VANCOUVER, British Columbia,
Jan. 18, 2016 /PRNewswire/ --Capstone
Mining Corp. ("Capstone") (TSX: CS) today announced the results of
the Pre-Feasibility Study – Mine Life Extension ("PV3 PFS") for its
wholly owned Pinto Valley Mine in Arizona, US.
Highlights
- Proven and Probable Mineral Reserves increased to 473.8 million
tonnes grading 0.31% copper, resulting in mine life to 2039, a 13
year increase over the previously published PV2 PFS (2014).
- Life of Mine ("LOM") average annual production of copper in
concentrate is estimated at 122.8 million pounds of copper and 1.9
million pounds of molybdenum.
- Mill production increases to 20.4 million tonnes per year
(56,000 tonnes per day ("tpd")) in 2017 from 19.8 million tonnes
(54,000 tpd) in 2016 through improvements in maintenance and
operational practices.
- Expected LOM C1 cash costs (1) are estimated to be
$2.05 per pound of payable copper
(net of by-product credits and including capitalized stripping as
an operating cost).
- No significant capital is required for PV3 until stripping
commences in 2020.
"The PV3 PFS adds significant value to the Pinto Valley Mine by
more than doubling the remaining mine life to 23 years and
increasing throughput by 8% without any major capital investment,"
said Darren Pylot, President and CEO
of Capstone.
"The PV3 mine plan and capital schedule closely mirrors the PV2
mine plan for the next two years, but with increased throughput
rates. The mine plan calls for relatively higher grade in 2016 and
2017 with low sustaining capital requirements, resulting in a C1
cost, including capitalized stripping, ranging from $1.90 to $2.00 per pound of copper and an all-in
cost (1) ranging from $2.10 to
$2.20 per pound of copper in those years," continued Mr.
Pylot. "The grade profile allows us to weather the current copper
price environment and the mine plan gives us significant
flexibility, with the next major decision point being to advance
the first PV3 pushback in 2020. Our focus will continue to be on
process improvements, with significant leverage to the upside when
copper prices improve."
(1)
|
This is
alternative performance measure; please see "Alternative
Performance Measures" at the end of this release.
|
Pre-Feasibility Study
The PV3 PFS project was directed
by Capstone with contributions from Kirkham Geosystems Ltd.
(geology, resource estimation), Independent Mining Consultants,
Inc. (reserve, geotechnical, mine design and schedule, equipment
selection), KWM Consulting Inc. (metallurgy), Amec Foster Wheeler
Environment & Infrastructure, Inc. (tailings), SRK Consulting
(U.S.), Inc. (environmental), and Capstone (infrastructure and
financial modelling). Personnel from each of these companies will
be signing off as a Qualified Person ("QP") as defined in National
Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators ("NI
43-101") for their specific responsibilities.
The Pinto Valley Mine is a conventional open pit operation, with
drilling, blasting, loading and hauling. The mill operation
consists of a primary, secondary, tertiary crushing system, six
ball mills, and flotation concentration.
The mill produces copper and molybdenum concentrates. The PV3
PFS contemplates that mill production increases will be achieved
through improved maintenance and operating practices, resulting in
increased operating hours and increased hourly throughput.
Mineral Resources
The mineral resources are effective
January 1, 2016. The estimate
includes results from drill programs conducted in 2015 and a
revised geological model.
Mineral Resource
Estimate, January 2016, at a 0.17% Cu Cut-off Grade
(2),(3),(4)
|
|
Metric
Tonnes
millions
|
Copper
%
|
Molybdenum
%
|
Contained
Copper
M lbs
|
Contained
Molybdenum
M
lbs
|
Measured
(M)
|
647.9
|
0.34
|
0.008
|
4,843.7
|
118.6
|
Indicated
(I)
|
772.3
|
0.26
|
0.006
|
4,387.8
|
105.6
|
Total
M&I
|
1,420.2
|
0.30
|
0.007
|
9231.5
|
224.1
|
Inferred
|
126.0
|
0.25
|
0.005
|
686.7
|
13.9
|
(2)
|
Mineral Resources
are reported inclusive of Mineral Reserves.
|
(3)
|
Totals may not sum
exactly due to rounding.
|
(4)
|
QP Garth Kirkham,
P. Geo., Kirkham Geosystems Ltd.
|
|
|
|
|
|
|
|
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.
Mineral Reserves
The PV3 PFS Mineral Reserve was
estimated without any tailings or land boundary constraints. The
study assumes that additional permits and land are available when
required (see permitting section below). The Mineral Reserve was
developed by tabulating the contained measured and indicated
(proven and probable) material inside of the designed pit at the
mill cut-off grades.
Mineral Reserve
Estimate, January 2016 (5),(6),(7)
|
Classification
|
Cut-off
Grade
|
Mineral
Reserve
|
Contained
Metal
|
Cu
%
|
M
tonnes
|
Cu
%
|
Mo
%
|
Cu M
lbs
|
Mo M
lbs
|
Proven
|
0.17-0.18
|
350.1
|
0.33%
|
0.009%
|
2,550
|
72
|
Probable
|
0.17-0.18
|
123.7
|
0.25%
|
0.007%
|
691
|
20
|
Proven +
Probable
|
0.17-0.18
|
473.8
|
0.31%
|
0.009%
|
3,242
|
92
|
(5)
|
Economic inputs to
the block model were USD$2.75/lb copper, USD$12.50/lb
Molybdenum.
|
(6)
|
Cut-off Grade –
variable between 0.17% Cu to 0.18% Cu through the LOM. The minimum
mill feed cut-off grade is 0.17% Cu, but in years where sufficient
higher grade mill feed is available, the mill cut-off grade may be
higher, resulting in material between the yearly mill cut-off grade
and 0.18% being stockpiled. The additional 0.01% from 0.17% to
0.18% is to cover the additional cost of rehandling material from
the stockpile to the mill. Material between 0.17% to 0.18% that is
not fed directly to the mill is not stockpiled as it cannot pay for
the mining re-handling cost at the price assumptions
used.
|
(7)
|
QP - John Marek,
Independent Mining Consultants Inc.
|
|
Mine Production Schedule
The increase in ore reserves
will extend mining to 2038 and mineral processing to 2039, an
increase of 13 years from the current mine plan of 2026. Total mine
production will increase to approximately 48.5 million tonnes in
2018 through 2031 then decreasing thereafter through 2039. Life of
mine strip ratio is 0.92:1.
Mine
Plan
|
Year
|
Mill
Cut-Off
|
Ore Mined to
Mill
|
Ore Mined to Low
Grade Stockpile
|
Waste
|
Total
Mined
|
|
Cu
%
|
M
tonnes
|
Cu
%
|
Mo%
|
M
tonnes
|
Cu
%
|
Mo%
|
M
tonnes
|
M
tonnes
|
2016
|
0.18
|
19.76
|
0.36%
|
0.008%
|
0.00
|
0.00%
|
0.000%
|
22.72
|
42.48
|
2017
|
0.19
|
20.44
|
0.34%
|
0.008%
|
0.99
|
0.18%
|
0.007%
|
23.47
|
44.90
|
2018
|
0.19
|
20.44
|
0.32%
|
0.011%
|
1.84
|
0.19%
|
0.007%
|
26.22
|
48.50
|
2019
|
0.17
|
20.44
|
0.32%
|
0.011%
|
0.00
|
0.00%
|
0.000%
|
28.16
|
48.60
|
2020
|
0.18
|
20.44
|
0.35%
|
0.013%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2021
|
0.19
|
20.44
|
0.35%
|
0.008%
|
0.81
|
0.19%
|
0.005%
|
27.25
|
48.50
|
2022
|
0.18
|
20.44
|
0.32%
|
0.007%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2023
|
0.17
|
20.44
|
0.29%
|
0.007%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2024
|
0.17
|
20.44
|
0.29%
|
0.008%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2025
|
0.17
|
20.44
|
0.36%
|
0.010%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2026
|
0.17
|
20.44
|
0.40%
|
0.014%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2027
|
0.17
|
20.44
|
0.33%
|
0.014%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2028
|
0.17
|
20.44
|
0.30%
|
0.010%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2029
|
0.22
|
20.44
|
0.28%
|
0.009%
|
9.57
|
0.20%
|
0.007%
|
18.49
|
48.50
|
2030
|
0.22
|
20.44
|
0.31%
|
0.009%
|
1.60
|
0.20%
|
0.007%
|
26.46
|
48.50
|
2031
|
0.18
|
20.44
|
0.32%
|
0.010%
|
0.00
|
0.00%
|
0.000%
|
28.06
|
48.50
|
2032
|
0.19
|
20.44
|
0.31%
|
0.009%
|
0.15
|
0.19%
|
0.006%
|
4.10
|
24.69
|
2033
|
0.17
|
20.44
|
0.28%
|
0.008%
|
0.00
|
0.00%
|
0.000%
|
3.00
|
23.44
|
2034
|
0.17
|
20.44
|
0.29%
|
0.007%
|
0.00
|
0.00%
|
0.000%
|
3.01
|
23.45
|
2035
|
0.17
|
20.44
|
0.27%
|
0.008%
|
0.00
|
0.00%
|
0.000%
|
1.38
|
21.82
|
2036
|
0.17
|
20.44
|
0.25%
|
0.008%
|
0.00
|
0.00%
|
0.000%
|
0.29
|
20.73
|
2037
|
0.17
|
20.44
|
0.29%
|
0.006%
|
0.00
|
0.00%
|
0.000%
|
0.00
|
20.44
|
2038
|
0.17
|
9.87
|
0.28%
|
0.004%
|
0.00
|
0.00%
|
0.000%
|
0.00
|
9.87
|
Total
|
|
458.87
|
0.31%
|
0.009%
|
14.97
|
0.20%
|
0.007%
|
437.08
|
910.92
|
The PV3 PFS has identified the need for additional mining
equipment that will be purchased in 2019 to enter service in 2020
to move the increased waste and ore tonnages.
Major Mining
Equipment
|
|
Current
Fleet
|
Additional Fleet
at Peak (2020)
|
Drills
|
3
|
0
|
Cat 994
Loaders
|
2
|
0
|
Hydraulic
Shovel
|
2
|
0
|
Cat 789
|
18
|
2
|
Processing
In the fourth quarter of 2015 mill
production averaged above 54,000 tpd, up from the planned 52,000
tpd, accomplished through improvements in maintenance and operating
practices. Continuation of these improvements is expected to
maintain production at 54,000 tpd in 2016 and increase to 56,000
tpd in 2017. Metal recoveries average 88% for copper and 46% for
molybdenum.
Mill Ore
Schedule
|
Year
|
Mill
Feed
|
Mill Head
Grade
|
Payable
Copper
|
Payable
Moly
|
Copper
Cathode
|
M
tonnes
|
%
Cu
|
%
Mo
|
Concentrate M
lbs
|
M
lbs
|
M
lbs
|
2016
|
19.76
|
0.36%
|
0.008%
|
133.3
|
1.0
|
4.8
|
2017
|
20.44
|
0.34%
|
0.008%
|
130.9
|
1.4
|
4.5
|
2018
|
20.44
|
0.32%
|
0.011%
|
120.0
|
2.2
|
4.2
|
2019
|
20.44
|
0.32%
|
0.011%
|
124.4
|
2.2
|
0.0
|
2020
|
20.44
|
0.35%
|
0.013%
|
134.8
|
2.6
|
0.0
|
2021
|
20.44
|
0.35%
|
0.008%
|
132.2
|
1.6
|
0.0
|
2022
|
20.44
|
0.32%
|
0.007%
|
122.2
|
1.3
|
0.0
|
2023
|
20.44
|
0.29%
|
0.007%
|
110.5
|
1.3
|
0.0
|
2024
|
20.44
|
0.29%
|
0.008%
|
110.5
|
1.6
|
0.0
|
2025
|
20.44
|
0.36%
|
0.010%
|
138.3
|
2.0
|
0.0
|
2026
|
20.44
|
0.40%
|
0.014%
|
153.9
|
2.9
|
0.0
|
2027
|
20.44
|
0.33%
|
0.014%
|
127.4
|
2.8
|
0.0
|
2028
|
20.44
|
0.30%
|
0.010%
|
115.7
|
2.0
|
0.0
|
2029
|
20.44
|
0.28%
|
0.009%
|
106.5
|
1.7
|
0.0
|
2030
|
20.44
|
0.31%
|
0.009%
|
119.1
|
1.9
|
0.0
|
2031
|
20.44
|
0.32%
|
0.010%
|
122.2
|
2.1
|
0.0
|
2032
|
20.44
|
0.31%
|
0.009%
|
118.3
|
1.8
|
0.0
|
2033
|
20.44
|
0.28%
|
0.008%
|
106.1
|
1.6
|
0.0
|
2034
|
20.44
|
0.29%
|
0.007%
|
110.0
|
1.4
|
0.0
|
2035
|
20.44
|
0.27%
|
0.008%
|
102.6
|
1.6
|
0.0
|
2036
|
20.44
|
0.25%
|
0.008%
|
95.2
|
1.7
|
0.0
|
2037
|
20.44
|
0.29%
|
0.006%
|
109.1
|
1.2
|
0.0
|
2038
|
20.44
|
0.24%
|
0.006%
|
90.2
|
1.2
|
0.0
|
2039
|
4.40
|
0.20%
|
0.007%
|
16.0
|
0.3
|
0.0
|
Total
|
473.8
|
0.31%
|
0.009%
|
2,749.4
|
41.4
|
13.4
|
Payable copper and molybdenum production will average 119
million pounds and 1.8 million pounds per year through to 2039.
Historically the Pinto Valley Mine has produced between 200,000 to
250,000 ounces of silver annually. Silver has not been estimated in
the geological model and is not included in the Mineral Resource or
Reserve estimate. As a result, silver represents potential upside
to the study and has not been included in the study or estimated C1
costs. Copper cathode production will be phased out starting in
2018 due to lower production, higher operating costs and the need
for waste rock storage area.
The study assumes that 80% of the concentrate will be sold
internationally and 20% domestically, achieving an average
concentrate shipping cost of $119/wet
metric tonne. Copper concentrate terms are estimated at
$95/dry metric tonne treatment and
$0.095/pound refining cost with 96.5%
payable copper.
Infrastructure
Pinto Valley Mine has existing mine,
mill, water and power related infrastructure to support operational
needs for the expanded mine life and increased mine equipment.
The tailings storage facility #4 ("TSF4") will be raised an
additional 175 feet (53 metres) above the current permitted height
of 800 feet (244 metres). Upgrades to the tailings pumping system
will be needed and additional land will be required from the US
Forest Service (see permitting section below).
Capital Cost Estimate
The total PV3 life of mine
sustaining capital cost estimate is summarized below:
PV3 PFS - Summary
of Capital Costs $M
|
Item
|
Units
|
Value
|
Site Sustaining
Costs
|
US$M
|
191.6
|
Mine Equipment
Purchases and Rebuilds
|
US$M
|
182.6
|
Mine Equipment
Component Replacements
|
US$M
|
253.1
|
Tailings
|
US$M
|
24.0
|
Total
Capex
|
US$M
|
651.3
|
Closure
Costs
|
US$M
|
143.4
|
Operating Cost Estimate
Summary of Average
Life of Mine Operating Costs
|
Item
|
Units
|
Value
|
Mining
Cost
|
$/tonne
moved
|
1.67
|
Mining
Cost
|
$/tonne
milled
|
3.25
|
Milling
Cost
|
$/tonne
milled
|
5.10
|
G&A
Cost
|
$/tonne
milled
|
1.48
|
Total
|
$/tonne
milled
|
9.83
|
Transportation/TC/RC
|
$/lb Cu
payable
|
0.48
|
SX/EW Cost
(2016-2018)
|
$/lb Cu
payable
|
1.85
|
Life-of-Mine C1 Cash
Cost (1) (including cathode)
|
$/lb Cu
payable
|
2.05
|
Life-of-Mine
Sustaining Capital
|
$/lb Cu
payable
|
0.24
|
Life-of-Mine All-In
Cost (1)
|
$/lb Cu
payable
|
2.29
|
(1)
|
This is
alternative performance measure; please see "Alternative
Performance Measures" at the end of this release.
|
Permitting
Extending the mine life to 2039 from 2026
will require revisions of two major permits:
- Aquifer Protection Permit ("APP") issued by the Arizona
Department of Environmental Quality ("ADEQ") to expand an existing
tailings facility and permit a new mine waste rock storage
facility.
- An amendment to the Plan of Operations ("POO"), issued by the
US Forest Service, related to:
- Tailings storage expansion, 409 acres,
- Mine expansion, 61 acres,
- Outstanding permit renewals.
Technical Report
The full NI 43-101 Technical Report
will be filed under Capstone's profile on SEDAR at www.sedar.com
within 45 days of the date of this news release.
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
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 Kutcho copper-zinc
project in British Columbia,
Canada, as well as exploration properties in Chile. Capstone's strategy is to continue
extend the lives of our current mines with mineral resource and
reserve expansions, maintain the optionality on the Santo Domingo development project, prudently
progress the exploration portfolio 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 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 "plan", "estimated", "indicates", "contemplates",
"may" 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 changes in project parameters as plans continue to
be refined; future prices of resources; possible variations in ore
reserves; grade or recovery rates; assumptions related to
geotechnical conditions of tailings facilities; accidents;
dependence on key personnel; labour pool constraints; labour
disputes; availability of infrastructure required for the
development of mining projects; delays in obtaining financing or in
the completion of development or construction activities; 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; our ability to integrate new acquisitions into our
operations, compliance with government regulation; reliance on, and
potential delays, in approvals, licences and permits from
governmental authorities; land reclamation and mine closure
obligations; 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 under the Company's profile 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 National Instrument 43-101
Compliance
Gregg Bush, P.
Eng., Senior Vice President and Chief Operating Officer for
Capstone, a QP under NI 43-101, reviewed and approved all Technical
Information in this news release. The following QP's will author
the technical report: Gregg Bush,
P.Eng., Garth Kirkham, P.Geo. of
Kirkham Geosystems Ltd., John Marek
P.E. of Independent Mining Consultants, Inc., Ken Major P.Eng. of KWM Consulting Inc., Tony
Freiman, P.E. of Amec Foster Wheeler Environment &
Infrastructure Inc. and Cori Hoag
C.P.G. of SRK Consulting (U.S.), Inc.
Based on the Mineral Resource Estimate, a standard methodology
for pit limit analysis, mining sequence, and cut-off grade
optimization, including application of mining dilution, process
recovery, economic criteria and physical mine and plant operating
constraints, has been followed to design the Pinto Valley pit and
determine the Mineral Reserve Estimate summarized in the Mineral
Reserve table. Information on data verification and exploration
information is included in the report titled "Pinto Valley Mine
2014 Prefeasibility Study, NI 43-101 Technical Report, Pinto Valley
Mine, Miami, Arizona", dated
28 April 2014.
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
Consolidated Interim Management's Discussion and Analysis for the
quarter ended September 30, 2015 as
filed on SEDAR and as available on the Company's website.
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 US securities laws. Without limiting the
foregoing, this news release may refer to technical reports that
use the terms "Indicated" and "Inferred" Resources. US investors
are cautioned that, while such terms are recognized and required by
Canadian securities laws, the SEC does not recognize them. Under US
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. US investors are cautioned not
to assume that all or any part of Indicated Resources will ever be
converted into Reserves. US 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, US 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 US
companies subject to the reporting and disclosure requirements of
the SEC.
Cindy Burnett, VP, Investor
Relations and Communications, +1-604-637-8157,
cburnett@capstonemining.com