Capstone Copper Corp. (CSC.TO) concluded its fourth quarter earnings call on February 22, 2024, with CEO John MacKenzie presenting a strong finish to the year. The company reported its highest quarterly copper production of over 44,000 tons at a C1 cash cost of $2.67 per pound. For the entire year, Capstone Copper produced 164,000 tons of copper, aligning with their second-half guidance.
The company anticipates a reduction in consolidated unit costs as the Mantoverde development project in Chile progresses, which remains on budget at $870 million. With net revenues of $354 million in Q4 and a healthy balance sheet boasting $353 million in liquidity, the company is positioned for a significant decrease in unit costs in the latter half of 2024. The earnings call also covered the Mantoverde and Mantos Blancos projects' developments, the recent equity raise, and the company's ongoing strategies.
Key Takeaways
- Q4 marked Capstone Copper's strongest quarter with over 44,000 tons of copper produced.
- The full-year production met the guidance with 164,000 tons of copper.
- Consolidated unit costs are expected to decline as Mantoverde development advances.
- The Mantoverde project is on track, with first ore to the mill expected in Q1 2024.
- Mantos Blancos improvements are underway, with nameplate throughput rates expected post-Q2.
- A $356 million equity raise was completed, enhancing liquidity and financial flexibility.
- The company is exploring expansion opportunities with studies due mid-2024 for both Mantoverde and Mantos Blancos.
Company Outlook
- Capstone Copper anticipates a large reduction in consolidated unit costs in the second half of 2024.
- The company expects to maintain a strong balance sheet, supported by recent funding activities.
Bearish Highlights
- No specific bearish information was provided during the call.
Bullish Highlights
- The Mantoverde project is nearing completion, with the potential to significantly increase production.
- The company has successfully diversified its shareholder base through secondary placements and a primary equity raise.
- Capstone Copper was awarded the copper mark for responsible operating practices at its Chilean mines.
Misses
- There were no specific misses reported during the earnings call.
Q&A Highlights
- The company addressed confidence in meeting cash cost guidance and overcoming potential challenges.
- The upcoming Santo Domingo study will provide an updated capital cost estimate and evaluate cobalt processing opportunities.
- The recent equity raise is intended to fund projects, including exploration and optimization efforts, and improve liquidity.
In summary, Capstone Copper's Q4 2023 results highlighted a strong operational performance and strategic positioning for future growth. The company remains focused on the successful ramp-up of its Mantoverde project and the optimization of existing operations. With a solid financial foundation and exciting prospects on the horizon, Capstone Copper continues to advance its position in the copper market.
InvestingPro Insights
Capstone Copper Corp. (CSC.TO) has shown resilience with its strong operational performance, yet the market sentiment reflects caution, as evidenced by recent data and analysis from InvestingPro. Here are some insights that may be of interest:
InvestingPro Data:
- P/E Ratio (Adjusted): A negative value of -42.21, indicating that the company has been operating at a loss over the last twelve months as of Q4 2023.
- Price / Book: The ratio stands at 1.55, suggesting that the stock is trading slightly above its book value.
- Revenue Growth: The company experienced a modest annual revenue growth of 3.82%, yet saw a slight quarterly decline of -2.44%.
InvestingPro Tips:
- Analysts have revised their earnings downwards for the upcoming period, which may impact investor expectations.
- Capstone Copper is trading at a high EBITDA valuation multiple, which could suggest that the stock is priced optimistically relative to its earnings before interest, taxes, depreciation, and amortization.
It's important for investors to consider these factors, especially in light of the company's recent developments and future prospects. For those seeking a deeper analysis, InvestingPro offers additional tips on Capstone Copper, and by using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 10 more InvestingPro Tips available that could provide further insights into the company's financial health and stock performance.
Full transcript - Capstone Copper (CSCCF) Q4 2023:
Operator: Good afternoon, ladies and gentlemen, and welcome to Capstone Copper Q4 2023 Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Thursday, February 22nd, 2024. I would now like to turn the conference over to Jerrold Annett. Please go ahead.
Jerrold Annett: Hello, I'd like to welcome you all to Capstone Copper's Q4 2023 conference call. Please note that the news release and regulatory filings announcing Capstone Copper's 2023 fourth quarter financial and operational results are available on our website and on SEDAR+. If you are logged in to the webcast, we will advance the slides of today’s presentation, which is also available in the Investors section of our website. I’m joined today by our CEO, John MacKenzie; our President and COO, Cashel Meagher; our Chief Financial Officer, Raman Randhawa; and our Senior Vice President, Risk, ESG and General Counsel, Wendy King. Following our brief remarks, there will be an opportunity 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 on the risks and uncertainties pertaining to our business, please see Capstone’s most recent filings, which are available on our website and on SEDAR. And finally, I’ll just note that all amounts we will discuss today are in U.S. dollars unless otherwise specified. Now I'll turn the call over to John MacKenzie.
John MacKenzie: Good afternoon, everyone in North America, and good morning to those dialing in from Australia. We're pleased to present our fourth quarter 2023 results and our achievements for the year. Starting with Slide 5, we produced just over 44,000 tons of copper at consolidated C1 cash costs of $2.67 per pound in Q4. It was our strongest quarter of the year with respect to both production and costs, and that translated into our strongest quarter of the year from a financial perspective. After strong finish to 2023, our operations are set up well for 2024. For the full year in 2023, we produced 164,000 tons of copper, which is in line with our second half guidance. Our consolidated C1 cash costs were impacted by lower production levels at the start of the year and our higher cost cap production. However, we expect our consolidated unit costs to decline as our Mantoverde development project in Chile ramps up. It is a significant accomplishment by our team to have completed the construction phase of MVDP, and to now be focused on the commissioning and ramp up of the project. There are no changes to our previously announced total capital budget of $870 million for the project. Nor for the commissioning timeline as described in our guidance release in January. This project is a culmination of many years of dedicated effort by our team from the exploration, studies, permitting and engineering to the building of the mind, and it's tremendously exciting that we are now approaching first production. MVDP is transformational for Capstone Copper and will drive a step change, improvements in our consolidated unit costs, and a pathway to record operating cash flow generation. Continuing with our achievements in 2023, I'm also very proud to highlight that both our Mantoverde and Mantos Blancos's mines in Chile, were awarded the copper mark. Responsible operating practices are a vital component of our commitments to the environments, our employees, local communities, and governments, and must remain front of mind in everything we do. The copper mark is a powerful assurance of transparency and accountability and reinforces our values on responsible sustainable production. We take pride in the achievements of -- operations, and we are actively striving to replicate the success of Pinto Valley and Cozamin. We also made great strides this year by broadening our senior management bench strength. We now have new general managers at three of our mines, and we've made several key additions throughout the year to our corporate technical team. We've been able to attract very talented and experienced individuals to join our team and our belief we're poised for success. Lastly, I would also like to highlight that in 2023, we diversified our shareholder base through a secondary placement of shares by our largest shareholder, Orion Mine Finance. We continued to bolster our shareholder register earlier this year with a further sell down by Orion in addition to a primary equity raise by Capstone On February 2nd, we announced that our shares commenced trading on the Australian Stock Exchange under the ticker symbol CSC. We grew our shareholder base in the Asia Pacific region substantially last year. The ASX is a premium market with a long track record as a platform for mining companies. We're committed to improving the liquidity on our shares on the ASX over time. And with that, I'll pass over to Raman for our financial results.
Raman Randhawa: Thank you, John. We are now on slide 6. In Q4, we recorded copper production of 44,100 tons and copper sales of 43,300 tons. LME copper prices during the quarter averaged $3.70 per pound, down 2% compared to $3.79 per pound in Q3 2023. Our realized copper prices of $3.74 per pound was largely in line with the LME average price. As a result, we recognized net revenues in the quarter of $354 million. We have recorded consolidated C1 cash cost of $2.67 per payable pound in Q4, which were within our second half guidance range and represented our lowest quarterly C1 cost of the year. We expect cost to trend similarly in the first half of this year between $2.65 to $2.85 per pound before a large step change in our consolidated unit cost in the second half driven by our Mantoverde development project down to $2.10 to $2.30 per pound. Adjusted EBITDA in Q4 of $88.3 million increased by 41% compared to Q3, driven by our stronger operational quarter with 10% higher production results. Adjusted net income to shareholders of 10.8 million or $0. 02 per share excludes unrealized derivative and FX losses of $21 million. Moving on to slide 7. On the left-hand side, we summarize our available liquidity, which as at year end 2023 was approximately $353 million including $127 million of cash and short-term investments and $226 million of undrawn amounts on our $700 million corporate revolving credit facility. Earlier this month, we closed a $356 million primary equity raise as part of a larger CAD431 million bought deal, which included a secondary sale by our largest shareholder Orion Mine Finance. The equity raise improves our liquidity and financial flexibility. Our pro forma liquidity including the net proceeds of the primary offering totals now $606 million. After accounting for the offering on a pro forma basis, we have a consolidated net debt of $674 million and an attributable net debt balance of $523 million. Our balance sheet is in excellent shape. The chart on the right-hand side illustrates our EBITDA sensitivity at various copper prices. In the first two bars, you can see that, we expect significant near-term EBITDA growth with Mantoverde sulfides at full run rate production. In the near-term, this year in 2024, our EBITDA will double from our 2023 levels with MVDP ramping up. And then with MVDP at full capacity, we expect to generate approximately $1 billion of annual EBITDA, assuming a $4 copper price. The EBITDA generation associated with Mantoverde will enable us to focus on generating free cash flow to delever our balance sheet and be below 1time net leverage at spot copper prices, which provides additional liquidity to advance our future growth pipeline in terms of Mantoverde optimized, expiration and Santo Domingo depending on market conditions. Now, I'll hand it over to Caso for the operations review.
Cashel Meagher: Thanks, Raman. We're now on Slide 8. Pinto Valley produced 15,933 tonnes of copper at C1 cash cost of $2.36 per payable pound during Q4. It was our strongest quarter of the year at Pinto Valley. As we started to see benefits from our new asset integrity program, and in my view, the mine is positioned well for this year. We have guided for 58,000 tonnes to 64,000 tonnes of copper production at Pinto Valley in ‘24. At C1 cash costs of $2.50 to $2.70 per payable pound. We expect copper production to be weighted towards the second half of the year driven by grades. Our guidance implies throughput of around 52,000 tonnes of ore per day versus the mill capacity of 60,000 tonnes per day. As we continue to execute on our asset integrity program, we believe we will be able to increase the meantime between failures and improve our overall availability to be able to deliver more consistently higher throughput. Also, of note, last year, Pinto Valley completed a third-party GAAP assessment for the copper mark. In 2024, our capital expenditure guidance also reflects our efforts to improve tailing stewardship as we work towards implementing the global industry standards for tailings management by year end 2028. Moving to slide nine, Cozamin mine delivered a solid Q4 producing 6,564 tonnes of copper at C1 cash costs of a $1.76 per payable pound. The mine demonstrated another quarter of nameplate mining rates after transitioning to the new cut and fill mining method earlier last year. We have guided for 2024 production from Cozamin of 22,000 to 24,000 tonnes of copper. 2024 costs are higher than those in our most recently published technical report due to a stronger Mexican peso and additional use of the new cut and fill mining method. We believe there are opportunities to reduce unit costs in the future as the workforce improves its proficiency with cut and fill. Our Mantos Blancos asset is highlighted on slide 10. Total sulfide and cathode production yielded 11,587 tonnes of copper at a blended C1 cash cost of $2.71 per payable pound. Sulfide operations this year have not performed consistently at nameplate levels, while the major components including the crushing, grinding, and floating circuits remain more capable of throughput rates in excess of 20,000 tons per day. Linkages between these systems, including pumps and pipes have exhibited bottlenecks. In Q4, we continue to execute on our plan to address plant stability that includes improved maintenance and optimization of the concentrator and tailing system. We have also incorporated the learnings to date from operating the plant since the expansion was completed. We've worked through several areas during the quarter, and we have addressed several of the bottlenecks in the crushing and grinding area of the mine. Operating rates so far in 2024 have tracked more closely with our plan. We've guided for sulfide production of 43,000 to 49,000 tonnes of copper with a larger weighting in the second half driven by higher throughput. During the first half of the year, our focus is on receiving, installing the engineering and infrastructure upgrades required in the tailings dewatering area of the plant. We expect to receive and install the necessary equipment in Q2, after which we expect Mantos Blancos to be operating at nameplate throughput rates. Included in our sustaining capital guidance at Mantos Blancos per 2024 is approximately $35 million related to achieving sustainable run rate production. We are confident that we have both the team in place and the asset that will support full run rates. Our efforts are focused on achieving this, and after that, we will commence our studies related to Mantos Blancos Phase 2, as we believe the ore body can support a further expansion. Now on to Mantoverde on Slide 11. Q4, 2023, oxide production was 10,019 tons of copper in cathode at C1 cost of $3.68 per payable pound. During the first quarter of 2024, we welcomed a new general manager at Mantoverde, Oscar Flores, who has significant experience ramping up and operating sulfide concentrators in his previous roles with Kin Ross, Ana Pagasa, Anglo-American, and Delco in Chile, plus his time at New Gold (NYSE:NGD) in Mexico, Australia, and Canada. Our previous GM, Pablo Asiain, will be staying on through the end of Q1 ahead of his retirement. We thank him for his stewardship at Mantoverde and wish him all the best. Importantly, significant progress was achieved at the MVDP during Q4, construction is effectively complete. Our project capital estimate of $870 million is unchanged and at this stage we do not anticipate any further increases to the capital budget for the project. Our key commissioning milestones are listed on the right side of the screen with first or to the mill expected in Q1. First saleable concentrate in Q2, and the mine hitting its name plate operating rates during the third quarter. Mantoverde will produce approximately 120,000 ton of ease of combined cathode and copper and concentrate with over 30,000 ounces of gold per year, once fully ramped up. During this ramp up year, we plan to produce between 61,000 to 75,000 ton of combined copper at Mantoverde. Around mid-2024, we plan to release a study for Mantoverde Optimize, which is a Brownfield expansion to increase the or throughput by approximately 40% with a resource of over 1 billion ton of material not currently included in reserves. We would also continue to evaluate the addition of a second concentrator line at Mantoverde. Slides 12 through 16 show our construction and commissioning progress at several key areas of the MVDP. Slide 12 shows the primary crusher on the left and the covered coarse ore stockpile on the right. We fed first door into the primary crusher during the fourth quarter and our covered coarse ore stockpile now sits about a third full ahead of the ramp up. Recall that the mining activities took place throughout 2023 and we have now stockpiled around 6 million tons of sulfide ore waiting to be fed to the primary crusher in mills. We have also a further six months of sulfide ore exposed in the pit, further de-risking the ramp up. Slide 13 shows a close-up of the SAG and Ball (NYSE:BALL) Mills. This is the next major step in our systematic commissioning process. Our engineering contractor, Asanko, is engaged for the commissioning and ramp up of the mill operations. We have also hired a full complement of sulfide operators in addition to our new plant manager, who are working alongside the Asanko ramp up team. Last week, the mills were energized and have been turning without ore. We are working with Ethel Smith, our equipment manufacturer, as they perform their final instrumentation and calibration treks prior to the first ore being fed into the mills, which we expect later this quarter. On Slide 14, you can see a bird's eye view of the processing flow sheet. We will continue to systematically commission the plant working through the flotation, filtration and tailings areas over the next few months. On slide 15, you'll see the tailings storage facility. Mantoverde sits approximately 900 meters above sea level and is one of the driest areas on the planet. In our view, it is among the best places on earth to have built and be ramping up a copper concentrator. Lastly, on Slide 16, you'll find our desalination plant on the coast about 30 kilometers away from the mine. It has now been expanded to support the MVDP. I'm excited to continue commissioning and ramping up the Mantoverde development project over the next few months. Now over to Wendy King for the sustainability review.
Wendy King: Thank you, Cashel. We're now on Slide 17 with a review of our sustainability highlights. In November, we published our first combined sustainability report for Capstone Copper, Growing Responsibly. This report provides enhanced information on our global sustainability policies and more in-depth information on community engagement and biodiversity management. We also reported emissions intensity data per unit of ore processed and unit of copper produced to give a clear and transparent picture for our emissions. In 2024, we will continue this trend of enhanced reporting by disclosing the results of our climate-related risk and opportunity assessment and scenario analysis, which we started in 2023. This work will further inform our business strategy and de-carbonization plan. Along with other Canadian mining companies, we will issue our first modern slavery report on our supply chain responsible sourcing practices. We are pleased to report that Mantoverde was named the 2023 Company of the Year by Corpora Atacama at its Annual General Meeting. Cozamin was recognized with three different awards, including the Socially Responsible Company Distinction Award from the Mexican Center for Philanthropy, The Ethics and Values Award for its Corporate Social Responsibility Practices from the Confederation of Industrial Chambers of Mexico, and The Company Committed to Human Rights Awards from the Zacatecas State Human Rights Commission. These awards are a testament to the work done by our sites to be corporate and industry leaders in our communities. At Mantoverde, we are working with Esconza, Chile and the Atacama regional government to provide desalinated water to the towns of Flamenco and Las Piznas to meet all of their water needs. This is an important example of how mining companies can give back and improve the wellbeing of the communities in which we operate. At Pinto Valley, water supply wells have been converted from diesel power to electric, and in our mine fleet, we are working to replace diesel equipment with electric or lower emission equipment as replacements come due. And we have implemented a new dust suppression system that saved approximately 17 million gallons of water last year. Initiatives like these will reduce our carbon footprint and improve our sustainability. In 2023, Cozamin published a biodiversity handbook based on a two-year flora and fauna monitoring program, which provides the basis for estimating net losses and gains at the site. This handbook was shared with universities and schools as part of our environmental education program and helps to illustrate the delicate balance between human activity and wildlife preservation and how mining can coexist with nature. In 2024, Capstone will be developing a global biodiversity standard outlining our commitments related to biodiversity. All of our sites continued to support local community priorities during the fourth quarter, highlighted by the removal of an 8,000-foot abandoned water pipe from National Forest Land in Arizona, and Mantos Blancos hosted an idea fair in Antofagasta (LON:ANTO) with children and youth to promote the themes of innovation, development and entrepreneurship, important skills to promote in our youth. And with that, I'd like to pass it back to John.
John MacKenzie: Thanks, Wendy. Turning to slide 18, we've outlined our sector leading growth plans and some of the additional upside within our portfolio. As can be seen, we expect MVDP at its full production run rates to bring us to a consolidated annual level of around 260,000 tons of copper, at cost approaching close to $2 per pound. As Cashel mentioned, we plan to release a feasibility study for our Mantoverde optimized project later this year, which is a low risk brownfield expansion that we think will unlock another 20,000 tons of copper per year with a highly attractive capital efficiency of $7,500 per ton of annual production. From there, we have a pathway to over 380,000 tons of copper production with a fully permitted Santo Domingo project, which is 35 kilometers from Mantoverde, and we believe will create a world-class mining district in Philly. Beyond that is further upside across our portfolio with underutilized SX-EW capacity in Chile, another low risk round field expansion opportunity at Mantos Blancos, the ability to unlock cobots in our MV-SD district. And lastly, we believe we can also create a world-class mining district at our Pinto Valley Mine in Arizona. On slide 19, we highlight the timelines for some of the aforementioned studies and other milestones as we execute on our growth plans. Finally, I would like to highlight that we're on the cusp of a transformation of Capstone as we ramp up Mantoverde, whilst delivering the studies that will define our next stage of growth. And with that, we're now ready to take questions.
Operator: [Operator Instructions]. Your first question comes from Orest Wowkodaw from Scotiabank. Your line is now open.
Orest Wowkodaw: Good afternoon. Congrats on completing the construction on Mantoverde sulfide. The question for casual, I mean, I guess you're in second month here of commissioning. Where do you think is, if you had to pick one area of the startup, where do you think the biggest risk is to meeting the timeline that you put out for ramp up?
John MacKenzie: So, obviously the way we're doing it is we're doing sequential commissioning. The actual, it's not that one area is at risk, it's that risk that exists in every single ramp up that I've been involved with and that I'm familiar with within the industry. That you could run into problems that were baked in several years ago during the fabrication process. And that's why you have vendor affirmation on all these processes is that they ensure that their warranties are stable and good because their products are functioning as designed. So that process the risk it would have, it typically adds a week here or a week there with the individual items that might be identified, but there's not really a massive risk otherwise. And one of the reasons I say that is it's a rather simple process line. It's been proven time and again in some six mines that Senco has commissioned in the past including Carrapateena most recently --, Constancia, Katie, Lumana, among and I might be missing a couple, but this is one line. They have done this in the past. It's led by their very experienced ramp up team, which is different from their construction team that have most recently done this, like I said, at Car Patina and Mina Huta. So, we feel we're in very good hands. The other thing we have is we have our operators on site also that are facilitating, monitoring and learning the process. 127 people have been employed, including the plant manager, his supervisors, the operators, and the maintenance personnel. So, we feel we have a good compliment of people there to review any of the normal commissioning risks and processes that are there so that we attain a very efficient and robust sort of commissioning process through this ramp up.
Orest Wowkodaw: So, at this point you're not seeing anything to get you overly concerned?
John MacKenzie: No, not at all. Like I said, in what I spoke about the project and the update is we're just turning the two mills now under FL Smith's supervision. So, we tend to be able to start loading them with ball charges very shortly. So that's very good sign for us because that's really the most critical piece of equipment in the whole area. The rest, we've undergone all the hydro testing, moving water around the whole process and plant site. And so, then it's all about will it handle slurry and those are pumps and pipes and we're pretty certain with the design that Senco has delivered to us.
Orest Wowkodaw: And just one quick follow up if I could. Do you still envision the CapEx for the optimization study or optimization work? The expansion to go to 45,000 tons a day at Mantoverde? Do you still expect that CapEx to be around 150 million?
John MacKenzie: Yeah, somewhere in that ballpark, I'd say.
Operator: Your next question comes from Ralph Profiti from Eight Capital. Your line is now open.
Ralph Profiti: Thanks, operator. Good afternoon. My question is on the challenges that you think you could possibly face in meeting that, second half 2024 cash cost guidance, right, that $1.45 to $1.75. I'm just wondering if you're seeing in these early days any deviations, things like concentrate logistics or energy costs or other cost pressures versus when those guidance expectations were set?
John MacKenzie: Yes. Thanks for the question, Ralph. I think at this stage, we're not seeing anything that makes us think any differently to what we put out in the guidance. I would sort of emphasize that, the primary driver behind the cost reduction that we see in the second half is the ramp up of months of added. The reason that the cost comes down is it just raises the percentage of high-grade sulfide ore that we're processing across our business. We're almost doubling the grade of our sort of across our average portfolio as we bring Monteverde on 0.35% last year up to 0.6% sort of across the portfolio this year. With that comes increased recovery. We get better recoveries out of the concentrators than we do after the beach plants. There are a few other things as well. Obviously, there's sort of scale. There's throughput, but those are the sort of fundamental drivers behind the reduction in costs that we forecast. I would also say this, it's really about sort of grade and recovery. We've already got 6 million tons of sulfide ore stockpile that Monteverde. I would say, there's been excellent reconciliation between our block model and what we've actually mined. I think at this stage, we don't see any reason to be deviating from the guidance we've given.
Ralph Profiti: Thanks, John. And maybe just a question for Raman. There's $75 million in Monteverde capitalized stripping in 2024, and I presume that a lot of that is associated with the sulfide ramp up. But just wondering how much does that fall off, if any. Is there significance to the fall off starting in 2025? What's a good run rate for cap stripping at Mantoverde specifically?
Raman Randhawa: Yes. It's more of a function of the accounting, Ralph. Like, it's based on the obviously the -- order waste ratios and the accounting we're doing is different than the tech reports, which assume no deferred stripping capitalization. So that number can it's going to vary by year, but it will be in that ballpark of like 50 to 70 going forward. It's actually capitalized by pit. It depends which -- it's not just what we're moving in the year for the total mine, it's by pit and there's multiple pits we're in. Even though we're mining in a particular pit for sulfides now. At the same time, we're actually stripping two more pits that we're going to mine the sulfides in from three years from now. So that's why you kind of see that run rate continue.
Operator: Your next question comes from Dalton Baretto from Canaccord. Your line is now open.
Dalton Baretto: Great. Thanks very much and good afternoon guys. I wanted to ask about the upcoming Santo Domingo study. Presumably, you guys are getting close to the finish line here, and I'm just wondering, in addition to marketing and market on the CapEx of the OpEx, what are some of the material differences I guess we can expect versus the existing feasibility study?
John MacKenzie: Yes, thanks Nelson for the question, and I think I'll probably pass most of that across to Cashel to respond to, but I would say, it's looking in really good shape. I think we are sort of really excited about kind of the direction that it's headed in. I think, obviously, we did do a sort of the original feasibility was done in 2018, so there's been sort of now six years of capital inflation that we've included since that time. But there were two other elements that have come into it. So, the one is incorporating synergies with Mantoverde, and various sort of infrastructure type synergies. And the other one was just re-looking at the actual design itself, sort of design optimizations, I think, we've been able to take out about 40% of the footprint as a result of just more efficient design than was in previously. We've -- I think just with a bit more experience in our technical team about processing orders in that area, we've made some adjustments to the process flow sheet that certainly give us, I'd say higher confidence in the actual process flow sheet itself, but also will perhaps not sort of lowering CapEx, but will give significant benefits on the operating cost side in the future. Maybe that just sort of passing across to Cashel, just to add anything to that.
Cashel Meagher: Yes, there's been a real complete revamp on the design, while maintaining the same critical footprint as required by the permit. Of course, this has its DL 600 and is a permitted plant. There's an opportunity we see here to increase throughput, changing the flow sheet. John mentioned, the reduction in steel and concrete required based on the footprint. So, we are being more capital efficient and that's just using what Senco has done for us at Mantoverde and some of their other plants here at Santa Domingo. With that being said, we're looking to bring in more tons, a little more of life of mine opportunity. We also noted that with the reevaluation of the resource itself, there's actually a little higher-grade copper there than what we had previously thought due to density weighting. The iron ore as you know has a higher density and we weren't weighting it properly. So, that's been a little modification that we believe will bring more copper sooner for longer, I should say, over the -- a longer period of time where the copper grade dropped off maybe in year six or seven. We might get a couple more years out of it. So that's an another sort of area of improvement. And then, I think this will more break out the opportunity section within the feasibility study where we'll have a better idea and evaluation of what possibly some of the strip material. John mentioned the synergies, the -- some of the oxide that's available to us in that strip material would never merit on its own an SX-EW plant. However, Mantoverde has capacity as we know, and there's a real opportunity there, we believe in the future to process that material. And the other one of course is our budding cobalt business. We're doing some pilot testing right now in Mantoverde, and we believe that Santo Domingo could provide considerable amount of feed to that processing plant that we might achieve at Mantoverde in the future. So, it'll outline among other things, all those things, and I think one of the important things for the analyst community is it'll have a refresh of a present and achievable capital cost estimate and also the returns we expect from that project. So, it's a good time to update all those things. So, we're really looking forward to completing it.
Dalton Baretto: And then just as a follow-up, I know the Cobalt study is coming a little bit later, but j just in terms of the JV process that you guys are running, is this study going to be enough to move that forward or are you going to wait until the cobalt study is done?
John MacKenzie: So, when you talk about the JV process?
Dalton Baretto: Just the partnership on Santo Domingo.
John MacKenzie: Bringing in a partner for Santa Domingo. Yeah, look ultimately, I think the partner process will sort of require us to have the sort of completed feasibility study. I think within that study as Cashel mentioned is, the base case, which I think you described well. And then on top of that are the opportunity sections. So, those areas just the work on them started a little bit later than sort of the feasibility work that's been done on the rest of Sunset Domingo. So, there's a slightly longer timeline to bring those to the same level of study and of confidence. But we were already quite some distance down the track. So, I think, those will certainly be sort of opportunities that we would be discussing with potential partners for Santa Domingo.
Dalton Baretto: And maybe if I can just squeeze one last one in. John, can you talk a little bit about the rationale behind the recent equity raise?
John MacKenzie: Certainly, I would say first of all, we saw sort of in the market sort of a relatively attractive sort of opportunity in terms of windows to raise certain amounts of funding at what seems to be a reasonable valuation. And what we've been doing is we relatively conservative in terms of the way we approach our balance sheet. And what we've been doing is really holding back on a lot of expenditure that would sort of drive some really interesting future value. And the real reason for that is, whilst we are sort of fully funded for the months of Mantoverde project, I certainly don't want to be sort of spending money until we've actually sort of seen the ramp up, seen all sort of seen the project delivering the cash flow that we expect. However, that does mean that we've been holding back a little bit on some sort of really exciting opportunities and just to sort of list some of those we've got the northern section of Mantoverde, we've got highly prospective expiration targets that we believe could sort of significantly sort of increase the resource base for Mantoverde. We've obviously got Mantoverde optimized and Cashel mentioned earlier, sort of a CapEx number of probably about $150 million. It's got a really short payback period, that project. And so, the sooner we can do it, the better. And then also, as we approach sort of Santo Domingo thereafter, to me, sort of it's best practice to actually advance the detailed engineering of the project before one actually kind of gives full notice to proceed on the actual construction. It just gives you a much tighter confidence level in terms of kind of where your CapEx is going to be for the project. This raise sort of facilitates our ability to execute on each of those things, which had we not done the raise, we would probably have been keeping the brakes on for certainly a little bit longer. I would say, there were on the other hand as well, part of it was the secondary sale by Orion. I think that's both with the primary and the secondary, we improved the liquidity in our stock. I think that's clearly an objective of ours to do that. Then I think finally, when we looked at our shareholder register, there were quite a number of blue-chip shareholders that sort of sort of blue-chip funds that we saw on some of our competitors register and who were not on ours. And so, one of the objectives was to facilitate the entry of some of those funds onto our register. And I think we were really pleased to see the uptake by those funds. We think in terms of our share register now, it's sort of looking in a good place.
Operator: Your next question comes from Stefan Ioannou from Cormark Securities. Your line is now open.
Stefan Ioannou: Thanks guys. Maybe just more of a curiosity from me with MVDP. Just curious, you mentioned you've got a good chunk of material now stockpiled and then also opened up in the open pit. Is the grade fairly variable or not or is it all mostly low-grade material? I'm just curious as you do ramp up, do you have any flexibility on grade as you go through that process to play with?
John MacKenzie: Yes, Stephen. Within the stockpiling strategy, they put some high grade and low grade. They're separated out. Just with the normal ramp up process in the very beginning with very few tons, there's very little grade going through. Obviously, there's a dial in the flotation cells and those types of things. But after that, when we got the process going and things, we want to put through the high grade and that's available to us.
Stefan Ioannou: Okay. You have access to both. Great. Okay. Thanks so much, guys.
Operator: [Operator Instructions]. There are no further questions at this time. Mr. John MacKenzie, please continue.
John MacKenzie: Thank you. We look forward to updating you again in early May with our Q1 results. And until then, keep well and feel free to reach out to Gerald or Daniel if you have any further questions. Thank you for your continued support and have a good day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for joining. You may now disconnect.
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