Capstone Copper Corp.

Capstone Copper Corp. is a mid-tier copper producer headquartered in Vancouver, Canada, operating primarily in South America. The company's portfolio consists of 5 projects, comprising 4 operating mines and 1 development project, in addition to several early-stage exploration prospects. Key assets include Mantoverde and Pinto Valley. The business model centers on operating a portfolio of mining assets with integrated processing capabilities, including flotation for concentrate production and solvent extraction/electrowinning for cathode output. The organization leverages a modular truck system for concentrate haulage and utilizes both domestic and international smelters and ports. Competitive positioning is primarily determined by operational cost structures, the production of high-grade concentrate with low impurities, and the ability to manage financial integrity through metal price cycles. A significant portion of production is sold through competitive tendering processes or under annual and multi-year contractual agreements with major trading companies. The enterprise's financial performance demonstrates high sensitivity to a principal commodity's price movements due to its concentrated business focus. Risk management may involve the use of financial derivative instruments to secure pricing within contractual quotation periods or for future deliveries, aiming to provide cash flow certainty for long-term value creation. The business requires specialized skills in mine operations, construction, geology, and logistics, retaining experienced executive officers and consultants to manage these complexities.

The organization's strategy focuses on unlocking production growth while executing cost and operational improvements through innovation, optimization, and responsible production. A core tenet is the disciplined allocation of capital to surface stakeholder value, with a clear emphasis on profitability. Near-term growth initiatives are advanced using proceeds from capital raises, funding detailed engineering for development projects and expansionary exploration programs. A key long-term objective involves creating an integrated, world-class mining district by leveraging infrastructure synergies between existing operations and development projects. This includes a phased approach to growth, starting with the ramp-up of recently completed projects, followed by sanctioning decisions on subsequent expansions. The strategy also encompasses a commitment to extending operational life through brownfield and greenfield exploration activities aimed at increasing mine life and identifying potential expansion opportunities across its asset portfolio. The enterprise actively evaluates technical alternatives for major projects to ensure optimal final configurations and nameplate capacities.

Executive leadership demonstrates a focus on long-term stability and strategic succession, highlighted by a plan for the current CEO, with extensive experience leading a major multinational's base metals division, to transition to Non-Executive Chair, with the President & COO succeeding him. The board of directors includes individuals with significant experience in capital markets, mining operations, and corporate governance, with recent appointments enhancing expertise in these areas. As of the report date, the board consists of 8 members, with the 4 members of the audit committee confirmed as independent and financially literate. Governance is structured through several board committees, including Audit; Governance, Nominating and Sustainability; Human Resource & Compensation; and Technical and Operational Performance. The Audit Committee, which meets at least 5 times annually, provides oversight on financial reporting, internal controls, and risk management. The board's oversight extends to key policies governing health, safety, environment, and community relations, with annual corporate objectives for sustainable performance linked directly to employee compensation at all organizational levels.

The enterprise has formalized its commitment through a Sustainable Development Strategy focusing on 5 priority areas: biodiversity, communities, tailings, climate, and water. This strategy includes establishing interim targets, such as for Greenhouse Gas (GHG) emissions reduction. The organization has adopted several key policies, including an Integrated Health, Safety, Environment & Community Policy, a Human Rights Policy, and a Supplier Code of Conduct, providing regular training to employees and suppliers. Governance for these initiatives is provided by the Technical and Operational Performance Committee of the Board. Specific commitments include achieving the Global Industry Standard for Tailings Management (GISTM) and improving dust control at its operations. The company has also committed to the Copper Mark assurance framework at 2 of its operations, an initiative designed to demonstrate responsible production practices. The organization's approach involves continuous improvement, compliance with international standards, and the integration of climate-related impacts into its strategic business planning, including assessing opportunities for low-carbon technologies.

The current corporate structure was formed in March 2022 through a transaction where Mantos Copper acquired all shares of Capstone Mining Corp. and was renamed. This event combined the businesses of the 2 previously separate entities. The organization holds a 70% interest in one of its key operating assets, with Mitsubishi Materials Corporation holding the remaining 30% interest under a shareholders' agreement established in February 2021. Major shareholders include Hadrian Capital Partners Inc. (13.22%) and Orion (11.88%), with Orion holding board nomination rights contingent on its ownership level. The company has entered into several material streaming and royalty agreements to finance development, including a 2019 silver production agreement with Osisko Bermuda Limited and a 2019 net smelter return royalty with Southern Cross Royalties Limited. Additionally, 2 precious metals purchase agreements were established with Wheaton Precious Metals Corp., one for silver in 2020 and another for gold in 2021. In July 2024, the company entered a binding agreement to acquire 100% of Compania Minera Sierra Norte S.A. to secure a potential future feed source.