Mineweb reported that with capital intensive projects in the works Capstone Mining will guard its USD 484 million kitty for the time being.
Mr Darren Pylot president and CEO of Capstone said that "Until we get some of these capexs known, we're happy to sit with a large cash position on the balance sheet."
As previously reported, there was some speculation that despite a capital intensive project pipeline Capstone might still have a sizeable chunk of cash to play with on a potential acquisition.
But while Mr Pylot did not rule out the possibility of mergers and acquisitions in coming quarters he made clear in his comments that the focus at Capstone was on internal growth not a potential shopping spree. Two of the better known money hogs looming large over Capstone are the Santo Domingo project in Chile, a JV with KORES and the Kutcho project in BC.
According to the latest prefeasibilty studies, Capstone's share of capital costs at Santo Domingo are USD 305 million for Kutcho, a 100% Capstone project the pricetag is CAD 187 million.
But it was not only the costly prospect of building these projects enticing Capstone to keep a tight hold on its purse strings. A Minto mine expansion could also weigh heavily on Capstone's cash resources as Pylot said the company is now looking at increasing throughput at Minto from 3,600 per day up to 30,000 tonnes per day in an internal study.
No decisions have been made at this point. But clearly that upper level, equating to as much as an eightfold increase in production tonnage, would require extensive upgrades to facilities and equipment at Minto and, more to the point, come with hefty capital costs.
Mr Pylot said that Capstone would share more details about its Minto expansion findings in the coming Q4. Meanwhile, in the Q3 net earnings grew to USD 21.1 million up from USD 6.6 million in the same quarter a year ago. Capstone produced 19.9 million pounds payable copper. Cash costs were stable at USD 1.39 per pound copper and Capstone had settled all its hedges and was planning on going hedge free in coming quarters.
He said that Capstone maintained guidance for 2011 at 58.5 million pounds copper in concentrates at a cash costs between USD 1.45 and USD 1.50 per lb. Production at Minto, where Capstone has mined out the Main Area pit, would be shifting to Area 2 next year once it has an amended water permit in hand.
(Sourced from www.mineweb.com)
