Capstone Copper Corp. (“Capstone” or the “Company”) today announced the Mantoverde-Santo Domingo (“MV-SD”) District Integration Plan (the “Plan”) which showcases the path towards creating a world-class mining district in the Atacama region of Chile, targeting over 200,000 tonnes per year (“tpa”) of low-cost copper production with the potential to also become one of the largest and lowest cost battery grade cobalt producers in the world. The Company has the opportunity to unlock a total of $80-100 million per year in operating cost savings, while also enabling additional copper and cobalt production, infrastructure capital savings, and the potential for significant tax synergies through the reinvestment in Chile to support our district growth (summarized in Figure 1).
The fully-permitted Santo Domingo project is located 35 kilometres northeast of the Mantoverde mine which is currently undergoing construction of a 32,000 tonne per day (“tpd”) sulphide concentrator with wet commissioning expected in late 2023. Following the completion and successful ramp-up of the Mantoverde Development Project (“MVDP”), the Company’s next phase of transformational growth will be a construction decision and integration of Santo Domingo. The combination of key infrastructure already in place alongside an experienced mine build and operating team significantly de-risks the future development of the district.
Please click the following link to view a 3D virtual tour presentation of the MV-SD District Integration Plan and respective synergies, further outlined herein: https://vrify.com/decks/12234-MV-SD-District-Integration-Plan
John MacKenzie, CEO of Capstone commented, “Over the past decade, I’ve closely monitored the progress at the Santo Domingo project given its proximity to, and obvious synergies with, Mantoverde. We are extremely excited to now be developing a world-class copper and cobalt district, with both commodities being essential to the global economy’s decarbonization efforts. Our team is committed to pursuing the highest standards in safety and environmental management as well as meaningful engagement with all stakeholders as we progress our growth plans. We are transforming Capstone into a leading long-life and low-cost producer of critical metals essential for the transition to net zero.”
Cashel Meagher, President and COO of Capstone added, “The permitted and executable growth pathway that lies ahead of us is the reason why I joined Capstone. This is a rare opportunity to design and engineer significant synergies into the plan prior to the construction of the Santo Domingo project. We look forward to hosting our Chile site visit next week to showcase our transformational growth in progress and our plans going forward.”
Base Case Plan
Our Base Case plan includes the completion and successful ramp-up of MVDP, a sanctioning decision followed by construction of the Santo Domingo copper-iron project, which includes upgrades to the existing water and power infrastructure, as well as a development scenario for the Santo Domingo port located approximately 65 kilometres by road from Mantoverde.
Future Growth Plan
Our Future Growth plans include Mantoverde Phase II, which envisions an expansion of the sulphide concentrator to process part of the 77% of resources not included in Phase I, processing Santo Domingo oxides at the underutilized 60,000 tpa SX-EW cathode plant at Mantoverde, as well as the development of the MV-SD cobalt opportunity, described below.
MV-SD District Integration Synergies:
- Water and Power Infrastructure – A plan to expand the existing Mantoverde desalination plant to 840 litres per second (“l/s”), utilization of existing water pipelines, and upgraded energy transmission capacity provides the infrastructure foundation to support our district growth opportunities. We are currently expanding the desalination capacity to 380 l/s to supply sufficient water requirements for MVDP with expected completion by year-end 2022. The expansion to 840 l/s is expected to reduce net capex by $25-30 million by utilizing existing pipeline infrastructure and lower operating costs by $4-6 million per year while also reducing our environmental footprint by not requiring the previously planned desalination plant at the Santo Domingo port. Additionally, a $20 million upgrade to the existing power infrastructure is expected to further lower operating costs by $1-2 million per year, while also allowing us to fully control our own energy distribution needs at our mine sites. The upgrade will provide approximately 50 Megawatts of excess transmission capacity to the port beyond the requirements from the current pipeline of projects and will enable optionality for future growth.
- Port Infrastructure – Opportunity to reduce Mantoverde’s concentrate trucking costs by $10 million per year by using the planned Santo Domingo port (the “Port”), located 65 kilometres from Mantoverde versus Puerto Angamos, 475 kilometers away. The planned Santo Domingo port is expected to have sufficient scale to handle capesize vessels suitable for large cargo, including Santo Domingo copper concentrate, iron ore, district cobalt production, and the potential for sulphuric acid handling. Additionally, the Port could handle Mantoverde’s copper cathode production which could lower transportation costs by approximately $2 million per year. Designing the Port presents an opportunity to engineer a world-class asset that meets the highest environmental standards, in-line with our overall environmental, social, and governance (“ESG”) strategy. The port framework agreement with Puerto Abierto S.A., a wholly owned subsidiary of Puerto Ventanas S.A., remains in-place and the rail and iron ore pipeline trade-off studies are ongoing.
- Integrated Operations – Potential to lower MV-SD district operating costs by $20-30 million by streamlining the organizational chart across both operations, increasing purchasing power given district scale, and standardizing equipment to promote productivity gains. Decades of technical and operating experience in Chile provide a unique opportunity to significantly de-risk the execution of Santo Domingo with a proven project delivery team from Mantos Blancos and Mantoverde.
- Santo Domingo Oxides – Potential addition of 8,000-10,000 tpa of copper production over the first 10 years of production, by leaching copper oxides at Santo Domingo and processing the concentrated solutions at Mantoverde’s underutilized SX-EW facility. The potential increase in production is expected to come from Santo Domingo’s oxide mineralization, much of which is in the pre-strip, providing an operating cost advantage.
- Cobalt Opportunity – Ability to reduce operating costs by approximately $45 million per year by building the cobalt and sulphuric acid production facility at Mantoverde that will process cobaltiferous pyrite produced by both Mantoverde and Santo Domingo. The benefits would be realized through the neutralization of a weak acid by-product stream from the cobalt operation at the Mantoverde heap and dump leach operation, as well as through the elimination of port and trucking costs related to sulphuric acid use at Mantoverde. The plan would target an increase in district cobalt production by approximately 1,500 to 2,000 tpa from Mantoverde to a total of 6,000 to 6,500 tpa, which would make MV-SD one of the world’s largest and lowest-cost sustainable cobalt producers outside of the Democratic Republic of Congo and China.
- Withholding Tax – Potential to realize tax synergies between $150-200 million by re-investing cash flows to support our overall growth plan in Chile.