This analysis provides an overview of Capstone Mining’s Q4/23 operating results and its 2024 guidance, along with a price target calculation and key risks. Here’s a breakdown of the key points:
Operational Results:
- Q4/23 Performance:
- Q4/23 copper production of 44kt Cu was below the analyst’s 49kt estimate but beat Street estimates.
- Q4 results were the best of 2023, setting up a positive outlook for H1 production.
- H2/23 Performance:
- Production in H2/23 of 85kt was within the company’s guidance (83kt-93kt).
- H2/23 includes MVDP (nameplate) production and costs, which is considered a key milestone.
- 2024 Guidance:
- Consolidated production guidance for 2024 is 5% below the analyst’s estimates, with costs 20% above expectations.
- Cash costs are higher due to slower ramp-up at MVDP, Pinto Valley, and Cozamin, transitioning to cut-and-fill mining.
Key MVDP Milestones (Expected in 2024):
- First ore to crushing circuit (Complete Q4/23).
- First ore to grinding circuit (Q1/24E).
- First saleable concentrate (Q2/24E).
- Nameplate capacity and operating rates (Q3/24E).
Price Target Calculation:
- CIBC has a price target of C$7.75 is derived through a sum-of-parts analysis using a weighted average of P/SFCF and EV/EBITDA (40% each) and a mine-by-mine NAV (20% weight).
- Target multiples for Capstone operating/project asset NAV, P/SFCF, and EV/EBITDA are 1.0x, 8.0x, and 6.0x, respectively.
- The EV/EBITDA calculation assumes net debt of $800.4M.
Key Risks to Price Target:
- Unexpected slowdown in global economic growth, particularly in China, and its potential negative effects on copper prices.
- Operational execution risks.
- Execution of Pinto Valley optimization projects.
- Development risk at Chilean assets.
- Lack of further exploration success at the Cozamin mine.
Capstone Stock Analysis
Average Analyst Target Price:
The average analyst target price for Capstone Mining Corp is CAD 7.78 over the next 12 months.
Analyst Rating:
The average analyst rating is reported as “Strong Buy,” suggesting a positive outlook on the stock.
Stock Target Advisor’s Analysis:
Stock Target Advisor’s own analysis is “Neutral.”
The neutrality is based on 5 positive signals and 6 negative signals.
Recent Stock Performance:
At the last closing, Capstone Mining Corp’s stock price was CAD 6.71.
Over the past week, the stock price has changed by +10.18%.
Over the past month, the stock price has changed by +1.05%.
Over the last year, the stock price has changed by +6.85%.
Summary:
The average analyst target price and positive stock performance indicators suggest a bullish sentiment among analysts. However, Stock Target Advisor’s neutral analysis, influenced by a mix of positive and negative signals, introduces some caution. Investors may consider these factors along with their own research and risk tolerance when making investment decisions.
