On Wednesday, Scotiabank increased its price target on Capstone Copper Corp (CS:CN) (OTC: CSFFF (OTC:CSFFF)) shares to C$13.00, up from the previous C$12.00. The firm has maintained a Sector Outperform rating for the mining company. This adjustment follows Capstone's recent release of an encouraging operational update for its Mantoverde copper mine located in Chile.
The operational update highlighted Capstone's successful ramp-up and the introduction of an enhanced life-of-mine (LOM) operating plan, which includes a de-bottlenecking expansion at the Mantoverde mine. Additionally, Capstone Copper announced a transition in its senior leadership, including the appointment of a new CEO.
Scotiabank's positive outlook is based on the progress made in ramping up operations, the appealing economics of the expansion, and a more than 7% increase in net asset value per share (NAVPS). The firm's valuation of Capstone's shares reflects the company's leading growth in copper production and leverage, potential catalysts, attractive valuation, and the possibility of being acquired.
The revised 12-month target price of C$13.00 per share is derived from a balanced approach, using a 50/50 mix of 6.5 times the firm's estimated average 2025-2026 enterprise value to EBITDA and 1.5 times the updated 8% NAVPS estimate. This target underscores Scotiabank's confidence in Capstone Copper's growth and operational prospects.
In other recent news, Capstone Copper Corp has seen positive feedback from several financial firms. BMO Capital Markets has maintained its Outperform rating on the company, following the announcement of results from the Mantoverde optimized study, which proposes a throughput expansion from 32,000 to 45,000 tonnes per day. This study also provided revised views on operational costs and capital expenditures, with BMO Capital seeing potential for further economic enhancement of the Mantoverde mine.
Raymond James also gave Capstone an Outperform rating, based on the company's promising outlook due to projected production growth and declining operating costs through 2024 and 2025. This optimism is largely due to the progress of the Mantoverde development project, set to ramp up in the second half of 2024. Raymond James anticipates reduced capital expenditure spending leading up to the sanctioning of the Santo Domingo project, projected for 2026.
Macquarie initiated coverage with an Outperform rating, citing robust demand for copper and the company's potential as a copper investment. These recent developments also include changes to Capstone's executive leadership, with the current President and COO, Cashel Meagher, set to become the CEO, while the current CEO, John MacKenzie, will transition to Non-Executive Chair.
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