(All amounts in US$ unless otherwise
specified)
VANCOUVER, Jan. 16, 2017 /CNW/ - Capstone Mining Corp.
("Capstone") (TSX: CS) today provided its operating and capital
expenditure guidance for 2017 along with a five-year outlook. In
2017, Capstone expects to produce 94,000 tonnes (±5%) of copper
from its Pinto Valley, Cozamin and Minto mines at a C1 cash cost (1,2)
of $1.60 to $1.70 per pound of
payable copper produced. Capital expenditures for 2017, including
$30 million of capitalized stripping,
are expected to be $67 million or
$0.33 per pound of payable copper
produced. Consolidated all-in cost guidance is $2.15 to $2.25 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.
"Despite the recent copper price momentum, our 2017 operating
plan and five-year outlook takes a conservative stance on metal
prices while focusing on further cost efficiencies at our existing
operations," said Darren Pylot,
Capstone President and CEO. "We are looking forward to our 2017
opportunities, including building on the operating success at Pinto
Valley, extension of mining activities at Minto and the zinc potential at Cozamin."
2017 Copper Production and Cost Guidance
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Copper Production
(tonnes ±5%)
|
61,000
|
14,000
|
19,000
|
94,000
|
C1 Cash Cost
(1,2)
|
$1.75-$1.85
|
$1.10-$1.20
|
$1.60-$1.70
|
$1.60-$1.70
|
All-In Cost
(1,3)
|
$2.10-$2.20
|
$1.90-$2.00
|
$1.65-$1.75
|
$2.15-$2.25
|
Fully-Loaded
All-In Cost (1,4)
|
|
$2.20-$2.30
|
|
(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 cash portion of production-phase capitalized stripping),
accretion of reclamation obligations, amortization of reclamation
assets, corporate G&A, share-based compensation, greenfield
exploration, cash portion of pre-production capitalized stripping,
PV3 development and care and maintenance costs. (4) Fully-loaded
All-In Cost is All-In Cost plus interest expense and
taxes.
|
Pinto Valley: Throughout 2016 the operation continued to drive
cost and operating efficiencies, with throughput ending the year 4%
above plan, averaging 56,000 tpd for the year. Building on this
success, the 2017 throughput plan has been increased beyond the
2017 target of 56,000 contemplated in the PV3 pre-feasibility
study. The 2017 mine plan calls for a higher strip ratio and lower
grade than 2016. Mine operating costs are expected to remain
relatively flat from 2016; however, unit costs on a per pound basis
are expected to be higher as a result of a higher strip ratio,
lower grade and resulting lower production, as anticipated in the
PV3 mine plan.
Cozamin: Milled tonnes are expected to be lower in 2017 than in
2016 but at a higher grade, with 80% of ore coming from the narrow
veined Mala Noche Footwall Zone. All-in cost includes the
development costs reflective of the move from the main zone to the
footwall zone. In 2017, we will evaluate the potential to bring the
existing zinc resource into the mine plan. The silver stream
expires in April 2017, resulting in
full silver revenue returning to Capstone.
Minto: In the first quarter of
2017, Minto will continue to
benefit from stockpiled high grade ore from the Minto North pit. An
additional open pit phase, Area 2 Stage 3, was approved for mining
in 2017 with activities commencing early in January and completion
expected in the third quarter of 2017. The decision to mine the
third stage of the Area 2 pit was based partially on the offset
benefit gained by placing the Stage 3 overburden as topsoil cover
during progressive reclamation. Underground mining will continue
until early Q4, after which the mill will process stockpiled
material, with milling currently scheduled to run at full capacity
until the end of 2017. Head grade is expected to average just over
2% in the first quarter, falling gradually to 1% in the fourth
quarter as all of the remaining stockpiles are processed. The
operation is currently slated to be temporarily placed on care and
maintenance at the end of 2017. However with an approximate 3 year
mine life beyond 2017 in reserves, we are continuing to review the
economics of additional mining which could extend operations into
2018 and beyond. Future decisions will depend on a number of
factors, most notably a continuing improvement in the copper market
outlook, which may allow Capstone to consider further options.
Copper Production and Costs 2018 to 2021: Consolidated
production from 2018 to 2021 is expected to average between 70,000
and 80,000 tonnes of copper annually at a consolidated C1 cash cost
in the range of $1.50 to $1.75 per
pound of copper.
2017 Capital Expenditure Guidance – Operating Mines
(US$M)
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Sustaining
|
$17
|
$18
|
$nil
|
$35
|
Development
|
2
|
-
|
-
|
2
|
Capitalized Stripping
*
|
30
|
-
|
$nil
|
30
|
Total
Capital
|
$49
|
$18
|
$nil
|
$67
|
|
* Capitalized
stripping is included as an operating cost in the 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 2017
is $8 million for mining fleet
component replacements. Other key sustaining capital costs include
crusher improvement initiatives of $3
million and water management projects totalling $2 million, with development capital of
$2 million related to the advancement
of PV3 permitting activities.
Cozamin: The majority of 2017 sustaining capital expenditures is
for mine development.
Minto: Limited sustaining
capital is required at Minto with
the expected temporary care and maintenance at the end of 2017.
Capital Expenditures 2018 to 2021: Beyond 2017, total
sustaining, development and brownfield exploration capital
expenditures at our operating mines are expected to average
$55 million to $65 million annually
(excluding capitalized stripping). Capitalized stripping at Pinto
Valley from 2018 to 2021 is expected to range between $15 and $35 million annually.
2017 Exploration Program (US$M)
|
Brownfield
|
Greenfield
|
Total
|
Cozamin
|
$5
|
-
|
$5
|
Project
Providencia* - Chile
|
-
|
$5
|
5
|
Total Budgeted
Exploration Expenditures
|
$5
|
$5
|
$10
|
|
* Exploration is
expected to be expensed for Project Providencia.
|
Brownfield Exploration: At Cozamin, the 2017 exploration program
includes over 30,000 metres of primarily underground infill
drilling aimed at increasing reserves in the Mala Noche Footwall
Zone and the San Rafael zinc zone.
Greenfield Exploration: In 2017, greenfield exploration remains
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 geochemistry, geology, trenching, metallurgy
and maintenance of the option.
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", "expected", "plan", "trend",
"target", "scheduled". 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., Capstone Senior Vice
President and Chief Operating Officer, a Qualified Person under NI
43-101. 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, 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.
SOURCE Capstone Mining Corp.