(All amounts in US$ unless otherwise
specified)
VANCOUVER, July 31, 2017 /CNW/ - Capstone Mining Corp.
("Capstone" or the "Company") (TSX: CS) today announced its
financial results for the three and six months ended June 30, 2017. Cash flow from operating
activities for the quarter was $4.1
million or $0.01 per share and
cash flow from operating activities before changes in working
capital for the quarter was $26.0
million or $0.07 per share.
The net income for the quarter was $12.8
million or $0.03 per share and
adjusted net income was $0.7 million
or break-even on a per share basis after adjusting for certain
non-cash and non-recurring charges. Copper production for the
quarter totalled 24,002 tonnes (23,176 tonnes of payable copper) at
a C1 cash cost1 of $1.75
per payable pound produced with copper sales for the quarter of
20,771 tonnes at a C1 cash cost1 of $1.74 per payable pound sold.
"Operational performance in the second quarter was on plan, with
costs trending down from the first quarter," said Darren Pylot, President and CEO of Capstone.
"Most importantly, Pinto Valley returned to full production,
setting quarterly and monthly throughput records."
"For the second half of the year, approximately half of our
production is unhedged and completely unhedged in 2018 and beyond,"
continued Mr. Pylot.
Overview
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Q2
2017
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Q2
2016
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2017
YTD
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2016
YTD
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Revenue ($
millions)
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115.2
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100.2
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243.2
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226.5
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Copper
produced (tonnes)
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24,002
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28,157
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44,952
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52,704
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Payable copper
produced (tonnes)
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23,176
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27,200
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43,407
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50,900
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C1 cash cost per
payable pound produced1 ($/lb)
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1.75
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1.51
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1.85
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1.61
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All-in cost per
payable pound produced1 ($/lb)
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2.10
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1.92
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2.35
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2.07
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Fully-loaded
all-in cost per payable pound produced1
($/lb)
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2.26
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2.01
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2.51
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2.19
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Copper sold
(tonnes)
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20,771
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22,549
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42,353
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50,534
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Realized copper
price per pound sold ($/lb)*
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2.56
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2.21
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2.63
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2.20
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Adjusted realized
copper price per pound sold ($/lb) **
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2.40
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2.21
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2.42
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2.29
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C1 cash cost per
payable pound sold1 ($/lb)
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1.74
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1.66
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1.72
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1.72
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All-in cost per
payable pound sold1 ($/lb)
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2.14
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2.15
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2.23
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2.19
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Fully-loaded
all-in cost per payable pound sold1
($/lb)
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2.31
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2.26
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2.39
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2.30
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Net income
(loss) ($ millions)
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12.8
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(13.4)
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5.4
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(26.2)
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Net income (loss)
attributable to shareholders ($ millions)
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12.9
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(13.2)
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5.4
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(25.9)
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Net income (loss)
per common share ($)
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0.03
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(0.03)
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0.01
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(0.07)
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Adjusted net
income (loss)1 ($ millions)
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0.7
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(7.5)
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(1.7)
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(9.0)
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Adjusted net
income (loss)1 attributable to shareholders
($ millions)
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0.8
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(7.3)
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(1.7)
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(8.8)
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Adjusted income
net loss1 per common share
($)
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0.00
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(0.02)
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(0.00)
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(0.02)
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Cash flow from
operating activities
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4.1
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1.1
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26.1
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33.3
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Cash flow from
operating activities per common share ($)
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0.01
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0.00
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0.07
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0.09
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Operating cash
flow before changes in working
capital1 ($ millions)
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26.0
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21.6
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50.1
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40.5
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Operating cash
flow before changes in working capital per common share1
($)
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0.07
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0.06
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0.13
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0.11
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Cash and cash
equivalents ($ millions)
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82.4
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100.2
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82.4
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100.2
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Net
debt1 ($ millions)
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216.5
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243.9
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216.5
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243.9
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* Q2 2017 includes
a provisional pricing adjustment of $0.2 million (2016 – negative
$5.8 million) related to prior shipments, equivalent to nil per
pound (2016 – $(0.12) per pound) of copper sold during the quarter.
2017 YTD includes a provisional pricing adjustment of $5.4 million
(2016 – negative $11.5 million) related to prior shipments,
equivalent to $0.06 per pound (2016 – ($0.10) per pound) of copper
sold during the six month period. The Q2 2017 and 2017 YTD
provisional pricing adjustments were predominantly related to assay
adjustments. The Q2 2017 figure of ($0.2 million) is broken down as
$0.6 million related to price adjustments and ($0.4 million)
related to assay adjustments. This translates into adjustments of
nil and nil respectively on a per pound sold basis. The YTD Q2 2017
figure of $5.4 million broken down as $3.7 million related to price
adjustments and $1.7 million related to assay adjustments. This
translates into adjustments of $0.04 and $0.02 respectively on a
per pound sold basis. ** Q2 2017 adjusted realized copper price
includes the provisional pricing adjustments noted above and
realized loss of $7.7 million (2016 gain – $0.2 million) equivalent
to $(0.16) per pound (2016 gain - nil per pound) related to copper
derivative contracts exercised during the quarter. 2017 YTD
adjusted realized copper price includes the provisional pricing
adjustments noted above and realized loss of $19.3 million (2016
gain – $9.8 million) equivalent to $(0.21) per pound (2016 gain –
0.09 per pound) related to copper derivative contracts exercised
during the period.
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Financial Highlights for the Three Months Ended June 30, 2017
- Net income of $12.8 million
included:
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- Earnings from mining operations of $21.1
million,
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- Realized copper price of $2.56
per pound
- A commodity derivative gain of $3.8
million, comprising a realized loss of $7.7 million combined with an unrealized gain of
$1.3 million and reversals of
unrealized losses recorded in a previous period of $10.2 million,
- Production costs included a non-cash reversal of $(0.7) million related to the write-down of
inventory at Pinto Valley,
- An income tax expense of $4.5
million.
- Cash flow from operating activities of $4.1 million or $0.01 per common share.
- Operating cash flow before changes in working
capital1 of $26.0 million
or $0.07 per common share.
- Working capital increased $8.7
million to $157.0 million at June 30, 2017 from $148.3
million at March 31, 2017.
Cash decreased to $82.4 million at
June 30, 2017 from $109.4 million at March
31, 2017 largely as a result of a $10.0 million debt repayment made in April, 2017
and $9.0 million in payments made
related to the commodity derivatives during Q2'17.
- Production of 23,176 tonnes of payable copper at a C1 cash
cost1 of $1.75 per pound
of payable copper produced and fully-loaded all-in cost1
of $2.26 per pound of payable pound
copper produced.
- Revenue of $115.2 million
generated primarily from the sale of 20,771 tonnes of copper.
Financial Highlights for the Six Months Ended June 30, 2017
- Net income of $5.4 million or
$0.01 per common share which
included:
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- Earnings from mining operations of $48.1
million,
- Production costs included a non-cash charge of $0.4 million related to the write-down of
inventory at Pinto Valley,
- A commodity derivative loss of $10.1
million, comprising a realized loss of $19.4 million, an unrealized loss of $6.0 million and reversals of unrealized losses
recorded in a previous period of $15.3
million.
- $8.4 million in current and
deferred income tax expense.
- Cash flow from operating activities of $26.1 million or $0.07 per common share.
- Operating cash flow before changes in working
capital1 of $50.1 million
or $0.13 per common share.
- Working capital decreased $14.1
million to $157.0 million at June 30, 2017 from $171.1
million at December 31, 2016.
Cash decreased to $82.4 million at
June 30, 2017 from $130.4 million at December
31, 2016 largely as a result of $30.0
million in debt repayments and $19.3
million in payments made related to the commodity
derivatives during 2017 YTD.
- Production of 43,407 tonnes of payable copper at a C1 cash
cost1 of $1.85 per pound
of payable copper produced and fully-loaded all-in cost1
of $2.51 per pound of payable pound
copper produced.
- Revenue of $243.2 million
generated primarily from the sale of 42,353 tonnes of copper.
Production and Additional Highlights for the Three and Six
Months Ended June 30, 2017
Pinto Valley Mine:
- Produced 15,491 tonnes of copper during Q2 2017 at a C1 cash
cost1 of $1.84 per pound
of payable copper produced and all-in cost1 of
$2.17 per pound of payable copper
produced.
- Produced 26,791 tonnes of copper during 2017 YTD at a C1 cash
cost1 of $1.98 per pound
of payable copper produced and all-in cost1 of
$2.42 per pound of payable copper
produced.
- At Pinto Valley, throughput averaged 58,700 tonnes per day
("tpd") for the quarter, setting a quarterly throughput record as
well as achieving a new monthly throughput record in May of 60,350
tpd. Grade, recoveries and production were as planned for the
quarter.
Cozamin Mine:
- Produced 4,106 tonnes of copper during Q2 2017 at a C1 cash
cost1 of $1.19 per pound
of payable copper produced and all-in cost1 of
$1.73 per pound of payable copper
produced.
- Produced 8,236 tonnes of copper during 2017 YTD at a C1 cash
cost1 of $1.26 per pound
of payable copper produced and all-in cost1 of
$1.84 per pound of payable copper
produced.
- At Cozamin, grade and recoveries were as expected, with
throughput continuing ahead of plan with ongoing improvement in
mine production and mine development.
- On April 4, 2017, the precious
metal streaming arrangement with Wheaton Precious Metals Corp.
(formerly Silver Wheaton Corp.) expired. After this date, the full
silver by-product credit is earned by Cozamin resulting in an
increase to by-product credits of $0.23 per payable pound of copper produced in Q2
2017 vs. Q2 2016.
Minto Mine:
- Produced 4,406 tonnes of copper during Q2 2017 at a C1 cash
cost1 of $1.93 per pound
of payable copper produced and all-in cost1 of
$1.95 per payable pound of copper
produced.
- Produced 9,926 tonnes of copper during 2017 YTD at a C1 cash
cost1 of $2.00 per pound
of payable copper produced and an all-in cost1 of
$2.03 per payable pound of copper
produced.
- At Minto, production for the
quarter was impacted by mine sequencing changes to support a mine
life extension. Throughput continued higher than planned, but head
grade and recoveries were lower than originally guided due to a
higher percentage of partially oxidized ore feeding the mill from
the Area 2, Stage 3 open pit and underground mining running
slightly behind schedule.
- At current copper prices, Capstone anticipates the continuation
of operations at Minto until
mid-2020, subject to permitting and regulatory approvals. Capstone
is also evaluating further deposits for re-inclusion into reserves,
which may support additional mine life beyond 2020.
Additional highlights:
- Capstone repaid $10 million on
the senior secured corporate revolving credit facility ("RCF") on
April 19, 2017, reducing drawn debt
to $298.9 million.
Outlook
Production Guidance:
Capstone expects to be within the
range of 2017 consolidated production guidance of 94,000 tonnes
(±5%) of copper. Minto and Cozamin
are expected to complete the year on, or above, plan, largely
offsetting Pinto Valley's first quarter deficit.
Operating Cost Guidance:
Capstone anticipates that
consolidated C1 cash cost1, All-in cost1 and
Fully-loaded all-in cost1 will end the year between
$0.15 and $0.20 per pound of payable
copper produced higher than originally guided.
At Minto, C1 cash
cost1 and all-in cost1are expected to
increase by approximately $0.50 per
pound of payable copper produced. The mine sequencing changes to
support the mine life extension have resulted in lower production
than initially guided in the first half of 2017. In addition, the
revised Minto mine plan that
extends operations beyond 2017 brings the Minto East underground
and an extension of the Area 2 open pit into the mine plan.
Development to access the Minto East deposit is ongoing and the
stripping of the extension of the Area 2 pit will commence in
H2'17, with resulting ore processed primarily in 2018. Because the
development and stripping activities related to Minto East and the
extension of the Area 2 pit are planned to take less than 12
months, all development and stripping costs will be expensed in
2017. The Area 2 open pit extension will supplement the ore mined
from the higher grade underground deposits.
At Pinto Valley, increased costs related to the first quarter
production deficit are expected to add between $0.10 and $0.20 to Pinto Valley's C1 cash
cost1 and all-in cost1per pound of payable
copper produced.
Cozamin's 2017 C1 cash cost1 and all-in
cost1 are expected to be slightly higher than guided as
a result of lower by-product credits per payable pound of copper
produced and additional planned capital, respectively.
1. This is an alternative performance measure; please see
"Alternative Performance Measures" at the end of this release.
Capital and Exploration Guidance
At Cozamin, an
additional $1.0 million in capital
development is planned to be spent by year-end as the mine has been
advancing at higher than planned development rates. As a result
Cozamin's 2017 sustaining capital guidance is increased from
$18.0 million to $19.0 million.
Also at Cozamin, a further $1.1
million has been approved to test brownfield targets along
strike from the Mala Noche Footwall Zone ("MNFWZ") and east of the
San Rafael zinc zone, and as a result, Cozamin's 2017 capitalized
exploration guidance is increased from $5.0
million to $6.1 million.
At Minto, $0.6 million has been added to the 2017 H2
capital budget for definition drilling at Minto East and Ridgetop
in support of the design of the extended mine plan.
All other capital and exploration guidance remains
unchanged.
Conference Call and Webcast Details
Capstone will hold
a conference call and webcast on Monday,
July 31, 2017 at 11:30 a.m. Eastern
time (8:30 a.m. Pacific time)
to discuss these results.
Date:
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Monday, July 31,
2017
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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
|
Webcast:
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http://event.on24.com/r.htm?e=1421361&s=1&k=20DB088377B441B928A92B347D0179CE
|
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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103102#
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The conference call replay will be available until Monday, August 7, 2017. 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.
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, 2017, 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, 2017, in addition to the
Q2 2017 webcast slides, will also be available 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 polymetallic 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 "anticipate", "guidance", "outlook", "planned",
"expects" 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, future prices of copper and other metals, compliance
with financial covenants, surety bonding, our ability to raise
capital, Capstone's ability to acquire properties for growth,
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, maintaining ongoing
social license to operate, 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, legal proceedings 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, 2017 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.