Capstone Copper Corp (CSC) – Red metal opportunity
December 9, 2024
Capstone Copper Corp. operates as a copper mining company in the US, Chile, and Mexico, and also explores for other metals including gold, silver and zinc. Capstone Copper is headquartered in Vancouver, Canada.
Ord Minnett has initiated coverage of Capstone Copper Corp (CSC) with a Buy recommendation and a target price of $13.00, based on the Canadian company’s strong production growth prospects from its already operating mines and future developments, its relatively high exposure to the copper price, on which Ord Minnett has a positive view, and an attractive entry point at present valuation levels.
Capstone has two operational mines in Chile, one in the US and one in Mexico, and a fully permitted development project in Chile. The most significant of these assets is Mantoverde open-pit mine in Chile, which accounts for circa 49% of our CY25 operating earnings forecast of US$1.51 billion ($2.35 billion).
A key pillar of the investment case for Capstone is its multiple growth options – we forecast the company to lift annual production to almost 400,000 tonnes by CY29 from expected CY24 production of circa 190,000 tonnes – in an industry where the opportunities to increase output are hard to come by.
The second pillar of our thesis is our positive view on the copper price – our latest commodity price review incorporates a long-term copper price of US$5 a pound, up from circa US$4.00 a pound currently.
Lastly, current pricing level puts Capstone shares on a price-to-net present value multiple of just 0.9x.
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