Investors in copper miner Capstone Copper Corp CDI (ASX: CSC) have enjoyed strong gains in recent times.
Shares this ASX 200 mining stock have more than doubled in the past six months to $14.47 apiece at yesterday's close.
This performance has comfortably outpaced the broader market despite the All Ordinaries Index (ASX: XAO) returning a 15.5% gain during the same period.
Capstone is already an established copper producer with two mines in Chile, one in Arizona, and another one in Mexico.
However, it also owns a series of development and exploration assets, including its Santo Domingo copper project in Chile.
And the company has identified the undeveloped Santo Domingo as a key pillar in its next phase of growth.
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Significant copper potential
To illustrate Santo Domingo's significance, let's dive into some numbers.
In 2024, Capstone produced about 184,000 tonnes of copper in total.
However, it aspires to grow this number towards 400,000 tonnes per annum, with Santo Domingo set to play a central role.
A recent feasibility study outlined a 19 year mine life for the project.
It forecast annual production of 106,000 tonne of copper and 35,000 ounces of gold in the first seven years of operations.
And over the life of the mine, it charted average annual output of 68,000 tonnes of copper and 22,000 ounces of gold.
However, the study also pointed to an initial US$2.3 billion outlay to build a mine, with further capital costs on top.
In turn, Capstone has been on a mission to ease this financial burden through the sale of a minority stake in Santo Domingo.
And this week, this ASX 200 mining stock secured an agreement which could help move the project closer to production.
Strategic agreement
In essence, Capstone made a deal to divest a minority interest in Santo Domingo and its Sierra Norte project to private equity firm Orion Resource Partners.
Orion will now take a 25% interest in the projects in a deal worth up to US$360 million, including a US$225 million cash component.
This significant cash injection helps de-risk capital funding requirements for Santo Domingo, whilst providing financial flexibility to move it closer to mining.
Notably, Santo Domingo is located just 35 kilometres from one of Capstone's operational copper mines in Chile, Mantoverde.
Capstone chair, John MacKenzie, commented:
This transaction is an important milestone in unlocking the meaningful value of Santo Domingo and the broader district. Following on from the successful construction and ramp-up of Mantoverde, the development of Santo Domingo will facilitate the establishment of a world-class copper district in the top-tier mining jurisdiction of Atacama, Chile.
Capstone now plans to progress several workstreams ahead of a final investment decision on Santo Domingo, expected in the second half of next year.
These include engineering studies, evaluation of district optimisation, and further funding initiatives to move the project closer to mining.
Shares in this ASX 200 mining stock jumped by 3.4% in Monday's trading.
