Capstone Copper Corp.

Good afternoon and welcome to Capstone Copper's second quarter 2026 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, July 30th of 2026. I would now like to turn the call over to Daniel Sampieri. Please go ahead.

Thank you, Operator, and thank you, everyone, for joining us today to discuss our second quarter results. Please note that the news release and regulatory filings are available on our website and on CDAR funds. If you are logging 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 President and CEO, Cash Elmar. our SVP and Chief Operating Officer, James Whitaker, our SVP and Chief Financial Officer, Thomas Randhawa, and our SVP, Risk, ESG, and our General Counsel, Wendy King. During the Q&A session at the end of the call, we will also be joined by our Head of Technical Services, Peter M. Olmsten, who is available for questions. Please note that comments made on the call today will contain forward-looking information within the meaning of applicable securities laws. This information, by its nature, Thank you, Daniel. Thank you, Daniel.

And hello to all of you dialing in from Americas, Europe, Australia, and around the globe. Today, we are pleased to present our second quarter 2026 results and achievements. At the beginning of this year, I spoke about 2026 being a year of operational stability and cash generation between periods of transformational growth. Q2 delivered exactly that, as highlighted on slide 5. Our operations delivered consolidated copper production of 51.8 thousand tons at consolidated C1 cash costs of $2.82 per pound in Q2. Improved production combined with exceptionally strong commodity prices drove record EBITDA for the seventh consecutive quarter. This performance was underpinned by record throughput and record low cash costs at Manta Murdoch. Strong throughput at Santos Blancos and consistently solid execution at Cozumel, with reliability initiatives underway at Pinto Valley. We have reaffirmed our 2026 guidance. As we execute on our operational targets, we remain focused on advancing our growth pipeline to increase production and lower costs. Near-term growth is driven by our MDO project. which remains on schedule and on budget. Longer term, we recently submitted an EIA permit application at Antos Blancos and progressed Santo Domingo towards a sanctioning decision which continues to be expected in Q4. We are also prioritizing absolute cost reduction projects, like the Monteverde Pirate Augmentation Project, designed to reduce sulfuric acid requirements while increasing copper production. We continue to strengthen our financial position in Q2 and intend to deleverage further through internally generated cash flows over the course of this year, ensuring we are well positioned to invest in accretive growth opportunities. As we increase production to meet growing demand for copper, We remain committed to doing so responsibly, as highlighted in a recently published 2025 Sustainability Report. Our people remain at the core of everything we do, an integral capstone to safely deliver results. At Manco Verde and Mancos Blancos, we have recently negotiated new three-year collective bargaining agreements with all unions. providing important stability as we continue to operate and advance growth in Chile. Since 2022, our company has matured and we have delivered improved output from a diversified base of four operations in top-tier mining jurisdictions. As we look towards the future, our near-term growth pipeline enables Capstone to deliver the copper the world needs. And with that, I'll pass over to Raman for our financial results.

Thank you, Cashel. We are now on slide six. In Q2, we recorded copper production of 51.8 thousand tons, marking improved output over the previous quarter. Elevated copper prices averaged 605 per pound in the quarter, up 4% compared to 583 per pound in Q1. And we realized a higher copper price of 622 per pound. After subtracting C1 cash costs at 282 per pound, we deliver strong gross margins of $3.40 per pound, or 55% in Q2, despite global inflationary pressures. Record adjusted EBITDA of $354 million increased 8% quarter over quarter and 64% year over year. This marks our seventh consecutive quarter of record EBITDA driven by solid operations and strong copper prices. Lastly, we reported record adjusted net income attributable to shareholders of 97.6 million, or 13 cents per share in Q2. Another quarter of record financial results builds on success of Q1 and forms a strong foundation for H2 2026. Next, as highlighted on slide seven, we finished Q2 with a consolidated net debt of 675 million, which represents a reduction of 63 million from the prior quarter and over $100 million year-to-date. The decrease was primarily attributable to strong operating cash flows supported by higher realized copper prices. Turning to slide 8, our available liquidity at quarter end was greater than $1 billion, including $367 million of cash and cash equivalents and $750 million of undrawn amounts on our corporate RCF. The decrease in our absolute net debt combined with a record EBITDA drove a further reduction in our net leverage with a net debt-to-EBITDA ratio of 0.5x the end of Q2. This is down significantly from the peak during construction of the Mantleberry Development Project. The improvements made to net debt, leverage, and liquidity since completing MBDP is aligned with our commitment to strengthening the balance sheet between periods of growth. The chart on the right-hand side of the page highlights our trailing 12-month EBITDA growth since 2023. At these copper prices, we expect EBITDA to continue to increase, with Mantle Verde Optimized coming online. On the far right, we have profiled our future growth with expected EBITDA close to $3 billion, with both MV Optimized and Samuel Domingo at run rate production. We have a strong platform to deliver peer-leading growth of approximately 70%, compared to our 2025 production, once both projects reach full rates. Onto slide nine. We present a snapshot of the year so far, as well as our expectations for the second half. Our consolidated operations delivered solid results in H1, enabling us to reaffirm our consolidated 2026 production, cost, and CapEx guidance. We are particularly pleased to see Manto Verde, Mantos Blancos performing well following project ramp-ups, were both on track towards four-year guidance. These two assets combined have generated approximately 70% consolidated EBITDA year-to-date. As a testament to the benefits of a diversified portfolio of assets, Cozumel is tracking towards the upper end of its site-level production guidance range, partially balancing out Pinta Valley, which is tracking towards the lower end. In the second half, we are expecting even stronger production, primarily driven by higher sulfide rates and throughput amounts of verdicts. Stability in our operations allowed us to progress and execute a number of key catalysts during H1. Throughout the remainder of the year, we look forward to delivering reliable copper production and strong cash flow generation while continuing to advance our growth opportunities. On to slide 10. We highlight some of the proactive steps we have taken to protect margins and maximize cash flow amidst the current inflationary environment. More importantly, copper markets have remained strong. Our operating locations and robust supply chains have ensured continued supply security. So to mitigate diesel volatility in the second half, we took advantage of a temporarily lower price to hedge 40% of the Chilean exposure at 82 cents per liter versus current spot of approximately 93 cents per liter and 50% of our U.S. of Valley Diesel, exposure at 93 cents per liter versus current spot of approximately $1.28 per liter. With these protections in place, our exposure to diesel price volatility through the second half of 2026 has been significantly reduced as shown on the sensitivities on the slide. We view our capital business as incremental, the most of our cash flow generated by the sulfides. This gives us valuable flexibility in how we respond to input cost pressures. Given the current elevated sulfuric acid prices, we leverage mine farm flexibility to temporarily reduce higher calcium carbonate ore feed to the Mantleberry heap leach, which will lower our capital production by approximately 5,000 tons and eliminate the requirement to purchase approximately 200,000 tons of sulfuric acid at spot in H2. We then reallocated the resource to a lower-cost sulfide business, which will contribute to additional sulfide production of approximately 5,000 tons, and is thus net mutual to consolidate copper production and a plus to optimize cash flow. The rest of the capital business, including the dump leaches, is unchanged and continues to generate cash. For the remainder of the year, approximately 80% of our asset consumption is fixed at a price of approximately a $1.90 per pound per ton compared to spot prices around $4.50 to $4.70 per ton. The Pyrite project will improve economics of our oxide business going forward to reduce acid requirements and provide incremental copper production. Given first half cost performance and our expectations for higher proportion of lower cost sulfide production in the second half, we are reaffirming our 2026 cost guidance. And with that, I'll hand it over to Jim for the operations.

Thanks, Raymond. We are now on slide 12. We will start with our month of early operation. For Q2, total production yielded 22,485 tons of copper at a record low combined C1 cash cost of $1.97 per p.l. Plant throughput averaged a record 36.3,000 tons per day for the quarter, 13% above our design capacity, despite completing five days of planned maintenance during April. We are also pleased to see strong recoveries maintained at an average of 90.2% for the quarter. Copper grades averaged 0.61% in Q2, which is slightly below our expectations for the year. At the bottom of the Mount Laverde pit, we experienced more water than predicted this quarter, requiring some material from the lower benches to be placed on the stockpiles to dry, which resulted in some lower-grade stockpile material being utilized. The team responded quickly to add wells and pumps, which increased the extraction rate. With that infrastructure in place, we expect grades to improve at Monteverde in the second half. As Raman noted, we responded to elevated sulfuric acid prices by temporarily pausing heat leach production at Monteverde. The oxide ore we were mining over the last few months had higher calcium carbonate content, which requires more acid to process. So we stockpiled it with the option to leach it at a later date once acid prices normalize. Starting in August, we are into oxide ore with lower calcium carbonate grades requiring significantly less acid. We expect to resume heat leaching at that point, albeit at lower levels than previous expected with little ramp-up time required. Taken together, record throughput. Strong recoveries and flexibility in our mine planning enabled Mount La Verde to deliver a 24% improvement in unit costs, in addition to improved production compared to last quarter. Moving to slide 13. This quarter we made good progress on the Mount La Verde optimized project. During our five-day planned maintenance down in April, we were also able to unlock higher throughputs by eliminating certain bottlenecks, This included improving the capacity of the rougher concentrate and regarding tanks, as well as a complete replacement of key pumps and water systems. The remaining project tie-ins will be completed during an extended 15-day maintenance period in September, followed by a wrap-up period in Q4. Our expectations around capital costs and timelines are unchanged, with the increased sulfide throughput capacity of approximately 45,000 tons Next on slide 14, we are excited to highlight the Manta Verde pyrite augmentation project, which will incorporate a new pyrite recovery circuit into the existing concentrator plant. This project is designed to reduce Manta Verde's sulfuric acid requirements by a material of 20%. while increasing heat bleach copper production by approximately 3.5 thousand tons per year. At an assumed sulfuric acid price of $200 to $450 per ton, this results in cost savings of approximately $18 to $40 million per year. We expect this project to be completed in early 2028 for an estimated capex of $45 million which will be incurred next year. The net present value of this project is around $200 million, assuming copper prices of $5 per pound and sulfuric acid prices of $200 per ton. However, this increases significantly to approximately $350 million at spot prices. The project boasts a very high NPV to capex ratio of approximately four times at longer-term prices and seven times at spot. Building the Pirate Plant also enables the opportunity to produce cobalt at Mount Verde in the future. The cobalt project is currently in the feasibility stage. Especially within the context of current inflationary environment, we will continue to prioritize projects like this that not only improve unit costs by proxy of increased production, but also reduce absolute costs. Turning to slide 15, Mansell's Blankos continued to deliver on plan in Q2. Total sulfide and cathode production yielded 12,483 tons of copper at C1 cash cross of $3.93 per variable pound. Throughput averaged above design rates at 20.9,000 tons per day in Q2. Sulfide copper grades of 0.66% were in line with mine sequencing, with the lowest grades of the year expected in Q2 and Q3. We continue to expect higher copper grades to return in 2027. Unit costs at Mantos Blancos were impacted by higher diesel and sulfuric acid prices, in addition to higher maintenance spend to improve availabilities. Consistent operating performance at Mantos Blancos enabled the delivery of key growth catalysts this quarter, including submitting an EF permit application for the next phase of Mantos Blancos. We expect to release a pre-feasibility study by the end of the year, including details of the increased throughput from the concentrator plant and increasing cathode production via historical tailings re-leaching. Moving to Pinto Valley on slide 16, which produced 10,047 tons of copper at C1 cash cost of $4.17 per table pound during Q2. Pinto Valley delivered incremental throughput improvements over Q1. and we see a clear path to future gains. The planned 10-day shutdown in Q3 directly targets the main areas that have constrained plant performance this year, the filter plant and the primary crusher, which we expect to position Pinto Valley for more stable operations. This investment in reliability is supported by a broader people strategy and asset management framework designed to deliver sustained improvements in mill availability. On the people's side, this includes reducing turnover and strengthening training, while on the asset side, this includes improving maintenance practices. Once again, Kosman delivered another quarter of strong, consistent results in Q2, as shown on slide 17. The operation produced 5,745 tons of copper at CO1 cash costs of $1.52 per kilovolt-pound. Cash Cross in Q2 came in towards the low end of the guidance range driven by higher solar by-products. And with that, I'd like to pass it to Wendy.

Thank you, Jim. In Q2, we released our 2025 sustainability report detailing the meaningful progress we made on our sustainable development strategy as highlighted on slide 18. We were particularly proud of the improvements to safety, driven by the implementation of a new HSE roadmap, including a 22% reduction in recordable injuries year after year. We are also tracking well towards our GIS PM implementation across all tailing storage facilities by 2028, achieving 80% conformance in 2025 compared to 48% in 2024. In 2025, we strengthened our climate governance and risk assessment by expanding Scope 3 data collection towards our goal of disclosing Scope 3 emissions for all sites by the end of this year. Our workforce grew to over 8,000 employees in 2025 with increased representation of women and reduced turnover, reflecting our ongoing commitment to an inclusive, stable, and engaged workplace. As Cashel mentioned, stability was reinforced this quarter with new three-year collective bargaining agreements reached with both unions at Mantos Blancos. Following the Mantos Verde agreement earlier this year, all of our Chilean operations now have labor stability for the next three years. Going forward, the Mantos Verde Pirates Augmentation Project that Jim discussed also delivers meaningful sustainability benefits. Less pyrite sent to our tailings facility, more copper from the heat bleach, and fewer trucks on the road delivering sulfuric acid to site. At Capstone, we recognize that mining is a long-term business. We are committed to responsibly delivering copper production growth by continuing to embed sustainability throughout our organization. I will pass it back to Cashel.

Thank you, Wendy. Moving to slide 20. This quarter, we continue to make steady progress towards a sanctioning decision at Santa Domingo, expected in Q4 this year. In terms of the remaining work streams prior to FIA, we are progressing detailed engineering to approximately 60% completion. We are evaluating the optimal financing strategy for the project, and we are advancing potential infrastructure opportunities. Our balance sheet is already in reach, but we will continue the leveraging through internally generated cash flows prior to a sanctioning decision. Then a delinquent transformational growth project that will deliver material improvements to our consolidated production and cost profile. With that said, Capstone's growth story is not dependent on a single project. Our growth pipeline includes brownfield and greenfield projects built around assets we know well, jurisdictions where we have deep operating experience, established infrastructure, and strong community relationships. We are committed to demonstrating an executable path to meaningful production growth while prioritizing disciplined capital allocation and sustainable free cash flow. On slide 21, we highlight some of the key catalysts we look forward to delivering in pursuit of this goal throughout the second half. Mentor Verde Optimize is our nearest term opportunity to deliver value by upgrading the plants to sustain sulfide throughput of 45,000 tons per day at a low capital intensity. At MDO, as MDO moves closer to completion, we have initiated our next ground field expansion by submitting an EIA permit for Mentos Blancos in Q2. We look forward to further defining this opportunity with the release of the study by the end of the year. Slide 22 reinforces our multi-layered growth trajectory, driven by organic brownfield extensions. The Santa Domingo project, district-scale opportunities in Chile and Arizona, and exploration upside across the portfolio. This is not growth for the sake of being bigger. These are low-risk, creative opportunities to deliver value in the same top-tier mining jurisdictions as their existing operations. Importantly, our growth pipeline is well aligned with the Copper outlook, reinforcing the importance of continuing to accelerate growth to deliver value. Our capital allocation priorities remain consistent, and Joanne Hannaford. for Capstone to provide the copper the world needs now and into the future. And with that, we're ready to take some questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 1 on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, Please press star 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Orest Waukadao of Scotiabank. Your line is already open.

Great. Thanks very much, and congrats on the improved operating performance. Great to see you. The question around this pyrite project at Manto Verde, I mean, looking at the economics here, it seems like it's a no-brainer. I'm just curious on what the plan is for 2027, given that this project won't be online until early 2028. Would you think about curtailing? If acid pricing stays elevated, should we expect you to curtail at least the heat leaching through 2027 until this is ready? Or how are you thinking about that transition period?

Hey, Horace, I can probably take that one on. I mean, when we look at our capital production, there is a certain amount of oxides when you think about it that are in kind of like the mixed pits, so you're mining through them to get to the sulfide. So that's kind of like incremental oxide feed. And then basically what we will be running the capital business when you look into 2027, because that's kind of a cutoff grade question that you're trying with the calcium carbonate. So a lot of our material is actually low calcium carbonate. And if you're mining through it anyways, once we know the price of acid and start looking at that later in the year and the copper price, we can do a balancing act to make sure that's profitable. But then what this has kind of proven is we have that flexibility. If we were in an oxide-only pit and it had a higher calcium carbonate, you know, there's no point in sending the trucks and shovels there. You might as well divert them to the sulfides, which gives us more flexibility. And our mill, as you noted when you started, is running very well, so we can run Okay, is there any opportunities to reduce acid consumption at Marcos Blanco's?

Yeah, we're evaluating it right now, Oris. The Mancos Blancos doesn't have a heat leach. It's a run-of-mine leach that generally consumes less acid anyway. But we're in the process of optimizing that as well. And another thing that is currently in what we're workshopping is acid swaps, for example. Some acid has been pre-purchased, so we're looking at different opportunities.

Yeah, just to add to that, Oris, you know, there is that future opportunity of leaching at Mantis Blancos, of course, tails in Eurypheus. And, you know, in that process, we'll evaluate any of these initiatives we have. But keep in mind, that's likely a chloride beach. So it requires some testing to see if there's some compatibility or not.

Fair enough. Just finally, if I can, what kind of timing do you think we can expect for an exploration update at Manto Verde?

Yeah, I think what it is is we've concentrated a lot of the drilling to date, I guess, on the near pit in Perth. So I think we've sort of said like the middle of next year is when we consolidate those mine plants. There'll probably be some conversion of infers indicated, and therefore we'll evaluate its inclusion in the life and mine process. So, outside of that, we've got a few drills running up to the north, and when we sort of consolidate a bunch of results, we'll put it out. We'll put those out. So, maybe not necessarily the next quarter, but the quarter after that, we'll probably have enough meat on the bone to be able to sort of guide what our exploration plans for the region are and what the results are to date.

Okay, great. Thanks very much.

Your next question comes from Fahad Tariq of Jefferies. Your line is already open.

Hi, thanks for taking my question. At Manto Verde, is there an opportunity to displace more than 5,000 tons from the oxide to the sulfides, or is it constrained by the 15-day tie-in in the third quarter?

No, not really. I mean, that sort of movement is sort of built in with the mine, and we're being somewhat what I would call conservative on what the throughput capabilities are I mean, we've now disclosed what the production rates were, obviously, in June. And, you know, we are seeing similar performance through July. So we're optimistic that perhaps the ramp-up will go faster than what we've built into our guidance, number one. And therefore, it's really up to the cadence of the mill to be able to accept more tonnage. and Joanne Hannaford opportunity against guidance.

Got it. Okay. And then maybe just switching to Santa Domingo, any update that you can provide on any potential discussions on a tolling agreement with companies that own the port and how we should be thinking about the CapEx? I would imagine the CapEx estimate is going to come, I think, in the third quarter before sanctioning in the fourth quarter, but please let me know if the timeline is different.

Yeah. Well, We have a dual process. We continue negotiating with port holders within the region to be able to optimize the project makeup. So that continues what I would characterize as very well. And then with respect to the CapEx, you know, I think what we would see is the CapEx update would come in the fourth quarter. in parallel and with sort of that FID announcement. We're sort of working towards what we call 60% detailed engineering, and it's sort of at that time we can provide that certainty of CAPEX for the project going ahead.

Great. That's it for me. Thank you.

Your next question comes from George Agia of UBS Financial. Your line is already open.

Yeah, hey Tim, nice update here. Can I ask again on the 200,000 ton reduction in asset at Manto Verde, what are the trade-offs there operationally to reduce this, I guess, and does it have any impact specifically on recovery too?

No, it doesn't. It's just a cost per pound calculation. The way it works is some of the material that has the higher carbonate consumes more acid. And therefore, that cost to produce a pound exceeds the value of selling a pound. And really, that's how simple it is. So what it means is some of those trucks that would have been moving that material The benefit, of course, in the short term is those tons have a higher margin and therefore lower the cost overall. But in the long term, we still remain encouraged by our optionality with the Oxide production and cathode production, and especially now with the addition of this pyrite augmentation, which will reduce the overall cost structure therein. There will be another step change in the future. We mentioned it in the phone call where we're working on a feasibility study to add another byproduct credit to further enhance the economics of the oxide material to produce cathode, which is to produce a saleable form of cobalt. And so we're excited about that. And so next year, that'll be another increment of cost reduction in our C1 to produce the copper.

Okay, that's great. Thanks. And then just back to Manto Verde Optimize. Again, like just the comments early 27 and the sort of commentary before, could we realistically see that $45,000 and Joanne Hannaford.

If I'm to take the current performance of the plant as what we experienced in June and seems to be what we experienced in July, I'd be now more positive that we'll be able to ramp it up before the end of the year to 45,000 times a day. But we're not going to restate our guidance or that sort of contingency, that sort of You know, where we're sort of sitting. And what we put built into that guidance as the midpoint for Manta Birdie itself was a throughput rate of 36,000 tons a day. And in June, as we disclosed, we were at 40,000 tons a day. So we're very close to the nameplate already, which gives us encouragement that there might be possibility in the future to exceed what we designed it for, the 45,000 tons a day. But, you know, the proof is in the pudding. We've got to run it through to see what it'll do.

Your next question comes from Marshall Farid of Goldman Sachs. Your line is already open.

Thank you, operator. Good evening, everyone. Thanks for the time. And congrats on the quite a good operational setup there. I want to spend some time on the month of Verdi. Clearly, you know, running above main plate capacity for the full quarter and with an active trade, I think, in June at above 40,000 tonnes per day, it's quite remarkable. Just trying to understand if you, you know, what sort of level of throughput you think you can maintain going into the second half of the year. And if you look at the guidance for the year in terms of grades that are just above 0.7%, obviously that implies some step up from the first half and you kind of sort of maintain the expectation for grade for the year as well. Just wondering if there is a scenario here we see, you know, stronger throughput combined with stronger grades into the second half of the year, which could hold very well for overall output as well. Thank you.

Hi, Marcio. How are you doing? Good question. Hi, Jim here. Yeah, you're exactly right, actually, on what you explained. The project is going really, really well. We budgeted $176 million. We had about $142 million committed, so the project burn rate is going very well. We're on track. We have the shutdown planned for September, and that should put us in a strong position to be able to ramp up the plan very quickly. As Cashel mentioned, we have all the indications that we'll be able to push that as much as possible. I think in our estimations, we're pointing around 41,000 average for the first quarter, but we're going to be trying to hit that as soon as possible. We are planning an increase in grade in the fourth quarter. We'll be going from 0.7 in Q3 up to 0.79 in Q4. That's our current plan, and recovery should basically be in line with the plan. So, yeah, you're right, and yes, we are very optimistic about Q4 this year.

Great, thank you. And just one on Santo Domingo. How should we think about potential hedging before CapEx is committed? Is there any plan to do some sort of hedging both on either by-products or on the cost side or on copper per se to reduce risks going into the CapEx plan? Thank you.

Yeah, good question. So, I mean, as we get closer to FID, we can, you know, look at hedging. But when you look at our balance sheet, and we're running multiple different scenarios, but, you know, at lower copper price environment, it still shows our balance sheets in a strong spot. And as you can tell, we're de-levering our target was 1x, and we're at 0.5x, and we've got another few quarters here to go underneath our build. So, we'll be in a very strong spot. So, I think it gives us the ability to make that decision if we like, but you know, where Copper is trading right now, we're very comfortable with the balance sheet, and then we'll, you know, we'll consider at that time if we want to layer in some protection.

Sounds good. Would COSME or is COSME part of that kind of portfolio or balance sheet protection as well?

Look, if that's kind of trading, like, you know, if you look at it, that just kind of reduces your equity intake, so it's not a requirement for funding San Domingo.

Thank you. That's great. Thank you.

Your next question comes from Rafael Barcelos of Redesco BBI Company. Your line is already open.

Hello, and thanks for taking my question. I have just one question. So, Pinto Valley is an operation that has proven to be more challenging than initially thought, right? So, I just wanted to get your thoughts on when we should see the asset delivering a more normalized run rate and even what would be your thoughts for operational performance for 2027. And on top of that, if there's any sort of strategic optionalities in both Pinto Valley and Cozumel. Thank you.

Yeah, hi. Look, we've been working on the asset integrity and plant availability and utilization at Pinto Valley for some time now. We had identified last year some critical elements that required upgrading, replacement, specifically revolving around the copper filtration system and the primary crusher. Our ambition was to address those in May, but there were some manufacturing delays in the filtration components, and we only want to take the plant down once. So we deferred it to September, and unfortunately, there was some production interruptions unplanned. But what I'd say is we've done a tremendous amount of work on inspection and evaluation of the integrity of the assets. We're going to address a lot of the deficiencies in this shutdown in September. It also gives us a tremendous opportunity to inspect, validate our assumptions, and lay out a plan for Pinto Valley after that. But our expectation is we'll be up and we'll be closer to 50,000 tons a day beyond that Correction for that shutdown. And that's sort of where we're going to take off from. And then we believe, you know, over the next year, we'll be able to get it up to its nameplate. And, you know, its nameplate is probably in the mid-50s. And so that's our goal here. And so we're very encouraged. It's sort of right at the end of the tunnel. We really wished we had been able to address these issues in May, but we're going to address them in September, and we're looking forward to continuing with it. What I'll say about a strategic process on Poseman versus Pinto Valley, Pinto Valley is a billion-ton deposit at over 0.3% copper. And it actually comes over in the swipe of mine over the next five to six years, incrementally higher grade year over year. So we look forward to getting the asset to its full capability and increasing production from that asset Total tons of copper, year over year, and driving down the unit costs with it. So, we think it's still very core, the capsule.

Perfect, thank you. Your next question comes from Daniel Morgan of Barringer Wee. Your line is 11.

Uh-huh, I got it. Hi, Cathal and Tim. Just on at Manta Verde, I mean, it's pleasing to see that that's running well, the sulphide portion. If you can run above nameplate, if that is possible, once Manta Verde optimises on, is there flex in the rest of the operation to actually handle that, like, you know, the mining rates or any other constraints that might come to mind? Thank you.

Um... I suppose it depends how high it goes, but we feel the... So on average, I believe our allowance is up to 55,000 tons a day under the permit. So that would be an ultimate constraint. The other constraints are simply, you know, mine planning, sequencing, and how much material movement there is. We believe that there is... opportunity to exceed the 45,000 tons a day with the current assets we utilize, or the current mine fleet, to keep up with it. And certainly there's capacity in our tailings management system. We also have a number of stockpiles of low-grade with which we have optimized grade in the past and going forward in the future. And then we could decide incrementally to present those in if we needed to reduce truck logger counts. But sort of as you point out, Dan, that would be a terrific problem to work on. So we look forward to that.

Yeah, thank you. And maybe just obviously acid. I mean, the question, I guess, twofold just about the market itself and then what you're doing about it. So what is happening to the acid market in Chile right now is obviously Middle East advances impact of global supply. But is there also a feeling that other miners are taking actions like you to reduce acid use and maybe we're seeing some impact on production in the industry? And then part two, how do you think about acid purchases for 27? Thanks.

Yeah, good question. I mean, yeah, so Chile's subject to global pricing, as you know, so we kind of quoted you a spot price like $4.50, $4.70 a ton. And to be honest, not a lot of people are buying at those prices, just like us. Have we reduced 200,000 tons of exposure? And so you are seeing some of those actions taken, which are reducing some of that cathode production that would have been purchasing. And the flip side of that is that that's a bonus to copper price, right? So it's lower cathode or lower asset purchases means holding copper prices stronger and supports it. 2027, I think there's hopefully a pathway here to resolution towards the end of the year. And really, asset prices does not really get set Your next question comes from

Anita Soni of CIBC. Your line is already open.

Hi, good evening. Thanks for clicking my question. I was just trying to figure out, I'm really just trying to know exactly what's happening with the cathodes here at Manto Verde, so if I can get a little bit more color. is the idea that you're going to stop producing cathodes at this point or just, you know, play it by ear? I think Boris was asking a little bit about this. Like, what does 2027 look like in terms of your cathode output? And then, you know, how exactly is this going to reduce the sulfuric acid that you're producing your own and then won't need to buy out in the market? Or you're reducing just in terms of the kind of... of Warrior Processing.

Yeah, it's a good question. I mean, so in simple terms, the cathode, now that we have the sulfide as an incremental business unit, so we have that flexibility to figure out what throughput we want to send to the heat. We have some dump bleach, which is always going to make money, and then we have the heat bleach. With the heat bleach, you get a grade, a copper grade, but you also get a calcium carbonate grade. So we played with a cutoff of what we want to place there. to make sure it's economic and generates cash. And some of the pits, if they're only, you know, oxide only and high calcium carbonate, we've diverted those trucks onto the sulfide and the mill's running well. So the offset is we're getting higher sulfide production and cut back on our cathode and reduce our exposure to acid. The pyrite that you speak about will generate, you know, a pyrite that will be put into the heap leach agone and that will reduce our acid required on the heap bleach by at least 20%. So, you know, if we used to consume 400,000 tons of acid a year is a fair number for the heap, it'll be 80% of that number. Or the other way to see it is we're acid proofing ourselves. So when you look at the sticker price of acid in the market, take 80% of that because we're going to have a 20% reduction of what we need.

Okay. I'm sorry. Can you just reiterate how much acid you're consuming, maybe in dollar amounts, just so at spot prices or even in the tons-based grades?

At Mantle Verde, typically, we consume about 600,000 tons a year. With our forecast, we've reduced that to 400,000 tons. And our price is about $190 a ton is what we fixed, and the market price is around $450.

And how long does that fixed rate last? For all of this year. Okay. And then next year you're exposed to spot?

Yeah, next year we'll go through the same kind of like, you know, by then, like I was mentioning on the last question, you know, the forecast that was so forecasted should normalize, assuming some resolution in the state of Hermes.

Thank you. Oh, actually, you know what, I have another question. On M&A, I just wanted to get an idea of what your current thinking, you know, is about divestitures. I mean, I know that there's been some chatter about closing in. Given its, obviously, consistency, I just want to understand why you're thinking about divesting that asset and then wondering if you're looking at other assets in nearby jurisdictions.

Yeah. You know, you always sort of, you function or you operate a business as a portfolio, and you're always evaluating the components of the portfolio of when it's optimum to either move off them or invest in them. You know, the growth profiles that we have around fields and green fields opportunities around Pinto Valley and also around Mentos Blanco's and Menta Berde, and obviously the big addition, which we intend on allocating capital to Santa Domingo at the end of this year, sort of have us looking at the rationalization of sustaining a business between 15 and 20,000 tons of copper per year in Mexico at an isolated mine. The mine has been absolutely tremendous over the last 10 years. It's been a very consistent producer. Much of the residual resource lies also in zinc, and it's a slightly different combination for a copper equivalent going forward outside of the next four or five years. And so to us, it's sort of maybe our portfolio is outgrowing the size of what Cozumel is. Now, with that being said, we wouldn't obviously divest it if we felt that the value of seeing it through to its end of mine life... We can assure ourselves now about those cash flows and why would we sell it if that's the case? So we have that sort of strategic consideration where we're evaluating the possibility if someone was to buy it, then maybe we would sell it. So it's sort of like a portfolio rationalization And one of the things, you know, you keep in mind is what is the present market and what is the present value of a copper pound? And obviously, you know, if you were sitting here this time last year, you know, the copper price was lower, but it's been sustained over $6 for some time now, and that operation will cash flow really well this year. So it's sort of an ongoing, continuous discussion that we have at our executive level of what we do with all our assets and where we allocate our capital. So I guess it's just a wait-and-see story.

And, Anita, just on the absolute numbers on the asset, just for reference, if we had bought $600,000, that budget was $190,000. That would be $114 million of assets spent in Metro Verde. We're currently going to spend $400,000 at $190,000, so that's $76 million. But if we had continued with plan A with that additional capital, we would have had, you know, The same tonnage and acid at a blended price, and we would have spent $166 million because we would have bought 200,000 extra tons at spot prices. So really, it's a saving of $90 million in absolute.

Okay. Thank you. And one final follow-up on that. What kind of recovery rate does that run of mine getting within the mill? I was trying to model that.

The dump recovery, I think it's 40%, 40% to 45%.

and Low Forties.

Okay, thank you.

Ladies and gentlemen, as a reminder, if you have a question, please press star 1. There are no further questions at this time. I would hand over the call to Cash Elmar for closing comments. Please go ahead.

Thank you, Operator. With Memphi Verde optimized, tie-ins ahead, and sanctioning decision on Santa Domingo expected in Q4, second half is set to be an exciting one for Capstone. We look forward to updating you in October with our Q3 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 or a good evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.