Capstone Copper Corp (ASX: CSC) is good buying around current levels, Macquarie analysts say, despite recent outages at the company's Mantoverde mine in Chile, which will disrupt production for about four weeks.
The copper miner had a failure of the electrical drive on one of the ball mills at the Mantoverde mine on August 24.
The company replaced the faulty motor; however, the second motor also failed, this time on August 30.
"Without an additional spare on site, this has resulted in a period of impacted production at Mantoverde,'' the company told the ASX on August 31.
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Macquarie analysts were not phased by the outage, saying that so far there had been no update to the company's production targets for the year and in their view, the impact was not enough to cause a revision to the full-year guidance of 220,000 to 225,000 tonnes of copper.
CSC now estimates that repairs to the ball mill motor will take ~4 weeks. During this period CSC expects that Mantoverde will continue to operate at 50% capacity through bypassing the ball mill. Additionally, CSC is planning to reschedule plant maintenance which was originally planned for late September to coincide with ball mill downtime. Although CSC has not provided an update to CY25 guidance, we view the production downgrade as minor with the opportunity to catch up in 4Q and in our view the reduction shouldn't be enough to result in the company to downgrade consolidated CY25 production or cost guidance.
Macquarie has incorporated a 3500 tonne reduction to full-year production as a result of the outage, but maintains an outperform rating on Capstone with no change to its $12.50 target price.
The stock was last changing hands at $10.76, implying upside of more than 16% at those levels.
While disappointing and ill-timed, the production downgrade is minor in the broad scheme of things for CSC with a 1%
impact to CY25 production and 4% reduction in Ebitda.
Capstone owns 70% of the Mantoverde mine, and also owns the Pinto Valley copper mine in Arizona, the Cozamin copper and silver mine in Mexico, and the Mantos Blancos copper and silver mine in Chile.
