Capstone 2012 Operating and Capital Guidance
VANCOUVER, British Columbia, January 26, 2012 /PRNewswire/ --
Forecast Production of 80 Million Pounds of Copper in Concentrates
(All amounts in US$ unless otherwise specified)
Capstone Mining Corp. (TSX: CS) today provided its production guidance for 2012 for its two operating mines, Cozamin and Minto, and company-wide capital expenditure guidance. Capstone expects to produce 80 million pounds +/- 5% of copper in concentrates at a total cash cost(1) of US$1.55 to US$1.65 per pound of payable copper, net of by-product credits and selling costs.
"Capstone's focus for 2012 is to maintain steady production from our two operating mines and advance our two development projects, Santo Domingo and Kutcho, towards production," said Darren Pylot, President and CEO of Capstone. "Our capital investment is focused on ongoing development at Cozamin and Minto, continuing to build on successful exploration at both mines. At Santo Domingo, major activities in 2012 will be centred on filing the Environmental Impact Assessment and substantially completing the bankable feasibility study. In addition, we will continue to advance our Kutcho project through the detailed engineering and permitting phase."
2012 Production Guidance
(All numbers approximate) Cozamin Minto Total
Tonnes milled (millions) 1.1 1.4 2.5
Copper grade (%) 1.90 1.49 1.67
Copper recovery (%) 92.7 89.4 90.9
Production (contained in concentrates)
Copper (millions lbs) 42 38 80
Zinc (million lbs) 20 - 20
Lead (million lbs) 4.5 - 4.5
Gold (oz's) - ~16,500 ~16,500
Silver (million oz's) 1.7 0.1 1.8
Total cash costs per payable pound
of copper(1) US$0.95-$1.05 $2.10-$2.30 $1.55-$1.65
Cozamin: Copper production in 2012 is expected to be slightly higher than 2011 as the mine is expected to run at the sustained levels of the last three quarters of 2011. Mining will decrease in the Avoca zone during 2012 and high grade production will be coming primarily from the 13 level, which is similar grade to the Avoca zone. New development will be centered in the Mala Noche Footwall Zone ("MNFWZ"), which is expected to contribute approximately 10% of ore production in 2012.
Minto: Copper production is expected to be similar to 2011. Recoveries are expected to be higher in 2012 than 2011 as an optimal blend of approximately 90% sulphide and 10% partially oxidized ore is planned for 2012, following tests of the partially oxidized ore in late 2011.
(1)The items marked with a "(1)" are alternative performance measures; please see "Alternative Performance Measures" below.
A reassessment of the engineering requirements for start-up of underground mining has prompted a revised development plan. Start-up of the underground operation is now scheduled for the third quarter of 2012, with ore production beginning in early 2013. Production for the first four months of the year will rely on low-grade stockpiles as stripping continues in Area 2/118. Ore from Area 2/118 will begin to feed the mill starting in the second quarter of 2012, with grades gradually increasing through the remainder of the year.
Cash costs for 2012 are budgeted to be higher than 2011. Total mining costs are projected to increase over 2011 due to the higher strip ratio associated with Area 2/118. In addition, increased partially oxidized blend in the 2012 plan will result in higher operating costs.
2012 Capital Expenditure Guidance - Operating Mines
Cozamin and Minto capital expenditures for the year are estimated at $47.3 million (excluding exploration), which includes $15.1 million at Cozamin and $32.2 million at Minto.
Major capital expenditures at Cozamin include $4.7 million in underground equipment and air system upgrades, $2.1 million for installation of a paste backfill plant, and $5.5 million in development and ventilation improvements which will include development to start commercial production from the MNFWZ in 2012.
Major capital expenditures at Minto include $7 million for renovations to the camp, $14 million in underground equipment, infrastructure and development, $4 million in upgrades to the water treatment facilities, $4.5 million in plant upgrades and $1.2 million in permitting activities related to Phase V.
At Minto, a pre-feasibility study that assesses the potential for conversion of mineral resources identified in 2011 to mineral reserves potentially exploitable by a combination of open pit and underground mining methods is being compiled and is expected to be completed before the end of the first quarter. In addition, a scoping level report investigating the benefits of an increase in throughput (the larger pit bulk tonnage scenario) at lower than current copper-gold cut-off grades is being finalized.
2012 Capital Expenditure Guidance - Development Projects
Santo Domingo, Chile: Development activities at Santo Domingo for 2012 will include substantial completion of a feasibility study and basic engineering, preparation and filing of an Environmental Impact Study and completion of in-fill and geotechnical drilling programs that are currently underway. The bidding process for the power contract is also scheduled for 2012, with the contract expected to be awarded early in 2013. Santo Domingo capital expenditures for 2012 are estimated at $42.0 million, which included basic engineering being developed concurrently with the bankable feasibility study. This concurrent engineering work will provide bid specifications for all major equipment before the end of 2012.
Kutcho, BC: Development activities at Kutcho for 2012 will be focused on the environmental and First Nations consultations towards permitting mine development in 2013. Sufficient detailed engineering will also be completed to support the permitting process and enable commencement of 2013 construction activities pending approvals being attained in a timely fashion. Kutcho expenditures for 2012 are estimated at $6.2 million, which includes $2.5 million in environmental assessment activities, $1.9 million in basic engineering, and $1.3 million in permitting activities.
2012 Exploration Activities
Capstone has approved an exploration budget of $16.5 million to be spent in four key projects within three strategic areas. Brownfield exploration around our producing mines remains a priority and we have allotted $11.3 million dollars combined between the Cozamin and Minto mines where we continue to target mineral resource additions aiming to increasing mine life and throughput. The Company has earmarked additional funds for greenfield exploration in Chile and Australia that were acquired through the June 2011 acquisition of Far West Mining Ltd. and other greenfield projects.
Drilling Cost
2012 Planned Exploration (metres) (US$ millions)
Minto - Test the gaps between deposits 23,520 $4.8
Cozamin - Test the MNV & MNFWZ at depth 32,000 $6.5
Chile - Test magnetic anomalies for IOCG's 7,500 $1.9
Australia - Follow-up known prospects & anomalies 10,100 $3.3
TOTAL 73,120 $16.5
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian mining company 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, as well as exploration at properties in Chile, British Columbia 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 and through acquisitions in politically stable, mining-friendly regions. Capstone is included in the S&P/TSX Composite Index and S&P/TSX Global Mining Index. Additional information is available athttp://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 "plans", "expects" or "does not expect", "is expected", "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. 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; 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 Sagman, P. Eng., Capstone's Vice President, Technical Services (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, 2011 as filed on SEDAR and as available on the Company's website for further details.
For further information:
Capstone Mining Corp.
Cindy Burnett, VP, Investor Relations
Telephone: +1-604-637-8157
Email: cburnett@capstonemining.com
Website: http://www.capstonemining.com
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