VANCOUVER, April 28, 2013 /CNW/ - Capstone Mining Corp.
("Capstone") (TSX: CS) today announced that it has entered into a
definitive agreement with BHP Copper Inc., a subsidiary of BHP
Billiton Ltd. ("BHP Billiton"), to purchase BHP Billiton's
wholly-owned Pinto Valley copper mining operation and the
associated San Manuel Arizona Railroad Company ("SMARRCO") in
Arizona, USA for US$650 million.
The Pinto Valley Mine is located in the Globe-Miami mining district in Arizona, approximately 125 kilometres east of
Phoenix. It is projected to
produce 130 - 150 million pounds of copper in concentrate and
approximately 10 million pounds of copper cathode annually, along
with by-product molybdenum and silver, at an estimated cash cost of
approximately $1.80 per pound, net of
by-product credits, for the first five years of production.
"Pinto Valley represents a unique opportunity to acquire a
mid-sized producing copper mine in a well-established and low-risk
mining jurisdiction with a significant mineral resource," said
Darren Pylot, President and CEO of
Capstone. "This acquisition gives Capstone our third producing mine
with a long mine life and is consistent with Capstone's strategy of
building an intermediate copper producer focused in the
Americas."
"The purchase price and financing structure allows us to
maintain our financial flexibility, retaining approximately
$135 million in cash," continued Mr.
Pylot. "The retained cash, combined with the immediate cash flow
and low on-going capital requirements expected from Pinto Valley
and our current operations, provides us with the necessary
financial resources to continue to fund our development
projects."
"During our extensive due diligence process we were very
impressed with the world-class operations and the solid workforce
and management team that are in place at Pinto Valley. We are
looking forward to the Pinto Valley employees joining Capstone as
we jointly prepare to realize the full value of the Pinto Valley
asset well into the future," concluded Mr. Pylot.
Investment Highlights
- Immediately transforms Capstone into an intermediate copper
producer.
- Annual production from Pinto Valley of 130 - 150 million pounds
of copper provides immediate >160% increase in Capstone's copper
production.
- First five year estimated cash cost of $1.80 per pound (net of by-product credits).
- Further asset diversification into Arizona, USA, one of the world's most
favorable mining jurisdictions and aligned with Capstone's existing
assets.
- Work underway aimed at upgrading the 1 billion tonne Measured
and Indicated ("M&I") Mineral Resource to extend operations
beyond the current reserve life reported by BHP Billiton.
- Maintained and managed to BHP Billiton's world-class
standards.
- All necessary established infrastructure, permits and skilled
workforce in place.
Transaction Overview
The purchase price is being paid in cash and is subject to
customary adjustments. The purchase price will be satisfied from
Capstone's existing $200 million
Senior Secured Revolving Credit Facility ($176 million available) and from a new 2.5-year,
$200 million Senior Secured Reducing
Revolving Credit Facility, that are respectively committed and
underwritten by The Bank of Nova
Scotia, and cash on hand. The new facility will include
customary covenants and closing conditions, including closing of
the Pinto Valley acquisition, and will bear interest at market
rates. The acquisition agreement is not conditional upon
financing.
Under the terms of the agreement, Capstone is committed to
maintaining Pinto Valley's existing environmental standards and
will provide financial assurances reasonably necessary to
obtain regulatory approvals for the transfer of the applicable
permits. BHP Billiton employees working at Pinto Valley and SMARRCO
will become employees of Capstone as part of the transaction.
The purchase agreement includes typical closing conditions,
including regulatory approvals. Closing of the transaction is
expected to occur in the third quarter of 2013. There can be no
assurances the acquisition or the financing will close.
Operational Highlights
The Pinto Valley Mine successfully restarted operations on
schedule in December 2012 at a
capital cost of $194 million
(including approximately $60 million
for a new mining fleet), which will be fully funded by BHP
Billiton. The restart is progressing well, and is on schedule to
achieve a run-rate of over 50,000 tonnes per day by the end of
2013.
The mine is projected to employ approximately 650 employees and
has all necessary established infrastructure. Key contracts will be
in place at closing of the transaction for water, power and access
to markets, and a Transitional Services Agreement will be executed
with BHP Billiton to provide various administrative services
through a defined transition period.
Local regulatory and community support has been demonstrated for
the mine during both prior operations and the recent re-start.
Arizona is among the world's most
favorable mining jurisdictions with respect to tax, regulation and
labour.
Mineral Resources
The Pinto Valley property includes a significant amount of
mineralization not included in BHP Billiton's publicly-reported
Mineral Reserve estimate. Capstone has completed the following NI
43-101 compliant Mineral Resource estimate for the global
identified resource, with a technical report to be filed within 45
days.
Mineral Resource Estimate, February 28,
2013, at a 0.25% COG*
|
Metric
Tonnes
(M) |
Copper
(%) |
Molybdenum
(%) |
Contained
Copper
(k tonnes) |
Contained
Molybdenum
(M lbs) |
Measured (M) |
402 |
0.38 |
0.010 |
1,544 |
40 |
Indicated (I) |
566 |
0.33 |
0.008 |
1,870 |
45 |
Total M&I |
968 |
0.35 |
0.009 |
3,414 |
85 |
Inferred |
45 |
0.33 |
0.009 |
146 |
4 |
* Totals may not sum exactly due to rounding.
This estimate had not been adjusted for the three months of mining
from start up to February 28,
2013.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Mineral resource estimates do not
account for mineability, selectivity, mining loss and dilution.
These mineral resource estimates include inferred mineral resources
that are normally considered too speculative geologically to have
economic considerations applied to them that would enable them to
be categorized as mineral reserves. There is also no certainty that
these inferred mineral resources will be converted to measured and
indicated categories through further drilling, or into mineral
reserves, once economic considerations are applied.
The current Pinto Valley plan of operation, based on BHP
Billiton's publicly reported reserves, projects a 5-year operation,
which is fully permitted with mining presently underway. Capstone
believes that considerable potential exists to upgrade the M&I
Mineral Resources into reserves, potentially extending the
operation meaningfully beyond the current reserve life as reported
by BHP Billiton. A Preliminary Feasibility Study ("PFS") is
underway that will target the M&I Mineral Resources for
potential conversion to reserves, with expected completion in 2013.
The PFS will consider the potential to extend operations within the
currently permitted boundaries. In addition, Capstone intends to
immediately commission the necessary engineering and economic
studies to consider all remaining current mineral resources in
preparation for filing the permit applications.
Mineral Resource Estimate Methodology
The mineral resource estimate reported herein was prepared by
Kirkham Geosystems Ltd. of Burnaby,
BC, Canada. The estimate
was completed using commercial mine planning software MineSight®
v7.50 using a three dimensional block model (100 ft by 100 ft by 45
ft (vertical) block size). The mineralization was interpreted into
distinct domains, modelled as wireframes and used as hard
boundaries to constrain estimation. Geostatistical analysis was
completed on the 45 ft composite assay data for each of the metals,
and variograms were defined for each domain of mineralization. The
grades for copper and molybdenum were interpolated into the block
model using the ordinary kriging method. Interpolated results are
reported in measured, indicated and inferred categories and are
based on continuity of the mineralization and sample density. The
model was estimated in imperial units and converted to metric units
where appropriate for disclosure purposes.
The mineral resources are confined within an optimized
Lerchs-Grossman (LG) pit shell to ensure reasonable prospects of
economic extraction. The pit shell was generated using a copper
price of $3.30/lb, applied to copper
equivalent grade, with mining costs (ore and waste) of $1.50/ton, processing costs of $5.00/ton and an overall pit slope of 45°. Copper
equivalence (CuEq), used to constrain the pit, was calculated using
a ratio of Cu:Mo of 1:3.3, and recoveries of 88% and 50%,
respectively. Mr. Kirkham is author of a Technical Report on the
Mineral Resource Estimate for the Pinto Valley resource estimate,
to be filed within 45 days of this news release. Mr. Kirkham is
independent of Capstone and is an "Independent Qualified Person" as
defined by NI 43-101. Mr. Kirkham has reviewed and validated the
resource information contained in this release.
Advisors
Scotia Capital Inc. is acting as financial advisor to Capstone
and its Board of Directors. Capstone's legal counsel is Blake,
Cassels & Graydon LLP and Davis, Graham & Stubbs LLP.
Pinto Valley Conference Call and Webcast
Capstone will hold a conference call and webcast on Monday April 29, 2013 at 11:00 am Eastern time (8:00 am Pacific time) for investors and analysts,
and at 1:00 pm Eastern time
(10:00 am Pacific time) for
media.
Investors and Analysts
Date: |
Monday, April 29, 2013 |
Time: |
11:00 am Eastern Time -- 8:00 am Pacific Time |
Dial in: |
North America: 1-888-390-0546, International:
1-416-764-8688 |
Slides: |
http://capstonemining.com/s/Presentation.asp (the webcast
includes the presentation slides) |
Webcast: |
http://event.on24.com/r.htm?e=615451&s=1&k=0CA36935ACBB5C42EFD7343A12A3A4B6 |
Replay: |
North America: 1-888-390-0541, International:
1-416-764-8677 |
Replay Code: |
500122 |
Media
Date: |
Monday, April 29, 2013 |
Time: |
1:00 pm Eastern Time -- 10:00 am Pacific Time |
Dial in: |
North America: 1-888-390-0605, International:
1-416-764-8609 |
Slides: |
http://capstonemining.com/s/Presentation.asp (the webcast
includes the presentation slides) |
Webcast: |
http://event.on24.com/r.htm?e=615488&s=1&k=393BB64A7DEE379C2D11F3629A87D85E |
Replay: |
North America: 1-888-390-0541, International:
1-416-764-8677 |
Replay Code: |
291320 |
The conference call replays will be available until May 13, 2013. The investor conference call audio
and transcript will be available on Capstone's website within
approximately 24 hours of the call at
http://capstonemining.com/s/Conference_Calls.asp.
Change to Capstone's Q1 Financial Results Timing and
Conference Call
Capstone will move the release of its first quarter financial
results to Tuesday, May 7, 2013 after
market close, from May 8 as
originally scheduled. The conference call will also move by one day
to Wednesday, May 8. The Q1
conference call for investors and analysts will be held at
11:30 am Eastern time (8:30 am Pacific time) on Wednesday, May 8, 2013. Please note the revised
date below.
Date: |
Wednesday, May 8, 2013 |
Time: |
11:30 am Eastern Time -- 8:30 am Pacific Time |
Dial in: |
North America: 1-888-390-0605, International:
1-416-764-8609 |
Webcast: |
http://www.newswire.ca/en/webcast/detail/1134543/1237395 |
Replay: |
North America: 1-888-390-0541, International:
1-416-764-8677 |
Replay Code: |
378784 |
The conference call replay will be available until May 23, 2013. The conference call audio and
transcript will be available on Capstone's website within
approximately 24 hours of the call at
http://capstonemining.com/s/Conference_Calls.asp.
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian base metals mining company,
committed to the responsible development of our assets and the
environments in which we operate. We are preferentially focused 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, as well as exploration at
properties in Canada, Chile, Mexico
and Australia. Using our cash flow
and strong balance sheet as a springboard, Capstone aims to grow
with continued mineral resource and reserve expansions,
exploration, and through acquisitions in politically stable,
mining-friendly regions. Our headquarters are in Vancouver, Canada and we are listed on the
TSX. Further information is available at
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 conversion of mineral resources to
mineral reserves, the anticipated date of closing of the
acquisition of Pinto Valley and the associated financing, 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",
"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 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.
Quality Assurance and NI 43-101 Compliance
The technical information in this news release has been prepared
in accordance with Canadian regulatory requirements set out in
National Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators ("NI 43-101")
and reviewed by John Wright, P.
Eng., Capstone's Business Development Manager, a "Qualified Person"
under NI 43-101. The mineral resource estimate reported herein for
the Pinto Valley property was prepared by Garth Kirkham, P. Geo, Kirkham Geosystems Ltd.,
an independent Qualified Person, from information provided by BHP
Billiton. BHP Billiton's mineral reserve estimate has been publicly
reported in the BHP Billiton 2012 Annual Report.
In addition, Gregg Bush, Senior
Vice President and Chief Operating Officer for Capstone Mining
Corp. reviewed and approved this news release.
Technical Report
A NI 43-101 compliant Technical Report related to the mineral
resources reported herein, will be filed under Capstone's profile
on SEDAR at www.sedar.com within 45 days.
Alternative Performance Measure
"Cash Cost per Pound of Copper" is an Alternative Performance
Measure. This performance measure is included because this
statistic is a key performance measure that management uses to
monitor performance. Management uses this statistic to assess how
the Company is performing to plan and to assess the overall
effectiveness and efficiency of mining operations. This performance
measure does not have a meaning within IFRS and, therefore, amounts
presented may not be comparable to similar data presented by other
mining companies. This performance measure should not be considered
in isolation as a substitute for measures of performance in
accordance with IFRS.
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 news
release may not be comparable to information made public by U.S.
companies subject to the reporting and disclosure requirements of
the SEC.
Note: All amounts in US$.
SOURCE Capstone Mining Corp.