Capstone Copper Corp. · TSX:CS
Capstone Copper — Investor Presentation (April 2021)
53 slides from Capstone Copper's investor presentation, April 2021
Slide 1: A Canvas for Transformational Growth
A CANVAS FOR TRANSFORMATIONAL GROWTH CORPORATE PRESENTATION – APRIL 2021 AERIAL OF SANTO DOMINGO FUTURE OPERATIONS SITE
Slide 2: Cautionary Notes
Cautionary Notes CAUTIONARY NOTE ON FORWARD LOOKING INFORMATION This document may contain “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (col
Slide 3: Cautionary Notes
Cautionary Notes CAUTIONARY NOTE TO UNITED STATES INVESTORS REGARDING PRESENTATION OF MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES As a British Columbia corporation and a “reporting issuer” under Canadian securities laws, we are required to provide disclosure regarding our mineral properties in ac
Slide 4: Capstone Transformation to Premier Mid-tier with Growth
Capstone Transformation to Premier Mid-tier with Growth 3-Year Growth Over 100% to ~200,000 tonnes per year in 2024 STRATEGY To build a sustainable, multi-asset copper portfolio in mining friendly jurisdictions that generate strong cash flows in all price environments Innovate and optimize every asp
Slide 5: Balance Sheet is Positioned to Power Our Transformation
Balance Sheet is Positioned to Power Our Transformation Currently 2021E-2023E Cumulative After-Tax Operating Cash Flow** NET CASH DEBT FREE in 2021 ~$1,400 • Capstone has pipeline of low capital, high return ~$1,200 brownfield growth projects at Pinto Valley and Cozamin ~$1,000 • Unhedged copper cas
Slide 6: Positioning to Recapture a ZERO Net Debt Valuation
Positioning to Recapture a ZERO Net Debt Valuation 5.00 5.00 2011 Acquired Santo Domingo Feb 2021 4.50 Zero Net Debt 4.50 2013 Acquired 4.00 4.00 Pinto Valley CS Share Price (C$ per share) 3.50 3.50 Copper Price (US$/lb) $3.00/lb Cu 3.00 3.00 2.50 2.50 2.00 2.00 1.50 1.50 1.00 1.00 0.50 0.50 0.00 0.
Slide 7: The Right Management Team
The Right Management Team DARREN PYLOT JERROLD ANNETT, P.Eng. President and CEO SVP, Strategy and Capital Markets Over 30 years in mining, founder of Capstone Over 25 years of global mining and capital Mining, acquired Cozamin for $3M, which has markets experience, previously in senior strategic del
Slide 8: Recovering Green Metals from Waste Streams
Recovering Green Metals from Waste Streams Pinto Valley Cozamin Santo Domingo Implemented 2020 H1 2022 H2 2022 H1 2023 2025/26 Jetti Catalytic Pyrite Coarse Particle Paste Backfill Cobalt Project Leach Technology Agglomeration Flotation -Approximately half of the -A tailing stream containing pyrite,
Slide 9: Optimization, Innovation and Expansion at Pinto Valley
Optimization, Innovation and Expansion at Pinto Valley Jetti Resources catalytic technology pioneered by Capstone is expected to recover up to 350 million pounds of copper from mineralized waste mined at Pinto Valley over the next 19 years
Slide 10: Pinto Valley: Only Operating Mine In This Historic District
Pinto Valley: Only Operating Mine In This Historic District • The Globe-Miami district is one of the oldest and most productive mining districts in the United States, with its first recorded production occurring in Copper Cities 1878. Since that time, more than 15 billion pounds Pinto Valley (BHP) o
Slide 11: Pinto Valley District Consolidation Potential
Pinto Valley District Consolidation Potential CAPSTONE MINING (TSX:CS) • 11
Slide 12: Pinto Valley – Higher Throughput and Higher Recovery
Pinto Valley – Higher Throughput and Higher Recovery An Exciting Catalyst-Rich Future 2021 Higher Production with Lower Costs PV3 Optimization and Innovation • Pilot plant testing of Eriez HydroFloat coarse particle flotation technology 160 $2.30 in Dec 2020 surpassed our 6% improvement target to ov
Slide 13: Innovation is the New Competitive Edge at Pinto Valley
Innovation is the New Competitive Edge at Pinto Valley CURRENT FLOWSHEET Recovered copper will be sent to Conventional Flotation Circuit regrind mill and flotation circuit ~85% copper recovery Copper lost to tailings per year: ~23 MIbs H2 2022 FLOWSHEET Eriez HydroFloat and Pyrite Agglomeration ~93%
Slide 14: Expanding Cathode Production at PV to 300-350 Mlbs
Expanding Cathode Production at PV to 300-350 Mlbs • 25 Mlbs per year SX-EW currently operating at under 20% capacity Cathode Expansion Could Deliver ~10-13% • Low cost cathode production from historic and future high-grade Boost to Production waste; all-in cost1 expected to be ~$2.00 per pound 12%
Slide 15: Cozamin 10+ Year Mine Life
Cozamin 10+ Year Mine Life "The Best Years Are Ahead"
Slide 16: Cozamin's Proven Track Record – Best is Yet to Come
Cozamin's Proven Track Record – Best is Yet to Come 2007-2020 2021E-2030E1 2031+ 2007 New Technical Impact23 Growth first full year of production Report Projects Exploration expansion potential in +500 Mlbs +512 Mlbs East and West Targets copper produced copper production Enhanced Pillar Recovery +1
Slide 17: 10+ Year Mine Life, Higher Mining Rates @ 1.77% Copper
10+ Year Mine Life, Higher Mining Rates @ 1.77% Copper 80 70 60 Expected Reserves Copper Production (Mlbs) Mine Plan % Cu LOMP Copper Million 50 Update Grade Production Tonnes1 2021 2021-2031 516 Mlbs 14.1 1.77 40 14.1 Mt @ 10.2 Mt @ 1.77% Cu 2020 2020-2029 394 Mlbs 10.2 1.79 1.79% Cu 30 2019 2018-2
Slide 18: Cozamin Mine Infrastructure (3,780 tpd)
Cozamin Mine Infrastructure (3,780 tpd) CAPSTONE MINING (TSX:CS) • 18
Slide 19: Cozamin Brownfield – MNFWZ West Expansion Target
Cozamin Brownfield – MNFWZ West Expansion Target MNFWZ West is an $5M budgeted in 2021 for 40,000 meters primarily targeting the MNFWZ West target extension of Vein 20 recently identified by extensive review of historical drilling data The West target is easily accessible from both the MNV and MNFWZ
Slide 20: Impact23 Growth Projects
Impact23 Growth Projects Extend mine life, increase environmental & safety performance and improve operational GOAL: efficiencies utilizing mineral resources already discovered in addition to testing new targets Exploration Expansion Potential in Drill testing the newly recognized West target area w
Slide 21: Santo Domingo: Unlocking Transformational Growth
Santo Domingo: Unlocking Transformational Growth CAPSTONE MINING (TSX:CS) • 21
Slide 22: Santo Domingo in the Middle of a Growing Mining District
Santo Domingo in the Middle of a Growing Mining District ~1,000m above sea level REGION III, CHILE 20 km (TSX:CS) • 22
Slide 23: Santo Domingo – Financing Plan to Transformational Growth
Santo Domingo – Financing Plan to Transformational Growth Capstone 2021-23 Operating Cash Flow (after-tax) of ~$0.8 to $1.0 Billion assuming $3.50 to $4.00 copper prices Significant De-Risking Capital Illustrative Financing Plan Financing Plan for Reduced Spend Capital Estimate Capital Estimate Per
Slide 24: Reduced Capital Strategy Targets Enhanced Financial Metrics
Reduced Capital Strategy Targets Enhanced Financial Metrics IRR & Profitability Index Materially Higher with Gold Stream, Port & Future Rail Deals Reduced Capital - $0.8B Capex Profitability Index = 1.3x $7,000 1.20% NPV(8% post-tax) = $1,080M; IRR = 33.3% $6,000 Payback = 1.9 Years First 5 Years C1
Slide 25: Major Construction to Start by Year-End 2021
Major Construction to Start by Year-End 2021 (TSX:CS) • 25
Slide 26: A Rare First Quartile Cu-Fe Project with Cobalt Optionality
A Rare First Quartile Cu-Fe Project with Cobalt Optionality • PEA Cobalt1 opportunity, incremental US$0.67B; potential to add additional US$0.63B to NPV8% • Simple flowsheet using a series of conventional metallurgical steps to achieve ~80% cobalt recovery and low costs • District opportunity to exp
Slide 27: Cobalt Sulphate PEA Flowsheet
Cobalt Sulphate PEA Flowsheet: Recovered from Tailings Stream & Refined to Battery Grade Cobalt Sulphate CAPSTONE MINING (TSX:CS) • 27
Slide 28: Santo Domingo Brownfield
Santo Domingo Brownfield No exploration drilling conducted on the property since Capstone acquired the project in 2011 2021 Brownfield Exploration Program Phase 1: Budget of $1.8M USD for ~6,000m in 20 to 23 holes is expected commence by mid-April 2021. Program will test two areas with potential to
Slide 29: 2021 Catalysts
2021 Catalysts Debt free in 2021 Within weeks Corporate Sustainable 200 Mlbs copper producer by 2022 On track Coarse particle flotation Decision H1 2021 Pyrite agglomeration Decision H1 2021 Pinto Valley PV3 Optimization projects Completed H2 2021 Updated Technical Report Release H2 2021 Ramp up to
Slide 30: Transformational Growth in 2024
Transformational Growth in 2024 Transformational copper production 2022-2023 ~200 Mlbs sustainable copper production 2024** growth with Santo Domingo Pinto Valley Cozamin Santo Domingo 50% adds 165 Mlbs and 70% adds 230 Mlbs • PV4 study released; • Impact23 Growth Project • Cobalt feasibility announ
Slide 31: Appendix
APPENDIX
Slide 32: 2021 Production, Cost and Capital Guidance
2021 Production, Cost and Capital Guidance Pinto Valley Cozamin Santo Domingo2 Total Investing in 2021 Towards Sustainable 200 Million Pounds Production by 2022 Production and Cost (US$) PINTO VALLEY Copper production (Mlbs) 127 – 137 48 – 53 - 175 – 190 • Completion of PV3 Optimization projects • F
Slide 33: Focused on Low Capital and High Return ROIIC Projects
Focused on Low Capital and High Return ROIIC Projects Avg 5 Year Total Initial Average Incremental NPV Profitability Annual NOPAT* Capex IRR ROIIC* ($M) Index ($M) ($M) PV Cathode Expansion 71% 171% 9.8 (Jetti Resources) $7 $10 $98 PV3 Optimization (announced to date) $12 $40 29% 32% $69 1.7 Cozamin
Slide 34: Sustainable Benefits of Current Initiatives
Sustainable Benefits of Current Initiatives Waste and Climate Change and Air Health and Safety Water Hazardous Employment Energy Emissions Emissions Materials PINTO VALLEY Copper cathode using Jetti Decrease mine waste and Less water intensive Less energy intensive production of copper Job creation
Slide 35: Company Structure (TSX:CS)
Company Structure (TSX:CS) Top Five Institutional Shareholders Own ~50% Q4 2020 Results Institution Name % of S/O Copper production (million pounds) Q4 2020 YTD 2020 GRM Investments Ltd. 22% Pinto Valley 34.1 119.0 Korea Resources Corporation (KORES) 10% Cozamin 10.3 37.9 Ingalls & Snyder 9% Total 4
Slide 36: Board of Directors
Board of Directors GEORGE BRACK, MBA, CFA, BA Sc DALE PENIUK, CPA, CA, B.Comm Chairman of the Board Former Assurance Partner, Mining, KMPG LLP and is Over 30 years in mining focused on exploration, corporate currently Audit Committee Chair for Lundin Mining,Argonaut development and investment bankin
Slide 37: Total Global Copper Inventory is Near a 10 Year Low
Total Global Copper Inventory is Near a 10 Year Low CAPSTONE MINING (TSX:CS) • 38
Slide 38: ESG Performance
ESG Performance Pinto Valley’s new CAT 994K loader burns ~30 less gallons of fuel per hour than the current shovels, both saving on operational costs and reduce CO2 emissions. The improved efficiency will save approximately 116,000 gallons of fuel in 2020. A second loader is being added in 2021, and
Slide 39: ESG at Capstone
Environmental work at Santo Domingo ESG at Capstone • Senior management development of ESG strategy with Board oversight, including identification of short, mid and long-term ESG-focused priorities • Amended executive compensation to further enhance ESG metrics and weighting • ESG Committee formed a
Slide 40: Safety Performance
Safety Performance KEY INITIATIVES • Health Clinic established at Pinto Valley in June 2017 improving case management • Ongoing training at all levels "Values in Action" and "Leadership in Action" • Reward Points System encourages reporting unsafe acts and conditions • Declining Lagging Indicator cu
Slide 41: Using Technology to Conserve Water
Eriez HydroFloat pilot plant at Pinto Valley Using Technology to Conserve Water • Coarse particle flotation technology lowers water consumption • Technology to reduce evaporation in various water sources • Retrofits to thickeners are expected to help with reclaiming process water, which will reduce
Slide 42: Climate Change and Environmental Performance
Climate Change and Environmental Performance Energy Consumption (000’s gigajoules) Mining Waste (Mt)* Fuel Electricity Purchased Electricity by Source Waste Rock Tailings 3,500 60.0 Hydro, 5% 3,000 50.0 1,419 1,411 1,445 19.6 2,500 20.3 20.0 40.0 2,000 Coal, 33% Natural Gas, 47% 30.0 1,500 30.1 1,46
Slide 43: Employment Performance for 2019
Line out meeting at Cozamin Employment Performance for 2019 Total Employees = 1,049 Employees by Gender Female, Cozamin, 129, 12% 452 Pinto Valley, 548 Santo Corporate & Domingo, 12 Exploration, 37 Male, 920, 88% Hiring and Turnover Rate Hiring and Turnover by Gender Male Female 18% 180 15% 160 165
Slide 44: Our COVID-19 Response
Our COVID-19 Response Focused on Four Key Principles BRITISH COLUMBIA Population: 6M Confirmed: 47,067 Deaths: 765 Death rate: 1.6% ARIZONA Population of 7.2M Confirmed: 461,345 Deaths: 7,972 Death rate: 1.7% ZACATECAS Population of 1.5M Confirmed: 20,049 Deaths: 1,795 Death rate: 8.9% CHILE Populat
Slide 45: Our COVID-19 Response
Our COVID-19 Response Ensure the Health and Safety of Our People and the Communities in Which We Operate Protecting Our People Thermal screening Extended paid sick leave Rapid COVID testing At risk employees off site Physical distancing protocols Engaging remote work Masks as standard
Slide 46: 2020 Awards and Recognition
2020 Awards and Recognition • In October, Cozamin received the “Health Security” badge from the Secretary of Health, through the Mexican Institute of Social Health (IMSS) • In September, Cozamin was awarded the Ethics and Values Award in the “Multinational Companies” category by the CONCAMIN (Confed
Slide 47: Capstone History
Capstone History 2004 2005 2006 2007 2008 2009 2011 2013 2017 2019 2021 January: June: February: October: May: May: June: October: December: June: March: Acquired Sherwood Minto Minto began Sherwood Silverstone Formed a Acquired Sold Kutcho Sold Minto 100%+ Cozamin Copper development commercial merg
Slide 48: Pinto Valley Reserves & Resources
Pinto Valley Reserves & Resources COPPER Total Proven & Probable Cu MineralReserve 1.16 Mt contained metal (369 Mt @ 0.31%Cu) Total Measured & Indicated Cu MineralResource 3.97 Mt contained metal (1,303 Mt @ 0.31%Cu) Measured Cu Mineral Resource 1.89 Mt contained metal (561 Mt @ 0.34% Cu) Indicated
Slide 49: Santo Domingo Reserves & Resources
Santo Domingo Reserves & Resources COPPER EQUIVALENT Total Measured & Indicated CuEq MineralResource 537 Mt @ 0.52% CuEq Inferred CuEq Mineral Resource 48 Mt @ 0.41% CuEq COPPER Total Proven & Probable Cu MineralReserve 1,167 kt contained metal (392.3 Mt @ 0.30% Cu) Total Measured & Indicated Cu Min
Slide 50: Cozamin Reserves & Resources
Cozamin Reserves & Resources COPPER Total Proven & Probable Cu MineralReserve 247 kt contained metal (13,966 kt @ 1.77% Cu) Total Measured & Indicated Cu MineralResource 446 kt contained metal (29,399 kt @ 1.52% Cu) Inferred Cu Mineral Resource 75 kt contained metal (13,866 kt @ 0.54% Cu) SILVER Tot
Slide 51: Consolidated Estimated Mineral Resources
Consolidated Estimated Mineral Resources MINERAL RESOURCES – Inclusive of Mineral Reserves CONTAINED METAL Cu Zn Pb Mo Ag Au Fe Co S Cu Zn Pb Mo Ag Au Fe3 Co3 Category kt % % % % g/t g/t % ppm % kt kt kt kt koz koz kt kt Pinto Valley1 Measured 561,323 0.34 - - 0.006 - - - - 1,886 - - 34 - - - - 31-D
Slide 52: Consolidated Estimated Mineral Reserves
Consolidated Estimated Mineral Reserves MINERAL RESERVES CONTAINED METAL Cu Zn Pb Mo Ag Au Fe Cu Zn Pb Mo Ag Au Fe Con3 Category kt % % % % g/t g/t % kt kt kt kt koz koz Mt 1 Pinto Valley Proven 226,003 0.33 - - 0.007 - - - 752 - - 16 - - - 31-Dec-2020 Probable 142,575 0.28 - - 0.006 - - - 405 - - 9
Slide 53: Contact Information
Contact Information GENERAL INQUIRIES MEDIA AND INVESTOR INQUIRIES Capstone Mining Corp. Jerrold Annett Suite 2100 – 510 West Georgia Street Senior VP, Strategy & Capital Markets Vancouver, BC V6B 0M3 1-647-273-7351, Toronto, ON www.capstonemining.com info@capstonemining.com info@capstonemin