, you know, that's why we're sort of now saying that the sanctioning window will open probably around the middle of next year. But, you know, I mentioned all the sort of criteria we want to have in place, but that doesn't necessarily mean we will take the decision to proceed. There's nothing forcing us into a a sort of construction decision at this point so you know what all we're saying is that we will have everything that right now we have you know we have the studies we have the permits the detailed engineering is is well underway which to me is sort of best practice in terms of um you know ensuring we deliver the project on budget and on schedule um you know getting the financing in place making sure we've got an optimized project. I saw a study the other day that suggested that on major mining projects, companies on average leave about half a billion dollars of NPV on the table by not properly optimizing the project design. So we want to extract every penny from this. So we're doing quite a bit of work around whether it's infrastructure optimization or process flow optimization, just making sure we're subjected every aspect of it to sort of rigorous review. And, you know, once we've done all of that, we're then in a position where at any point I would be comfortable, you know, sort of the board's approach to take a decision on that project. But, you know, there are other factors as well. We need to look at the rest of our portfolio, you know, how much cash is being generated. Are we comfortable with how each of our assets is performing? Obviously, the macro environment as well. That said, it's not necessarily the case that hard times are a bad time to start a project. Sometimes those are the best times to start and build a project with a view to actually bringing it on into the upturn. We need to carefully consider all of those parameters and then come to a decision that's really in the best interest of the company and its shareholders. And as I say, I think that window will open in the middle of next year, but there's nothing that forces us to move at that point.

Thanks for the call.

Your next question comes from Dalton Barreto from Canterbury. Please go ahead.

Thanks for taking my questions. Maybe I can stay on that same vein there that Orris wrapped up on in terms of timing. I know you just said that there's nothing sort of pushing you to take the sanction decision at that date. Do you have a sense for what other projects might be going ahead and whether actually getting contractors and so on might be a concern at that point in time?

Yeah, it's an interesting question, Dalton. And, you know, that's one of the criteria that obviously we take into account. You know, sort of at the end of the day, you know, within that region, there's a limited pool of A-grade contractors, A-grade engineers, etc., I think we're very fortunate that we already have a project team that has multi-decade experience before they came across to Montevideo that now work together for the past three years at Montevideo as a team. And so we'll be stepping across to do exactly the same thing at Santo Domingo. So I think we're in a much better position than most. We have already sort of identified the most likely you know, suppliers and contractors for that project. And, you know, that gives us a lot of confidence, but we obviously do need to make sure that, you know, what is the overall environment? What are the availabilities? Quite frankly, I think the current economic volatility is likely to further, you know, I think actually Santo Domingo is ahead of the ahead of the pack in terms of readiness in Chile, in terms of sort of development. So we're kind of ready to pull the trigger, you know, if not now, just because we're carrying on with detailed engineering and a few government things that we'd like to have in place before we start a project. But I would say we're well ahead of pretty much all the other projects in that region. And I have a feeling that the current sort of macro volatility that we see is going to cause a lot of companies to go pins down on their projects. I actually think we're likely to be ahead of the pack in terms of access to all the resources that we need to build that project.

Great. Thanks, John. And then just as my follow-up, I'll stay on San Domingo here and maybe a bit of a two-part question here around the JV process. First question is, I guess, you've talked in the past about maybe the straight equity partner versus an infrastructure sharing agreement. And I'm just wondering, is there any reason you couldn't do both deals? And then part B of that is, how do you plan to price in the upside with Sierra Norte and the oxides and so on when you go forward with this? Thank you.

Both very good questions. I think, yes, absolutely. We need to look at all options. And I think I spoke a little bit about how we think about optimizing a project. And part of that is looking at each aspect of infrastructure. If we can reach agreements to utilize existing infrastructure rather than build our own, Potentially, that's a better economic and risk outcome to us than doing it all ourselves. We need to properly evaluate that. In an ideal world, I'd say one would normally look to having one partner, but I've operated in many JVs where we've had multiple partners, and it's really just about having the right partners sort of shareholders agreement, the right JV agreement and the right JV governance that ensures that things run very smoothly. So I don't really see any reason why we couldn't have a combination of both a sort of equity type partner and an infrastructure partner. I think we're going to look at all of those options. And I think I've said before that the process that we're going through, it's not a sort of conventional sale process where you You run an auction, you sell it, and then you walk away. We're obviously going to be partnered up with our partners for the next 30, 40, 50 years in this district. So we do need to be very thoughtful about how we set up that arrangement and make sure it's something that's not just good this month, but is good for the next multiple decades. I think just on your question about how we build in that sort of future value that's going to be created, we need to think about that. We're obviously, it's very difficult to align the same level of technical work all at the same point. Today, we've obviously got a technical report that's out there. That's our base case feasibility. We've got a number of other opportunities that we believe are very, high probability, but they're still further back on the sort of technical development curve. So that's work that's to be done. And I think when we enter into the sort of final negotiations with a partner, that'll be part of the discussion as to how we think about value for those projects.

Great. Thanks, John. I'll jump back in queue.

Your next question comes from Ralph Perfetti from CFO. Please go ahead.

Thanks, operator, and good afternoon, everyone. I wanted to come back to Monteverde. You know, above design in January and March, and that included, you know, one day at 45,000. tons per day plus it begs the question cashland john whether or not the base is higher uh than the 32 000 tons a day and and are there any advantages to seeing not only if the base is higher but stable at higher throughput ahead of mantle verde uh optimized and that mid 2025 i mean maybe this is just a question of scaling up uh would be would be potential you know after mvo but just wondering if there's any advantage to seeing if that if that rate if that stable rate is at a higher level

Thanks, Ralph, for that question. I want to ask Castle just to respond to that.

Yeah. Hi, Ralph.

Yeah, I think you're on to it. Right now, our permit allows us basically to average 32,000 tons a day, and we expect to get that DIA modification in the middle of this year. And it ostensibly... rates, the throughput, the new permit at 45,000 tons a day average. However, we can peak out up to 55,000 tons a day. So it's been very encouraging to see the performance of the crushing and grinding circuit and also the current installed capacity at our tailings that occasionally we can get to that volumetric that allows us to mill over 40,000 tons a day. So while to be able to sustain an average of 45,000 tons a day will require the $150 million in capital, half of it is actually mining fleet that will deliver the ore. So that's one of our constraints. But it does give us the opportunity to exceed our sort of guidance that we put out. The midpoint would have suggested 30,500 tons a day this year. We're already exceeding that throughput of guidance in our first quarter. And it would give us the opportunity when we receive that permit to see if we can push higher in maybe the mid or high 30s. But that remains to be seen. And it's a great option for us to have going forward and a great opportunity against our stated guidance.

Okay. Yeah, that's excellent. Very helpful. And I want to come back to Matos Blancos also. And your presentation talked about the variability of milling having significantly been reduced in the last little while. And I'm looking at sort of the non-throughput KPIs on sort of benchmarking the performance there and whether you can help me understand whether or not those are within spec, things like tons per day and mill availability.

So the answer is yes.

Yeah, sorry, John. Yeah, the answer is yes. We are sort of hitting every one of our ambitions at Mantos Blancos. I mean, the team's done an incredible job. And to say that is partially the merit of the asset integrity program and system we've been implementing and its adoption by that management group. So we are replicating that at Pinto Valley. Pinto Valley is a bigger mine, more complex, but Mentos Blancos is the example of how you can turn around an old asset and make it reliable, get the availability you require as such to have the throughput design and meet those requirements. plant utilization, plant availability numbers as we sort of laid out our ambitions to be at the start of this asset integrity program. So we're super happy with the way it's been working out.

Good, good. Thank you. Very helpful answers.

Your next question comes from Daniel Morgan from Barranjoey.

Please go ahead.

Hi, John and Cashel. First question is just wondering whether you might be willing to share just an update on April around the grounds. Obviously, April's now finished and whether you might have throughput numbers for different assets you might be willing to share and maybe just recovery at Mantevedo.

Cashel, close to you.

Um, yeah, like, uh, so as far as metal balances go, recoveries, um, sort of can't get those yet because we get daily. So we get indication of which way they go, but we don't have our metal balances. That usually is a lagging, um, metric that we get, you know, a week or two into the next month. But I can speak that more or less, uh, our performance in Q1 has been repeated in April. And, um, The throughputs are hitting sort of design capacities as we sort of did in Q1 at Mantos Blancos, Mantoverde. And of course, no one talks about Cozumel, but it's steady as it goes and it continues to perform as designed. The way I would sort of describe Pinto Valley is sort of we've sort of... We had a couple unplanned events again, where we had a little, well, we exited Q1 at 53,000 tons a day. We rolled back maybe to about 50,000 tons a day in April. But now the plant's up and going again. So a little bit of a stutter step there at Pinto Valley, but the other assets are performing as designed.

Okay, thank you very much. That's very helpful. another question I just note that within Manta Verde the cathode cost guidance is you know 410 440 a pound obviously the world economy is more uncertain the copper outlook more uncertain as we stand here today I'm just wondering what would happen if you decided to maybe cease cathode production you know is that the true cost of cathode or you know just noting that the site costs obviously including the sulfides is a lot lower and you're making cash overall at the site and I'm just trying to work out, I guess, how you might run your business in a lower copper price environment where we would see one? Thank you.

Yeah, so it's a really good question. And I think today the vast majority of our cash flows is obviously now going to be coming from the sulphides. We do actually have the luxury where we can, should we choose to sort of wind back oxide production if we feel it's not going to be making a margin. Obviously, the first quarter of Montevideo was higher cost just because we were in some lower-grade areas and we had some maintenance. But the other risk mitigation we took is we knew from our budgeting process that Montevideo cathodes were going to be in that sort of range which we mentioned. So we actually have an overall general policy that we don't hedge copper, but unless it specifically makes sense for risk mitigation during the project construction or if we've got some very high-cost production. This year, that was the case for Montevideo's cat boat. So we have hedged pretty much most of that production out with zero-cost collars, I think, between $4.15 and $4.85 or $4.90. So You know, we've sort of locked in the margin that we're making there or locked in to make sure we're not losing money on that production. And, you know, as we open up the sulfides, we're also finding we're opening up kind of more oxide and that creates opportunity for us as well. So, you know, it is something we constantly monitor. One of the kind of restrictions we have a little bit is we need to pretty much on an annual basis lock in our acid purchases, sulfuric acid purchases. So once we've done that, we don't lock all of it in. We lock about 2 thirds of it in. But it does mean that's the amount of oxide production that we've committed to for the next 12 months. But obviously, that is the major cost element in generating that copper. And so we're able to have a pretty good idea as to what it's going to cost us. And hence, make sure we protect ourselves on the downside, but leave ourselves the upside in terms of opportunity because of additional margin. Raman, I don't know if there's anything you want to add to that.

No, I just, Daniel, I think your question initially was like, is that guidance range kind of incremental basis? That's kind of sharing the mining costs. So if you truly were to kind of shut off the oxide, that's not on a true incremental basis. So there are some mining costs that are split between oxide and sulfide cash costs. If you only ran the sulfide, you would see that cost go up slightly. So on an incremental basis, the actual cash costs are probably a little bit lower than the guidance just on the allocation base.

Yeah, thank you. Exactly.

I mean, both of you have got to the answer I was looking for. Thank you.

Your next question comes from Kate McCutcheon from CT. Please go ahead.

Hi, evening. Just a couple of quick ones. So you had the COREZ payment come out this quarter. And you flagged the Minto obligations this year. Can you just call out any other cash outflows to come out over the year? And also, what do those Minto outflows sort of look like throughout the year?

Raman, do you want to take that one?

Yeah, I think the chorus was a big one. Then we had this Anami royalty that we bought back this quarter. The rest of the year, we don't really have any other large one-offs. The Minto... I think the short-term next 12 months is about $17, $18 million US. So you divide that by four quarters, right? So it's like $4 or $5 million coming out. But other than that, no other one-offs you should see.

Okay, excellent. And then just the MVO throughput opportunity that you spoke about earlier on the call before that CapEx is spent. With the permitting, I think you're expecting that mid-year. We're nearly there, May. What is the update on the timing there or where you're at with that process?

Yeah, that's a good question. And maybe I'll ask Castle just to talk. I think we're very confident about it. But Castle, do you want to talk through sort of where we are in that permitting process?

Yeah. So we've gone through some... Q&A periods, I think two back and forth with the the administrative departments that are handling the approvals. So typically we've been told under the process because we submitted it sort of mid or late May, it was supposed to be 12 months. But we've sort of been telling everybody June or July, the middle of the year, simply because, you know, things sometimes take longer than they should. So we're still expecting it. All our indications and communications with the various authorities are indicating that it'll be expected as expected in the middle of the year, and we've answered all their queries and questions. So we're looking forward to receiving it and then to be able to utilize the installed capacity we have and then the modifications and some of the metrics we see out of MVO, which is a terrific return on the capital we'll employ.

Okay, cool. Thank you. Your next question comes from Emerson Vieira from Goldman Sachs. Please go ahead.

Hello, guys. Good afternoon.

Thank you for the opportunity. So, I got two questions. The first one is on Pinto Valley. Just running back of the envelope calculations here. I mean, for the mine to deliver on the upper range of the guidance in terms of CO1 cash cost, you would have to be running in the lower end of the guidance cost for the coming quarters. So just wanted to understand what can you think of Pinto Valley CO1 cash cost compared to the guidance? Is it more likely that we see that figure reaching the top end of the guidance, and even still considering the potential cost increase due to the tariffs discussion. So that's the first question. And then the second one would be on cash flow generation. You guys just mentioned that there was a slight increase in net debt on a quarter-by-quarter basis, and working capital was one of the reasons for that. So I just want to understand if that working capital dynamics should improve going forward. And then considering the ramp up in production and lower costs, we should finally see net debt decreasing going forward.

Thank you.

Thanks, Sarasen. And on the first question, I want to ask Kessel to respond. I think it's very much a story of grade and throughput for Pennsylvania as to why we confidence in the cost. I'll ask Castle to talk to that, and then I'll ask Laman just to respond on sort of what our expectations are in terms of bringing the working capital number down.

Yeah, so with Pinto Valley, it's volume-driven. One of the big variances or opportunities to reduce the cost per pound is the grade, and the grade in the first quarter is is the lowest grade that we've budgeted to be mining this year, and then the grade goes up. With that and improvements on throughput, we expect the unit costs to come down and fall within the guidance range. We have been signaling that. I do know that when we put out our guidance, we put out one number for the 12 months, but there is a profile to the grade. We also have communicated that our improvements, incremental over the year, will increase the throughput at Pinto Valley. So the combinations of those two will bring down the unit costs.

And just on the net debt, like the biggest variance is quarter wallet kind of went up with those one-offs with Corus and Anami. So if you take those out, net debt comes flat. And then working capital is a function depending on quarter. Mantel Verde sulfides obviously are new in terms of the sales for this year. And there's a couple of different customers they go to, and some of them have a longer sales leg. But I think you'd see in this quarter us receiving, obviously, that buildup of receivables. So you should see that kind of ebb and flow, but it should turn back to positive this quarter.

All right. Thank you very much, guys.

Your next question comes from Delvin Barreto from Connaught. Please go ahead.

Yeah, thanks for taking my follow up. Just one quick one from me. We saw Mitsubishi Materials sell back their stake in another mine up in BC to one of your peers. And I'm just wondering if there's an opportunity for you to buy back their stake in . Thank you.

Yeah, thanks, Delvin. Look, we do have a right of first offer to acquire their stake should they ever wish to sell it. I think Monteverde is an absolutely spectacularly good asset, and so we'd obviously love to increase our shareholding units to the maximum that we could. On the other hand, I'd say MMC have been really fantastic partners, and we can't really speak on their behalf in terms of if they would have any intention of exiting their stake. Certainly in my discussions with them, they state that this is their most core asset in their portfolio. They're super happy with it. So I think it's been a really great partnership and I suspect that's going to continue for a long time to come.

Great. Thanks, John.

As a reminder, if you wish to ask a question, please press power one. There are no further questions at this time.

I will now turn the call over to John McKenzie. Please continue.

Thank you, operator.

It's been an honor to serve as the chief executive officer of Capstone Copper for the past three years. I look forward to continuing to serve the company and all stakeholders as Chair of the Board of Directors following our AGN tomorrow. Hassell will become the new CEO of Capstone and I have every confidence that he has the experience and capabilities to lead our company through its next phase of transformational growth. We look forward to updating you in late July with our Q2 results. Until then, stay safe and feel free to reach out to Daniel, Michael or Claire if you have any further questions.

Thank you for your continued support and have a good day.

Ladies and gentlemen, this concludes today's conference call.

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