Capstone Copper creating mining district in Chile for copper, cobalt production

Canada's Capstone Copper is focused on creating a mining district in northern Chile with the integration of its Mantoverde and Santo Domingo operations in Atacama region. 

In addition to achieving total output of 200,000t/y copper, the district would produce between 4,500t/y and 6,000t/y of battery-grade cobalt "at the lowest cost in the world outside of China and the Democratic Republic of Congo," the miner said in its latest quarterly report.

To do this, the company is currently advancing construction of the Mantoverde development, which was 88% complete as of the end of June, with total project spend at approximately US$706mn of a budget of US$825mn.

It has also commissioned local engineering company Ausenco to update the feasibility study for the Santo Domingo initiative, with that work set to be completed by the end of the year.

Meanwhile, Capstone is implementing improvements to debottleneck the integrated project, advancing permitting and formalizing agreements with third parties, it added.

The synergy between the two units will unlock US$80mn-100mn per year due to lower operating costs, capital savings in infrastructure and optimization measures in water and energy consumption, according to the company. Consequently, it will expand the capacity of its Mantoverde desalination plant to 380l/s from 120lt/s in a first stage, before later increasing maximum output to 840lt/s.

In 2Q23, copper production at Mantoverde dropped 37% year-on-year to 8,300t. But the company is confident that output will be higher in the remainder of the year, thanks to greater water availability and new electrical connections. Guidance for the year is output of 36,000t-40,000t of cathodes at the site.

Copper production at the firm's Mantos Blancos mine also declined 6% year-on-year to 11,700t in 2Q23. In this case, output was affected by lower mill performance and other challenges associated with integrating existing and new equipment, the company said.

For the year, production is expected to reach 45,000-51,000t of copper in concentrates and 10,000-12,000t of cathodes at Mantos Blancos.

Capstone will continue making improvements to the Mantos Blancos concentrator in the second half of the year as part of an optimization project to increase the plant's throughput to 10Mt/y from 7.3Mt/y. This is phase II of the operation, which is also intended to extend the mine life. The feasibility study for this will be completed in 2024.

In its quarterly report, Capstone referred to the new mining royalty scheme that will go into effect in January of next year, stating that, under this framework, it expects to record deferred income tax expenses in a range between US$45mn and US$55mn.

This does not include Santo Domingo, since it has a tax stability agreement with the government for 15 years from the start of production, so it will remain subject to the current mining tax during that period.

Capstone Copper therefore remains firmly in line with its expansion plans. It expects to increase companywide copper production from the current 180,000t/y to 380,000t/y once the Santo Domingo-Mantoverde integration is completed.