Good afternoon, and welcome to the Capstone Copper Q4 2025 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, March 2, 2026. I would now like to turn the conference over to Daniel Sampieri. Please go ahead.
Thank you, operator. Thank you everyone for joining us today to discuss our Fourth Quarter Results. Please note that the news release and regulatory filings are available on our website and on SEDAR+. If you are logged into the webcast, we will advance the slides of today's presentation, which are also available in the investors section of our website. I am joined today by our President and CEO, Cashel Meagher, our SVP and Chief Operating Officer, Jim Whittaker, our SVP and Chief Financial Officer, Raman Randhawa, and our SVP, Risk, ESG, and General Counsel, Wendy King. During the Q&A session at the end of the call, we will also be joined by our Head of Technical Services, Peter Amelunxen, who is available for questions. Please note that comments made on the call today will contain forward-looking information within the meaning of applicable securities laws.
This information, by its nature, is subject to risks and uncertainties, and actual results may differ materially from the views expressed today. For further information, please see Capstone Copper's most recent filings, which are available on our website at www.capstonecopper.com. Finally, I'll just note that all amounts we will discuss today are in U.S. dollars unless otherwise specified. It is now my pleasure to turn the call over to our President and CEO, Cashel Meagher.
Thanks, Daniel, and hello to all of you dialing in from the Americas, Europe, Australia, around the globe. Today, we are pleased to present our fourth quarter 2025 results and achievements. 2025 represented an inflection point for Capstone, with record copper production and EBITDA generation, driven by execution of growth and a commitment to operational excellence. 2025 was also marked by the delivery of several key catalysts as we continue to grow, including sanctioning of our high-return Mantoverde Optimized project and unlocking the value of the Santo Domingo project through a partnership agreement. This year, we are focused on disciplined execution and reliable results from our portfolio of assets. This will ensure we are well-positioned to advance our next phase of value freedom growth. Starting on slide five.
In Q4, our operations delivered record consolidated copper production of 58.3 thousand tonnes at a record low consolidated C1 cash cost of $2.31 per pound. For full year 2025, we achieved our production and cost guidance, producing a record 225,000 tonnes of copper at a consolidated C1 cash cost of $2.44 per pound. This represents a 22% increase in output compared to 2024. During 2025, Mantoverde increased its copper production by 65%. We achieved above design capacity at various points in 2025, culminating with our best month of the year at close to 37,000 tonnes per day in December. In 2026, we look to build on our success as we execute on Mantoverde Optimized to deliver meaningful incremental production at a low capital intensity.
Mantos Blancos had a very strong year, achieving a 25% increase in output over 2024 and exceeding the top end of its production guidance. Our team is hard at work preparing the Mantos Blancos Phase II study, which contemplates a low capital intensity brownfields expansion to increase throughput using existing sulfide mill capacity. Arizona was impacted by severe drought conditions during 2025, which resulted in constrained throughput at our Pinto Valley mine. For the next couple years, we have a solution in place to mitigate the risk of impacted production from droughts. We will continue to progress the implementation of our asset management framework to improve the reliability of the operations, including a longer-term strategy around water.
District growth optionality continues to evolve, and we remain committed to unlocking the significant value of Pinto Valley, an asset strategically positioned in the United States with over a billion tonnes of resources. Cozamin delivered another year of strong performance in 2025. The site achieved towards the high end of its production guidance range, marking the third year in a row increased copper production at Cozamin. 2025 was a remarkable year for Capstone, with record results across the business as highlighted on slide six. Our diversified portfolio of operations delivered within guidance as we ramped up projects at Mantoverde and Mantos Blancos, providing a strong foundation of growth. We advanced our peer-leading growth pipeline on a number of fronts, including de-risking and unlocking the value of Santo Domingo through a joint venture partnership.
Meanwhile, on the corporate side, we enhanced our financial position through our balance sheet refinancing strategy and achieved a significant reduction in debt leverage. We will continue to build on this success in 2026. As we focus on delivering dependable operational outcomes, we will also advance our pipeline of executable organic growth opportunities, including delivering Mantoverde Optimized and advancing Santo Domingo towards a sanctioning decision, as well as progressing studies and exploration programs. Meanwhile, we will continue to capitalize on strong commodity prices by deleveraging through internally generated cash flows, ensuring we are well positioned to advance our growth strategy. Our recently announced guidance, as outlined on slide seven, forecasts total consolidated copper production of 200,000 to 230,000 tonnes at C1 cash costs between $2.45 and $2.75 per payable pound of copper.
This represents largely stable production compared to 2025, while cash costs are expected to increase, driven by the impact of lower grade zones in the mine sequence at Mantos Blancos and Pinto Valley, combined with modest inflation. Our portfolio of pure play copper assets provides upside to strong copper prices, with the potential for continued cash flow generation to deleverage and reinvest in our pipeline of high quality growth projects. For 2026, sustaining capital is forecasted to be approximately $270 million. We continue to focus on optimization and improvements through our asset management framework as well as ESG and tailings initiatives.
Expansionary capital guidance of $225 million is primarily comprised of $150 million to execute Mantoverde Optimized, as well as $15 million at Mantos Blancos and $60 million at Santo Domingo to advance future growth at those assets. Capital stripping and exploration are guided at $225 million and $70 million respectively. Moving to slide eight. A year of stability in 2026 will set us up for a strong 2027 and beyond as we work towards delivering the next major change in production with Santo Domingo. Taking a look at the bigger picture, the chart on this slide illustrates what sets Capstone apart from our peers, and that's our sector-leading permitted and executable growth. Over the past 2 years, we have increased copper production by 37% and decreased unit cost by 16%.
That is a significant accomplishment in our industry and a testament to the executable nature of our growth opportunities and our best-in-class mine build and operating teams. Looking towards the future, our permitted growth pipeline alone has the potential to increase production by a further 70% and decrease unit costs by 30%. Beyond our permitted growth stands a robust pipeline of low risk, high return projects in top tier jurisdictions. This includes a brownfield expansion at Mantos Blancos to drive incremental copper production, optionality to unlock synergies in the MV/SD district, and the potential doubling of the capacity at our flagship Mantoverde operation. Our growth strategy is well supported by a strong copper price environment and growing consensus of increasing future demand, reinforcing the importance of retaining optionality within a portfolio to drive returns. With that, I'll pass over to Raman for our financial results.
Thank you, Cashel. We are now on slide nine. In Q4, strong copper production and commodity prices drove record quarterly revenue of $685 million. Copper sales were around 2,600 tons below payable production levels, primarily due to timing of sales in Mantoverde, which would have increased EBITDA by approximately $24 million. LME copper prices averaged $5.03 per pound in the quarter, up 13% compared to $4.44 per pound in Q3. We realized a higher copper price of $5.36 per pound. LME copper prices are even stronger today at approximately $6 per pound. C1 cash cost of $2.31 per pound decreased by $0.11 from last quarter, marking the fourth quarter in a row our team has delivered lower cash costs.
Solid production and cost control allowed us to realize strong gross margins of $3.05 per pound, or 57% in Q4, which represents an 11% increase over Q3. As commodity prices reached all-time highs to close out 2025, we remained focused on protecting margins through cost control across the business. Record adjusted EBITDA in Q4 of $308 million increased 79% year-over-year. The sales leg, as noted previously, would have increased EBITDA to approximately $332 million. This is the fifth quarter in a row we've generated record EBITDA as we continue to realize benefits of our recently ramped-up mines in Chile amidst a strengthening copper price environment. We reported strong operating cash flow of $287 million before working capital changes.
Adjusted net income attributable to shareholders more than doubled year-over-year to $75 million or $0.10 per share in Q4 2025. A record Q4 marks the end of a strong 2025, driven by increased production, lower cash costs, and strong commodity prices. Moving on to slide 10. On the bottom left-hand side, we summarize our available liquidity, which has doubled year-over-year to greater than $1 billion at year-end, including $304 million of cash and $711 million of undrawn amounts in our corporate revolving credit facility. We finished the quarter with consolidated net debt of $780 million. Absolute net debt increased in the quarter, driven by a negative working capital adjustment of $109 million, tied primarily to timing of accounts receivable collections.
We have continued to see our net leverage decline as we deleverage our balance sheet ahead of Santo Domingo with a net debt to EBIT of 0.8x at the end of 2025 compared to 1.5x at the end of 2024. The chart on the right-hand side of the page illustrates our EBITDA sensitivity at various copper prices based on 2026 expectations, as well as our near-term growth with Mantoverde Optimized at full rates. An increase in grades at Mantos Blancos next year and the normalization of throughput at Mantoverde and Pinto Valley. The midpoint of our 2026 guidance represents EBITDA in the range of $1.2 billion to $1.7 billion at copper prices between $5.50-$6.50 per pound.
As we look into next year, we 2027 and beyond, we expect to see a significant increase in EBITDA approaching $1.7 billion to $2.3 billion or close to 40% growth year. This is also indicative of our free cash flow growth potential, as mentioned in 2027 and beyond. This level of EBITDA generation will enable us to continue to generate cash to delever our balance sheet, further enhancing our financial position as we prepare for the next phase of growth. Moving to slide 11. As we experience a period of robust commodity prices, we are focused on protecting margins to ensure that the benefits of higher prices flow through to the bottom line.
Our operating costs for 2026 remain consistent with prior years, with an expected 4% increase in absolute dollars, reflecting modest inflationary impacts largely related to labor and sulfuric acid. The increase in our C1 cash cost guidance compared to prior year is more reflective from the denominator effect driven by lower copper grades as a result of mine sequence at Mantos Blancos and Pinto Valley. On a consolidated company-wide basis, year to date, we have seen much higher byproduct prices compared to our guidance assumptions, which should provide a tailwind for costs in 2026. At current spot prices, our C1 cash cost guidance would be reduced by $0.10 per pound. Now I'll hand it over to Jim for the operations review.
Thanks, Raman. We are now on slide 13. We will start with our Mantoverde operation. For Q4, total production yielded 23,819 tons of copper at a combined C1 cash cost of $2.32 per payable pound. In Q4, plant throughput averaged 23.4 thousand tons per day as the site conducted repairs to address the reliability of the mill motors, which resulted in approximately 16 days of downtime. The repairs to the motors included upgrading components, installing additional protections, enabled the sulfide plant to reach record average throughput of approximately 37 thousand tons per day in December. Today, all five motors are on site, which includes four motors in operation and one rebuilt spare, have been upgraded with additional protections installed to prevent the breakdowns we experienced last year from reoccurring.
We have also enhanced the electrical delivery system with additional condition monitoring and changing out cables. As an extra layer of contingency, we have also ordered a second spare motor scheduled to arrive later this year. Copper grades of 0.79% in Q4 continue to reconcile well with the mine plan and block model. Q4 recoveries averaged 83.7%, impacted by the downtime in the mill associated with the motor repairs. Copper production and cash costs are forecast to remain stable in 2026 as more consistent throughput from the sulfide mill is offset by periods of impacted production, including a 15-day maintenance period to complete the construction tie-ins for the Mantoverde Optimized project. On slide 14, we have provided an update for Mantoverde Optimized.
Throughout Q1, we will plan to complete the final stage of procurement and commence civil works before executing key construction contracts for the concentrator desalination plant and the tailings facility in Q2, once the required equipment and supplies arrive on site. Our expectations for capital costs of $176 million and timelines for the project remain unchanged. To reiterate, in Q3 we are planning to complete the project tie-ins for MVO before ramping up throughput during Q4, with a goal to exit 2026 at throughput levels of approximately 45,000 tons per day. We are eager to deliver near-term production growth at our flagship asset through MVO, which adds 20,000 tons per annum of copper production at a low capital intensity of around $9,000 per ton. Turning now to slide 15. Mantos Blancos finished strong in Q4 to close out a remarkable year.
Total sulfide and cathode production yielded a record 16,861 tons of copper at C1 cash costs of $1.94 per payable pound. Thru exceeded design levels in Q4, averaging 21.4 thousand tons per day. The significant reduction of variability in the milling processes in 2025 is a testament to the capabilities for our asset management framework, which we are working on integrating company-wide. For 2026, we have guided to 48-56 thousand tons of copper production at combined C1 cash costs at $2.85-$3.15 per payable pound.
The expected production decrease compared to 2025 is primarily driven by a 1-year period of lower copper grades, which are expecting to approximate 0.7% in 2026 due to mining sequencing, with higher grades of 0.85% expected to return in 2027. The higher C1 cash costs at Mantos Blancos in 2026 also reflect the lower amount of capitalized stripping. As we continue to benefit from stabilizing throughputs in the sulfide mill, we are preparing for the next phase of growth at Mantos Blancos as we work towards releasing our phase II study by mid-year. Moving to the United States, we will now discuss Pinto Valley on slide 16.
We produced 11,423 tons of copper at C1 cash costs of $3.53 per payable pound during Q4, which marked the strongest quarter of the year for Pinto Valley. Due to prolonged drought in central Arizona, which resulted in water constraints, we operated at two-thirds availability with only four of the six mills online for October before returning to full availability in November and December. Internally, we have dedicated significant time to build the strategy around improving reliability at Pinto Valley. There are two main components to this strategy. Our first priority is water. In the near term, this includes improving on-site water infrastructure, utilizing the pit bottom as additional water storage, and assigning dedicated positions to manage water-related initiatives. While in the longer term, we are evaluating potential agreements with other closed mines in the area.
Our second priority is increasing operational capacity through our people strategy and asset management framework, including improving operations and maintenance management, integrated business and asset life cycle planning, and our procurement processes. As part of this implementation, there is expected to be a 10-day maintenance shutdown, which includes replacement of the primary crusher mainframe. We now expect this shutdown to occur in Q3. The Pinto Valley Mine development has already demonstrated a significant improvement with a 37% increase in material mined year-over-year in 2025. In 2026, we are focused on replicating this success across the remainder of the operation. As we focus on improving production and cost at Pinto Valley, in parallel, we remain committed to unlocking significant value through the evaluation of upside opportunities on our land package and within our broader district.
Over the course of 2025 and into 2026, we have seen an increased focus from the U.S. administration on growing domestic copper production, which has provided further endorsement for the strategic position of Pinto Valley. Cozamin delivered another quarter of strong results in Q4, as showed on slide 17. The operation produced 6,170 tons of copper at a record low C1 cash cost of $0.98 per payable pound, benefiting from higher silver by-products, which continue to represent a tailwind for 2026. Through this year, we will continue to conduct exploration to evaluate the potential for mine life extensions or improvement to the production profile. With that, I'd like to pass it to Wendy for a safety and sustainability review.
Thanks, Jim. We are now on slide 18, where we will discuss our safety and sustainability highlights for 2025. In October, we published our 2024 sustainability report titled Concentrating on Performance, which details how we continue to build the capacity of our organization in pursuit of our business and sustainability goals. Key highlights from the report include the launch of an integrated health, safety, and environment management system, which lays the foundation of a cohesive organizational approach. We also began to develop Capstone-wide standards for key areas of sustainability, setting minimum performance standards connected to our sustainable development strategy priorities. We continued to make progress on our sustainable development strategy during 2025, including advancing our climate risk assessment by developing a financial model to analyze various scenarios.
Additionally, we were proud to receive The Copper Mark in recognition of responsible mining practices at Pinto Valley during 2025. Joining Mantoverde and Mantos Blancos, both of which received the award in 2023. As a testament to our commitment to transparency and responsible production, our Cozamin site also began The Copper Mark assurance process in 2025. Meaning all of our sites are now participants. Last, but certainly not least, 2025 represented the first year of our health, safety and environment program that we call CU Safe. During year one of this 3-year initiative, we completed our first safety leadership module with site management and executed phase I of our mobile HSE database. We are already seeing evidence of its effectiveness. As a result of this program, we've achieved a year-over-year reduction in reportable injuries of approximately 30%. I will now pass it back to Cashel.
Thanks, Wendy. Turning now to slide 20. Over the past few years, Capstone has navigated through a period of significant change as we built and ramped up mines. Following the execution of several key milestones, our portfolio of assets is now well-positioned to support future growth. During 2026, we will remain focused on operational excellence to get the most out of our existing operations while continuing to advance our pipeline of executable organic growth opportunities. At Santo Domingo, we have several remaining work streams ongoing prior to an FID expected in the second half of this year. These include securing an optimal financing strategy and progressing detailed engineering to approximately 60%, as well as advancing upside opportunities and potential infrastructure opportunities.
In terms of our financial position, we will continue to capitalize on strong commodity prices by deleveraging through internally generated cash flows and reducing our net debt leverage further prior to a sanctioning decision. In addition to advancing Santo Domingo, we've highlighted our other key priorities for execution over 2026 on slide 21. We will upgrade Mantoverde to sustain 45,000 tonnes per day, funded through internally generated cash flows. We will also look to release the Mantos Blancos Phase II study mid-year. Both these projects are great examples of the type of low capital intensity brownfield expansions we like to prioritize, especially beneficial during periods of strong commodity prices. On the exploration front, we will continue to build on our success from 2025 with an expanded exploration budget of $70 million for 2026.
One of our main priorities is to progress phase II of the Mantoverde exploration program, with a focus on improving grades, adding mineralization, and testing high-priority targets immediately north of the pit and along the 10-kilometer northern corridor. At Santo Domingo and the nearby Sierra Norte deposit, we will focus our exploration efforts on advancing upside opportunities for incremental copper production in the region, specifically those eligible for contingent consideration under our joint venture agreement. Our team is eager to unlock significant value through exploration in pursuit of our strategy of building a world-class, long-life copper district in Chile's Tier 1 Atacama region. At Capstone, we are proud to have created a peer-leading pipeline supported by an enhanced, diversified foundation of operating assets. As we enter into a new year, our strategy has not changed.
We will continue to focus on operational execution, strengthening our balance sheet, and responsibly advancing our projects to ensure we are well-positioned to execute our goals. The fourth quarter marked the completion of an inflection year for Capstone. We achieved our guidance and delivered record results across a number of metrics, allowing us to realize the benefit of strong commodity prices. We also took tangible steps on our path toward transformative growth through execution of several key catalysts. We are well-positioned to become a leading long-life, low-cost copper producer, playing an important role in providing the copper the world needs now and into the future. With that, we are now ready to take questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. Your first question comes from the line of Orest Wowkodaw from Scotiabank. Your line is now open.
Hi, good afternoon. Obviously this year, based on your guidance, is more of a transition year. When I look at your slide eight and you've got a target there of approximately 265,000 tons of copper, and you've labeled it near term growth, is there any reason for us not to think that 2027 could be something in that range? When I look at what's assumed in that 265, just based on the fine print, it feels like all those pieces are in place for 2027. Just wondering if I'm missing something or if that's being too optimistic.
Thanks for the question, Orest. I would think that is the closest characteristic of what we expect to produce in 2027. As you know, we've been giving 1-year guidance year over year. You're absolutely right to identify that all those pieces are in place. Obviously, there's some optimization and execution that's not dependent to deliver on that 265. The range is where we're sort of thinking about the probability, and we're not ready to provide the range yet. We're maturing all our long-term plans now as we speak, such that we can provide maybe that accuracy again, with guidance next year. We would be disappointed if we weren't able to achieve that next year.
Okay. That's great. Just as a follow-up, I'm just curious what you assume as a normalized throughput rate for Pinto Valley for the next couple of years.
T hat's a great question. I'll just sort of lead in and preface it by the process improvement we employed at Mantos Blancos and the asset management framework and the team that facilitated that there with consultants and internal expertise, as well as the management team, is what our deployment is at Pinto Valley. We've now been on that journey for a year at Pinto Valley. Obviously, we had the overprint of the drought last year, which was, you know, unlucky, but we've sort of drought-proofed ourselves going forward for the next two years, and we'll seek sort of long-term solutions thereof that we believe are perfectly executable.
The way I look at it is the instantaneous throughput of Pinto Valley is 62,000 tons a day, and best in class of an asset of that vintage would suggest 90% utilization, accounting for unplanned and planned maintenance periods. That would mean 56,000 tons a day. We see ourselves from the beginning of this year, where we have built into what we call our prudent and reliable guidance, from 50,000 tons, working our way through the year up to 52,000 tons a day, and then next year incrementally taking that up again. As we make these improvements in our maintenance program, switching it from a reactive process to a proactive process, we see ourselves marching in the next couple of years towards 56,000 tons a day on a reliable, prudent, continuous basis.
Appreciate the color. Thank you, Cashel.
Your next question comes from the line of Dalton Baretto from Canaccord Genuity. Your line is now open.
Great. Thanks, operator. Good afternoon, everyone. Cashel, maybe I can start by asking, what the Mantoverde mill averaged in February. You're past the strike. You're past a lot of the stuff from last year. Thanks.
Thanks, Dalton. A lways bringing up a plant from an unplanned interruption always has its challenges. The team there has done a terrific job. It hit nameplate that 32,000 tons a day and just right around 85% recovery. We're really looking forward to getting back to what we achieved in December, which was through continuous production after working through some of the items that Jim outlined with respect to the motor where we achieved 36,400 tons a day in December. We're looking towards getting back to that and building against that prudent and reliable guidance that we put out that is in and around that 32,000 tons a day. That's what we achieved.
That's great. Thanks for that, Cashel. Just maybe building on what Orest was asking around 2027. For 2026, you put out your guidance, your stock was down in the back of that. Now, for your longer term, it's down to $3.75 versus $400. I'm just wondering if you could sort of contextualize all of that for us a little bit more and maybe, you know, hit on some of the key assumptions for 2026 in terms of what you're assuming for a ramp-up at MVO, Pinto Valley, that sort of thing. Thank you.
Great question. T hanks for noting those differences. When we speak about guidance, what is most frustrating is when repeatedly companies don't meet guidance. There are ways to build your plans, and they can be. We use, there are terms we use, prudent, stretch, and breakthrough. When you repeatedly put out, stretch, and breakthrough, while ambitions and processes are there, you really can only build on what you're capable of doing and what you've done. We believe what we've put out for guidance is a prudent forecast of what we can achieve with a certain amount of bumps in the road. We have left ourselves for upside.
That upside, as you sort of indicated, is we're not assuming we're instantaneously going to achieve after the August shutdown and tie in of MVO, which is a 15-day shutdown, the 45,000 ton a day throughput. We believe that's gonna take a certain increment to ramp up. Recognizing that that comes near the end of the year and, you know, having been in the mining industry for 30 years, when you have high grade or ramp ups at the end of the year and you have a month delay, it can really impact your guidance and thereof. We took what we call the conservative approach and didn't book that. We sort of booked a lower ramp up through that last quarter.
It still gives us four months to ramp up essentially what our pumps and pipes to what we're already achieving some days over 45,000 tons a day through our pressure and grinding circuit. We have high confidence we'll be able to exceed the expectations at Mantoverde and start out 2027 at that 45,000 tons a day there. Really that production is a major increment to that increase of what Orest had previously pointed out, the 265,000 tons, which is indicative of what we believe our guidance will be in 2027.
That combined with a little more throughput at Pinto Valley, back through the sequence in higher grades at Mantos Blancos and less down days through the year of 2027 because we won't have the MVO tie-in or some of the major equipment downtime we're having at Pinto Valley. All those things conspire to sort of that run rate of that 265. Just for the last part of your question, you mentioned, the discrepancy with respect to the 400,000 tons of copper at the completion and ramp up run rate at Santo Domingo when we build upon all our other assets. Part of it is just the maturity of these mine planning processes and that characterization I get of being prudent and reliable. Part of it is the mine planning.
What I would say is we have a number of operational excellence and improvement projects where we believe over time, we'll be able to build that back over 400,000 tons. By that time, we achieve full production at Santo Domingo, principally for Mantos Blancos. We have two programs there, one that could add 15,000 tons of copper in concentrate with Mantos Blancos to 7,000 tons a day by bringing on two existing mills. We have the opportunity of 20,000-25,000 tons of cathode at our heap leach opportunities with respect to the old ripios and some of the coarse fraction of the higher grade residual from the 1980s and 1990s in the order of 140 million tons available to us at 0.3 copper.
Those are just two examples, not to mention some of the other byproduct credits we see coming. Later this year, we hope to put out a feasibility study around some of our cobalt production, for example. All those will be contributory that we'll get back over that 400,000. We'd sort of characterize that 375 as executable, prudent, and permitted. We have more growth beyond that by the time we get to Santo Domingo.
Thanks for that, Cashel. I'll jump back in queue.
Your next question comes from the line of Daniel Morgan from Barrenjoey. Your line is now open.
Hi, Cashel. My question regards Pinto Valley and just drought-proofing initiatives. Can you just expand on the actions taken there? It sounds like there's water retention you're doing at the bottom of the pit. Just wondering, is that gonna continue into 2027 at all and have any impact on the early part of 2027? Thank you.
Thanks, Daniel. Yes. We call it our northwest wall. We're doing a pushback there. The highest grade at Pinto Valley is in the bottom of the pit. We're in a sequence where we're pushing back the pit. We get the opportunity now to store that water, rather than in a old tailings facility where we typically have stored the water. We'll get an opportunity to drain that tailings facility, take a look at it, understand for future value. The sequence of the mine is such that we'll be able to use that for fully two drought seasons, the drought season in 2026, the drought season in 2027. We've already almost stored the total amount required that would have mitigated the drought last year in the bottom of the pit currently.
We're well set up, and then we will address the issues of water management beyond 2027 over these next two years, while we utilize that opportunity of the pit, to be able to store the necessary water we need.
Thank you. Can you just remind us again, the Mantos Blancos expansion that you're studying and planning to put out on mid this year. I'm not looking for numbers, but just, can you remind us conceptually about what needs to be done, to achieve your goals there? W hat can you leverage and what needs to be installed or improved?
T hanks. The major bottleneck is actually, we will have exhausted our fines tailings capacity three years from now. As it is currently, with the administrative process of receiving permits in Chile, you can work on one site at a time. We have three things we have ambition to permit at Mantos Blancos. One is bringing on two mills that we currently use when we go into a reline on our Mill #8 . Mill #8 's the new mill that was added in 2021 and 2022. When we go into that reline, we actually do compensate for our production by turning on these other two mills.
The only reason we can't use them now, really, is because of permitting constraints on throughput and some downstream capacity issues that we need to build in. That's what we call Mantos Blancos Phase II, that would add that additional 15,000 tons of copper per year to concentrate. That program, you know, we could probably execute that in less than a year, provided we had the permits. The permit is for this fines tailings impoundment. The current impoundment site is a combination dam and open pit. Our next site is an open pit we're currently mining. That open pit is called Phase 22. That'll be ready a couple of years from now for more tailings. The way the Chilean administrative process is that it takes two years for a full EIA for a tailings dam.
We don't know if this is going to be the case, but the CAS administration has indicated they might, in the future, accelerate administrative processes. We think this could be a candidate for that because this isn't an impoundment structure. We're filling a hole. Conservatively, we're saying we'll have the permit submitted near the end of this year. It'll take two full years to go through an EIA, and then we'll get the opportunity for this new fines tailing impoundment site, as well as Mantos Blancos II with the two mills.
There's that other separate project I was talking about where we can utilize some of the installed capacity in our SX-EW plant , where we could see upwards of 20,000-25,000 tons of cathode being produced by leaching some of the ripios and coarse tailings that have some high residual oxide and secondary sulfide grades. That project, we're still working with. Probably the guidance for that project will be more to the end of the year than the middle of the year, but we're still figuring out what we can do if there's a possibility maybe to bring some of that copper forward, outside of that permitting constraint. That'll be for another quarter.
Thank you so much, Cashel.
Your next question comes from the line of Craig Hutchison from TD Cowen. Your line is now open.
Hi, guys. I was wondering if you could just provide some more color on the grade guidance for Mantos Blancos this year. The 0.7%, it's pretty lower than the tech report. When I look back, I think you're supposed to be a little bit above 0.9% this year. Is that a function of negative grade reconciliation? Are you smoothing out your technical report? Just any context around that would be helpful. Thanks.
Good observations, Craig. T he reconciliation isn't in question. It works well. The tech report evaluated. Well, it was published in 2021. It was part of the merger of the two companies. We will be replacing that tech report later this year with a new tech report with more resolution on the mine planning. I would say that one was flatlined more or less out in the future years with less detail in the present years. The present years they were looking at were more the years of 2022, 2023 and 2024. Well, now we're out in 2025, 2026 and 2027, and it doesn't have the resolution required.
The sequencing we have, we're just into a low-grade portion. It has no concerns or considerations for any reconciliation. All our reconciliation is working out within normal tolerances. We will be back into +0.85% copper in 2027, 2028, and 2029.
Okay, great. Maybe just, a similar question for Pinto Valley, just for the upper benches. Should we assume grades in 2027 are quite similar to 2026?
E xactly. Probably in the order of 0.29%. We're pushing back that northwest wall and, there is some variability in there. There is some opportunity for dilution, but that'll be all to the upside of the guidance we have.
Okay. Thanks, guys.
Your next question comes from the line of Lyndon Fagan from JPMorgan. Your line is now open.
Thanks for that, good morning, good afternoon. Look, I was hoping to just continue on the grade theme. Obviously the guidance was pretty poorly received by the market for 2026. If we look into 2027, you've talked a bit about the Mantoverde grade, what about the other assets? Are you able to give us a flavor of the grades across the portfolio in '27 just to avoid that kind of sticker shock?
I just was talking about Lyndon, I was talking about Mantos Blancos just to clear the deck here. That was the grade shock was the decrease to 0.7% from this year at 0.9% or 0.92%. And then, the next three years, like I said, what we are anticipating is to be above 0.85% for 2026, 2027, and 2028. That's Mantos Blancos. Pinto Valley will be at 0.29% for 2027, 2026, and 2027. And then, the following year during, sometime during the year, I can't say exactly just off the top of my head what quarter yet, but we'll be back into the bottom of the pit.
In the pit, the grade will start trending higher to the 0.32%-0.33%, maybe even 0.34%. That'll be Pinto Valley sort of recovering. Mantoverde we're in 0.72% now, and we see ourselves in the next year in 2027 sort of getting up, we're upwards of 0.73%, sorry. We're going to be pretty level going forward with the 0.7%-0.73%. Cozamin, there's slight decrease in grades going forward right out to what we have as current end of mine life.
Last year, we produced 25,000 tons of copper. I believe 2031 is scheduled for 18,000 tons of copper. It's kind of more or less a decline from here to there.
Thanks. Just to clarify, Mantoverde, do you mind just running through the 2027 and 2028 outlook? While we're at it, talking a bit about the oxide, it looks like the grades have fallen there. I don't know if it's temporary in 2026, but a bit of flavor of what's going on there as well.
Well, good identification. We're in a two-year lower cycle on the grades at Mantoverde, and then they'll start coming up again on the oxides.
And sorry, the sulfide, what did you say again for '27 and '28?
0.72%, 0.73%. The same grade.
Thanks. Okay, great. I guess the other part of guidance which is pretty hard to get a handle on going forward is capitalized stripping. Are we trending around the 26 number for the next few years or going up or down? It'd be good to get a sense flavor there, please.
As we've said, we're endeavoring to update a couple of our technical reports, certainly Mantos Blancos this year, and we hope maybe early next year Pinto Valley, because those are sort of the consumers of the larger strip and some of the capitalized stripping. We do have some sustainability and ambitions to meet certain standards and guidelines on some of the old infrastructure and tailings impoundment at both Mantos Blancos and Pinto Valley. That'll go this year and next year. We sort of see ourselves, if you take off that, So that run rate of capitalized stripping plus, is in and around with sustaining CapEx $600 million if you take off the expansion capital.
W e see that for two years, we see ourselves maybe dropping to more like $ 500 million, maybe $ 400 million to $ 500 million after the next two years. For those four assets.
Thanks, Cashel. T hat's really helpful. Thanks very much. I'll pass it on.
Your next question comes from the line of Marcio Farid from Goldman Sachs. Your line is now open.
Thank you. Hi, everyone. Quick one maybe on Santo Domingo. Obviously, you've reached your financial targets to move on with the sanctioning. Got the JV partner already. The scope of things are missing. Obviously, the project's finance facility hasn't been detailed yet. Also I think that just, you know, if you can provide some update in terms of where we are at in terms of the project finance discussions, but also any updates on the on the development of Santo Domingo's profile would be great as well. Just trying to understand if there's a, you know, 2026 sanction, is it still a viable option? Thank you.
Just maybe, I'll just put in a few words, and I'll pass it to Raman for exactly what our options are with respect to financing. Our goal is to be in a position in Q4 for sanctioning. You know, obviously there's the macro environment. There are a lot of things external that might affect what that is. Our goal is to take what is in our control and be ready then. One is detailed engineering to 60%. Another is to determine what is in within the scope of capital financing and what is out. As many of you know, there is a modular nature to some of the off-site infrastructure required for Santo Domingo, like a desalination plant and a port.
There's everything from working with a current owner of a desalination and a port and a commercial arrangement, to joint ownership, to boot contract of infrastructure of our own assets, to capitalizing our own assets. It seems complicated. It's not that it's complicated, I suppose. It's just what is the best strategic outcome and the best value outcome. We're working through those. We sort of set ourselves a goal to resolve that in the second quarter this year, such that we can then determine with that 60% detailed engineering, what a robust capital number is, and what required financing we have. With that, I'll just pass it over to Raman to talk about some of the ideas we have with respect to financing. I'd just add, obviously, we did do the partnership agreement for the 25%.
Thanks, Cash. Yeah. Like Cash mentioned, we got the Orion partnership, which brings in obviously $300 million in de-risk, kind of the financing plan when you look forward. We're trading off a couple alternatives. We got the base case of like traditional project financing, which could be done at the asset level that we've kicked off already, and that takes time, but it'll be in place for Q4 timing, 'cause you gotta start that. You know, the other alternatives we're also assessing in parallel are a potential mix of, you know, like a high yield and a bank debt piece that can be put in place as well to fully finance a project. As you know, the bank markets are open from a lending perspective in these robust copper price environments.
I think we're just trading off the cost of capital as a, as a couple alternatives and the restrictions and whatnot that come with it, assessing that and discussing that with our board.
Okay. That's great. Thank you. Pass it over.
Your next question comes from the line of Adam Baker from Macquarie. Your line is now open.
Hi, Cashel and team. Thanks for getting to the question. Just on the cathode production at Mantoverde. Looking back at the tech report, I think you had it rising to around 39,000 tons in CY 2026. I know you noted on the call, you know, lower grades driving lower cathode production, do we have confidence we can get, you know, back up to the 39, 40 KC levels for cathode, noting, you know, the drop in this year's guidance? Thank you.
I don't know if I caught the second part of your question, but let me get to the first one first. You can repeat yourself maybe after, Adam. The first part is, if you recall, we're, you know, versus the tech report, we're a little late on MVO versus our ambition. Part of it was 5,000 tons of enhancement due to bioleaching and due to enhancements in our SX-EW and leaching processes. That is one of the boosts we'll see is actually a gain in recovery that'll happen in 2027 versus 2026. I hope that sort of fills that gap for you. Did you have another part to your question?
Just to see if we could get back to 39 KC of cathode production for Mantoverde once MVO is fully ramped up. Is there anything to suggest that you can't get to those levels?
That is one of the key contributors there, combined with some grade lift two years from now. Between the two of them, we'll get back closer to that 40,000 tons of copper.
Thank you. Maybe just one for Raman on the taxation expenses. Bit of an uplift in the 4Q. You know, a lot of that's obviously driven from higher profitability with higher copper prices. Can you just remind us of the income tax expense rates moving forward from here?
On the income tax rate? Roughly kinda like it depends by jurisdiction. PB is like 21%. Mexico is like 30% you could use. You know, Chile's 30-35%. Just, you know, the Chile's got that adverse law inside the copper prices a bit that kinda came up. Slightly higher taxes perhaps in Q4 tied to a higher copper price.
Thanks, guys.
Our last question comes from the line of David Radclyffe from Global Mining Research. Your line is now open.
Hi. Good morning. Good evening, Cash and team. I had a quick question on Pinto Valley slide and the comment there in regards to district consolidation opportunities, 'cause that particular comment has been, flagged in the DAC for many years, and today we've seen a peer growing their U.S. business through M&A in the States. Maybe if you could comment to the extent you can on the potential for this to actually advance in 2026, any color you can provide and maybe what you see as the current roadblocks?
We continue to work with our neighbors and specifically with the exploration slash amalgamation idea with BHP and Copper Cities. That has been ongoing, as you correctly identified, for two years. We are seeing, as you would see with either our peers or other letters of intent out there with BHP, that there is a renewed focus in the American Southwest to help generate more copper production. Obviously, we're well-positioned having an operating asset for growth and incremental growth by bringing these things through rather than greenfield builds that are either questionably permitted or not permitted yet. With respect to Copper Cities, we're evaluating the possible inclusion of other I would call satellite opportunities to see if they can enhance the prospects thereof.
All I can say is we really hope to be able to bring more light and more color to our plans, later this year, and that we're seeing more energy and more focus, from our potential partners.
Okay. Brilliant. Thank you. I'll pass it on.
That's the end of our Q&A session. I will now turn it over to Cashel Meagher. Please continue, sir.
Thank you, operator. We look forward to updating you in April with our Q1 results. Until then, stay safe and feel free to reach out to Daniel, Michael or Claire if you have any further questions. Thank you for your continued support and have a good day or evening.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.