Capstone Copper (CSC.ASX, CS.TO): Capstone: Cost Concerns Ease; Deleverage Continues; TP raised

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11 Aug 2026 09:01:19 ET │ 18 pages

Capstone Copper (CSC.ASX, CS.TO)

Capstone: Cost Concerns Ease; Deleverage Continues; TP raised

CITI'S TAKE

We update our model following 2Q26 and raise our target price to

C$18.50/sh (A$18.70/sh), reiterating Buy. While investors remain focused

on the risk of higher sulphuric acid costs and potential margin pressure

across the Chilean operations, we believe these concerns are increasingly

offset by lower acid exposure at Mantoverde, stronger by-product credits,

higher copper prices and the approaching contribution from Mantoverde

Optimized (MV-O). As a result, we raise EBITDA by 7-21% across FY26-28E

despite production forecasts remaining broadly in line with consensus. We

continue to see Capstone as an attractive copper growth story, supported

by a rapidly improving balance sheet, MV-O ramp-up through 2027 and a

potential Santo Domingo sanctioning decision later this year.

Thiago Ojea AC

Jack Whelan

Estimates Changes — Our 2026E copper production estimate decreases by 6% to

209kt, and our 2027E and 2028E estimates decline to 248kt and 261kt,

respectively, reflecting a more conservative ramp-up profile across the portfolio. We

increase our 2026E C1 cash cost estimate by 11-14% through FY26-28. Higher

commodity prices and stronger by-product credits more than offset the volume

revisions, leading us to increase revenue by 3%, 13% and 15. The higher revenue more

than offsets the higher C1 cash cost, with adjusted EBITDA increasing by 7%, 17%

and 21%, in 2026E, 2027E and 2028E, respectively. We now forecast adjusted

EBITDA of US$1.55bn in 2026E, US$2.07bn in 2027E and US$2.14bn in 2028E.

Fundamentals — Mantoverde remains Capstone’s main operating and growth driver

following record sulphide production of 18.2kt in 2Q26, supported by throughput of

36.3ktpd, 13% above current design capacity, and recoveries of 90.2%. The

company is prioritizing lower-cost sulphide production and reducing acid-intensive

cathode output, which is expected to lower 2026 sulphuric acid requirements by

approximately 200kt and eliminate the need for spot acid purchases at Mantoverde

for the remainder of the year.…