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Analyst Actions: Credit Suisse Revises Estimates on Capstone Mining; Target Unchanged

Event: "CS provided 2013 production and cash cost guidance for its two operating mines, and project-wide capital cost estimates."

View: "Another steady production year. CS total production guidance of 85Mln lbs +/-5% of copper was in-line (our estimate: 86Mln lbs) while cash cost guidance of $1.65-1.75/lb copper was also in-line (our estimate: $1.64/lb). Cash costs are expected to be higher YoY due to the addition of underground mining costs at Minto. Cash costs are expected to be significantly higher in 1H13 due to the immediate recognition of mining costs associated with low grade ore, while lower costs in 2H13 will be driven by higher grade ore accessed both from open pit and underground workings. CS's total FY13 capital expenditures will be $97Mln including major expenditures at Santo Domingo ($25Mln) to complete a BFS and Minto underground development and equipment ($27Mln). Our FY12/13/14 EPS estimates go to $0.15/0.21/0.23 (from $0.16/0.22/0.22) reflecting updated production and operating assumptions."

Catalysts: "Filing of the EA at Kutcho is expected mid-2013 and the completion of the BFS for the Santo Domingo project is expected 1Q14. CS had previously announced that due to the current state of the electricity market in Chile, economic rates for electrical power are not expected to be available until 2017-2018, and as a result, the targeted startup for Santo Domingo is now slated for mid-2017 at the earliest (our estimate: 1Q19)."

Valuation: "We forecast CS will exit 2013 with a cash balance of $603Mln and no debt, placing it in a relatively strong position to seek copper acquisitions and fulfill its pipeline of expanding and development projects. Our C$4.50 target price remains unchanged, and is based on a 50/50 weighting of 0.9x our NAVPS of C$5.57/share and 5x FY13/14 EV/EBITDA."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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