VANCOUVER, Jan. 10, 2018 /CNW/ - Capstone Mining Corp.
("Capstone") (TSX: CS) today announced production results for the
three and twelve months ended December 31,
2017 and provided its operating and capital expenditure
guidance for 2018 along with a three-year outlook.
"We ended the year with solid copper production for the fourth
quarter," said Darren Pylot,
President and CEO of Capstone. "Our operations continue to run well
in 2018, positioning us to take advantage of strong copper prices,
with our entire copper hedge program now completed."
"We are guiding production for 2018 consistent with our 2017
production. Planned capital expenditures in 2018 of $100 million reflect scheduled haul truck
maintenance at Pinto Valley, the continuation of operations at
Minto and an increased allocation
for exploration at Cozamin, following up on 2017's significant
exploration success," continued Mr. Pylot.
2017 Production Results
Combined production totalled 23,400 and 90,300 tonnes of copper
in the fourth quarter and full year, respectively, with additional
by-products of zinc, molybdenum, lead, silver and gold.
2017 Copper Production (tonnes)
|
|
|
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
2017
|
Pinto
Valley
|
11,300
|
15,500
|
14,400
|
16,100
|
57,300
|
Cozamin
|
4,100
|
4,100
|
4,200
|
4,300
|
16,700
|
Minto
|
5,500
|
4,400
|
3,400
|
3,000
|
16,300
|
Total copper
production (1)
|
20,900
|
24,000
|
22,000
|
23,400
|
90,300
|
(1)
|
Total production
includes copper in concentrate and cathode
production.
|
Operational Highlights
- Pinto Valley had a good fourth quarter, with production ahead
of plan on higher grade and recoveries.
- At Cozamin, production for the fourth quarter and full year was
well ahead of plan, largely on higher mining and processing rates
as the mine achieved development rates that allowed for increased
flexibility.
- At Minto, underground
production continued to lag planned rates, resulting in higher
utilization of partially oxidized surface ore stockpiles. The lower
proportion of sulfide ore in the mill feed negatively impacted
grade and recovery.
Q4 and Full Year 2017 Operating Details
|
|
|
|
|
Pinto
Valley
|
Cozamin
|
Minto
|
|
Q4
|
2017
|
Q4
|
2017
|
Q4
|
2017
|
Contained
Production (1)
|
|
- Copper
(tonnes)
|
16,160
|
57,331
|
4,254
|
16,732
|
3,003
|
16,332
|
- Zinc
(tonnes)
|
-
|
-
|
1,015
|
4,232
|
-
|
-
|
- Molybdenum (Mo
tonnes)
|
25
|
32
|
-
|
-
|
-
|
-
|
- Lead
(tonnes)
|
-
|
-
|
3
|
50
|
-
|
-
|
- Silver
(ounces)
|
88,692
|
315,810
|
263,285
|
1,000,313
|
29,994
|
170,809
|
- Gold (ounces)
(2)
|
188
|
3,687
|
-
|
-
|
3,112
|
25,205
|
Payable Copper
Production (1) (tonnes)
(in
concentrate and cathode)
|
15,611
|
55,392
|
4,084
|
16,076
|
2,905
|
15,800
|
Mine
|
|
- Ore (tonnes) – open
pit
|
5,346,957
|
20,605,344
|
-
|
-
|
140,777
|
941,123
|
- Waste
(tonnes)
|
6,556,346
|
26,164,913
|
-
|
-
|
2,382,430
|
7,889,701
|
- Ore (tonnes) –
underground
|
-
|
-
|
219,930
|
912,000
|
106,542
|
327,890
|
Mill
|
|
- Tonnes
processed
|
5,164,865
|
19,654,904
|
223,532
|
912,000
|
349,897
|
1,439,374
|
- Tonnes processed
per day
|
56,140
|
53,849
|
2,430
|
2,499
|
3,803
|
3,943
|
- Copper grade
(%)
|
0.32
(3)
|
0.32
(3)
|
1.98
|
1.91
|
1.06
|
1.37
|
- Zinc grade
(%)
|
-
|
-
|
0.71
|
0.71
|
-
|
-
|
- Molybdenum grade
(%)
|
0.0054
|
0.0050
|
-
|
-
|
-
|
-
|
- Lead grade
(%)
|
-
|
-
|
0.06
|
0.07
|
-
|
-
|
- Silver grade
(g/t)
|
*
|
*
|
46.0
|
43.4
|
3.7
|
4.76
|
- Gold grade
(g/t)
|
*
|
*
|
-
|
-
|
0.41
|
0.79
|
Recoveries
|
|
- Copper
(%)
|
95.1
(3)
|
89.2
(3)
|
96.2
|
96.1
|
81.1
|
82.6
|
- Zinc (%)
|
-
|
-
|
64.2
|
65.5
|
-
|
-
|
- Lead (%)
|
-
|
-
|
0.9
|
8.0
|
-
|
-
|
- Silver
(%)
|
*
|
*
|
79.7
|
78.7
|
71.9
|
77.6
|
- Gold (%)
|
*
|
*
|
-
|
-
|
64.3
|
59.3
|
Concentrates
|
|
- Copper concentrate
(dmt)
|
55,204
|
196,583
|
15,881
|
61,473
|
7,643
|
37,372
|
|
Copper (%)
|
28.4
|
28.2
|
26.8
|
27.2
|
39.3
|
43.7
|
|
Silver
(g/t)
|
*
|
*
|
515
|
502.2
|
122
|
142.2
|
|
Gold (g/t)
|
*
|
*
|
-
|
-
|
12.1
|
18.0
|
- Zinc concentrate
(dmt)
|
-
|
-
|
2,200
|
8,919
|
-
|
-
|
|
Zinc (%)
|
-
|
-
|
46.1
|
47.5
|
-
|
-
|
- Molybdenum
concentrate (dmt)
|
50
|
64
|
-
|
-
|
-
|
-
|
- Lead concentrate
(dmt)
|
-
|
-
|
2
|
81
|
-
|
-
|
|
Lead (%)
|
-
|
-
|
58.5
|
61.7
|
-
|
-
|
|
Silver
(g/t)
|
-
|
-
|
2,532
|
2,996
|
-
|
-
|
Payable Copper
Shipped (tonnes)
|
14,662
|
54,196
|
3,911
|
15,933
|
4,004
|
17,788
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjustments based
on final settlements will be made in future periods. (2) Pinto
Valley gold production reaches payable levels from time to time.
Any payable gold production will be reported in the period revenue
is received. At Minto, final gold production is not available since
assaying is conducted off-site, but is estimated above. (3) Grade
and recoveries were estimated based on concentrate production.
*Silver and gold have not been estimated in the Pinto Valley
resource model. Only recovered silver and payable gold is reported
for this mine.
|
2018 Operating and Capital Guidance
In 2018, Capstone expects to produce 90,000 tonnes (±5%) of
copper at a C1 cash cost (1,2) of $1.85 to $1.95 per
pound of payable copper produced. Capital expenditures for 2018,
including $24 million of capitalized
stripping and $7 million of
brownfield exploration, are expected to be $100 million or $0.50 per pound of payable copper produced.
Consolidated all-in sustaining cost guidance is $2.50 to $2.60 per
pound of payable copper produced. The subsequent two-year outlook
is included to illustrate the overall trend of our existing
operations, excluding any further growth through project
development or acquisition.
2018 Copper Production and Cost Guidance
|
|
|
|
|
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Copper Production
(tonnes ±5%)
|
56,000
|
15,000
|
19,000
|
90,000
|
C1 Cash Cost
(1,2)
|
$1.90-$2.00
|
$1.00-$1.10
|
$2.35-$2.45
|
$1.85-$1.95
|
All-In Sustaining
Cost (1,3)
|
$2.50-$2.60
|
$1.75-$1.85
|
$2.55-$2.65
|
$2.50-$2.60
|
(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 sustaining 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 cash portion of production-phase
capitalized stripping), accretion of reclamation obligations,
amortization of reclamation assets, corporate G&A and cash
portion of pre-production capitalized stripping.
|
Pinto Valley: In 2018, focus will continue to shift from
maximizing throughput to overall plant optimization.
Throughput is targeted at, or above, the level contemplated in the
PV3 pre-feasibility study. Operating costs are expected to remain
relatively flat from 2017; however, unit costs on a per pound basis
are expected to be higher as a result of lower grade and a higher
strip ratio than 2017 in accordance with the PV3 mine plan. The
lowest grade material for the year will be milled in the first
quarter, with higher head grade for the remainder of the year.
Cozamin: Milled tonnes are expected to be similar to 2017 with
grade down slightly. The majority of ore will continue to come from
the Mala Noche Footwall. The 2018 guidance does not include any
additional zinc production from the San Rafael Zinc zone.
Metallurgical work is continuing with positive results to date and,
if confirmed in the first half of the year, we could take advantage
of underutilized mill capacity for additional zinc production in
the second half of 2018 and beyond.
Minto: Open pit mining in 2018
will comprise the Area 2 extension and the Ridgetop North Pit.
Underground mining will take place in the Area 2 Lower Lens, Minto
East Underground and Copper Keel. Copper grade is expected to be
relatively consistent at plus 1.5% throughout the year with
throughput maintained at above 3,900 tonnes per day. Costs however,
will fluctuate significantly as stripping and development will be
expensed as incurred with the most significant impact expected in
the second and third quarters. The current mine plan continues
through mid-2021, with production gradually falling starting in
2019, reaching approximately 75% of the 2018 production level by
2021.
Copper Production and Costs 2019 and 2020: Consolidated
production for 2019 and 2020 is expected to average 86,000 tonnes
of copper annually at a consolidated C1 cash cost of approximately
$1.95 per pound of copper.
2018 Capital Expenditure Guidance – Operating Mines
(US$M)
|
|
|
|
|
|
Pinto
Valley
|
Cozamin
|
Minto
|
Total
|
Sustaining
|
$44
|
$19
|
$6
|
$69
|
Capitalized Stripping
*
|
24
|
-
|
-
|
24
|
Total
Capital
|
$68
|
$19
|
$6
|
$93
|
*
|
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 2018
is $18 million for mining fleet
component replacements, which includes scheduled haul truck
maintenance driven by operating hours on the existing fleet in
accordance with the preventative maintenance plan. Other key
sustaining costs include replacing the current rougher flotation
cells ($7 million), and SX/EW
repurposing initiatives ($4 million),
crushing improvements ($3 million),
pit dewatering ($2 million) the
advancement of PV3 permitting ($2
million) and replacement of underground power lines with
overhead lines ($2
million).
Cozamin: The majority of 2018 sustaining capital expenditures is
for mine development, with additional sustaining capital for
ventilation and production equipment capitalized maintenance.
Minto: As a result of mine life
extension beyond 2017, capital will be required for increased
underground ventilation, dewatering and electrical infrastructure.
Additional delineation drilling will take place along with minor
replacement of equipment that has reached the end of its useful
life.
Capital Expenditures 2019 and 2020: In 2019 and 2020, total
sustaining capital expenditures at our operating mines are expected
to average $55 million annually
(excluding capitalized stripping). Capitalized stripping at Pinto
Valley for 2019 and 2020 is expected to average $12 million annually.
2018 Exploration Program (US$M)
|
|
|
|
|
Brownfield
|
Greenfield
*
|
Total
|
Cozamin
|
$7
|
-
|
$7
|
Mexico
|
-
|
$1
|
1
|
Chile
|
-
|
2
|
2
|
Total Budgeted
Exploration Expenditures
|
$7
|
$3
|
$10
|
*
|
Greenfield
exploration will be expensed.
|
Brownfield Exploration: The 2018 brownfield exploration program
will include 45,000 metres of step-out and infill drilling aimed at
extending the mine life at Cozamin. The majority of drilling will
focus on the Mala Noche Footwall Zone to follow up on the
significant 2017 drilling success, including testing on newly
acquired property contiguous to Cozamin.
Greenfield Exploration: Capstone has exited Project Providencia
in Chile, however will allocate
funds for additional greenfield exploration opportunities in both
Mexico and Chile. Four technical discoveries were made at
Providencia, including two
deposits, however, data suggests they are not of a size meaningful
to Capstone.
Financial Results Timing
Capstone will report Q4 2017 financial results on Wednesday, February 14, 2018 after market close,
followed by a conference call and webcast for investors and
analysts on Thursday, February 15,
2018 at 11:30 am Eastern Time
(8:30 am Pacific Time).
Conference Call and Webcast Details
Date:
|
Thursday, February
15, 2018
|
Time:
|
11:30 am Eastern Time
(8:30 am Pacific Time)
|
Dial
in:
|
North America:
1-888-390-0546, International: +416-764-8688
|
Webcast:
|
http://event.on24.com/r.htm?e=1559280&s=1&k=9E417F05C934E98FC1A5B362C357B8ED
|
Replay:
|
North America:
1-888-390-0541, International: +416-764-8677
|
Replay
Passcode:
|
894303#
|
The conference call replay will be available until Thursday, February 22, 2018. 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
polymetallic mine in Zacatecas State, Mexico and the Minto copper mine in Yukon, Canada. In addition, Capstone has the
large scale 70% owned copper-iron Santo
Domingo development project in Region III, Chile, in partnership with Korea Resources
Corporation as well as exploration properties in Chile. 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", "expected", "potentially", "guidance" 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", "planned"
and "expects". 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.
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, 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.