(All amounts in US$ unless otherwise
specified)
VANCOUVER, July 26, 2016 /PRNewswire/ - Capstone
Mining Corp. ("Capstone" or the "Company") (TSX: CS) today
announced its financial results for the three and six months ended
June 30, 2016. Operating cash flow
before changes in working capital (1) was $21.6 million or $0.06 per share, with a net loss of $13.4 million and an adjusted net loss of
$7.5 million after adjusting for
certain non-cash and non-recurring charges. Copper production for
the quarter totalled 28,157 tonnes (27,200 tonnes of payable
copper) at a C1 cash cost (1) of $1.51 per payable pound produced with copper
sales for the quarter of 22,549 tonnes at a C1 cash cost
(1) of $1.66 per payable
pound sold.
Capstone will hold a conference call and webcast
on Wednesday, July
27, 2016 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the quarter
ended June 30, 2016, which are
available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including results
to June 30, 2016, in addition to the
Q2 2016 webcast slides, will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
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Q2
2016
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Q2
2015
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2016
YTD
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2015
YTD
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Revenue ($
millions)
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100.2
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112.5
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226.5
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215.4
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Copper produced
(tonnes)
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28,157
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21,100
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52,704
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44,777
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Payable copper produced
(tonnes)
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27,200
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20,367
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50,900
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43,220
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C1 cash cost per payable pound produced
(1)
($/lb)
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1.51
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2.22
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1.61
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2.09
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All-in sustaining cost per payable pound produced
(1)
($/lb)
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1.91
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2.69
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2.06
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2.54
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All-in cost per payable pound produced
(1)
($/lb)
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1.92
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2.98
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2.07
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2.99
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Fully-loaded all-in cost per payable pound
produced (1)
($/lb)
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2.01
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2.92
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2.19
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3.01
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Copper sold
(tonnes)
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22,549
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20,473
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50,534
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40,555
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Realized copper price per pound sold
($/lb)*
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2.21
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2.67
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2.20
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2.57
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Adjusted realized copper price per pound sold
($/lb) **
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2.21
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2.67
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2.28
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2.57
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C1 cash cost per payable pound sold (1)
($/lb)
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1.66
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2.09
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1.72
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1.99
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All-in sustaining cost per payable pound sold
(1)
($/lb)
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2.13
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2.56
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2.17
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2.46
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All-in cost per payable pound sold (1)
($/lb)
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2.15
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2.84
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2.19
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2.95
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Fully-loaded all-in cost per payable pound sold
(1)
($/lb)
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2.26
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2.78
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2.30
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2.97
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Net income (loss) ($
millions)
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(13.4)
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1.3
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(26.2)
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(16.0)
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Net income (loss) per common share
($)
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(0.03)
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0.00
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(0.07)
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(0.04)
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Adjusted net income (loss)
(1) ($
millions)
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(7.5)
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1.3
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(9.0)
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(7.6)
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Adjusted net income (loss)
(1) per common share
($)
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(0.02)
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0.00
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(0.02)
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(0.02)
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EBITDA (1) ($
millions)
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13.0
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26.4
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41.4
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39.1
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Operating cash flow before changes in working
capital (1) ($
millions)
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21.6
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21.8
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40.5
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38.3
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Operating cash flow before changes in working
capital per common share (1)
($)
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0.06
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0.06
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0.11
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0.10
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Cash and cash equivalents ($
millions)
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100.2
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97.6
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100.2
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97.6
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Net debt (1) ($
millions)
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243.9
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202.0
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243.9
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202.0
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* Q2 2016 includes a negative provisional pricing adjustment
of $5.8 million (2015 – negative
$0.9 million) related to prior
shipments, equivalent to $(0.12) per
pound (2015 – $(0.02) per pound) of
copper sold during the quarter. 2016 YTD includes a negative
provisional pricing adjustment of $11.5
million (2015 – negative $13.6
million) related to prior shipments, equivalent to
$(0.10) per pound (2015 –
($0.15) per pound) of copper sold
during the six month period. The Q2 2016 and 2016 YTD negative
provisional pricing adjustments were predominantly related to assay
adjustments. The Q2 2016 figure of ($5.8
million) is broken down as $0.1
million related to price adjustments and ($5.9 million) related to assay adjustments. This
translates into adjustments of ($0.00) and ($0.12)
respectively on a per pound sold basis. The YTD Q2 2016 figure of
($11.5 million) broken down as
($0.2 million) related to price
adjustments and ($11.3 million)
related to assay adjustments. This translates into adjustments of
($0.00) and ($0.10) respectively on a per pound sold basis.
** Q2 2016 Adjusted realized copper price includes the realized
gain of $0.2 million related to
maturing forward contracts (2015 – nil). 2016 YTD Adjusted realized
copper price includes the realized gain of $9.8 million related to the put contracts the
Company exercised and maturing forward contracts (2015 –
nil).
"Operational performance in the second quarter was strong, with
record setting production," said Darren
Pylot, President and CEO of Capstone. "Costs trended down
from the first quarter and our focus on operating efficiencies
across the Company resulted in both C1 cash costs (1)
and all-in costs (1) coming in better than planned."
"Operating cash flow for the quarter was $21.6 million and the short term price fixing and
hedging we did earlier this year protected our financial position
and liquidity through the volatile commodity price environment in
the first half of the year," continued Mr. Pylot.
"Improved mill reliability and consistency at Pinto Valley has
demonstrated its upside potential and Minto is set up to access the high grades at
Minto North, positioning us well for strong second half
performance."
Financial Highlights for the Three Months Ended June 30, 2016
- Net loss of $13.4 million or
$0.03 per common share which
included:
- Earnings from mining operations of $2.8
million,
- Production costs included a $6.4
million non-cash charge related to the write-down of
inventory at Minto,
- Share-based compensation expense of $3.1
million, driven primarily by an increase in Capstone's share
price and the effect this has on the share unit liabilities,
- $1.4 million in current and
deferred tax expense.
- Working capital decreased marginally to $160.6 million at
June 30, 2016 from $163.4 million at March
31, 2016.
Financial Highlights for the Six Months Ended June 30, 2016
- Net loss of $26.2 million or
$0.07 per common share which
included:
- Earnings from mining operations of $4.8
million,
- Production costs included a $7.9
million non-cash charge related to the write-down of
inventory at Minto and Pinto
Valley,
- Share-based compensation expense of $5.5
million, driven primarily by an increase in Capstone's share
price and the effect this has on the share unit liabilities,
- A gain on commodity derivatives of $3.2
million, comprising $1.7
million on new copper forward contracts and $1.5 million on $2.60 copper puts, which expired in February 2016,
- $4.3 million in current and
deferred tax expense.
- Working capital decreased marginally to $160.6 million at
June 30, 2016 from $162.4 million at December
31, 2015.
Production and Additional Highlights for the Three and Six
Months Ended June 30, 2016
Pinto Valley Mine:
- Produced 18,776 tonnes of copper in concentrates and cathode
during Q2 2016 at a C1 cash cost (1) of $1.45 per pound of payable copper produced,
setting a quarterly production record.
- Produced 35,141 tonnes of copper in concentrates and cathode
during 2016 YTD at a C1 cash cost (1) of $1.54 per pound of payable copper produced.
- During Q2 2016, mill throughput continued above plan, setting a
third consecutive quarterly record of 55,667 tonnes per day and
contributing to lower costs on a per pound basis.
- With the mill operating at steady state and above plan since
September 2015, the primary focus at
Pinto Valley has been on optimizing operations. A consideration for
any potential further increase in mill throughput is the
availability of additional water. Capstone's goal is to determine
the surplus water that would potentially be available to consider
low-cost expansion opportunities in the range of 10% beyond the
mill throughput level currently contemplated in the PV3
pre-feasibility study ("PFS").
Cozamin Mine:
- Produced 3,288 tonnes of copper in concentrates during Q2 2016
at a C1 cash cost (1) of $1.52 per pound of payable copper produced.
- Produced 6,948 tonnes of copper in concentrates during 2016 YTD
at a C1 cash cost (1) of $1.51 per pound of payable copper produced.
- At Cozamin, production continued to be challenged by a
shortfall in mine development. The mine underwent a reorganization
in the quarter and a number of additional process improvements and
training resources were implemented with mine development rates
consistently improving.
Minto Mine:
- Produced 6,093 tonnes of copper in concentrates during Q2 2016
at a C1 cash cost (1) of $1.70 per pound of payable copper produced, which
excluded $0.01 per pound of cost
allocated to stockpile.
- Produced 10,615 tonnes of copper in concentrates during 2016
YTD at a C1 cash cost (1) of $1.91 per pound of payable copper produced, which
included $0.01 per pound of cost
allocated from stockpile that was spent in prior periods, bringing
the actual cash expended during 2016 YTD to $1.90 per pound of payable copper produced.
- Minto production was better
than planned, led by strong mill throughput and recoveries. Mining
continues to advance in the Minto North pit, with copper grades
above 2% reaching the mill by early June, resulting in
significantly higher production planned for the second half of the
year. Underground mining continued through the second quarter and
is planned to extend into Q3, to take advantage of high-grade
underground ore.
Operating Outlook
Capstone's 2016 guidance to produce
108,000 tonnes (±5%) of copper from its Pinto Valley, Cozamin and
Minto mines at a C1 cash cost
(1) of $1.45 to
$1.55 per pound of payable copper produced, an all-in cost
(1) of $1.90 to
$2.00 per pound of payable copper produced and a
fully-loaded all-in cost (1) of $2.05 to $2.15 per pound of payable copper
produced remains unchanged. However, the production distribution by
mine is expected to be different than originally guided, with
outperformance at Pinto Valley and Minto expected to make up for an anticipated
shortfall at Cozamin for the year. Pinto Valley guidance is being
increased to 66,000 tonnes of copper, Minto guidance is being increased to 28,000
tonnes of copper and Cozamin guidance is being reduced to 14,000
tonnes of copper, all ±5%. Lower costs at Pinto Valley and
Minto are expected to offset
higher unit costs at Cozamin so consolidated cost guidance has not
changed.
Conference Call and Webcast
Details
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Date:
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Wednesday, July 27,
2016
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Time:
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11:30 am Eastern Time (8:30 am Pacific
Time)
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Dial in:
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North America: 1-888-390-0546, International:
+416-764-8688
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Webcast:
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http://event.on24.com/r.htm?e=1186432&s=1&k=A468B7DF9F7C38CB231D23E4E75DC74B
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Replay:
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North America: 1-888-390-0541, International:
+416-764-8677
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Replay Passcode:
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301819#
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The conference call replay will be available until Wednesday, August 3, 2016. The conference call
audio and transcript will be available on Capstone's website within
48 hours of the call at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
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 and US. Capstone's strategy is to focus
on the optimization of operations and assets in politically stable,
mining-friendly regions, centred in the Americas. 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 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 our expectations or beliefs regarding
future events. Forward-looking statements include, but are not
limited to, statements with respect to the estimation of mineral
resources and mineral reserves, the realization of mineral reserve
estimates, the timing and amount of estimated future production,
costs of production and capital expenditures, the success of our
mining operations, environmental risks, unanticipated reclamation
expenses and title disputes. In certain cases, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "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", "anticipated", "planned",
"potential", "positioning" and "expected". By their very nature,
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, amongst
others, risks related to inherent hazards associated with mining
operations, assumptions related to geotechnical condition of
tailings facilities, future prices of copper and other metals,
compliance with financial covenants, surety bonding, our ability to
raise capital, counterparty risks associated with sales of our
metals, use of financial derivative instruments and associated
counterparty risks, foreign currency exchange rate fluctuations,
changes in general economic conditions, accuracy of mineral
resource and mineral reserve estimates, operating in foreign
jurisdictions with risk of changes to governmental regulation,
compliance with governmental regulations, compliance with
environmental laws and regulations, reliance on approvals, licences
and permits from governmental authorities, impact of climatic
conditions on our Pinto Valley, Cozamin and Minto operations, aboriginal title claims and
rights to consultation and accommodation, land reclamation and mine
closure obligations, uncertainties and risks related to the
potential development of the Santo Domingo Project, increased
operating and capital costs, challenges to title to our mineral
properties, dependence on key management personnel, potential
conflicts of interest involving our directors and officers,
corruption and bribery, limitations inherent in our insurance
coverage, labour relations, increasing energy prices, competition
in the mining industry, risks associated with joint venture
partners, our ability to integrate new acquisitions into our
operations, cybersecurity threats 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 our actual results, performance
or achievements to differ materially from those described in our
forward-looking statements, there may be other factors that cause
our results, performance or achievements not to be as anticipated,
estimated or intended. There can be no assurance that our
forward-looking statements will prove to be accurate, as our actual
results, performance or achievements could differ materially from
those anticipated in such statements. Accordingly, readers should
not place undue reliance on our 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)" are alternative
performance measures and readers should refer to Alternative
Performance Measures in the Company's Consolidated Management's
Discussion and Analysis for the quarter ended June 30, 2016 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.
(1) This is an alternative performance measure; please see
"Alternative Performance Measures" at the end of this release.
SOURCE Capstone Mining Corp.