Capstone Copper (TSX: CS; ASX: CSC) is committed to modernizing its Pinto Valley open-pit operation in Arizona to raise production and potentially extend mine life, according to CEO Cashel Meagher.

Situated in the Globe-Miami mining district roughly 130 km east of Phoenix, Pinto Valley accounts for about one-quarter of Capstone's copper output. In the second quarter, its cash costs of $4.17 per lb. were the highest among the company's four operations — more than four times those of Chile's Mantoverde, Capstone's top-producing mine.

The company's sharpened focus on its Chilean assets, which Meagher describes as "our crown jewel," does not signal that the Vancouver-based miner has turned away from Arizona. Beginning this month, workers will rebuild Pinto Valley's primary crusher and copper filtration plant. The planned shutdown "is expected to support improved performance thereafter," Capstone says.

"Pinto Valley offers a tremendous amount of opportunity," Meagher, a former Inco and Hudbay Minerals (TSX, NYSE: HBM) executive, told The Northern Miner in an interview last month. "It's an asset that was built in the early 70s, went through periods of austerity and didn't necessarily have over the last 10 to 15 years the sustaining capex required to maintain steady production. We've embarked on what we'd call an asset management framework to be able to improve the reliability of the plant, such that we can produce the copper at its design nameplate capacity."

The upcoming work "will unlock a lot of the unplanned maintenance problems we were having with the asset," added Meagher, who has led Capstone since May of last year.

Weak point

Although Pinto Valley was designed to process up to about 56,000 tonnes of ore per day, throughput over the past two years has slipped to roughly 40,000 tonnes, Meagher noted.

"There's been this sort of performance decline because of failure of the old components and the interconnectivity of various things like slurry pipelines and electrical cables that are continuously being replaced and repaired," he said.

The recent surge in copper prices has created "a real opportunity" for Capstone to return daily throughput to its original level, the CEO stressed. As press time approached, spot copper traded at $6.58 per lb., roughly 47% higher than a year earlier. Copper demand has been supported in recent years by electrification trends, including electric vehicles, power grids and renewable energy infrastructure, all of which are copper-intensive.

An expanded mine "would be a very important cash contributor in the portfolio," Meagher said.

Pinto Valley's copper production fell less than 1% year-over-year to just over 10,000 tonnes in the second quarter as unplanned maintenance reduced plant throughput and recoveries. Mantoverde and Mantos Blancos, the company's second Chilean mine, together delivered almost two-thirds of Capstone's sulphide output during the period.

Pinto Valley "remained a weak point in the second quarter," TD Securities mining analyst Craig Hutchison wrote in a note last month.

Ex-BHP asset

Since operations began in 1972, Pinto Valley has produced more than 4 billion lb. of copper, including 500 million lb. of copper cathode. Capstone acquired the mine from BHP (ASX, LSE, NYSE: BHP) in October 2013. The Globe-Miami district is one of Arizona's oldest copper camps, with mining activity dating back more than a century, and remains host to multiple operating operations alongside Pinto Valley.

Over the longer term, technical studies are under way "to evaluate if there is a novel way without major capital costs to get [throughput] to maybe 70,000 tonnes a day," Meagher said. "That would be like step two after these next few years."

According to a March 2021 resource estimate, Pinto Valley hosts about 1.4 billion measured and indicated tonnes grading 0.29% copper, containing 8.93 billion lb. of the metal. Inferred resources were pegged at 170.6 million tonnes grading 0.26% copper for 967.6 million lb. of contained copper.

Capstone says it is examining ways to incorporate a portion of the 1 billion tonnes of resources into the mine plan, which could extend operations until 2050. At present, Pinto Valley is fully permitted to operate through 2039. Any extension beyond that would require new permitting, including approvals for additional tailings storage.

"If we permit a new tailings dam and we come up with some improvements there, we can easily see this asset going into the 2050s," Meagher said. "Keep in mind that there's still a billion tonnes of resource there. The trend in copper is it's harder to get and harder to find, so really year over year Pinto Valley will become more and more valuable."

District consolidation

There are also opportunities to acquire nearby land outright or strike joint ventures to access additional mine feed, Meagher said, while declining to name potential partners beyond noting that negotiations are under way.

Neighbouring properties include BHP's Copper Cities site, Freeport-McMoRan's (NYSE: FCX) Miami mine and KHGM's Carlota operation.

"We believe we have some runway for some district consolidation," Meagher said. "We're going to work with our neighbors around what we believe are sterilized, isolated deposits within the Globe-Miami area that don't merit their own infrastructure but might benefit Pinto Valley by offering some higher-grade feed. There are several players with several different deposits around there, and we're working with them to determine what might work."

"It's not something we see in our immediate future, but it's something we're working towards," he added.

US copper

The Trump Administration's drive to accelerate U.S. mining projects and expand critical metals production to reduce reliance on Chinese imports can only benefit a facility like Pinto Valley, Meagher added. The push aligns with broader policy efforts in Washington to strengthen domestic supply chains for critical minerals.

"Obviously, what's in vogue these days is U.S. copper. We produce U.S. copper and we see an avenue forward that Pinto Valley can be a very serious producer for a very long time," he said.

"So, while Chile is our crown jewel, there's a lot of work going on to polish up Pinto Valley. What we say internally is that we see light at the end of the tunnel. We see the way out for Pinto Valley to be a reliable producer."