Capstone Copper pivots on acid, delivers record quarter

Capstone Copper's Q2 2026 results read like the company's own script: record EBITDA for the seventh consecutive quarter, consolidated copper production of 51.8kt at a low C1 cash cost of $2.82/lb, and net debt trimmed to $675M. But the more interesting narrative is the operational flexibility the company displayed in response to one of the industry's most acute input-cost shocks: sulfuric acid.

"Improved production combined with exceptionally strong commodity prices drove record EBITDA for the seventh consecutive quarter," CEO Cashel Meagher said. The star was Mantoverde, where record throughput averaged 36.3k t/d, 13% above design capacity ("Plant throughput averaged a record 36.3 thousand tons per day for the quarter 13% above our design capacity" — James Whittaker, COO).

The acid pivot

Sulfuric acid spot prices have spiked to $450–470/ton, driven by Middle East supply disruptions. Capstone had fixed 80% of its acid consumption for 2026 at ~$190/ton, but—faced with the prospect of buying incremental acid on the spot market—management chose instead to temporarily reduce higher-calcium-carbonate oxide feed to the heap leach, cutting cathode production by ~5kt and reallocating that to the lower-cost sulfide circuit. This is net neutral to copper output but significantly improves cash flow.

As CFO Ramanpreet Randhawa put it: "But we have also fixed that $1.90, so we are not buying anything at $4.50." This is the essence of spot prices management—using mine-plan flexibility to avoid locking in a bad price. The decision also de-risks the forward heap leaching profile. "We view our capital of business as incremental but most of our cash flow generated by the sulfides. This gives us valuable flexibility in how we respond to input cost pressures," Randhawa noted earlier on the call.

No. It does not. it is simply it is just a cost per pound calculation. The way it works is some of the material that has the higher carbonate consumes more acid. And therefore, that cost to produce a pound exceeds the value of selling a pound.

This is not a one-off maneuver. The absolute cost reduction mindset has led to the Mantoverde pyrite augmentation project—a $45M investment (early 2028) that cuts acid consumption by 20%, adds ~3.5kt/yr of heap leach copper, and boasts an NPV/CapEx ratio of ~4x at long-term prices. It also opens the door to future cobalt production, a byproduct credit management is studying.

Growth pipeline intact

While dealing with the acid squeeze, Capstone continues to advance its growth pipeline. The Mantoverde Optimize project remains on schedule and on budget, with the September tie-in expected to lift sulfide throughput to 45k t/d. Santo Domingo is on track for a sanctioning decision in Q4, with 60% detailed engineering complete and financing strategy under evaluation.

Management also confirmed they are "always evaluating the components of the portfolio" (Cashel Meagher on Cozamin divestiture chatter), which suggests a willingness to rationalize assets to fund higher-return growth. This strategic optionality is a theme that has been building through prior quarters—on the Q1 2026 call, Meagher was already framing the 2027 production trajectory: "I would think that is the closest characteristic of what we expect to produce in 2027." And on the Q3 2025 call, he outlined the exploration-led upside: "Yes, Ralph, thanks. I think what we've done is with that exploration release is what we've done is we've developed a platform."

The market has rewarded this discipline, with the stock trading near $50 CAD and a market cap of ~$9.7B. But the biggest test lies ahead: executing the Mantoverde Optimize ramp and bringing Santo Domingo online while navigating a volatile acid market. Capstone's investors will be watching how the company balances growth spending with the cost-control discipline that defined this quarter.