(All amounts in US$ unless otherwise specified)
VANCOUVER, British Columbia--(BUSINESS WIRE)--
Capstone Mining Corp. (“Capstone” or the “Company”) (TSX:CS) is pleased to provide a corporate update including
2022 production, cost and capital guidance, project and exploration work and an update on the combination with
Mantos Copper to form Capstone Copper Corp. An update to the 2022 guidance will be provided shortly after
completion of the combination with Mantos Copper.
In 2021, Capstone’s consolidated copper production was 85,000 tonnes which finished at the upper end of the
79,000 to 86,000 tonnes guidance range at C1 cash costs1 that were at the mid-point of the $1.75 to
$1.90 per pound of payable copper.
2021 Copper Production (tonnes)
|
2021 Guidance
|
2021 Actual
|
Pinto Valley
|
57,500 – 62,000
|
60,500
|
Cozamin
|
21,500 – 24,000
|
24,500
|
Total
|
79,000 – 86,000
|
85,000
|
The Company will provide further details on its 2021 results when it releases its 2021 Q4 results on Tuesday,
February 15, 2022 after market close, followed by a webcast and conference call on Wednesday, February 16, 2022
at 11:30 am Eastern Time.
2022 PRODUCTION, COST AND CAPITAL GUIDANCE
In 2022, Capstone expects to produce between 82,000 and 90,000 tonnes of copper at C1 cash costs1 of
between $1.85 and $2.00 per pound payable copper produced at its Cozamin and Pinto Valley mines.
Darren Pylot, CEO commented, “2021 was another challenging pandemic year and added to this was extreme weather
events in Arizona. I’m incredibly proud of our employees for delivering strong operational results despite tough
conditions and this speaks to our culture of excellence”.
Cashel Meagher, President and COO added, “I recently joined Capstone because of its platform to build a Canadian
mining champion in copper which will be significantly enhanced with the Mantos Copper combination. I look
forward to furthering operating efficiencies and delivery of growth initiatives to hedge against the current
inflationary cost environment.”
2022 GUIDANCE
|
Pinto Valley
|
Cozamin
|
Santo
Domingo
|
Total
|
Production and C1 Cash Costs1 (US$)
|
Copper production (tonnes)
|
59,000 – 64,000
|
23,000 – 26,000
|
-
|
82,000 – 90,000
|
C1 Cash Cost (per payable pound)1
|
$2.15 – $2.30
|
$1.10 – $1.25
|
-
|
$1.85 – $2.00
|
Capital Expenditure (US$ millions, rounded)
|
Sustaining1
|
$65
|
$27
|
-
|
$92
|
Capitalized Stripping – Expansionary1
|
$5
|
-
|
-
|
$5
|
Expansionary1
|
$20
|
$30
|
$45
|
$95
|
Total Capital Expenditure
|
$90
|
$57
|
$45
|
$192
|
Exploration (US$ millions, rounded)
|
Brownfield (Cozamin and Santo Domingo)
|
-
|
$3
|
$2
|
$5
|
Greenfield (Brazil and Chile)
|
-
|
-
|
-
|
$2
|
Greenfield (Copper Cities, Arizona)
|
-
|
-
|
-
|
$7
|
Total Exploration
|
|
$3
|
$2
|
$14
|
Update on the Combination with Mantos Copper to form Capstone Copper Corp.
On November 30, 2021, Capstone announced a combination with Mantos Copper to create a premier copper producer
with transformational near-term growth. Capstone’s shareholders will vote on the transaction during a Special
Meeting of Shareholders (the “Meeting”) to be held on February 28, 2022. The record date for the Meeting is
January 14, 2022. Please refer to Capstone’s website (www.capstonemining.com) to access the Meeting’s page that contains the
meeting details and materials. The materials will be filed on Sedar and mailed out to shareholders.
GROWTH PROJECTS 2022
Pinto Valley - PV4 Study
The PV4 Study is planned for release in Q4 2022 and is expected to maximize the conversion of approximately one
billion tonnes of mineral resources to mineral reserves by extending Pinto Valley’s mine life into the 2050s and
to increase the mine’s copper production profile. The application of the following new technologies and
innovation is being considered:
-
Expansion of the use of Jetti Catalytic Leach Technology which has the potential to increase higher
mill cut-off-grades and increase tonnage available for leaching. Column leach testing is ongoing through H1
2022 and results will be included in the PV4 Study.
-
Enhanced Coarse Particle Flotation was pilot plant tested at Pinto Valley in 2020 and has the
potential to increase copper recovery by ~6% while enabling potential to increase mill throughput from the
current ~60,000 tonnes per day. A low capital strategy is currently under review to improve coarse particle
recovery with some modest investment in the current conventional flotation circuit.
-
Pyrite Agglomeration has strong ESG implications as it will divert acid-generating minerals including
pyrite and chalcopyrite from tailings to the dump leach operation. Additional copper recovery and lower
costs via self–generation of free acid are also key economic drivers for this project. The project’s
implementation is targeted for H2 2022 subject to board approval. The project is expected to require a low
capex of less than $10M with a fast payback of approximately 1.3 years.
Higher Mill Throughput will be considered targeting up to 65,000 to 70,000 tonnes per day. Key areas of
investment include upgrades to ball mill motors, grinding circuit cyclones, and to the rougher flotation
circuit. Coarse particle flotation technology will also be studied. An expanded dump leach strategy would
translate to higher grades sent to the mill for processing and increased copper cathode production by expanding
dump leach tonnage.
Cozamin – Paste Backfill & Dry Stack Tailings
Construction of the new paste backfill plant and dry stack tailings facility at Cozamin started in Q4 2021 and
completion is expected at year-end 2022. Approximately half of the filtered tailings will be combined with
cement to form a paste and pumped underground to be used as mine backfill, allowing for increased copper ore
extraction. This project has contributed to the extension of the mine life through 2031 and may give the
optionality to extract ore pillars from historic areas of the mine.
Figure 1 – Major construction has commenced for the Paste Backfill Plant. The
picture
on right is an artist rendition of the future plant expected to be operational by year-end 2022. (Photo:
Business Wire)
Santo Domingo – Cobalt Study
At Santo Domingo, a tailings stream containing pyrite laden with ~0.6% cobalt, will be recovered through
flotation. The concentrate will be sent to a conventional process of roasting and solvent extraction followed by
crystallization to produce battery grade cobalt sulphate heptahydrate. At an expected 10.4 million pounds of
cobalt production per year, this will be one of the largest and lowest cost cobalt producers in the world at C1
cash costs1,2 of -$4 per pound. Additional benefits of this project include the production of
by-product sulphuric acid from a pyrite roasting process, which can be used for heap or dump leaching to produce
low-cost copper cathodes at Santo Domingo, Mantoverde, and elsewhere in the district.
Figure 2 – Cobalt Project Timeline (Graphic: Business Wire)
EXPLORATION UPDATE
The 2022 budget for brownfield exploration at Cozamin is $3 million and Santo Domingo of $2 million. In
addition, the total budget for greenfield exploration is $9 million of which $7 million is planned for the
Copper Cities Project in the Pinto Valley district (refer to the news release titled “Capstone Enters into
Exploration Access Agreement with BHP Copper Inc. for Copper Cities Project” dated January 20,
2022), and the remaining $2 million is planned for exploration in Chile and Brazil.
Refer to the Exploration page on Capstone’s website for more information. An update on
2021 exploration results and further details on 2022 exploration programs will be released during Q1 2022.
Coazmin Step-Out Drill Program
Cozamin Step-Out Drill Program. Figure 1 – MNV exploration target in the west
at Cozamin. In 2022, this area will be drilled from underground from a cross-cut developed in 2021. This
will lead to efficient drilling being considerably closer to the target. (Graphic: Business
Wire)
Q4 2021 RESULTS CONFERENCE CALL AND WEBCAST DETAILS
Capstone will release its 2021 Q4 and YE 2021 results on Tuesday, February 15, 2022 after market close, followed
by an investor webcast and conference call on Wednesday, February 16, 2022 at 11:30 am ET (8:30 am PT).
Link to the webcast and audio:
https://produceredition.webcasts.com/starthere.jsp?ei=1524721&tp_key=1dedc36dcb
Dial-in numbers for the audio-only portion of the conference call are below. Due to an increase in call volume,
please dial-in at least five minutes prior to 11:30 am ET to ensure placement into the conference line on time.
Toronto: (+1) 416-764-8650
Vancouver: (+1) 778-383-7413
North America toll free: 888-664-6383
Confirmation #50217755
A replay of the conference call will be available until March 2, 2022. Dial-in numbers for Toronto: (+1)
416-764-8677 and North American toll free: 888-390-0541. The replay code is 217755#. Following the replay, an
audio file will be available on Capstone’s website at: https://capstonemining.com/investors/events-and-presentations/default.aspx.
ABOUT CAPSTONE MINING CORP.
On November 30, 2021, Capstone and Mantos Copper announced that they have entered into a definitive agreement to
combine pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the
“Transaction”) Upon completion of the Transaction, the new company will be named Capstone Copper 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 two producing mines are the
Pinto Valley copper mine located in Arizona, US and the Cozamin copper-silver mine in Zacatecas State, Mexico.
In addition, Capstone owns 100% of Santo Domingo, a large scale, fully permitted, copper-iron-gold project in
Region III, Chile, as well as a portfolio of exploration properties. 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) under the symbol
CS.
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 the Company does not intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable securities legislation.
Forward-looking statements relate to future events or future performance and reflect our expectations or beliefs
regarding future events and the impacts of the ongoing and evolving COVID-19 pandemic. Forward-looking
statements include, but are not limited to, statements with respect to the estimation of Mineral Resources and
Mineral Reserves, the expected success of the underground paste backfill system study, the realization of
Mineral Reserve estimates, the timing and amount of estimated future production, costs of production and capital
expenditures, the timing and expected results of the PV4 Study, construction at Cozamin, the Cobalt Study at
Santo Domingo and the budget for exploration at Cozamin, Santo Domingo, Pinto Valley and other Projects the
success of our mining operations, the continuing success of mineral exploration, the estimations for potential
quantities and grade of inferred resources and exploration targets, Capstone’s ability to fund future
exploration activities, environmental risks, unanticipated reclamation expenses and title disputes. The
consummation and timing of the transaction with Mantos Copper (the”Trasaction”), the timing for the shareholders
meeting for the Transaction and the mailing of materials. The potential effects of the COVID-19 pandemic on our
business and operations are unknown at this time, including Capstone’s ability to manage challenges and
restrictions arising from COVID-19 in the communities in which Capstone operates and our ability to continue to
safely operate and to safely return our business to normal operations. The impact of COVID-19 to Capstone is
dependent on a number of factors outside of our control and knowledge, including the ,effectiveness of the
measures taken by public health and governmental authorities to combat the spread of the disease, global
economic uncertainties and outlook due to the disease, and the evolving restrictions relating to mining
activities and to travel in certain jurisdictions in which we operate.
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 “anticipated”, “guidance”, “plan”
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 and closure
of mining projects, 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, market access restrictions or tariffs, 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, licenses and permits from governmental authorities,
acting as Indemnitor for Minto Exploration Ltd.’s surety bond obligations post divestiture, impact of climatic
conditions on our Pinto Valley and Cozamin operations, aboriginal title claims and rights to consultation and
accommodation, land reclamation and mine closure obligations, risks relating to widespread epidemics or pandemic
outbreak including the COVID-19 pandemic; the impact of COVID-19 on our workforce, suppliers and other essential
resources and what effect those impacts, if they occur, would have on our business, including our ability to
access goods and supplies, the ability to transport our products and impacts on employee productivity, the risks
in connection with the operations, cash flow and results of Capstone relating to the unknown duration and impact
of the COVID-19 pandemic, uncertainties and risks related to the potential development of the Santo Domingo
Project, including our ability to finance the 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, risks related to the consummation of the Transaction,
including failure to receive shareholder and other necessary consents and approvals for the Transaction. As well
as other risks of the mining industry and those factors detailed from time to time in the Company’s interim and
annual financial statements and MD&A 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, Annual Information Form and news releases
(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. Disclosure Documents include the National Instrument 43-101 compliant technical reports
titled "NI 43-101 Technical Report on the Cozamin Mine, Zacatecas, Mexico" effective October 23, 2020, “NI
43-101 Technical Report on the Pinto Valley Mine, Arizona, USA” effective March 31, 2021 and “Santo Domingo
Project, Region III, Chile, NI 43-101 Technical Report” effective February 19, 2020.
The disclosure of scientific and Technical Information in this news release was reviewed and approved by Brad
Mercer, P. Geol., SVP Strategic Projects and Exploration.
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures are furnished to provide additional information. These non-GAAP performance
measures are included in this news release because these statistics are key performance measures that management
uses to monitor performance, to assess how the Company is performing, and to plan and assess the overall
effectiveness and efficiency of mining operations. These performance measures do not have a standard meaning
within IFRS and, therefore, amounts presented may not be comparable to similar data presented by other mining
companies. These performance measures should not be considered in isolation as a substitute for measures of
performance in accordance with IFRS.
C1 Cash Costs1 Per Payable Pound of Copper Produced
C1 cash costs1 per payable pound of copper produced is net of by-product credits and is a key
performance measure that management uses to monitor performance. Management uses this measure to assess how well
the Company’s producing mines are performing and to assess overall efficiency and effectiveness of the mining
operations and assumes that realized by-product prices are consistent with those prevailing during the reporting
period.
Net Debt
Net debt is a performance measure used by the Company to assess its financial position.
Sustaining capital
Sustaining capital is expenditures to maintain existing operations and sustain production levels.
Expansionary capital
Expansionary capital is expenditures to increase current or future production capacity, cash flow or earnings
potential.
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the
end of this release.
2 Reflects operating costs related to the cobalt process, net of by-product credits from
sulphuric acid sales of $45 per tonne ex-minesite, power credits from cogen plant, and copper recovered in the
process.
Source: Capstone Mining Corp.