Capstone Copper Sells 25% Stake in Chile Projects to Orion for $360M

Capstone Copper’s Strategic Sale to Orion Enhances Chile Project Funding

Capstone Copper agreed to sell a 25% stake in its Santo Domingo and Sierra Norte copper projects in Chile to Orion Resource Partners. The deal is worth up to $360 million. This move lowers Capstone’s upfront capital needs. It also boosts funding for development across the Mantoverde–Santo Domingo district in Chile’s Atacama region. Orion will pay $225 million after a positive final investment decision (FID). They will contribute an additional $75 million within six months. Additionally, the private equity firm will provide up to $60 million in milestone-based contingent payments. Orion will also invest $10 million in new Capstone shares at a 5% premium.

Capstone CEO Cashel Meagher called Santo Domingo the company’s “next pillar of transformational growth.” He noted its low cash costs and close proximity to Mantoverde. Meanwhile, Orion’s CIO Istvan Zollei expressed confidence in Capstone’s ability to deliver a quality copper asset. He emphasized its support for the global energy transition.

Orion’s Stake and Market Valuation: Key Considerations on the Capstone Deal

Orion’s stake reduces Capstone’s equity requirement for Santo Domingo to about $400 million, assuming project financing and proportional contributions. Importantly, Capstone retains a buy-back option to regain full ownership after commercial production. This clause ensures Orion earns a set return on its investment. Once the transaction closes, Orion’s ownership in Capstone will increase from 11.9% to nearly 12%.

Jefferies analysts have flagged the deal’s discounted valuation. They cited jurisdictional risk, project complexity, and the buy-back clause as possible reasons. Furthermore, they compared the valuation to Hudbay Minerals’ recent $600 million sale of a 30% stake in its Copper World project. That deal commanded a higher price-to-net-asset-value (P/NAV) multiple. Jefferies values Santo Domingo’s NAV at $1.6 billion after accounting for the Wheaton Precious Metals stream. This implies Orion’s 25% stake is worth $408 million. The initial cash payment reflects a 0.6x P/NAV multiple, which rises to 0.7x including contingent payments.

SuperMetalPrice Commentary:

Capstone Copper’s partnership with Orion is a strategic move to lower capital risk while accelerating exploration in a key copper district. The deal balances funding needs with flexibility to regain full ownership post-production. Despite a discounted valuation, it highlights strong market confidence in copper’s critical role in the global energy transition. Investors should closely monitor Capstone’s progress on project milestones and market dynamics amid ongoing shifts in copper supply and demand.