Capstone Mining Corp. (“Capstone”) (TSX: CS) today provided its production guidance for 2013 for its two operating mines, Cozamin and Minto, and company-wide capital expenditure guidance. Capstone expects to produce 85 million pounds ±5% of copper in concentrates at a total cash cost(1) of $1.65 to $1.75 per pound of payable copper, net of by-product credits and selling costs.
“Capstone’s focus for 2013 is to maintain steady production and optimize operations at our two operating mines and advance our two development projects towards production,” said Darren Pylot, President and CEO of Capstone. “With a 10-year mine life in reserves at Minto and nine years at Cozamin, our capital investment is focused on on-going development and upgrades at both mines. At Santo Domingo, we will complete various trade-off studies and pursue a port agreement, both of which will feed into the Bankable Feasibility Study. At Kutcho we will file the Environmental Assessment in 2013 that starts the formal permitting process.“
2013 Production Guidance
Cozamin Minto Total
Tonnes milled (millions) 1.2 1.4 2.6 Copper grade (%) 1.91 1.48 1.68 Copper recovery (%) 92.9 92.8 92.9
Production (contained in concentrates) Copper (million lbs) 44 41 85 Zinc (million lbs) 18 – 18 Lead (million lbs) 3.8 – 3.8 Gold (ounces) – ~18,300 ~18,300 Silver (million ounces) 1.8 0.2 2.0
Total cash costs per pound of payable copper(1) $1.00-$1.10 $2.30-$2.40 $1.65-$1.75
Cozamin: Mining in the Avoca zone will be completed in 2013 and production will be coming primarily from lower levels, which are lower grade and volume than the Avoca zone. New development will be centered in the 12W and 14C stopes, which along with the Mala Noche Footwall Zone (expected to contribute approximately 11% of ore production in 2013 at an average grade of 2.21%), are the highest grade areas of the mine.
Minto: The mill is expected to process ore from the Area 2/118 pit for the full year 2013, supplemented by ore from the underground development starting in the third quarter of 2013. Minto has received regulatory approval to increase mill throughput, and now has the flexibility to increase up to 1.5 million tonnes per year, effective December 6, 2012.
Cash costs for 2013 are budgeted to be higher than 2012 due to the addition of underground mining costs at Minto. Cash costs will be significantly higher in the first half of the year at Minto due to the immediate recognition of the mining costs associated with low grade ore (reserve grade ore that is less than 1% copper, including low grade partially oxidized ore). Lower cash costs in the second half of the year will be driven by higher grade ore that will be accessed both from the Area 2/118 open pit as well as from the underground workings.
2013 Capital Expenditure Guidance – Operating Mines
Cozamin Minto Total (US$ millions) 2013 Budgeted Capital Expenditures (excluding exploration) $15.3 $49.4 $64.7
Major capital expenditures at Cozamin include $5.2 million for underground development, $3.1 million in underground equipment, $2.0 million for a tailings lift, and $2.0 million for installation of a paste backfill plant that was deferred from 2012.
Major capital expenditures at Minto include $19.1 million in underground development, $8.3 million for underground equipment, $6.4 million for renovations to the camp and other site upgrades (partially carried from 2012), $1.7 million to purchase drills for owner open pit drilling, $1.3 million to optimize crushing and replace contract crushing in the mill, and $5.1 million in permitting and environmental activities related primarily to the joint Phase V/Phase VI Yukon Environmental and Socio-economic Assessment Board (“YESAB”) application, intended to assess the impacts of bringing all remaining known reserves at Minto into the mine plan. The underground development in 2013 will be performed by a contractor, with Capstone planning to take over operation of underground mining in 2014.
2013 Capital Expenditure Guidance – Development Projects
(US$ millions) Santo Domingo (100% basis) $24.5 Kutcho 7.9 Total $32.4
Santo Domingo, Chile: Development activities at Santo Domingo for 2013 will include substantial completion of a Bankable Feasibility Study (“BFS”) and basic engineering, preparation and filing of an Environmental Impact Study (“EIS”) and a number of trade-off studies that are planned or underway. The BFS was originally targeted for completion in the first quarter of 2013. However, given the current state of the electricity market in Chile, at this time reasonable rates for electric power are not expected to be available until 2017-2018. As a result, Capstone has chosen to modify the project timeline to more closely align with power availability. The revised date for completion of the study will be the first quarter of 2014 and will incorporate a number of optimizations and trade-off studies. The EIS was completed as originally planned; however starting the formal assessment has been delayed to allow incorporation of potential project improvements and the port location.
Kutcho, BC: Development activities at Kutcho for 2013 will include filing the Environmental Assessment in mid-2013, consultations with First Nations with respect to advancing towards Impact Benefit Agreements and camp development.
2013 Exploration Program
(US$ millions) Cozamin $ 4.5 Minto 0.2 North American Earn-In Projects 2.9 Chile and Australia 1.0 Total $ 8.6
Brownfield exploration at Minto will pause for 2013 as the mine life currently exceeds 10 years and the most compelling targets will be accessed from underground once the ramp reaches an optimum point to resume drilling. Underground drilling at Cozamin in 2013 of 20,000 metres will target the edges of the Mala Noche and Mala Noche Footwall reserve areas, with a focus on adding to the nine-year mine life currently in reserves. Greenfield exploration will be directed towards drill testing targets at earn-in properties in North America (9,000 metres) and continued drill testing and geophysics on properties in Chile and Australia (3,000 metres).
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian base metals mining company, preferentially focussed on copper, with two producing copper mines, the Cozamin copper-silver-zinc-lead mine located in Zacatecas State, Mexico and the Minto copper-gold-silver mine in Yukon, Canada. In addition, Capstone has two development projects, the large-scale 70% owned Santo Domingo copper-iron-gold project in Chile in partnership with Korea Resources Corporation and the 100% owned Kutcho copper-zinc-gold-silver project in British Columbia. Capstone also has ongoing exploration at properties in Canada, Chile, Mexico and Australia. Using its cash flow and strong balance sheet as a springboard, Capstone aims to grow organically through continued mineral resource and reserve expansions, exploration, and through acquisitions in politically stable, mining-friendly regions. Additional information is available at http://www.capstonemining.com.
Cautionary Note Regarding Forward-Looking Information
This document may contain “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). These forward-looking statements are made as of the date of this document and Capstone Mining Corp. (the “Company”) does not intend, and does not assume any obligation, to update these forward-looking statements, except as required under applicable securities legislation.
Forward-looking statements relate to future events or future performance and reflect Company management’s expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as “guidance”, “plans”, “expects” or “does not expect”, “is expected”, “outlook”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative of these terms or comparable terminology. In this document certain forward-looking statements are identified by words including “scheduled”, “guidance”, “plan”, “planned”, “estimated”, “projections”, “projected” and “expected”. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves, grade or recovery rates; accidents, dependence on key personnel, labour pool constraints, labour disputes; availability of infrastructure required for the development of mining projects; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; and other risks of the mining industry as well as those factors detailed from time to time in the Company’s interim and annual financial statements and management’s discussion and analysis of those statements, all of which are filed and available for review on SEDAR at http://www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements.
National Instrument 43-101 Compliance
Unless otherwise indicated, Capstone has prepared the technical information in this news release (“Technical Information”) based on information contained in the technical reports, news releases and MD&A’s (collectively the “Disclosure Documents”) available under Capstone Mining Corp.’s company profile on SEDAR at http://www.sedar.com. Each Disclosure Document was prepared by, or under the supervision of, a qualified person (a “Qualified Person”) as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (“NI 43-101”). Readers are encouraged to review the full text of the Disclosure Documents which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents.
The disclosure of the Technical Information contained in this news release has been reviewed and approved by John Wright, P. Eng., Capstone’s Business Development Manager (Technical Information related to mining and production) and Brad Mercer, P. Geol., Capstone’s Vice President, Exploration (Technical Information related to mineral exploration activities), both Qualified Persons under NI 43-101. In addition, Gregg Bush, Senior Vice President and Chief Operating Officer for Capstone reviewed all Technical Information in this news release.
Alternative Performance Measures
The items marked with a “(1)” are alternative performance measures and readers should refer to Alternative Performance Measures in the Company’s Interim Management’s Discussion and Analysis for the three and nine months ended September 30, 2012 as filed on SEDAR and as available on the Company’s website for further details.
Cautionary Note to United States Investors
This news release contains disclosure that has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. Without limiting the foregoing, this news release uses the terms “indicated” and “inferred” resources. U.S. investors are cautioned that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. U.S. investors are cautioned not to assume that all or any part of indicated resources will ever be converted into reserves. U.S. investors should also understand that “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of “inferred resources” will ever be upgraded to a higher category. Therefore, U.S. investors are also cautioned not to assume that all or any part of inferred resources exist, or that they can be mined legally or economically. Accordingly, information concerning descriptions of mineralization and resources contained in this press release may not be comparable to information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.
(1) The items marked with a “1” are alternative performance measures; please see “Alternative Performance Measures” at the end of this release.
For further information: Cindy Burnett, VP, Investor Relations and Communications +1-604-637-8157 [email protected]
