Good afternoon, and welcome to Capstone Copper's Q3 2026 results conference call. At this time, all lines are in 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 Thursday, October 29th, 2026. I would now like to turn the call over to Daniel Sampieri. Please go ahead.
Thank you, operator, and thank you everyone for joining us today to discuss Capstone Copper's third 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; and our SVP and Chief Financial Officer, Raman Randhawa. During the Q&A session at the end of the call, we will also be joined by our SVP Technical Services, Peter Amelunxen, and our SVP Risk, ESG, and General Counsel, Wendy King, who are available for questions. Please note that comments made on the call today will contain forward-looking information within the meaning of applicable security 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'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 USD unless otherwise specified. It is now my pleasure to turn the call over to our President and CEO, Cashel Meagher.
Thank you, Daniel, and hello to all of you dialing in from the Americas, Europe, Australia, and around the globe. Today, we are pleased to present our third quarter 2026 results and achievements. We delivered a solid quarter of financial performance, supported by robust copper prices in Q3. As highlighted on slide five, our operations produced 45,2 18 tons of copper at consolidated C1 cash costs of $2.95 /lb in Q3. We achieved record EBITDA for the eighth consecutive quarter, despite conducting planned maintenance across our portfolio. This performance was underpinned by strong contributions from Cozamin, Mantos Blancos, and Mantoverde. With three quarters of the year behind us, we note that we expect to finish at the low end of our production guidance range and the high end of our cost guidance range.
Our production so far this year has been impacted by more unplanned maintenance at Pinto Valley, in part due to the deferral of the maintenance shutdown from May to September, plus our decision to lower cathode output at Mantoverde to maximize cash flows. Our unit costs have been impacted by the lower production, in addition to higher input costs, notably on diesel and sulfuric acid. We have also increased our capital expenditure guidance by $40 million, mostly resulting from higher capitalized stripping due to higher diesel prices, plus changes in the mine sequence at Mantoverde. Q4 is set up to be our strongest quarter of the year, supported by the Mantoverde Optimized ramp-up and higher grades at Mantoverde and Mantos Blancos. Our performance year-to-date has generated almost $280 million in free cash flow from operations, enabling us to redeploy capital into our accretive growth opportunities.
During Q3, this included completing critical project tie-ins for our MVO project, advancing the study to define the next phase of growth at Mantos Blancos, and progressing detailed engineering ahead of a sanctioning decision at Santo Domingo. This third quarter, we were also excited to announce our acquisition of the San Pietro project, as illustrated on slide six. San Pietro adds approximately 16,000 hectares to Capstone's district scale land position in the Atacama. Not only did this transaction provide an immediate increase in mineral inventory, but also a platform for further resource growth through substantial exploration upside. We look forward to leveraging our regional expertise to advance optimization opportunities, identify potential synergies, and progress a coordinated district development strategy. Moving to slide seven. To ensure we are well-positioned to advance our peer growth pipeline, we took steps to streamline our portfolio and further strengthen our balance sheet during Q3.
In September, we announced the divestment of Cozamin to Luca Mining for up to $385 million in total consideration, including $275 million in upfront cash. Cozamin has been an important part of our portfolio, providing stability and strong cash flows as Capstone matured into a diversified copper producer. We extend our sincere thanks to everyone at Cozamin for their dedication to operational excellence and safety. Given the strong operational track record of the Luca team in Mexico, we believe they will be excellent stewards of the mine.
It is an ideal time to optimize our portfolio through this divestiture, which we expect to close in the fourth quarter. This transaction not only enhances our financial position, but allows leadership to focus on advancing high return copper organic growth opportunities in Chile and the United States. With that, I'll pass over to Raman for our financial results.
Thank you, Cashel. We are now on slide nine. in Q3, we recorded copper production of 45,218 tons. LME copper prices averaged $3.40 /lb in the quarter, up 6% compared to $3.05 /lb in Q2. We realized a higher copper price of $3.61 /lb. After subtracting our C1 cash cost of $2.95 /lb, we delivered strong gross margins of $3.66 /lb for 55% in Q3. We continue to experience cost pressures and volatility in energy and commodity prices, including oil, sulfur, and sulfuric acid. Rising energy costs during 2026, particularly diesel prices, have impacted our cost by approximately $80 million, annualized or $0.16 /lb compared to 2025. Sulfuric acid prices, meanwhile, have approximately doubled, although we have taken steps to reduce our exposure and have locked in to fixed price contracts.
Notwithstanding those impacts, we reported record adjusted EBITDA of $358.3 million, which increased 1% quarter-over-quarter and 44% year-over-year. This marks our eighth consecutive quarter of record EBITDA. Lastly, we reported adjusted net income attributable to shareholders of $93.8 million or $0.12 per share in Q3. Turning to slide 10. Our available liquidity at quarter end was maintained at over $1 billion, including $263 million of cash and $826 million of undrawn amounts, on our corporate RCF. The decrease in our consolidated net debt to $564 million, combined with record EBITDA, drove a further reduction in our net leverage, with a net debt to EBITDA of 0.4x at the end of Q3. With the expected closing of Cozamin in Q4, we forecast a net debt to EBITDA ratio of approximately 0.2x at the end of the year.
Our balance sheet is in great shape, and we are well-positioned to advance our accretive growth pipeline. Moving on to slide 11. In Q2, we spoke about some of the proactive steps to protect margins and maximize cash flow amidst the current inflationary environment. This included temporarily pausing higher calcium carbonate feed to the Mantoverde heap leach to reduce our exposure to elevated sulfuric acid prices. We view our cathode business as incremental, with most of our cash flow generated by the sulfides. This is illustrated through the charts and the graphs on the slide using Mantoverde as the example. Prior to the completion of the Mantoverde Development Project or the concentrator in 2024, 100% of Mantoverde's production was the cathodes. In 2025, once MVDP was ramped up, Mantoverde's mix shifted to almost 70% sulfides, which represented 96% of Mantoverde's EBITDA.
This theme has become even more pronounced in 2026 year-to-date, with the implementation of the cash flow optimization strategy last quarter to prioritize a higher margin sulfide production. Having the ability to adjust our business, the sulfide to cathode split at Mantoverde, gives us a very valuable flexibility in how we respond to input cost pressures. To protect margins and to reduce exposure to acid prices, we will continue to prioritize lower cost sulfide production through projects and cash flow optimization strategies. With that said, in 2027, we expect a similar level of copper cathode production to 2026 forecast based on current elevated sulfuric acid prices. We will retain the flexibility to increase the cathode production if acid prices decline or copper prices increase further.
To further protect margins in 2027, we have entered into approximately 6,000 tons of copper collars to ensure margin for a portion of our cathode production. Now I'll hand it over to Jim for the ops review.
Thanks, Raman. We are now on slide 13. We will start with our Mantoverde operation. For Q3, total production yielded 20,806 tons of copper at a combined C1 cash cost of $1.77 per payable pound. This represents a $0.20 /lb improvement on combined cash costs compared to Q2, a direct result of our cash flow optimization strategy to protect margins by prioritizing lower cost sulfide production. Plant throughput averaged a strong 33,000 tons per day for the quarter, 3% above our design capacity, despite the 15-day plant shutdown in September for the MVO sulfide concentrator tie-in. This included a record monthly average throughput of 40,386 tons per day in August.
For Q3, we are pleased to see strong recoveries at an average of 87.7%. While copper grades of 0.65% were slightly below expectations due to inclement weather in Chile, which occasionally caused safety concerns in the mine that meant we had to pull from lower grade stockpiles. Thankfully, given the location of Mantoverde at low elevation, the weather impacts were limited to a modest deferral of higher grade material. We expect grades to improve further at Mantoverde in the fourth quarter. In Q3, we continued to implement our cash flow optimization strategy at Mantoverde in response to elevated sulfuric acid prices by temporarily pausing heap leach production. Heap leach production resumed in September once we progressed into oxide ore with lower calcium carbonate grades requiring significantly less acid.
Taken together, strong throughput and flexibility in our mine planning enabled Mantoverde to deliver Q3 combined unit cost about 20% below the low end of its cost guidance range. Moving now to slide 14. We are excited to announce that the sulfide concentrator tie-ins for the Mantoverde Optimized project are complete. During the planned shutdown period, over 1,000 contractors were on-site from over 40 different companies to complete the remaining work on the concentrator, tailings facility, and desalinization plant. We are proud of the team at Mantoverde for safely and efficiently executing this high return brownfield expansion project, which represents an important step in our Mantoverde-Santo Domingo District growth strategy. In October, we completed commissioning and began ramping up the new design throughput rate. We have hit several record throughput so far with our highest individual day over 53,000 tons.
So far in October, we are averaging about 30,000 tons per day, including the last two weeks at approximately 47,000 tons per day. We continue to work towards safely and efficiently sustaining these higher throughput rates, and we are proud of our teams for the great work they have done so far. Turning to slide 15. Mantos Blancos continued to deliver solid performance in Q3. Total sulfide and cathode production yielded 12,011 tons of copper at C1 cash cost of $3.96 per payable ton. Throughput averaged above design rates at 21,000 tons per day in Q3, despite completing three days of planned maintenance during the quarter. Our throughput performance has continued to improve following the debottlenecking project completed in Q3 of 2024. Sulfide copper grades of 0.66% were modestly impacted by the heavy rainfall in Chile, with higher grades expected in Q4.
Unit costs at Mantos Blancos were impacted by higher diesel and sulfuric acid prices, which added $0.22 and $0.29 /lb respectively, in addition to higher maintenance spend. We continue to work towards releasing a pre-feasibility study, including details on increased throughput from the concentrator plant and increased cathode production via historical tailings releaching expected in Q1 of 2027. Moving to Pinto Valley on slide 16, which produced 6,358 tons of copper at a C1 cash cost of $6.11 per payable pound during Q3. in September, a tremendous amount of work was undertaken to directly target the main areas that have constrained plant throughput throughout this year, including the primary crusher and the filter plant. Over a 16-day shutdown period, the filter plant was rebuilt, and then the mill was restarted using mobile crushers at approximately 1/3 availability while the primary crusher rebuild continued.
The commissioning of the primary crusher commenced on October 21st, during which time additional required repairs were identified. These repairs are expected to be completed by November 2nd, at which point operations will restart. In Q3, operating rates and the timeline of the planned maintenance was also impacted by an increased frequency of localized storms and strong winds in Arizona. These severe weather events have continued into the fourth quarter. Unit costs at Pinto Valley this quarter were impacted by the lower production as well as higher maintenance spend and input cost pressures. The work done in Q3 was a significant step forward in delivering improved performance at Pinto Valley. Our near-term goal continues to be increasing availability rates to 90%. A coordinated effort between our asset management framework and people strategy has been focused on four key areas, people, mine, mill, and water.
In 2025, we hired a new general manager and a new mine manager while improving mine movement by over 40%. This year, we have continued to replace key management positions, completed important work in the mill, and improved on-site water infrastructure. Looking towards next year, we want to see what the plant can do following the work performed on the primary crusher and filter plant. Once we understand the new baseline, we will evaluate the best path forward to further increase throughput and recoveries. In parallel with improving production in the near term, we continue to work towards unlocking the strategic value of Pinto Valley on a longer-term basis. We remain committed to reviewing and evaluating numerous upside opportunities at Pinto Valley, both on a standalone basis and with a view to integrate district resources. In Q3, Cozamin delivered another quarter of strong, consistent results, as highlighted on slide 17.
The operation produced 6,044 tons of copper at C1 cash costs of $1.64 per payable pound. Cash costs year-to-date continue to be below the lower end of guidance, driven by higher silver by-product prices. As Cashel mentioned, we announced the divestment of Cozamin during the third quarter. I wanted to reiterate our thanks to the entire team at Cozamin for your contributions to Capstone over the past 20 years. We believe Cozamin will be well-positioned under Luca's ownership. The Luca team has the regional experience, focus, and commitment to invest in the mine's future for the long-term benefit of the workforce and surrounding communities. With that, I'd like to pass it back to Cashel.
Thanks, Jim. At Capstone, we remain focused on unlocking meaningful production growth while prioritizing disciplined capital allocation and sustainable free cash flow. On slide 19, we highlight some of the key catalysts delivered to date and those we look forward to executing over the next few quarters in pursuit of this goal. This includes MV Optimized, which represents another milestone successfully delivered at our flagship Mantoverde mine. With the sulphide construction tie-ins complete, we look forward to executing the next phase of our Mantoverde-Santo Domingo District growth strategy, which aims to expand our world-class mining district in Chile, as seen on slide 20. During Q3, we continued to advance towards a sanctioning decision at Santo Domingo, which is now expected in Q1 2027.
This included progressing detailed engineering towards our target of approximately 60% completion, while evaluating the optimal financing strategy for the project and advancing potential infrastructure opportunities. Our financial position is in great shape, but we will continue to deleverage through internally generated cash flows prior to a sanctioning decision. In the fourth quarter, we also expect to receive the upfront cash proceeds from the Cozamin divestment, which will further enhance our balance sheet. Since the last feasibility study in 2024, we have made significant progress, both in terms of optimizing the project and maturing our company to ensure we are well-positioned to enter a growth phase. We have improved the economics of the project in several ways, including forming a joint venture with a buyback option and acquiring surrounding properties to unlock the district scale potential.
Importantly, copper prices have steadily increased from an assumed price of $4.10 /lb in the study to spot prices of around $6.65 /lb today. As a company, we have materially improved our financial position, streamlined our portfolio, and enhanced our existing operations to form a strong foundation for future growth. While Santo Domingo is a key growth milestone in our pipeline, it is not our only opportunity to deliver incremental production. As shown on slide 21, our multilayered growth pipeline includes low-risk, accretive opportunities to deliver value in the same top-tier mining jurisdictions as our existing operations. In addition to Santo Domingo, this includes district-scale opportunities in Chile and Arizona, and exploration upside across the portfolio. Most importantly, our growth pipeline is well-aligned with the copper outlook, reinforcing the importance of continuing to accelerate growth to deliver value.
We are committed to putting capital to work in order to sustain and optimize our assets through investing in high-return growth projects and maintain a strong balance sheet. Capstone is well-positioned as we enter a period where execution can directly translate into value. We have near-term operational momentum, a permitted flagship growth project in Santo Domingo, and district scale optionality, which provides a strong foundation for Capstone to deliver 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 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 two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Dalton Baretto with Canaccord. Your line is now open.
Thanks. Good evening, Cashel and team. Congrats on some really great numbers here. I wanted to start by asking about the MVDP ramp-up. I think Jim said there that over the last couple of weeks, it has been running steadily at 47,000 tons per day, and I am just trying to understand what it is going to take to keep it going and any sort of bottlenecks that you see between now and steady state. Thanks.
Thanks, Dalton. One of the curiosities is, of course, we entered the shutdown more than what the previous nameplate was. It was 32,000 tons a day, and we were somewhere between 38,000 and 40,000. W e were very hopeful that we could enter, or we could ramp this up very quickly to the 45,000. If you remember the way the guidance was constructed, we sort of thought we would end the year at 45,000. I am really pleased to see that the Mantoverde team has been able to sort of reach that number very early. I will leave it to Jim. I do believe there are minor things we can do also that can maybe are part of the completion of the MVO project and might provide the option or the opportunity for future upside. Jim, did you want to add something there?
Yeah, sure. I can speak to that, Cashel. Thank you. Just talking about the concentrator, yeah, a really successful ramp-up. It is good to see the team hitting the numbers and above the averages. We, as Cashel mentioned, we took a bit of a conservative view. You are not quite sure you get into these expansions. In Q4 of this year, we are expecting to walk our way up to January. As mentioned, yeah, it is great to see us hitting those numbers. In Q4, we don't really have any maintenance planned, any major downs. We will be getting into our regular maintenance cycle again through next year. We will be guiding to that, but we are basically designing that around the average design of a nominal 45,000 tons per day. We have got great expectations for the 2027 year as far as throughput.
Right now, the focus of the team is consistency, and that consistency drives recovery. That is where the short-term focus is right now. As Cashel alluded to, there is a second piece of the MVO project, which is the BIOX leaching project. This was something that was carried out kind of in parallel, but the focus was obviously on the concentrator. We have just finished bidding the construction contracts for that portion of the expansion, and we will be building that in the heap leach pads through the next couple of quarters. We do expect to see first improved and increased leach production at the end of Q2 of next year. Again, we will be guiding to that through the full-year budget. It is that additional part of the MVO project that I don't think we talk about enough. Concentrator, yes, in great shape and ready to go.
Looking forward to 2027. We have got the BIOX project just around the corner that we will be bringing in as well through the 2027 year.
Thanks for that, Jim. Then maybe staying on this topic of consistency. At Pinto Valley, what gives you comfort that once you are through this primary crusher rebuild, filter plant rebuild, that you will actually get to 90% availability?
Yeah. Dalton, I will pass it on to Jim in a second, but I sort of look at it from a very simplistic way, in a very simplistic way, and it is when you debottleneck something, you drive the critical or the bottleneck to a different area in the plant. If we go back a couple of years on this journey of the asset management framework and the debottlenecking exercise we have had underway at Pinto Valley, it did start with the secondary and tertiary crushers, and then it went to sort of our conveyances, and then we went to our mills and our thickeners, and we had to address some of the water infrastructure in some of our tailings.
What really gets me, I guess, sort of excited or what convinces me that there is light at the end of the tunnel and we are just about, we are on the cusp of sort of debottlenecking Pinto Valley is if you look at the assets we addressed over this shutdown, they were at the extremities of the plant. It was the primary crusher, so at the very start of the plant, and the copper filtration at the very end. We have sort of pushed the bottlenecks to the extremities. That really gives me a lot of hope or I guess, well, it gives me a lot of confidence that we will be able to now start marching towards that nameplate capacity and experience much less unplanned maintenance and therefore have greater throughputs and greater production of copper.
Over the next year to year and a half, march our way towards its nameplate capacity in its current configuration, which we believe is closer to 56,000 tons a day. I don't know, Jim, did you want to add something to that?
Yeah. Thanks, Cashel. I can just add a couple of points. I don't think it can be underestimated the amount of work that went on during the shutdown. We talk a lot about the primary crusher and we talk a lot about the filter because they are single-line pieces of equipment. If they shut down, they will take down the entire plant. R eally the focus is there, but there was a massive amount of work that was going on through all other sections of the plant. We attacked the fine crushing plant, which is between the primary crusher and the grinding circuit. We are into the grinding circuit. We are in through the flotation circuit, through the tailings area, into the water distribution.
Also something that even I was surprised about, through the electrical distribution, we were changing and rerunning major high voltage distribution lines through the plant to eliminate problems. Work going on on the lines, on the switch gears. Adding isolation valves, really protecting ourselves against future downtime was the focus of the shutdown. As I said, we were able to get a massive amount of work done. The primary will be coming up basically new and rebuilt. We've been able to rebuild the filter plant, which protects the back end. We're really looking for a strong November and December with respect to throughputs and closing off the year in a good space with respect to guidance.
Thanks, Jim. Then maybe just one last quick one from me. On Santo Domingo, you're marching your way towards 60% detailed engineering. Any sense for what the CapEx number's looking like?
Yeah, that's a good question. I think we feel more or less under the same scope as what was published in September of 2024, in the technical report that outlined the cost in 2023 dollars. I think we're really holding true to what the inflationary pressures would've been on that original scope, somewhere in the order of 20%. That original scope, keep in mind, contemplated that Capstone would build their own port for the iron ore concentrate. We remain very optimistic that we'll be able to utilize existing infrastructure within the region, and we continue to work a dual path.
One, to self-perform the port, and two, to utilize a port that currently exists. That would be sort of a binary opportunity, I suppose, in the overall CapEx number. W e believe that we're sort of holding true somewhere in the order of 20%. We look forward to completing this detailed engineering to the level where the major components and infrastructure are addressed. As we've said, that'll be concluded in the first quarter and really allow us to move on to FID.
Thanks, guys. I'll leave it there.
Okay.
Your next question comes from Orest Wowkodaw with Scotiabank. Your line is now open.
Hi. Good evening. Could I just clarify, just with the Mantoverde Optimized, did I hear you say that the mill average, was it 40,000 tons a day in the last two weeks or 47,000 tons a day?
It was 47,000.
47,000? A bove nameplate already?
Yeah.
Is that continuing here? Are you seeing that on a regular basis, or was there something maybe, say, softer ore or something that would've, say, artificially inflated that?
No. I think that's an entire possibility. I will keep in mind, I would like to declare a victory, and I am very positive we have. I would point out to average 45,000. At some point, you do 47,000, and at some point, maybe you do 43,000. I would say all indications are is maybe that average is different. What we need to do is continue running the plant to understand exactly what it is. I t's not a ore characterization that's enabling that. It's just the current installed capacity enables it.
Okay. Is there any reason to think that you might not operate at something close to nameplate for the rest of this quarter? Or is there still some schedule sort of stop/starts here?
No. It's up and running now. I think in the beginning, in the first two weeks, we might have had a day of minor interruption. Maybe Jim, you can give some more color, but I believe it's been operating quite consistently since we brought it up.
Yeah. Cashel, I could just add a couple of points. Obviously, there was a lot of equipment change outs during that process. The main equipment was left in place, but all the motor drives, a lot of the pumping lines, the pump systems controls, and a lot of electrical and instrumentation was worked through. W e are still trying to work through that. We are doing it on the fly.
Once we got the plant up and running, really, we are starting to pick up some things, but with our maintenance team, we are actually able to stay ahead of them. T hat's not to say we are not going to be at 100% runtime for the next couple of months. That's not going to happen. I think, if we are focused at the nameplate of 45,000 tons per day, we are definitely well positioned to be able to hold that, and get to the end of the year and hit a strong 2027.
That's fantastic. You mentioned also just trying to manage recoveries here. Should we expect a bit of a dip in recoveries here in Q4 overall, just from the tie-in, or do you think you can get back to sort of that 90% level?
The recoveries are variable dependent on where we are mining, anywhere between 87% and 91%. W e feel we are within that range. Jim, if you want to give some more detail on that.
Yeah, sure. On average, we are expecting, as I said, when we put this together into our budget, when we put it together in a recent view in the forecast, we still assume that we are going to be working through some things. E ven though we are a bit bullish on the throughput, I think that what we put into our kind of outlook till the end of the year was probably about 88% - 90% recovery. T hat's going to take consistency and retuning the control loops around the flotation circuit at the higher flow rates. Y eah, there's some work to do there. It will continue, but again, high 80%, that's a pretty good positioning for Mantoverde on recoveries.
No, that is fantastic. Just the final one, if I could, just the decision to move the FID on Santo Domingo to Q1 from, I believe you were telegraphing previously, Q4 of this year. Is that intentional in the sense of you want to get the engineering to a certain level, perhaps get a third party port agreement? Or is there something that is actually driving the pushback in that decision?
Yeah, Orest, really, it is just the way things conspire to the end of the year. If something slips a couple of weeks, there is not much value in doing it over the Christmas period. We know that there are certain metrics with respect to engineering. There are certain processes underway with respect to bids on our desalinization, bids on our port construction, and concurrent evaluation of utilization of existing infrastructure that have all just sort of progressed, matured, but are just taking a little more time. We feel that the prudent thing to do is to responsibly work through those items such that we have a very robust estimate and a very robust project to announce when we bring it to the board for FID. It is those things.
Makes sense. Okay. No, it makes a lot of sense. Thanks very much.
Your next question comes from Marcio Farid with Goldman Sachs. Your line is now open.
Thank you. Good evening, everyone. Is there any reason for the marginal delay in terms of potential FID for Santo Domingo to early 2027 versus, I think expectations were for later this year. Is there any specifics there in terms of, is it the engineering that is running lower, or is it just the final details around funding and potential agreement with the port partner as well? Thank you.
Yeah. Again, very similar to the response I gave to Orest. It's the maturation of the engineering, it's the maturation of the bidding process on the desalinization plant, the bidding process on the port, and also the maturation of discussions to utilize existing infrastructure in the district. The way those are all progressing is really well, and there's no problems. They've just sort of, things take a little more time, and we feel that the prudent approach is to finalize those processes before we're ready to bring the project to our board for FID. We establish certain standards we would maintain, and that's why this has slipped a month or two into Q1, such that we can reach those standards and be able to give a very robust estimate and a very robust project to our board to approve for FID.
That's very good. Thanks, Cashel. Just a quick one on Pinto Valley. Shutdown was a little bit longer than expected. I think you are still in the commissioning phase of the primary crusher there. When can we expect the mine to be running at full capacity and potentially some operational stability and improved costs as well?
Yeah. Basically, Jim has told me he'll have this running very shortly. I think he said November 2nd, so that's just a few days away. I'm looking forward to that. Maybe Jim can talk briefly about why this took a little bit longer. I know we had some surprises in some inspections, and so we took the prudent approach to be able to repair those things, such that when we do get running, we can run sustainably and reduce our unplanned maintenance events. Jim, do you want to give a little more color on that?
Yeah, sure, Cashel. In perspective, this crusher rebuild is just not like a top-end rebuild. We took this right down to concrete and started at the base. T here was a lot of work going on with respect to getting back to original alignments, original design and having that all stacked up so it worked correctly. We went through one sequence. We started it up. We weren't happy. We had some fit issues around the shaft and around one of the eccentric bushings. W e're back into that. We're taking care of that right now. We'll be recommissioning that primary crusher starting most likely Sunday night, and then we'll be bringing the circuit back up very quickly next week.
That's great. Thanks, Jim. Thanks, Cashel.
Your next question comes from Steven Hanson with Macquarie. Your line is now open.
Hi, guys. I'm going to ask one on Santo Domingo after this one, because you've answered a lot on it already. J ust on acid pricing, could you just give us an update on how you're seeing the market into 2027? I understand some of the contracting happens around LME Week, so post that, just be good to get your thoughts on how that's looking and maybe any potential mitigants you're looking to keep costs down and under control. I think Jim mentioned the BIOX project, which I assume is one of them, but just some color around that'd be great.
Yeah, we have a couple projects. We have the MV Optimized BIOX project, and earlier this year, we sanctioned a $45 million project for our Pyrite Augmentation, whereby we put pyrite in the agglomeration bins and we will be able to reduce and offset our costs, I think conservatively by 20% of the volume we would typically use in the dynamic heap leach. Maybe what we will do is we will give some color. Maybe Raman, you can give some color on the acid costs and price and recognize that our Pyrite Augmentation is for the production year of 2028. Maybe Peter, after you talk about diesel, can talk about that and our BIOX program and the benefits we will get from both of those.
Great. Thanks.
Sure thing, Cashel. Just from a sulfuric acid market price, currently, there is not a lot being bought on the spot market, but in Chile, the current publication price is around $360 a ton. That is off the highs that you saw earlier this year of like $485 a ton. November is the annual cycle where the sulfuric acid purchasers and the sellers or traders will get together and lock in an annual fixed price for a portion if you wanted to commit to a price for next year, otherwise, you would let it ride spot.
You can see our use forecast for next year is roughly about $275 a ton, so lower than spot. We believe it should come in under $300 as well, in the $250-$300 a ton range for next year for fixed contracts that we could put in place towards the end of this year. With that, I will give it to Peter.
Yes. Thanks, Raman. There are two major projects on course at Mantoverde that will result in significantly reduced acid consumption. The first one is the BIOX conversion. The existing heap leach has been a conventional acid heap leach. We are converting it to a bio-oxidative heap leach by adding a bacterial augmentation system where we grow bacteria and add them to the ore before it goes on the heap leach, together with an aeration system underneath the pad to blow air into it and feed the bugs. They react with the copper sulfide in the ore, and in the process, create some acid byproducts as part of the chemical process undergone.
It is not too much. I think it is about 5 kg per ton or maybe about 5%-10% of the heap leach consumption in that pile. When we add the Pyrite Augmentation, which has been approved recently and detailed engineering and equipment purchases are progressing, the pyrite adds a lot more sulfur that can be converted to the acid, and that is another about 15 kg per ton, roughly. W hen you add them two together, you are in the range of about 20%-25% acid reduction in the heap leach. The pyrite project will be online starting early 2028, and the BIOX project will be online starting roughly end of Q1, early Q2 2027. Those are the two projects we have got.
Thanks. T hat was very helpful, thank you. I just wanted to go back to Santo Domingo, Cashel. Can you give us any color on some of the outstanding issues that are coming up when you are having these shared infrastructure discussions? It might be worthwhile touching on the options. I guess, you are talking about port contracting. Just what you will do if these discussions with potential partners don't progress as you had hoped.
Yeah. Look, on a long-term analysis, whether we do port sharing of infrastructure or we self-perform, we believe they are more or less NAV neutral. T here are other benefits to owning a port in the region. We are building a, what we believe is a tier one district, and there is the opportunity to move other products through the port, principally our copper concentrate or some of our consumables received in the port in the future, maybe like acid. T here are operational benefits to having our own port. Conversely, when we look at sharing existing infrastructure, you remove that CapEx requirement from project construction period, and you also remove a bit of execution risk. T o us, it is a wash, and it really comes down to those economic evaluations.
Y ou need to know with detail what both costs and benefits are, and that's part of this detailed engineering we're pursuing, whether it's on the port, the desal plant, the plant itself. We need to understand with certainty, and we feel that we need to get our detailed engineering to a certain standard such that we're making the right decision. For the sake of adhering to the timeline we'd previously disclosed that we thought we'd be ready for FID at the end of the year, we're happy to wait another month or two to ensure we have the exact right answer.
What I would say is those processes are maturing really well. There are no problems with them. We're just waiting for the detail around those answers, such that we can make the right decision for our shareholders and for the right decision for the long-term viability of the district.
Great. Okay. Thanks very much.
Yeah.
Your next question comes from Craig Hutchison with TD Cowen. Your line is now open.
Hi, good evening, guys. Most of my questions have been answered, but it is just one more on Santo Domingo. You guys are obviously looking at incremental copper production optionality. I was just curious whether we could get an update on exploration or if there is a plan to provide some of the upside optionality on the copper side before you guys make a final investment decision. Thanks.
Yeah. I don't believe that exploration is a requisite for our FID process. However, exploration is important to show the viability of the district. We have been very successful in adding on prospective land with historical mineral resource in a few of the properties we have added in ENAMI, San Pietro, and Sierra Norte. We have conducted quite a bit of exploration, some at Santo Domingo, some at Sierra Norte, and some at Mantoverde over the last number of months or the balance of this year. I think we will be disclosing a narrative on that exploration and some of the results of that exploration between now and Christmas.
Expect that to come out, and that will speak to the prospectivity and what we are seeing, and the direction to which the district is going for future optionality and future opportunity that will only enhance in the future the current or the FID metrics that we will come out with in the first quarter for the sanctioning of Santo Domingo. It will be additive to it, but will not be inclusive of it, and is not required for us. We don't need, for example, success in that exploration to move ahead with it. W hat I would say is, it is extremely interesting and we will be more than happy to be able to disclose that between now and the end of the year.
Okay, thanks. Very clear. Thanks, guys.
Your next question comes from Ricardo Monegaglia with Safra. Your line is now open.
Hello, guys. Thank you for taking my questions. I have two. The first one on capitalized stripping. Saw you guys revised up the CapEx guidance for the year, namely due to higher diesel and also changes in mine sequence at Mantoverde. I wonder if you guys could give us some color on how that should evolve in the coming year. Do you think we may see a structural change or step up in CapEx? I know it depends on diesel, but if you could quantify the effect of diesel on that would be great. Thank you.
Okay. Raman, would you mind commenting on that, please?
Yeah, no worries. Yeah, so the increase in the capital guidance was half diesel cost related for this year. The other was, as you know, we talked about the oxide business and shifting more to sulfide production. T hat required some of the areas where we would've done oxide ore mining only for oxide purposes. We've shifted now those trucks to the sulfide business, so it means we're stripping more into the mine plan. I t's changed the mine plan, so it's just a ratio between waste to ore has increased, which means you capitalize a bit more to that figure.
So that's the change for the 40 that you talked about. I don't think our cost, it depends on your view on diesel costs going forward. Mine plan changes are separate from, you could say, stripping costs being higher for longer. I think if you look at the oil markets currently, they're calling for a return of WTI oil per barrel back to $80 or less. I wouldn't say you should be caring for these higher stripping costs related to diesel onwards. It depends on your outlook on the diesel, on what's going on.
Sounds good. The next question on Santo Domingo. Iron ore is a meaningful part of the project's revenue, and recently we saw a lot of volatility, not only on the price, but also on freight. Correct me if I'm wrong, but I think you don't have an offtake for the iron ore concentrate, and I wonder if you guys are actively engaging with Orion or any of its affiliates to sort it out once the project is ready, who will buy the iron ore? Maybe if you could give us a bit of color on the terms that you guys are discussing, because freight could be very punitive. It would be great to hear from you.
Yeah, I'll start. I think, like the previous answers with respect to when we're ready for FID, all these types of negotiations are part and parcel of that decision process. We are in discussions with various groups to be able to market the products out of Santo Domingo, including the iron ore concentrate. Because we're in these discussions and these processes, I think a lot of that will reveal itself with FID. Some of it, you can imagine, is binary with respect to the scope we decide to choose. Whether we're using existing infrastructure from an existing iron ore port or we're building our own, you can see that in that decision tree, we would choose very different paths, and those different paths have different structures to them. I don't know, Raman, did you want to comment any more on that?
Yeah. I'd say, look, on the iron ore offtake, there's a very active market, as you can imagine, for that offtake. I think it'd be highly sought after. Really our focus is on what kind of product we'll produce and targeting the higher grade iron ore products so we can demand some of those premiums that are associated to the 65% iron ore is our focus. I think, look, freight is elevated currently, $40 a ton. We're talking about a project now from by the time we build it three or four years out. That's the view on freight that matters a bit more in the tech report for us than the elevated prices that we're seeing in the market today.
Makes sense. Thank you, guys.
Your next question comes from Thiago Ojea with Citi. Your line is now open.
Thanks, everyone. My first question is on Mantoverde. When we look from the recovery perspective, you really improved a lot from the third quarter two years ago, we're 68% now with the optimization plan, you are reaching close to 88%. I think the design range is now 87% - 91%. Given that the flow sheet is 45,000, you're running even a little bit over this. Maybe I would like to know if there is any additional flotation optimization that's still to come or if you can even consider higher design range. On top of that, of course, is there any limitation on your environmental license to run the plant above 45,000? You mentioned the release that you reached at 53,000 at a certain point. Could be 45,000 more as a floor than anything? That's the first question. Thanks.
Yeah. So, with respect to what we're allowed, I believe we could average as much as 55,000 tons a day per the permit that exists at Mantoverde Optimized. The plant, it was designed to be able to deliver with the characteristics 45,000 tons a day. Obviously, we're delighted that we're exceeding that at the moment. The other thing I'll point out is that whenever you make a modification to a circuit, especially when it's modifying throughput, the first thing you optimize is the throughput, and then you optimize after you have steady state, you optimize the recovery. My understanding is we're range bound between 87% and 91%. There probably are items that we can do that are around the edges in optimization in flotation. Maybe, Peter, do you want to talk to that particular question around recoveries?
Yeah, sure. O ne of the ways we got the tonnage up to above 45,000 was by coarsening the grind slightly from about 180 microns to 212 microns, which it sounds like a large change in the grind size, but from the recovery perspective, that is only about a 0.9% drop in the average weighted copper recovery for all of our ore types. Now, there are a few ore types that behave a little bit differently, but for the most part, we thought it was a good trade to give up a little less than 1% recovery in exchange for a 40% increase in throughput. We did also redo the cleaner flow sheet, so we have a simpler cleaner flow sheet right now with the existing equipment.
We did not add any new equipment, but we reduced one cleaning stage and extended the residence time in the scavengers, which is going to make it a little bit easier for the operators to operate the circuit. That said, it has only been two weeks in, and in two weeks it is difficult for Nielsen's team, the mill management and the operators to actually go through and tune all the control loops, make sure the pumps are running perfectly. I would not be surprised if we start to see a little bit of upset, but I don't think we are going to see much of a step change in the overall recovery until we get the pyrite scavenging cells in as part of the Pyrite Augmentation process. That will add another stage of copper scavenging to the back end of the plant.
Copper that will eventually come out in the form of copper cathode. T hat is going to be a key step change in the performance of the integrated oxide sulfide plant. T hat will be the next thing to look for. L ike I said, that is early 2028, we are expecting that.
Thanks. I think, pinging back on this, Peter, the Pyrite Augmentation project has an NPV of, I think, $200 million, a current price like $3.50. This includes the cobalt that you are gaining on the project, or this is without the cobalt?
I can't verify that number. I'm not sure where that came from. I don't think we would've included cobalt in it because the cobalt requires a separate ion exchange or hydrometallurgical recovery step to recover it. Once that pyrite, which contains the cobalt, starts leaching and releasing the cobalt, the cobalt grades will build in the circulating leach solutions. After 6 months or a year, we'll be able to take a small bleed stream out and recover that through an ion exchange circuit. That would be late 2028 when that happens. We're doing the engineering for that right now. It should be at a PFS stage by the end of the year.
Yeah. Those metrics don't include the beneficiation of cobalt. We'll do that next year. Peter's team is working hard on getting that to a feasibility stage such that we can build on that refinery to produce that cobalt.
Okay. Thank you. My second question on the acid contracts. You mentioned, I think, in August that you had 80% of the acid contract at $190 per ton for the remainder of the year. Is this still the case? I think Mantos Blancos reported higher than that. How much of 2027, if any, acid contract is already priced? Thank you.
Raman?
Yes. At Mantos Blancos, we have some contracts that are tied to. We've committed, but they're committed to publication price, so they're tied to the annual publication price that comes out in Chile monthly. That's why Blancos technically has the supply contract, but the price is floating, let's call it. When we talk to the fixed price contracts, we were referring more to Mantoverde's acid purchase commitments.
Thank you. For 2027, you have already settled any contracts or not yet?
No. As I was mentioning earlier, November is kind of the key month where you can decide how much you want to fix versus float. We have a preexisting contract at Mantos Blancos for about 60,000 tons for next year. Then we have about another 19,000 for Mantoverde, so that is like 79,000, and we need roughly about 400,000 tons for next year. So, we will be entering into those discussions here in November, December.
That is clear. Thank you, guys.
Your next question comes from Anita Soni with CIBC. Your line is now open.
Hi. Good evening, and thanks for taking my question. I just wanted to go through a little bit on Pinto Valley. I think there's some pretty good disclosure in terms of the throughput. I just wanted to clarify, so when you were talking about running at one third of the capacity, I guess up until November 2nd, is that at the run rate of 40,000 ton per day, I guess, which is what kind of the higher numbers that we've seen in the last few years, or is that more like at your 50,000 ton per day optimized rate?
Yeah. Maybe Raman, you want to address that on what the actual throughput is. What I will say is when we say a third of the capacity, it's not of the previous run rate, it's of the total is. A third of the 60,000 or the third of the 56,000 tons a day. How about Raman?
Yeah. The third was referring to when we had the mobile crushers on site in that disclosure in the MD&A, Anita. As we started commissioning the primary crusher, obviously, we found a few more things to repair. C urrently, we'll be restarting full operations on Monday there.
Okay. All right. When we're looking at these 100% throughput rates, this should be more along the lines of 50,000 tons per day?
Yeah. There'll be a ramp-up period for us to get to 50,000. We're hoping, based on the work we've done, we think it's achievable that we'll exit the year at 50,000, and then during next year, move it up towards its nameplate capacity.
Okay, thanks. Then just going to Mantoverde. In terms of the dump leach and heap leach operations, what you delivered in terms of tonnage and grades, is that a fair run rate going into Q4 and into next year at this stage?
Yeah. That's what we kind of-
Yeah, Raman, you want to answer that?
Yeah. If you look at the forecast run rate that we're doing, it's about 20,000, 22,000 tons of cathode for the combined mines. That's what we've guided as an indicator for next year.
Lastly on the sulfide, sorry, the Pyrite Augmentation. When do you think you'll start spending on that? It's been approved, right? Sorry, we only get an hour with this disclosure before we have to start asking questions, so I apologize if I can't remember. I think it said that it's been approved, and you'll start ramping that up. Can you give me the CapEx spend, when that'll be?
Most of it'll be next year. There's very little this year. There'll be some ordering of equipment and long lead items and some engineering. It was a $45 million project. There'll probably be a couple million this year, but the bulk of the spend will be next year.
Okay, thanks. Then I guess one last question, if I may. The grades at Mantoverde in the fourth quarter, at the sulphide plant, can you just give us an idea? I think originally it was supposed to be ticking up into some higher grades going into 2027. Is that still the case? Are you still expecting quarter-over-quarter increase in grade and also higher grades in 2027?
Yes.
All right. Thank you. That's it for my questions.
There are no further questions at this time. I will now turn the call over to Cashel for closing remarks.
Thank you, operator. With the major maintenance quarter behind us and multiple key catalysts on the horizon, Capstone is well positioned as we look towards Q4 and 2027. We look forward to updating you in early February with our Capital Markets Day, followed by our Q4 results. Until then, stay safe and feel free to reach out to Daniel, Michael, or Claire if you have further questions. Thank you for your continued support, and have a great day.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and I invite you to please disconnect your line.