News

January 08, 2009

Capstone Mining Motors On In The Copper Space, With A Strong Hedge Book Driving The Engine

By Alastair Ford

Not too long after the closure of the merger deal between Capstone and Sherwood Copper at the back end of last year, Minesite took the opportunity to have a chat to Mark Patchett of Capstone to find out how it had all gone. The combination brings Capstone’s Cozamin mine in Mexico together with Sherwood’s Minto mine in the Yukon. Both assets are primary copper producers, but between them they now provide the new bigger, better Capstone with significant by-products in gold, silver, lead and zinc. And, get this - the combined Capstone has forward sold more than 120 million pounds of copper at an average price of US$2.56 per pound, a price which should ensure some robust-looking cash flow numbers during a time of supposed weakness in the copper mining business. Capstone’s own literature talks of that hedging as fuelling the company’s cash flow “engine”, and at a time when half the world’s miners are stalling and coming to a dead halt there are far worse positions to be in.

Lest anyone think that the new Capstone is so-called for anything other than pragmatic reasons, Mark Patchett is keen to point out otherwise. He emphasizes that the merger deal was done on as near enough equal terms as you can get, and says that the Capstone name was simply kept on because Capstone itself had, prior to the deal, a full listing on the Toronto exchange, while Sherwood was only listed on the Venture exchange. It’s not a simple matter merging two companies, even if the commercial...