Capstone Copper Corp (CSC) – Red metal opportunity

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.

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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.

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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).

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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.

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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.

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Lastly, current pricing level puts Capstone shares on a price-to-net present value multiple of just 0.9x.

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