(All amounts in US$ unless otherwise
specified)
VANCOUVER, Jan. 20, 2015 /CNW/ - Capstone Mining Corp.
("Capstone") (TSX: CS) today provided its production and capital
expenditure guidance for 2015. Capstone expects to produce 90,000
tonnes (±5%) of copper in concentrates and cathode from its Pinto
Valley, Cozamin and Minto mines at a C1 cash cost(1) of
$2.00 to $2.10 per pound of payable
copper produced.
"In light of the current copper markets we have developed our
2015 budget in a manner that maintains our financial flexibility,
preserves the value of our development projects and maximizes our
existing operations," said Darren
Pylot, Capstone President and CEO. "We have put a flexible
financing structure in place and have developed a capital plan that
will allow us to quickly adjust our spending if required."
"Within our capital budget, we have flagged $36 million of capital that may be deferred or
cancelled should ongoing low copper prices persist. Our current
cash balance and available credit facilities, along with tightly
managed capital spending, will allow us to weather the volatility
in the copper market well into the foreseeable future."
"Our primary focus for 2015 is to deliver sustainable
performance at Pinto Valley and to advance the next stage of cost
reduction and operational improvement initiatives at the mine,"
continued Mr. Pylot. "At Cozamin, activities are underway with the
goal of upgrading the resource to extend the mine life and at Minto
the focus remains on preparing the Minto North open pit for mining
in 2015."
"At Pinto Valley we plan to complete a Pre-Feasibility study to
consider resources not in the current mine plan ("PV3 PFS"). We
also intend to continue to advance our Santo Domingo development project in
Chile in a measured and
disciplined manner, with a number of steps in our stage-gate
process to be completed prior to large capital expenditure
commitments."
The 2015 operating and capital guidance is based on:
US$1=CAD$1.18; US$1=MXN$13.25; US$1=CLP$557; Diesel US$3.25/gallon. Diesel, gas and lubricants
comprise approximately 9% of Capstone's 2015 budgeted consolidated
site operating costs, suggesting potentially meaningful savings
based on current spot prices and exchange rates.
2015 Production Guidance – Operating Mines
|
|
|
|
|
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Tonnes milled
(millions)
|
19.0
|
1.2
|
1.4
|
21.6
|
Copper grade
(%)
|
0.35
|
1.59
|
1.19
|
0.47
|
Copper recovery
(%)
|
88.1
|
93.3
|
86.4
|
88.3
|
|
Production
(contained in concentrates, except as indicated)
|
Copper
(tonnes)
|
56,300
|
18,000
|
13,000
|
87,300
|
Copper cathode
(tonnes)
|
2,700
|
-
|
-
|
2,700
|
Total Copper
(tonnes)
|
59,000
|
18,000
|
13,000
|
90,000
|
|
Zinc
(tonnes)
|
-
|
8,300
|
-
|
8,300
|
Molybdenum
(tonnes)
|
480
|
-
|
-
|
480
|
Lead
(tonnes)
|
-
|
400
|
-
|
400
|
Silver (million
ounces)
|
0.3
|
1.4
|
0.1
|
1.8
|
Gold
(ounces)
|
-
|
-
|
17,000
|
17,000
|
|
C1 cash cost
per pound of payable copper produced net of by-product credits and
selling costs(1)
|
$2.00-$2.10
|
$1.35-$1.45
|
$3.10-$3.20
|
$2.00-$2.10
|
1. This is an alternative performance measure please see
"Alternative Performance Measure" at the end of this release.
Pinto Valley: Grade in 2015 is projected to average 0.35% copper
in accordance with the PV2 mine plan. While total operating costs
and costs on a per tonne mined basis are expected to fall year over
year, C1 cash cost(1) on a per pound of payable copper
basis will be higher than 2014 due to the grade profile.
The primary focus remains on mill stability and ongoing cost
reduction activities. The mill frequently operates at a throughput
rate above 50,000 tonnes per day, reaching the highest average
monthly throughput in December of 51,180 tonnes per day. Ongoing
work however, is needed to reliably sustain that rate. In 2015 we
will implement a systematic maintenance program to monitor and
address equipment reliability issues in the mill to reduce
unplanned downtime.
Cozamin: The majority of the ore will continue to come from the
San Roberto blocks in 2015, with the Mala Noche Footwall Zone
contributing approximately 37% of ore production in 2015 at an
average copper grade of 1.78%. Cost per tonne of ore milled is
budgeted to decrease slightly; however C1 cash cost(1)
per pound of payable copper is expected to increase over 2014 due
to the lower grade.
Minto: The 2015 mine plan at Minto reflects the delay in
receiving surface mining permits for Minto North, which contains
the highest grade open pit reserves remaining on the property,
shifting the bulk of production from Minto North into 2016. Minto's
2015 guidance assumes receipt of all permits and the commencement
of pre-stripping Minto North in March.
- Surface Mining – The 2015 mine plan calls for the first Minto
North ore to the mill in September, with high grade ore release
planned to start in December 2015
continuing until December 2016, at
which time the Minto North pit will be fully depleted.
- Underground Mining – Minto South
underground ore production, which commenced in late 2014, is
budgeted to continue until November
2015, pausing while the mill processes Minto North ore and
access is developed for the next area of underground mining.
Production is expected to resume from underground in mid-2016. The
mining method identified in the Minto Phase VI Pre-Feasibility
study ("Phase VI PFS") has changed from post-pillar cut-and-fill to
include long-hole mining, which will reduce underground mining
costs from those anticipated in the Phase VI PFS.
- Mill Operations – The mill will process approximately 70% of
its ore from stockpile for the first three quarters of the year,
supplemented with ore from underground. In the fourth quarter,
production will shift to Minto North, which will provide
approximately 70% of the mill feed with the remainder coming
primarily from underground.
Cost per tonne of ore milled is expected to be higher in 2015
due to the higher proportion of underground mining. C1 cash
cost(1) per pound of payable copper is expected to be
very high, owing to the large proportion of low-grade stockpile
material being processed in 2015 while the Minto North pit is being
stripped.
The 2015 C1 cash cost(1) guidance includes
$0.34 per pound of costs allocated
from stockpile which was spent in 2014 and earlier, bringing actual
cash expended during 2015 to $2.75 to
$2.85 per pound of payable copper. The cost profile
throughout the year will have significantly higher costs per pound
at the start of the year, decreasing each quarter as grade
improves.
Despite the high C1 cash cost(1) in 2015 at Minto,
the greatest return is achieved by continuing to operate the mill
and process low grade material in 2015 to allow for continued
operation through to the time when we are able to process the high
grade Minto North ore. Under the current economic environment and
copper price, it is Capstone's intention to proceed as planned with
the stripping of Minto North in 2015. We will, however, continue to
review alternate operating profiles to optimize profitability at
Minto should depressed copper prices continue for an extended
period.
2015 Capital Expenditure Guidance – Operating Mines
|
|
|
|
|
US$
millions
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Sustaining
|
$21.9
|
$15.9
|
$11.2
|
$49.0
|
PV2
Capital
|
45.5
|
-
|
-
|
45.5
|
PV3 Study
|
8.0
|
-
|
-
|
8.0
|
Capitalized
Stripping
|
10.7
|
-
|
23.6
|
34.3
|
Total 2015
Budgeted Capital Expenditures
|
$86.1
|
$15.9
|
$34.8
|
$136.8
|
Pinto Valley: Major sustaining capital expenditures at Pinto
Valley in 2015 include $6.9 million
for mining fleet component replacement and $2.5 million for tailings and water management.
The implementation of the PV2 Pre-Feasibility study recommendations
to extend the mine life from five to 12 years are budgeted to be
$45.5 million in 2015. Of the Pinto
Valley total capital guidance, $16.5
million has been flagged as potentially discretionary and
could be deferred or canceled should low copper prices persist for
an extended period.
An internal scoping study was completed in 2014 that evaluated
the significant amount of resources at Pinto Valley not included in
the mine plan. As a result, two cases will be advanced to the
Pre-Feasibility study level. The PV3 PFS base case will include a
10% to 15% increase in throughput and the possibility of a mine
life extension beyond 2026 and a second case will evaluate a
throughput increase to 90,000 tonnes per day combined with a
potential mine life extension. The PV3 PFS is expected to be
completed in the third quarter of 2015, at which time we will
evaluate the two alternatives and the best use of capital.
Cozamin: Major capital expenditures at Cozamin include
$4.6 million for underground
development, $5.1 million for
infrastructure and communications, $2.9
million on the construction of a paste fill plant and
$2.5 million in underground and
surface equipment. Of the Cozamin total capital guidance,
$6.7 million has been flagged as
potentially discretionary and could be deferred or canceled should
low copper prices persist for an extended period.
Minto: Major capital expenditures at Minto include $7.5 million in underground development and
equipment and $2.6 million for
various improvement projects. Permitting and environmental
activities are budgeted to be $1.1
million, related primarily to the Yukon Water Board review
that is currently underway to bring all remaining known reserves at
Minto into the mine plan. In addition, Minto expects to capitalize
stripping costs of $23.6 million from
March through December, related to the development of the Minto
North pit once permitted, contingent on the final decision to strip
Minto North. Depending upon the mine plan followed in 2015,
$7.2 million has been flagged as
potentially discretionary and could be deferred or canceled should
low copper prices persist for an extended period.
2015 Capital Expenditure Guidance – Development
Projects
|
|
|
|
US$
millions
|
Santo
Domingo
|
Kutcho
|
Total
|
2015 Budgeted
Capital Expenditures
|
$11.8
|
$0.8
|
$12.6
|
Santo Domingo, Chile: Capstone is advancing the Santo Domingo
Project using a stage-gate project management process. In light of
current copper market conditions, 2015 guidance above reflects the
base case spending plan to advance permitting, social license, and
sustain the owners' team. The budget for the full year is
$16.9 million (of which Capstone's
70% share is $11.8 million).
Once the EIA is received, anticipated around the end of the
first quarter at which point Capstone will have spent approximately
$4.6 million ($6.5 million on a 100% basis), Capstone will
evaluate the status of the project and communicate the next steps.
The decision to proceed to the second gate will reflect, among
other factors, ongoing social license, long-term power
availability, receipt of the port concession, awarding of the
project execution contract, general and project specific market
conditions, the financing market, project economics and
alternatives available to the company at that time. Should economic
conditions improve and the fundamentals of the project continue to
warrant it, the budget for Santo
Domingo could be increased to up to $33.7 million (of which Capstone's share would be
$23.6 million) for the full year.
The decisions related to the Santo
Domingo project will be targeted at maximizing the value of
the project to Capstone shareholders in a manner that ensures
financial flexibility for continued growth and security for the
Company's existing operations.
Kutcho, BC: The Kutcho project is not of the size and scope to
warrant further development and is held for sale. The 2015 budget
of $0.8 million consists primarily of
ongoing environmental baseline studies as well as some operational
costs related to the camp.
2015 Exploration Program
|
|
|
|
US$
millions
|
Brownfield
|
Greenfield
|
Total
|
Cozamin
|
$5.6
|
-
|
$5.6
|
Project Providencia*
– Chile
|
-
|
$5.4
|
5.4
|
Total 2015
Budgeted Exploration Expenditures
|
$5.6
|
$5.4
|
$11.0
|
* Exploration is expected to be expensed for Project
Providencia.
As exploration expenditures are discretionary, we will align our
expenditures with prevailing market conditions, financing capacity
and corporate priorities. The exploration guidance represents the
base case 2015 exploration program before any potential
reductions.
Brownfield: At Cozamin, the 2015 exploration program includes
18,900 metres of underground infill drilling to add certainty to
the block model with the goal to potentially recover some reserve
losses identified in the 2014 Pre-Feasibility study, as well as
step-out on both the Mala Noche Vein and Mala Noche Footwall Zone
mineral resource areas. The continuation of surface drilling, which
began in 2014 targeting Mala Noche splays that had not previously
been tested, will continue in 2015 with 12,000 metres of surface
drilling budgeted.
Greenfield: Greenfield exploration is principally focused on
Project Providencia in Chile,
Capstone's earn-in project with Sociedad Química y Minera de Chile
S.A. (SQM), with 15,000 metres of drill testing budgeted as a
continuation of the drill program that began in 2014 plus
continuing geophysics and geochemistry work on Project Providencia
and an adjacent property. The minimum expenditure required in 2015
under the SQM agreement is $1.5
million.
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian base metals mining company,
focused on copper. We are committed to the responsible development
of our assets and the environments in which we operate. Our three
producing mines are the Pinto Valley copper mine located in
Arizona, US, the Cozamin
copper-silver mine in Zacatecas State, Mexico and the Minto copper mine in
Yukon, Canada. In addition,
Capstone has two copper development projects; the large scale 70%
owned copper-iron Santo Domingo
project in Region III, Chile, in
partnership with Korea Resources Corporation, and the 100% owned
copper-zinc Kutcho project in British
Columbia, Canada, as well as exploration properties in
Chile. Using our cash flow and
strong balance sheet as a platform, Capstone's strategy is to
continue to grow with mineral resource and reserve expansions and
exploration, and through acquisitions in politically stable,
mining-friendly regions. We will pace our growth with our financial
capacity, ensuring we retain, as a priority, sufficient financial
flexibility to meet the requirements of our existing operations and
our committed development projects, while maintaining an adequate
cushion to deal with market volatility and operating risks inherent
in the mining industry. Our headquarters are in Vancouver, Canada and we are listed on the
Toronto Stock Exchange (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 commodity prices, the estimation of
mineral reserves and mineral resources, the conversion of mineral
resources to mineral reserves, 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 "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; counterparty risks associated with sales
of our metals; changes in general economic conditions; increased
operating and capital costs; operating in foreign jurisdictions
with risk of changes to governmental regulation; impact of climatic
conditions on our Pinto Valley, Cozamin and Minto operations;
increasing energy prices; 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.
National Instrument 43-101 Compliance
The technical information in this news release ("Technical
Information") 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"). The disclosure of the Technical Information contained in
this news release has been reviewed and approved by Brad Skeeles, P. Eng., Vice President of North
American Operations (Technical Information related to mining and
production), Brad Mercer, P. Geol.,
Vice President, Exploration (Technical Information related to
mineral exploration activities), and Gregg
Bush, P. Eng., Senior Vice President and Chief Operating
Officer, all Qualified Persons under NI 43-101.
Alternative Performance Measures
The item marked with (1) "C1 Cash Cost per Pound of Payable
Copper Produced" 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 may refer to technical
reports that use 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.
SOURCE Capstone Mining Corp.