VANCOUVER, March 9, 2016 /CNW/ - Capstone Mining Corp.
("Capstone") (TSX: CS) today announced that it has taken steps to
support covenant compliance on its Revolving Credit Facility
("RCF") throughout 2016 at copper prices as low as US$1.60 per pound in the first half of the year
and US$1.70 per pound in the second
half.
Actions taken include price fixing over 90% of the copper that
had been sold in Q4 2015 with open copper pricing periods at
December 31, 2015, at US$2.13 per pound of copper, eliminating the risk
of a material negative pricing adjustment to Q1 2016 revenue; price
fixing and hedging approximately 75% of Q1 2016 expected sales at
US$2.20 per pound of copper; and
hedging 90% of expected Q2 2016 sales at US$2.24 per pound of copper.
These actions, when combined with the January and February 2016 copper put options at US$2.60 per pound of copper, are expected to
ensure compliance with the financial ratio tests under the RCF,
provided consolidated production and costs meet guided levels. They
are expected to eliminate the need to use any of the additional
liquidity levers in 2016 that were outlined in the December 31, 2015 Management's Discussion and
Analysis, including amending the RCF to obtain covenant relief,
preserving the flexibility to use those levers beyond 2016 should
metal markets continue lower.
"In this challenging commodity price environment our first
priority is to reduce our debt risk," said Darren Pylot, Capstone President and CEO. "The
recent upward spike in the copper price allowed us to
opportunistically lock in most of our revenue for the first half of
the year to help ensure compliance with our debt covenants. Beyond
the first half of 2016, when production from our high grade
Minto North pit is expected to
contribute significant EBITDA, we remain open to copper price
changes."
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 to
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 remaining within covenant compliance
on the RCF, meeting 2016 guided production and 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, 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
"risk", "expected", "provided" and "guided". 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.
SOURCE Capstone Mining Corp.