VANCOUVER, British Columbia,
Jan. 18, 2016 /PRNewswire/ --Capstone
Mining Corp. ("Capstone") (TSX: CS) today provided its operating
and capital expenditure guidance for 2016 along with a five year
outlook. In 2016, Capstone expects to produce 108,000 tonnes (±5%)
of copper from its Pinto Valley, Cozamin and Minto mines at a C1 cash cost (1,2)
of $1.45 to $1.55 per pound of
payable copper produced. Capital expenditures for 2016, including
$38 million of capitalized stripping,
are expected to be $80.2 million or
$0.35 per pound of copper produced.
Consolidated all-in cost guidance is $1.90
to $2.00 per pound of payable copper produced. The
subsequent four year outlook is included to illustrate the overall
trend of our existing operations, excluding any further growth
through project development or acquisition.
"In light of the current commodity price environment our 2016
guidance and five year outlook focuses on financial flexibility,
while maximizing the cost efficiency of our existing operations,"
said Darren Pylot, Capstone
President and CEO. "2016 is expected to be a strong year
operationally for us as we process ore from the high grade Minto
North open pit. We will further benefit from Cozamin's consistent
performance and have started the year running well at Pinto
Valley."
"Both our C1 cash cost and all-in cost are expected to be
significantly lower in 2016, driven by higher production at each of
our operations and strict capital management across the company,"
continued Mr. Pylot. "Our 2016 guidance reflects a number of cost
reduction measures implemented and announced throughout 2015,
including a reduction of our permanent workforce by 10% and
full-time contractors by 5%. Additionally, moving into 2016 we have
reduced corporate head office positions by 22%, budgeted a 25%
reduction in general and administrative expenses and will
immediately place the San Manuel Arizona Railroad Company
("SMARRCO") on temporary care and maintenance."
2016 Copper Production and Cost Guidance
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Copper Production
(tonnes ±5%)
|
63,000
|
18,000
|
27,000
|
108,000
|
C1 Cash Cost
(1,2)
|
$1.65-$1.75
|
$1.35-$1.45
|
$1.10-$1.20
|
$1.45-$1.55
|
All-In Cost
(1,3)
|
$2.00-$2.10
|
$1.80-$1.90
|
$1.30-$1.40
|
$1.90-$2.00
|
Fully-Loaded
All-In Cost (1,4)
|
|
$2.05-$2.15
|
(1) This is alternative performance measure; please see
"Alternative Performance Measures" at the end of this release. (2)
C1 cash cost per pound of payable copper produced net of by-product
credits and selling costs. (3) All-In cost per pound of payable
copper produced is C1 cash cost plus NSR and production royalties,
non-cash deferred revenue, all sustaining capital expenditures
(including exploration and production-phase capitalized stripping),
accretion of reclamation obligations, amortization of reclamation
assets, corporate G&A, share-based compensation, greenfield
exploration, pre-production capitalized stripping, PV2 and PV3
development and Santo Domingo
holding costs. (4) Fully-loaded All-In Cost is All-In Cost plus
interest expense and taxes.
Pinto Valley: Throughout 2015 the mine began to see benefits
from manpower reductions and cost efficiencies. C1 cash cost is
expected to continue to fall as a result of increased throughput,
declining input costs and targeted cost reduction activities which
are continuing at the operation.
A key cost reduction initiative in 2016 is the temporary
cessation of all rail operations as part of the transportation
chain that delivers concentrate to the Port of Guaymas, Mexico for export. A modular truck
transport system for both domestic consumption in the United States as well as to Guaymas for export will be used to haul the
concentrate. SMARRCO will be placed on temporary care and
maintenance, resulting in the furlough of 13 employees.
Cozamin: The focus in 2016 will be on cost reduction and
operational efficiencies. The majority of the ore will continue to
come from the San Roberto blocks
in 2016, with the Mala Noche Footwall Zone contributing
approximately 30% of ore production in 2016.
Minto: The 2016 production and
operating costs at Minto reflect
the significant contribution from the high grade Minto North open
pit. Head grade is expected to average 1.3% in the first quarter,
ramping up to over 2.6% in the second half of the year, resulting
in significantly lower costs. Surface mining of the Minto North pit
is expected to be completed in August
2016, with the mill continuing to process Minto North
material until the end of Q1 2017.
Underground mining will be paused in Q1 2016 and the operation
will be temporarily closed once all the ore from Minto North and
the remaining stockpiles are processed by mid-2017. Future
decisions will depend on a number of factors, most notably an
improvement in the copper market outlook.
Copper Production and Costs 2017 to 2020: Consolidated
production from 2017 to 2020 is expected to average between 70,000
and 85,000 tonnes of copper annually at a consolidated C1 cash cost
ranging from $1.60 to $1.70 per pound
of copper.
2016 Capital Expenditure Guidance – Operating Mines
(US$M)
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Sustaining
|
$23.2
|
$14.9
|
$2.1
|
$40.2
|
PV3
Development
|
2.3
|
-
|
-
|
2.3
|
Capitalized Stripping
*
|
29.0
|
-
|
8.7
|
37.7
|
Total
Capital
|
$54.5
|
$14.9
|
$10.8
|
$80.2
|
* Capitalized stripping is included as an operating cost in
the PV2 PFS and PV3 PFS, however, under IFRS accounting guidelines
stripping costs are capitalized when the strip ratio is higher than
the life-of-mine strip ratio.
Pinto Valley: The largest category of sustaining capital in 2016
is $10.3 million for mining fleet
component replacement, which was accounted for as an operating cost
prior to 2016 and in the PV2 PFS. In 2016 this has been
reclassified from operating to capital and is accounted for as
capital in the PV3 PFS.
Cozamin: Major capital expenditures in 2016 are $6.2 million for mine development and
$3.5 million for the construction of
a paste fill plant that was deferred from 2015.
Minto: Limited sustaining
capital is required at Minto with
the expected temporary closure in 2017.
Capital Expenditures 2017 to 2020: Beyond 2016 sustaining,
development and brownfield exploration capital expenditures at our
operating mines are expected to average $40
to $50 million annually (excluding capitalized stripping).
Capitalized stripping at Pinto Valley from 2017 to 2020 is expected
to range between $15 and $30 million
annually.
2016 Exploration Program (US$M)
|
Brownfield
|
Greenfield
|
Total
|
Cozamin
|
$2.9
|
-
|
$2.9
|
Project
Providencia* - Chile
|
-
|
$5.5
|
5.5
|
Total 2016
Budgeted Exploration Expenditures
|
$2.9
|
$5.5
|
$8.4
|
* Exploration is expected to be expensed for Project
Providencia.
Brownfield Exploration: At Cozamin, the 2016 exploration program
includes 10,400 metres of primarily underground infill and step-out
drilling aimed at increasing reserves, primarily in the Mala Noche
Vein and Mala Noche Footwall Zone.
Greenfield Exploration: In 2016 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 a
continuation of the geophysics, geochemistry and drill programs
that began in 2014. There is no minimum expenditure commitment in
2016 under the SQM agreement and as exploration activities are
discretionary, we will align our expenditures with prevailing
market conditions, financing capacity and corporate priorities.
The guidance represents the base case 2016 exploration program,
which includes advancing towards scoping level resource estimates
on two of the three copper discoveries at Project Providencia since
2014, along with commencing basic metallurgical studies. One
deposit is a completely oxidized Chilean Stratabound Type and the
other is a deeply oxidized IOCG Type. In both cases mineralization
is at or very near surface, covered by very shallow overburden.
Drilling in 2016 will focus on the near surface copper oxide
potential.
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. Capstone's strategy is to extend the
lives of our current mines with mineral resource and reserve
expansions, maintain 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 "anticipated", "guidance", "plan", "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 on our Pinto
Valley, Cozamin and Minto
operations; increasing energy prices; our ability to integrate new
acquisitions into our operations, 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
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
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 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 Gregg Bush, P. Eng., Senior Vice President and
Chief Operating Officer. Technical Information related to mineral
exploration activities has been reviewed and approved by
Brad Mercer, P. Geol., Senior Vice
President, Exploration. Both are Qualified Persons under NI
43-101.
Alternative Performance Measures
The items marked with a "(1), (2), (3), (4) " 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 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.
Cindy Burnett, VP, Investor
Relations and Communications, +1-604-637-8157,
cburnett@capstonemining.com
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SOURCE Capstone Mining Corp.