Capstone Mining achieves record cash flow in Q1, becomes debt-free

Copper cathodes at Capstone’s Pinto Valley mine in Arizona. Image from Jetti Resources.

Capstone Mining (TSX: CS) ended Q1 2021 with a record operating cash flow of $95 million and zero long-term debt on its balance sheet, the strongest quarter in its 15-year history as a copper producer.

According to Capstone president and CEO Darren Pylot, the increased cash flow was generated by “excellent operating performance and cost containment in a higher copper price environment” that surpassed the company’s expectations.

“We are now debt free and generating cash flow as a mid-cap company with a peer-leading 100% growth plan over the next three years,” Pylot said.

Net income for the quarter was was $127.0 million, or 0.25 per share, which includes a $92.4 million impairment reversal on mineral properties related to the Santo Domingo project in Chile. Without this loss reversal, adjusted net income would be 64.4 million, or 0.16 per share.

The strong first quarter performance was driven by sales of 49.2 million pounds of copper at a realized price of $4.12/lb and C1 cash costs of $1.70/lb.

For the three months ended March 31, 2021, Capstone’s total copper output was 47.8 million pounds, representing a 35% improvement on Q1 2020 due to higher throughput, grades and recoveries at its Pinto Valley and Cozamin mines.

At Pinto Valley, Arizona, production increased by 36% compared to the same period last year, underpinned by investments in the PV3 Optimization Phase 1 projects that were completed in 2020.

Production at Cozamin, in Zacatecas, Mexico, was 31% higher than the same period last year. This was primarily due to the completion of the Calicanto one-way ramp, which has debottlenecked the mine haulage system that has facilitated an increase in underground mining rates.

“Capstone’s robust balance sheet position plus strong operating cash flow generation enable us to advance multiple high return projects like Eriez HydroFloat at Pinto Valley, paste backfill and dry stack tailings at Cozamin, and our transformational, fully permitted, greenfield project at Santo Domingo in Chile. We are on track to announce the Santo Domingo ownership structure and finance plan by mid-year,” Raman Randhawa, SVP & CFO, said in the media statement.

Shares of Capstone Mining jumped 7% by 12:30 ET Wednesday following the Q1 production and financial results. The Canadian base metals miner has a market capitalization of C$2.23 billion.