Income from the Group’s royalty increased 75% from $3.7m in 2020 to $5.7m in 2021. While the Group benefited from the 9% increase in total payable copper volumes from 41.3Kt in 2020 to 45.0Kt in 2021, the primary driver of the growth in royalty revenue was the 38% increase in the underlying copper price to $8,318/t for the year (2020: $6,044/t). Copper prices have performed well since the beginning of the pandemic as industrial output, particularly in China, remains resilient. Most commentators are predicting a supply deficit in the copper market over the course of the next decade as new supply has been slow to come online at a time when demand, both from traditional sources and the electric vehicle market, has increased. It would appear that over the medium term there could be more upside than downside risk to the copper price.
The operator has focused on optimising production from the expanded plant, which in mid-2022 had throughput capacity for 7.3Mtpa of sulphide ore and expects to achieve steady state production in Q3 2022. Capstone Copper is currently reviewing Mantos Blancos Phase II which will see the throughput of the sulphide concentrator plant expand to 10Mtpa and a potential extension of the life of copper cathode production. A pre-feasibility study was completed in Q2 2022 and will be incorporated into an Advanced Engineering Study in Q4 2022.