11:15 AM EDT, 09/02/2025 (MT Newswires) -- (Adds share price move in first paragraph and National Bank commentary from the fifth paragraph)

Capstone Copper Corp. ( CSCCF ) was at last look down more than 5% Tuesday after it over the holiday weekend reported that sulphide copper production is temporarily impacted due to a motor failure in the ball mill at the Mantoverde mine in Chile.

A statement noted that on August 24, the Mantoverde site experienced a failure of one of its two ball mill electrical drive motors. Over the next few days, it said, the team on site replaced the damaged motor with the spare in order to return to full capacity. However, on August 30th, the site experienced a failure of the second ball mill drive motor. Without an additional spare on site, this has resulted in a period of impacted production at Mantoverde, it added

Capstone said: "We estimate repairs to the ball mill motor will take approximately four weeks. During this period, we expect that Mantoverde will continue to operate at approximately half capacity through bypassing the ball mill, an operating mode for which the circuit is configured and that our team has successfully executed previously. An opportunity exists to further mitigate the effects of the interruption by rescheduling plant maintenance that had been planned for later in September to coincide with the ball mill downtime. Our team will continue to identify and execute mitigation plans, investigate the root cause of the motor failure, and advance a replacement and repair strategy to return to full capacity."

"At this time," it added, "based on an estimated four-week repair schedule while we continue to operate at half capacity during that period, we expect production to be impacted by 3,000 to 4,000 tonnes of copper in concentrate at Mantoverde. Capstone plans to provide further updates in due course."

National Bank, which has an Outperform rating and C$9.75 target on the stock, said: "We had previously outlined reliability challenges with motors throughout the mill at Montoverde and had previously assumed the company would take the opportunity to replace existing motors alongside its recently sanctioned MV-O project which was not incorporated into the project's scope. We continue to see some reliability challenges at the operation and continue to model Mantoverde sulphide production near the lower end of the company's guidance range as a result."

Given the estimated four-week repair schedule and operations at half capacity during that period, National Bank notes CS expects production to be impacted by 3,000-4,000 tonnes of copper in concentrate at Mantoverde. Capstone plans to provide further updates in due course. National Bank said while its conservative estimates account for lower than planned production in the second half, the net impact from downtime is expected to be less than the negative EBITDA impact from removing production under its Base Case operating assumptions of near US$20.0 million or near 2.2% to its 2025 EBITDA estimate of US$906.7 million.

National Bank said its Outperform rating is based on its "positive long-term growth outlook for the company" as it sees expansion opportunities and potential cost savings through the MV-SD district integration plan as well as several near-mine exploration opportunities to provide further scale. The bank noted the company has recently provided a comprehensive path forward for Santo Domingo, which should help alleviate any fears in the market of high capex development under current market conditions. It also noted shares have reacted favorably in recent weeks to a pending minority stake sale at Santo Domingo based on precedent transactions in the market (Copper World) outlining a strong price environment for copper development projects. National Bank continues to see the potential for a positive surprise to the market with respect to the valuation of Santo Domingo. "While we believe CS is well-positioned longer term, the company's elevated costs through 2025 and commitment to MV-O somewhat defers a significant FCF inflection at current prices until early next year," it added

The bank noted CS is trading at 1.19x NAV (compared to peers at 0.87x) and 6.5x EV/2026E CF (compared to peers at 6.1x). The bank bases its target on a multiple of 1.10x NAV (50%) + 6.5x EV/2026E CF (50%).

Price: 9.31, Change: -0.51, Percent Change: -5.19