Capstone’s Santo Domingo Copper Project: Chile’s Strategic Mining Development

What is the Santo Domingo Copper Project?

Santo Domingo stands as one of Chile's most promising copper development opportunities, strategically positioned in the resource-rich Atacama region. This fully-permitted open-pit project lies approximately 35 kilometers from Capstone Copper's operational Mantoverde mine, creating significant operational synergy potential. Designed to produce copper, gold, and iron ore concentrates, Santo Domingo forms a cornerstone of Capstone's ambitious growth strategy to substantially boost copper output while establishing a world-class mining district.

The project represents a substantial addition to the global copper supply forecast, particularly valuable as the world faces increasing demand for the red metal driven by electrification and renewable energy transitions. With construction pending final investment decisions, Santo Domingo is poised to become one of Chile's next major mining operations.

Project Location and Infrastructure Advantages

Santo Domingo benefits from its prime location in Chile's established mining corridor. Situated near the town of Diego de Almagro and approximately 130 kilometers north-northeast of Copiapó, the project enjoys strategic positioning in one of the world's premier copper jurisdictions.

The site's location provides exceptional infrastructure advantages, including access to existing transportation networks, established power infrastructure, and proximity to coastal ports for concentrate export. Chile's long-standing mining tradition ensures access to experienced labor, technical expertise, and service providers, creating an ideal ecosystem for project development.

Regional synergies with Capstone's nearby Mantoverde operation further enhance Santo Domingo's development potential, allowing for shared infrastructure and operational efficiencies that significantly improve the project economics.

How Does Santo Domingo Fit into Capstone's Growth Strategy?

Santo Domingo represents the centerpiece of Capstone's ambitious expansion plans, designed to transform the company from a mid-tier producer into a major global copper supplier. The project aligns perfectly with Capstone's strategic vision to leverage existing operations while developing new assets in established mining jurisdictions.

The company's leadership has positioned Santo Domingo as the key catalyst for achieving Capstone's long-term production goals, with the project's development timeline synchronized with projected copper demand surges expected in the late 2020s. This strategic alignment enables Capstone to capitalize on anticipated copper supply deficits.

Transformational Production Potential

Santo Domingo stands as the primary growth driver in Capstone's production pipeline. The company currently produces approximately 184,000 tonnes of copper annually from its operations across Chile, Arizona, and Mexico. With Santo Domingo's development, Capstone aims to boost its total copper production toward 400,000 tonnes per year, effectively doubling its current output and repositioning itself among larger industry players.

This production growth comes at a strategic time when copper market fundamentals are strengthening due to electrification trends, renewable energy development, and constrained supply growth from traditional mining regions. Capstone's expansion through Santo Domingo positions the company to benefit from projected copper price strength while achieving economies of scale across its operations.

Integration with Mantoverde Operations

A key strategic element of Santo Domingo's development is its proximity to Capstone's operational Mantoverde mine. The company has developed a comprehensive integration plan seeking to create operational synergies between the two sites, potentially generating annual cost savings of $80-100 million through shared infrastructure and operational efficiencies.

The district integration approach aims to optimize various aspects of both operations:

• Shared administrative and technical services
• Unified maintenance facilities and warehousing
• Coordinated transportation and logistics
• Combined water management systems
• Integrated power infrastructure
• Potential processing synergies

This "mining district" approach represents an innovative strategy in Chilean mining, where traditionally mines have operated as standalone entities despite geographic proximity. By pioneering this integrated approach, Capstone aims to set new benchmarks for operational efficiency in the region.

What Are Santo Domingo's Key Production Metrics?

Santo Domingo's production profile positions it as a significant contributor to global copper supply, with additional revenue streams from gold and iron ore. The project's metrics reflect a high-grade initial production phase followed by sustained long-term operations, creating an attractive investment proposition.

The project's dual-metal production provides natural hedging against commodity price fluctuations, while the iron ore component adds valuable diversification. These combined outputs create a robust economic profile for the operation throughout its mine life.

Copper and Gold Output Projections

According to recent feasibility studies, Santo Domingo is expected to deliver impressive production figures over its 19-year mine life:

The production profile demonstrates a classic high-grade early mining strategy, with the first seven years yielding substantially higher output than the life-of-mine average. This approach accelerates capital payback while maximizing early returns for investors.

Santo Domingo's projected copper output during its first seven years represents approximately 0.5% of global copper production, making it a meaningful contributor to global supply. The gold production provides valuable by-product credits that improve the project's overall economics and reduces the effective cost of copper production.

Iron Ore and Potential Cobalt Production

Beyond copper and gold, Santo Domingo will produce high-grade iron ore concentrates, adding significant diversity to its revenue streams. The iron ore component is estimated to yield 3.3 million tonnes of 66% iron concentrate annually for the first five years, with production continuing throughout the mine life.

Additionally, recent metallurgical studies have identified substantial cobalt potential within the Santo Domingo resource. While not included in the base case economics, this cobalt opportunity could potentially transform Santo Domingo into one of the world's largest and lowest-cost cobalt producers outside the Democratic Republic of Congo, where most global cobalt is currently sourced.

This cobalt potential aligns perfectly with growing demand for battery metals driven by electric vehicle manufacturing and energy storage systems. Capstone continues to evaluate options for extracting this strategic metal as a by-product of copper production, which could significantly enhance the project's economics.

How Will the Project Be Financed?

Financing Santo Domingo represents a critical challenge and opportunity for Capstone, requiring strategic partnerships and innovative funding approaches to advance the $2.3 billion project. The company has made significant progress in addressing this funding challenge through a recently announced strategic investment.

The project's substantial capital requirements necessitate a phased and diversified funding approach, combining strategic partnerships, potential offtake arrangements, and traditional project finance. Capstone's leadership has demonstrated a disciplined approach to financing, seeking to minimize dilution while ensuring adequate capital for successful development.

Recent Funding Developments

In a significant milestone for the project, Capstone recently secured a strategic agreement with private equity firm Orion Resource Partners. This landmark deal provides up to US$360 million in funding in exchange for a 25% interest in Santo Domingo and the Sierra Norte project, a promising exploration property in the same region.

The agreement includes a substantial US$225 million cash component that helps address the project's immediate capital requirements while maintaining Capstone's majority control. This strategic partnership validates Santo Domingo's value proposition and reduces financing risk as the project advances toward construction.

The Orion deal represents a creative financing solution that minimizes equity dilution for Capstone shareholders while securing a financial partner with deep mining expertise. Orion's involvement brings additional technical capabilities and market connections that further strengthen the project's development pathway.

Capital Requirements and Timeline

The project faces substantial initial capital costs, with recent feasibility studies indicating an estimated US$2.3 billion investment required for construction. This figure includes mining equipment, processing facilities, tailings storage, water infrastructure, and other essential components for a world-class mining operation.

With the Orion agreement in place, Capstone is now better positioned to advance Santo Domingo toward a final investment decision, expected in the second half of 2026. The company continues to evaluate additional funding initiatives to fully finance the project's development, including:

• Project debt financing from commercial banks and development institutions
• Potential streaming arrangements for gold production
• Strategic partnerships with end-users seeking copper supply security
• Possible infrastructure partnerships to share capital costs
• Additional equity investment at the project level

The phased approach to financing allows Capstone to maintain flexibility while progressively de-risking the project through detailed engineering and optimization studies. This strategy aims to secure the most favorable financing terms while maintaining majority ownership of this valuable growth asset.

What Technical and Operational Aspects Define Santo Domingo?

Santo Domingo's technical characteristics position it favorably among global copper development projects, with conventional mining methods applied to a substantial resource base. The project's design incorporates proven technologies and operational approaches, minimizing technical risk while allowing for optimization opportunities.

The project's technical planning has benefited from Capstone's operational experience at similar mines, particularly the nearby Mantoverde operation. This experience has informed Santo Domingo's design and contributed to realistic cost estimations and operational planning.

Mining and Processing Methodology

Santo Domingo will employ conventional open-pit mining techniques, utilizing a truck and shovel operation to extract ore from multiple deposits including Santo Domingo Sur, Iris, Iris Norte, and Estrellita. The mining plan envisions a phased approach, beginning with the highest-grade zones to maximize early cash flow.

The processing facility will incorporate standard crushing, grinding, and flotation circuits to produce copper concentrates, with separate processing for iron ore recovery. Key processing components include:

• Primary crushing and SAG mill grinding circuit
• Conventional flotation cells for copper recovery
• Magnetic separation for iron ore concentration
• Filtering and dewatering systems for concentrate handling
• Tailings thickening and management facilities

This processing configuration represents proven technology with minimal technical risk, having been successfully implemented at numerous operations globally. The separation of copper and iron circuits allows for operational flexibility and product optimization based on market conditions.

Resource Base and Mineralization

The project's resource base consists primarily of iron oxide-copper-gold (IOCG) deposits, a globally significant deposit type known for producing copper, gold, and iron ore. This mineralization style typically offers good metallurgical recovery rates and the potential for long-term resource expansion through continued mineral exploration insights.

IOCG deposits are characterized by:

• Typically large size and moderate to high grades
• Association with iron oxides (magnetite and/or hematite)
• Relatively simple metallurgy and good recovery rates
• Potential for multiple commodities (copper, gold, iron, and sometimes cobalt)
• Amenability to conventional processing methods

The Santo Domingo deposits demonstrate these favorable characteristics, with metallurgical testing confirming strong recovery rates for both copper and gold. The presence of magnetite also allows for efficient recovery of iron ore concentrates, enhancing overall project economics through multi-commodity production.

What Environmental and Sustainability Measures Are Planned?

Santo Domingo's development plan incorporates comprehensive environmental management and sustainability measures, recognizing the increasing importance of responsible mining practices. Capstone has designed the project to meet or exceed Chilean regulatory requirements while addressing stakeholder expectations regarding environmental protection.

The project's environmental approach balances operational needs with conservation objectives, implementing best practices for water management, emissions control, and biodiversity protection. These initiatives reflect the mining industry trends toward sustainable development and Capstone's commitment to environmental stewardship.

Water Management Strategy

In the water-scarce Atacama region, Santo Domingo has developed a sustainable water management plan centered on the use of desalinated water. A dedicated desalination plant and pipeline system will supply the operation's needs, eliminating competition for scarce local water resources.

This approach aligns with increasing regulatory and community expectations regarding responsible water usage in mining operations. The water management system includes:

• Seawater desalination facility at the coast
• Pipeline infrastructure to transport water to the mine site
• Water recycling systems within the processing plant
• Tailings thickening to maximize water recovery
• Monitoring systems to track water consumption and quality

By utilizing desalinated water, Santo Domingo avoids the potential conflicts over freshwater resources that have affected other mining projects in the region. This approach represents industry best practice for mining operations in arid environments and enhances the project's social license to operate.

Energy and Carbon Considerations

The project's development plans incorporate energy efficiency measures and the potential use of renewable energy sources to reduce its carbon footprint. These sustainability initiatives reflect growing investor and stakeholder expectations for mining projects to minimize environmental impacts and contribute positively to climate goals.

Energy and carbon management strategies include:

• Evaluation of renewable energy supply contracts
• Energy-efficient equipment selection for mining and processing
• Optimization of hauling distances and materials movement
• Consideration of electric or hybrid mining equipment
• Potential carbon offset programs for remaining emissions

Chile's energy grid is increasingly supplied by renewable sources, particularly solar generation from the Atacama region. Santo Domingo is well-positioned to benefit from this transition to cleaner energy, potentially reducing both operating costs and carbon emissions compared to similar projects in regions with carbon-intensive power generation.

What Challenges and Risks Does the Project Face?

Like all major mining developments, Santo Domingo faces various challenges and risks that require careful management. Understanding these factors is essential for stakeholders to evaluate the project's potential and assess Capstone's mitigation strategies.

The company has developed comprehensive risk management plans addressing each major risk category, with contingencies and mitigation strategies implemented throughout the project planning process. This structured approach to risk management enhances Santo Domingo's resilience against potential obstacles.

Market and Commodity Price Risks

Like all mining developments, Santo Domingo faces exposure to copper and gold price volatility. While long-term copper fundamentals remain strong due to electrification trends and renewable energy growth, short-term price fluctuations could impact project economics and financing options.

Key market risk considerations include:

• Copper price volatility affecting revenue projections
• Gold price movements impacting by-product credits
• Iron ore market dynamics and pricing trends
• Exchange rate fluctuations, particularly the Chilean peso to US dollar
• Input cost inflation, especially energy and consumables

Capstone's approach to managing these risks includes conservative price assumptions in feasibility studies, potential hedging strategies for early production, and the multi-commodity nature of the project providing natural diversification against single-metal price swings.

Construction and Operational Execution

The substantial capital investment required for Santo Domingo presents execution risks related to construction timelines, cost management, and operational ramp-up. Capstone's experience with similar projects, including the recent successful construction and ramp-up of Mantoverde, provides some mitigation of these risks.

Construction and operational challenges may include:

• Capital cost overruns during construction
• Schedule delays affecting project economics
• Technical challenges during commissioning
• Skilled labor availability in a competitive mining region
• Supply chain constraints for key equipment and materials

To address these risks, Capstone plans to implement proven project management methodologies, engage experienced contractors with regional expertise, and leverage lessons learned from recent mining developments in Chile, including their own Mantoverde project.

How Does the Market View Capstone and Santo Domingo?

Market perception of Capstone and the Santo Domingo project has evolved significantly as the company has advanced development plans and secured strategic funding. Investors have responded positively to Capstone's growth strategy and its progress in de-risking the project through partnerships and technical studies.

The market's assessment of Santo Domingo reflects both project-specific factors and broader sentiment regarding copper's long-term fundamentals. Investors increasingly recognize copper's strategic importance in the energy transition, supporting valuations for companies with quality development assets.

Recent Share Price Performance

Investor sentiment toward Capstone and the Santo Domingo project has been notably positive in recent months. The company's shares have gained approximately 111% over the past six months, significantly outperforming the broader market's 15.5% return during the same period. The stock recently traded at $14.47 per share, reflecting strong market confidence.

This performance suggests market confidence in Capstone's growth strategy and the value potential of Santo Domingo. The recent 3.4% share price jump following the Orion funding announcement further demonstrates investor approval of the company's progress in advancing the project toward development.

Capstone's market performance has benefited from several factors:

• Strengthening copper market fundamentals
• Successful operational execution at existing mines
• Strategic progress at Santo Domingo
• Balance sheet improvements reducing financial risk
• Increasing recognition of copper's role in the energy transition

These factors have combined to drive substantial shareholder returns as the market reassesses Capstone's growth potential and competitive positioning within the copper industry.

Analyst Perspectives

Industry analysts have generally viewed the Santo Domingo project favorably, noting its potential to transform Capstone into a larger, more diversified copper producer. The recent funding agreement with Orion has been interpreted as a validation of the project's value and viability, potentially de-risking the development pathway.

Analyst opinions highlight several key aspects of the Santo Domingo opportunity:

• Significant production scale providing transformational growth
• Attractive copper grades during initial production years
• Multi-commodity revenue streams enhancing economics
• Strategic location in an established mining jurisdiction
• Synergy potential with Mantoverde operations
• Progressive de-risking through partnerships and engineering

These positive assessments have contributed to improving sentiment toward Capstone, with several analysts raising price targets following the Orion agreement announcement. The market increasingly views Santo Domingo as a viable development project with the potential to create substantial shareholder value.

What's Next for Santo Domingo?

Santo Domingo stands at a pivotal point in its development journey, with several critical milestones ahead before construction can commence. Capstone has outlined a clear pathway toward development, with defined workstreams and decision points leading toward a final investment decision.

The project's advancement follows a structured approach, with each phase designed to incrementally de-risk the development while optimizing the economic potential. This methodical progression allows for adjustments based on market conditions while maintaining momentum toward production.

Near-Term Development Milestones

Following the Orion funding agreement, Capstone plans to advance several workstreams ahead of a final investment decision expected in the second half of 2026. These activities include:

• Detailed engineering studies to refine capital cost estimates
• Evaluation of district optimization opportunities with Mantoverde
• Further funding initiatives to complete the project's financing requirements
• Procurement planning for long-lead equipment items
• Permitting updates and regulatory compliance work
• Community engagement and social development programs
• Exploration activities to expand the resource base

These parallel workstreams aim to enhance project readiness while potentially improving economics through optimization efforts. The integration with Mantoverde represents a particularly significant opportunity to reduce capital requirements and operating costs through shared infrastructure and services.

Long-Term Production Outlook

If development proceeds as planned, Santo Domingo could potentially enter commercial production by 2028-2029. The project's 19-year mine life provides a long-term production horizon, with potential for extensions through resource expansion and district exploration.

The integration with Mantoverde operations could create a mining complex producing over 200,000 tonnes of copper annually, establishing a world-class copper district in Chile's Atacama region. This combined operation would represent one of the most significant copper producing centers in Chile, a country already recognized as the world's leading copper producer.

Long-term opportunities for Santo Domingo include:

• Resource expansion through near-mine exploration
• District-scale discoveries on the broader land package
• Process optimization to enhance recoveries and reduce costs
• Potential cobalt production as markets for battery metals expand
• Operational synergies beyond initial integration plans
• Production expansion through incremental capital investment

These growth opportunities extend beyond the current mine plan, potentially creating additional value for Capstone shareholders and establishing the Santo Domingo-Mantoverde district as a core copper producing region for decades to come.

FAQ: Santo Domingo Copper Project

What makes Santo Domingo a strategic asset for Capstone?

Santo Domingo represents a transformational growth opportunity that could potentially double Capstone's copper production capacity. Its integration with the nearby Mantoverde operation creates significant operational synergies and establishes a world-class mining district in Chile's copper-rich Atacama region.

The project's multi-metal production profile, including copper, gold, and iron ore, provides revenue diversification while capitalizing on growing demand for copper in clean energy applications. This strategic combination of scale, location, and commodity mix positions Santo Domingo as a cornerstone asset in Capstone's portfolio.

How does the project's economics compare to other copper developments?

Recent feasibility studies indicate that Santo Domingo will operate with first-quartile production costs and relatively low capital intensity compared to other global copper projects. These favorable economics are enhanced by the potential for significant cost savings through integration with Mantoverde operations.

The project benefits from several economic advantages:

• High-grade initial production boosting early cash flows
• By-product credits from gold and iron ore production
• Operational synergies with existing Mantoverde infrastructure
• Location in an established mining jurisdiction with proven regulatory framework
• Access to skilled labor and established supply chains

These factors combine to create compelling project economics, particularly when compared to greenfield developments in more challenging jurisdictions or with single-commodity production profiles.

What impact will Santo Domingo have on global copper supply?

At full production, Santo Domingo will contribute approximately 106,000 tonnes of copper annually during its first seven years, representing a meaningful addition to global copper supply. This production comes at a time when copper demand is projected to increase substantially due to electrification trends and renewable energy growth.

The project's contribution is particularly significant considering the challenges facing global copper supply:

• Declining grades at existing major mines
• Growing complexity of new discoveries
• Increasing capital intensity of new projects
• Extended permitting timelines in many jurisdictions
• Limited discoveries of high-quality copper deposits

Santo Domingo's development helps address the projected copper supply gap expected in the late 2020s and early 2030s, potentially supporting market balance during a period of anticipated strong demand growth.

How is Capstone addressing the project's environmental footprint?

The project incorporates several sustainability initiatives, including the use of desalinated water to minimize freshwater consumption, energy efficiency measures, and potential renewable energy integration. These approaches align with increasing stakeholder expectations for responsible resource development.

Capstone's environmental management plan includes:

• Comprehensive baseline studies of local ecosystems
• Detailed impact assessments for all project components
• Biodiversity protection measures in sensitive areas
• Progressive rehabilitation planning throughout operations
• Community engagement to address environmental concerns
• Monitoring programs to track environmental performance

These initiatives reflect the evolution of mining industry practices toward greater environmental responsibility and Capstone's commitment to sustainable development principles throughout Santo Domingo's lifecycle.

Further Exploration:

Readers interested in learning more about copper mining developments in Chile can also explore related educational content on copper investment strategies and development projects. This content offers additional perspectives on resource sector investments and understanding the complexities of large-scale mining developments in established jurisdictions like Chile.

The copper market's fundamentals continue to strengthen as global electrification accelerates, creating opportunities for well-positioned development projects like Santo Domingo to meet growing demand while delivering value to investors, communities, and other stakeholders.

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