Santo Domingo

Santo Domingo is a top quartile copper-iron-gold project with an opportunity to build a low-cost, vertically integrated battery-grade cobalt business, and Chile’s only fully-permitted greenfield project.

Santo Domingo is located in a mining-friendly region, ~35 kilometres northeast of the Mantoverde mine, 50 kilometres southwest of Codelco's El Salvador copper mine and 130 kilometres north-northeast of the city of Copiapó, near the town of Diego de Almagro in the Atacama region in Chile. The project has the support from the local community and government. Elevation at the site ranges from 1,000 to 1,280 metres above sea level, with relatively gentle topographic relief.

Capstone released results of an updated technical report in February 2020 that includes a higher level of CAPEX/OPEX certainty, additional key permits and the development in Section 24 of a Preliminary Economic Assessment with respect to cobalt production.

Capstone has a framework agreement with Puerto Abierto S.A., a wholly owned subsidiary of Puerto Ventanas S.A. (subsidiary of Sigdo Koppers S.A., collectively "Puerto Ventanas" or "PVSA") under which Puerto Ventanas assumes responsibility for financing, constructing and operating the proposed port component of the Santo Domingo project. This represents approximately $250 million of the initial capital identified in the most recent NI 43-101 Technical Report. Discussions with Sigdo Kopper's rail business "FEPASA" are ongoing and present an opportunity for a further $150 million reduction in Santo Domingo's project capital costs by replacing the iron pipeline and related port infrastructure with a rail option.

Mantoverde/Santo Domingo Synergies Analysis

In Q4 2021, we started work to identify and refine potential synergies between the Mantoverde and Santo Domingo Project. The Santo Domingo Project is located ~35 kilometres northeast of the Mantoverde mine and offers significant potential synergies opportunities for:

  • Infrastructure sharing (including power, water, pipelines, port),
  • Transportation synergies for concentrate shipment,
  • Potential enabling of product lines (additional iron or cobalt production from Mantoverde, processing oxide ore from Santo Domingo),
  • Potential integrated operating approach, and
  • Construction synergies (including project teams and camp).

We expect to release a synergies study and integration plan in September 2022.

Cobalt Opportunity

Capstone is currently advancing a PFS for the Santo Domingo Cobalt option. In 2021 the Company started drilling for flowsheet confirmation and geometallurgical work. The drilling program from Q3 and Q4 of 2021 generated sufficient sample mass for 2022 pilot scale testing of the cobalt recovery process. The first of a total of two stages of the cobalt feasibility engineering work, covering pre-feasibility level activities, started in September 2021 and is expected to be complete in March 2022. The proposed cobalt recovery process takes advantage of a tailings side-stream containing pyrite laden with ~0.6% cobalt, which will be recovered through a conventional flowsheet. The concentrate will be sent to pyrite 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 after credits of minus $4 per pound. Additional benefits of this project include the production of by-product sulphuric acid from the 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.

Pre-feasibility engineering is expected in H1 2022 and the PFS is expected in H2 2022, which will include a first mineral reserve. Capstone has visited industrial sites with similar sulphide concentrate oxidation-leach facilities and processing technologies in Europe. Capstone is working with global consultants to keep the study on schedule and on budget (H2 2022, and $20 million, respectively).

Key Facts (February 2020 Technical Report)

Primary mineralization Copper
By-products Magnetite iron and gold, with potential to produce battery-grade cobalt sulfate
Estimated mine life (years) 18
Proposed mining type Open pit
Proposed throughput LOM average: 60,500 tpd
First 5 years: 65,000 tpd
Average annual production LOM average: 137 M lbs Cu, 4.2 Mt Fe, 17 koz Au
First 5 years: 259 M lbs Cu, 3.3 Mt Fe, 35 koz Au
Grade Cu 0.30%
Fe 28.15%
Au 0.04 g/t
No cobalt processing
Development Capital: $1.51B
IRR (after tax): 21.8%
NPV (8% discount after tax): $1.03B
Payback (after tax): 2.8 years
Including cobalt processing opportunity
Development Capital: $2.18B
IRR (after tax): 23.0%
NPV (8% discount after tax): $1.66B
Payback (after tax): 3.5 years

Mineral Reserves & Resources

Santo Domingo Estimate Mineral Reserves as at December 31, 2020

Classification Tonnes
Grade Contained Metal
Magnetite Conc. (Mt)
Proven Reserves
Santo Domingo Sur 65.4 0.61 0.08 30.9 398 169.9 8.2
Probable Reserves
Santo Domingo Sur 252.1 0.27 0.04 27.8 674 300.8 48.2
Iris Norte 74.8 0.13 0.01 26.9 94 36 18.7
Total Probable 326.9 0.24 0.03 27.6 768 336.8 66.9
Total Mineral Reserves
Proven + Probable 392.3 0.30 0.04 28.2 1167 506.7 75.1

NOTE: Mineral Reserves have an effective date of 14 November 2018 and were prepared by Independent Qualified Person Mr. Carlos Guzman, CMC, an employee of NCL. Mineral Reserves are reported as constrained within Measured and Indicated pit designs and supported by a mine plan featuring variable throughput rates and cut-off optimization. The pit designs and mine plan were optimized using the following economic and technical parameters: metal prices of US$3.00/lb Cu, US$1,280/oz Au and US$100/dmt of Fe concentrate; average recovery to concentrate is 93.4% for Cu and 60.1% for Au, with magnetite concentrate recovery varying on a block-by-block basis; copper concentrate treatment charges of US$80/dmt, U$0.08/lb of copper refining charges, US$5.0/oz of gold refining charges, US$33/wmt and US$20/dmt for shipping copper and iron concentrates respectively; waste mining cost of $1.75/t, mining cost of US$1.75/t ore and process and G&A costs of US$7.53/t processed; average pit slope angles that range from 37.6º to 43.6º; a 2% royalty rate assumption and an assumption of 100% mining recovery. Rounding as required by reporting standards may result in apparent summation differences between tonnes, grade and contained metal content. Tonnage measurements are in metric units. Copper and iron grades are reported as percentages, gold as grams per tonne. Contained gold ounces are reported as troy ounces, contained copper as million pounds and contained iron as metric million tonnes.

Santo Domingo Estimated Mineral Resources as at December 31, 2020

Deposit Tonnes (Mt) CuEq (%) Cu (%) Au (g/t) Fe (%) S (%) Co (ppm)
Total Measured Resources 66 0.81 0.61 0.081 30.9 2.3 254
Santo Domingo Sur 64 0.82 0.62 0.082 31.1 2.4 254
Iris 2 0.42 0.39 0.047 23.6 1.4 250
Total Indicated Resources 471 0.48 0.26 0.034 25.0 1.9 225
Santo Domingo Sur 224 0.54 0.31 0.043 26.6 2.4 275
Iris 103 0.45 0.19 0.027 25.9 1.3 166
Iris Norte 89 0.44 0.12 0.014 26.7 2.6 231
Estrellita 55 0.40 0.38 0.039 13.7 0 125
Total M & I 537 0.52 0.30 0.039 25.7 2.0 229
Total Inferred Resources 48 0.41 0.19 0.025 23.6 2.2 197
Santo Domingo Sur 24 0.40 0.22 0.033 22.8 2.5 195
Iris 4 0.42 0.19 0.024 26.6 0.7 125
Iris Norte 14 0.45 0.09 0.009 28.1 2.8 256
Estrellita 5 0.32 0.31 0.030 12.3 0 108

NOTE: Mineral Resources are classified according to CIM (2014) standards. Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The Independent Qualified Person for the estimates is Mr. David Rennie, P. Eng., an associate of Roscoe Postle Associates Inc. Mineral Resources for the Santo Domingo Sur, Iris, Iris Norte and Estrellita deposits have an effective date of 13 February 2020. Mineral Resources for the Santo Domingo Sur, Iris, Iris Norte and Estrellita deposits are reported using a cut-off grade of 0.125% copper equivalent (CuEq). CuEq grades are calculated using average long-term prices of US$3.50/lb) Cu, US$1,300/oz Au and US$99/(dmt) Fe conc. The CuEq equation is: % Cu Equivalent = (Cu Metal Value + Au Metal Value + Fe Metal Value) / (Cu Metal Value per percent Cu). The general equation for metal value is: Metal Value = Grade * Cm * R * (Price – TCRC – Freight) * (100 – Royalty) / 100, were Cm is a constant to convert the grade of metal to metal price units, R is metallurgical recovery, and TCRC is smelter treatment charges and penalties. Only copper, gold and iron were recognized in the CuEq calculation; cobalt and sulphur were excluded. Mineral Resources are constrained by preliminary pit shells derived using a Lerchs–Grossmann algorithm and the following assumptions: pit slopes averaging 45º; mining cost of US$1.90/t, processing cost of US$7.27/t (including G&A cost); processing recovery of 89% copper and 79% gold, iron recoveries are calculated based on magnetic susceptibility; and metal prices of US$3.50/lb Cu, US$1,300/oz Au and US$99/dmt Fe concentrate. Rounding as required by reporting standards may result in apparent summation differences. Tonnage measurements are in metric units. Copper, iron and sulphur are reported as percentages, gold as grams per tonne and cobalt as parts per million.