TORONTO (miningweekly.com) – Copper-focused miner Capstone Mining has reported strong earnings for the June quarter, boosted mainly by strong output from its relatively new Pinto Valley mine, in Arizona, US.

The Canadian company recorded net earnings of $16.6-million, or $0.04 a share, up 80% compared with the net earnings of $9.2-million, or $0.02 a share, in the previous comparable period. The main contributor to higher net earnings was the increased contribution of Pinto Valley, as well as greater volumes sold by Cozamin, in Zacatecas state, Mexico and Minto, in the Yukon, Canada.

Earnings were, however, below analyst consensus estimates of $0.06 a share, on revenue of $173.29-million. The earnings miss was largely owing to higher costs, exploration expenses and a higher than anticipated tax rate.

Revenue nearly tripled to $171.7-million compared with $58.3-million a year earlier, offset by lower margins on earnings from mining operations, driven by higher C1 cash cost, as well as greater depletion and amortisation (mainly from Pinto Valley), a higher write‐down of Minto inventory ($1.8-million versus $800 000 a year earlier), an increase in finance costs associated with the debt that was taken on to finance the Pinto Valley transaction in the fourth quarter last year and an increase in taxes related to the new Mexican 7.5% mining duty, as well as the incremental tax associated with Pinto Valley.

C1 cash costs, which are the measure of direct operating costs, rose 19% year-on-year to $2.03/lb, mainly pushed higher as Minto continued with underground production.

The TSX-listed miner reported concentrate and cathode output of 27 700 lb for the three months ended June 30, up marginally from the first quarter and half-year output of 55 300 lb of red metal. During the quarter, Capstone shipped 24 564 t of payable copper from all three mines.

The company confirmed its 2014 guidance for 102 000 t of copper in concentrates, at a C1 cash cost from $1.90/lb to $2/lb of payable copper, net of zinc, molybdenum, lead, silver and gold by-product credits and selling costs.

Laurentian Bank Securities metals and mining analyst Christopher Chang said despite the weak earnings result, he did not see any changes to the investment thesis.

“Given Capstone’s relatively flat copper production profile for the next three years, we believe the company could return to its growth-through-acquisition strategy as the company’s existing portfolio of projects are longer-term in nature. Capstone has started studies on Pinto Valley 3, which is a two-phased study on increasing reserves beyond 2026, as well as a potential mill throughput expansion,” he pointed out in a note to clients.