VANCOUVER, Sept. 9, 2015 /CNW/ - Capstone Mining
Corp. ("Capstone") (TSX: CS) today announced that in light of the
current copper price environment it has lowered 2015 operating mine
site capital expenditures relative to previous guidance by
approximately $20 million, will
reduce mine site operating costs by $20
million over the second half of 2015 and has suspended work
on the Santo Domingo project.
"As copper prices continue to deteriorate, we have looked at a
range of actions to preserve our financial flexibility. We have
taken the steps we outlined with our initial 2015 guidance to
reduce our overall capital expenditures and have reduced operating
costs in order to enhance our financial position and provide
sufficient liquidity to execute our operating plan in the current
market environment. This includes reducing and deferring capital
expenditures at our operating mines, suspending all work on the
Santo Domingo project, eliminating
non-essential operating and general and administrative expenses and
reducing exploration expenditures," said Darren Pylot, President and CEO of Capstone.
Revised 2015 Operating and Capital Guidance
Operating Mine Guidance: Overall production guidance
remains unchanged, however the distribution by mine has been
revised to reflect the outperformance at Minto and the shortfall at Cozamin. Overall
cost guidance has been reduced from $2.00-$2.10 per pound of payable copper produced
to $1.95-$2.05 per pound, reflecting
both expenditure reductions as well as efficiencies in operations
at Pinto Valley and Minto.
|
|
|
|
|
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Revised Operating
Guidance
|
|
Copper production
(tonnes) (±5%)
|
59,000
|
15,500
|
15,500
|
90,000
|
C1 cash cost per
pound of payable
copper produced net
of by-product
credits and selling
costs(1)
|
$1.90 -
$2.00
|
$1.50 -
$1.60
|
$2.55 -
$2.65
|
$1.95 -
$2.05
|
Revised Mine Site
Capital Guidance (US$ millions)
|
|
Sustaining
|
$15.4
|
$10.7
|
$7.8
|
$33.9
|
PV2
Capital
|
45.0
|
-
|
-
|
45.0
|
PV3 Study
|
8.0
|
-
|
-
|
8.0
|
Capitalized
Stripping
|
21.4
|
-
|
10.6
|
32.0
|
Total
|
$89.8
|
$10.7
|
$18.4
|
$118.9
|
|
|
|
|
|
|
(1) This is an alternative performance measure; please see
"Alternative Performance Measures" at the end of this
release.
Capital expenditures at the operating mines have been reduced by
$17.9 million or 13% from the initial
budget of $136.8 million. Pinto
Valley sustaining and development capital has been reduced by
$7 million. Capitalized stripping at
Pinto Valley is estimated to be higher than originally planned
because we advanced our 2015 mine plan to align with the expected
PV3 mine plan. Approximately $10
million of capitalized stripping at Minto, originally planned for 2015, will be
pushed into 2016 due to the delay in accessing the Minto North
pit.
Development and Exploration: Total 2015 expenditures for
Santo Domingo are expected to be
$17 million on the basis of
Capstone's 70% ownership. Capitalized exploration expenditures at
Cozamin have been reduced to $3.5
million from an initial budget of $5.6 million in 2015. An additional
$5.4 million in exploration is
expected to be expensed at the Providencia project in Chile, unchanged from the original budget.
Maintenance costs for the Kutcho project are expected to be
$0.1 million, down from the original
guidance of $0.8 million.
Suspension of Santo Domingo Project
Capstone will discontinue all work on its Santo Domingo project, and will downsize the
Santiago and Diego de Almagro
offices in Chile. The previously
communicated 2015 budget of $19.4
million will be reduced by $2.4
million (including severance costs) on the basis of
Capstone's 70% ownership. In 2016 and beyond, holding and community
relations costs are expected to be in the range of $2 million annually on a 100% basis. Of the 31
employees at Santo Domingo, 23
positions are affected and a one-time restructuring charge of
approximately $3.2 million on a 100%
basis will be expensed in the third quarter.
"While we continue to believe that Santo Domingo is an excellent project, a
number of factors, including uncertainty over the future direction
of copper prices and our financing capacity for the project, make
capital preservation a priority at this time," continued Mr. Pylot.
"In this environment, we believe the most prudent course of action
is to put the project and completion of the updated Feasibility
Study on hold, while maintaining the optionality for future
development when conditions improve."
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 extend the lives of
our current mines with mineral resource and reserve expansions, to
advance the Santo Domingo
development project, conduct focused exploration and grow 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 the reduction of capital and
operating costs, restructuring and severance costs, 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, 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", "estimated" 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; 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.
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.
SOURCE Capstone Mining Corp.