08:38 AM EDT, 10/02/2024 (MT Newswires) -- National Bank has kept an Outperform rating and C$12.75 target on Capstone (CS.TO) while noting a "softer" 2024 outlook for the company despite Mantoverde achieving commercial production, and an updated technical report outlining further growth.

The bank said the overall impact of the update from Capstone is "negative."

After the close yesterday, National Bank noted, Capstone provided an update on Mantoverde, achieving commercial production (as of September 21). However, delays in commissioning of both Mantoverde and Mantos Blancos are expected to see a reduction in 2024 production guidance and increase in cost guidance. The company also provided an overview of MVDP Optimized Feasibility Study, with production and timing broadly in line with NBF Estimates albeit outlining higher LOM capital and operating costs. At the current premium valuation, National sees some near-term risks to the shares but reiterates its positive long-term outlook given several transformational growth projects in the pipeline and a management team in place to deliver its stated growth objectives.

National Bank said its Outperform rating is based on its positive long-term growth outlook for the company as the bank continues to see expansion opportunities and potential cost savings through the MV-SD district integration plan in the coming years, solidified with the recently updated Santo Domingo feasibility study and management messaging regarding the addition of a minority partnership for the project. With MVDP now complete, National Bank noted management remains focused on executing Mantoverde and Mantos Blancos ramp-ups ahead of 2025 to support continued re-rating.

National added: "At the current valuation, a reduction in the operating outlook for 2024 and higher capital/operating costs at Mantoverde may present an attractive buying opportunity, as we continue to believe CS will be the name investors will pivot to under an improved backdrop for copper prices given several transformational growth projects in the pipeline and a management team in place to deliver its stated growth objectives."

Capstone rose $0.18 or 1.7% to $10.75 yesterday.