Capstone Reports Pre-Feasibility Study Results for Santo Domingo Project in Chile
VANCOUVER, Aug. 15, 2011 /CNW/ --
Santo Domingo PFS Generates After-tax NPV (8%) of US$1.1 billion with a
3 year payback
VANCOUVER, Aug. 15, 2011 /CNW/ - Capstone Mining Corp. (TSX: CS) today
announced the results of the Pre-feasibility Study ('PFS') for its
Santo Domingo Iron Oxide-Copper-Gold ('IOCG') project ('Santo Domingo'
or the 'Project') in Region III, Chile. The Project is owned 70% by
Capstone and 30% by Korea Resources Corporation ('KORES').
Highlights
(all amounts in U.S. dollars unless otherwise indicated and reflect 100%
of the project)
-- Average annual production of 144 million pounds of copper, 4.1
million tonnes of iron concentrate and 15 thousand ounces of
gold. Copper production will average 255 million pounds in the
first five years of the Project.
-- Base Case(1) after-tax net present value (NPV), discounted at
8%, of $1.1 billion. Spot Case(2) after-tax NPV (8%) of $4
billion.
-- After-tax internal rate of return (IRR) of 22% with a payback
period of 3.0 years (Base Case).
-- Expected life of mine total cash production costs are estimated
to be $0.11 per pound of payable copper (net of magnetite iron
and gold by-product credits and selling costs); $0.32 in the
first five years (Base Case).
-- Total capital costs estimated to be $1.24 billion, which
includes a 14% contingency on total costs.
-- 18 year mine life with operations expected to commence in
late-2015.
-- Nominal plant throughput rate of 63,500 tonnes per day; 70,000
tonnes per day in the first five years.
-- Favourably located close to existing infrastructure, with
direct access to Asian markets.
-- Off-take agreements (at market pricing) committed for 50% of
the copper and 50% of the iron concentrate, life of mine, as
part of the strategic partnership with KORES for development of
the Project.
(1 Base Case at constant $2.50/lb. copper price, $1.00/dmtu iron price
($65/t conc. at 65% Fe), $1,000/oz. gold price. All calculations are
Base Case except where otherwise specified.)
(2 Spot Case at constant $4.00/lb. copper price, $2.00/dmtu iron price
($130/t conc. at 65% Fe), $1,400/oz. gold price.)
'The positive Santo Domingo PFS has met our economic expectations,' said
Darren Pylot, President and CEO of Capstone. 'With the buoyancy in the
copper market and strong demand for the by-product iron production, we
intend to advance this Project towards production. With our $507
million cash balance at June 30, 2011, and the commitment by KORES to
arrange debt financing for 65% of the capital costs of the Project, we
have the means to move forward rapidly.'
'With the PFS and funding in hand, we will proceed to award the contract
for the Feasibility Study ('FS') and we have started the permitting
process in Chile, as well as Project staffing under the direction of
Gregg Bush, Capstone's Senior Vice President and Chief Operating
Officer. Gregg has over 30 years of experience in large mine
operations and development, with over 12 years of that spent in Chile,'
continued Mr. Pylot. 'We are starting immediately to build the team
that will see this exciting new Chilean copper project through to
production.'
Prefeasibility Study
The Santo Domingo PFS was completed by Ausenco, a global leader in
engineering and project management services for the resource and energy
sectors. With 30 offices in 20 countries, Ausenco specializes in the
Energy, Environment & Sustainability, Minerals & Metals, Process
Infrastructure and Program Management sectors. Ausenco was chosen for
the Santo Domingo PFS because of its expertise and experience with
similar sized, large base metal and iron projects, and proven
experience with port and slurry pipeline construction. Significant
contributions to the report were made by Scott Wilson RPA (subsequently
Roscoe Postle Associates Inc.) (resource model), Arthur H. Winckers &
Assoc. (metallurgy), Nilsson Mine Services Ltd. (mine design) and
Knight Piésold (environmental).
The PFS builds on the Preliminary Assessment ('PA') completed in 2008(3). Since the PA, considerable work has been done on the project. The
mineral resource has been increased from 240 to 486 million tonnes, the
metallurgical performance, using seawater for copper and iron recovery,
has been proven, and a large data set to support grinding
characteristics/throughput estimates has been gathered.
The Santo Domingo Project will be an open pit operation, using
conventional drilling, blasting, loading with diesel hydraulic shovels,
and truck haulage. The process plant will have an annual average
throughput of 63,500 tonnes per day using SAG and ball milling, with
conventional flotation utilizing seawater to produce a copper
concentrate. Magnetite iron will be recovered from the copper rougher
tailings using Low Intensity Magnetic Separation (LIMS). A pipeline
will bring seawater from the coast, approximately 74 kilometres from
the project, and both copper and iron concentrate will be transported
to the coast in a slurry pipeline for export.
(3 Far West Mining Ltd. Preliminary Assessment dated May 9, 2008.
Available in the Santo Domingo section of Capstone's website or on
SEDAR under Far West's profile.)
Location
The Santo Domingo Project is located 50 kilometres west of Codelco's El
Salvador copper mine, and 130 kilometres north northeast of Copiapó in
Region III, Chile, near the town of Diego de Almagro. Elevation at the
site ranges from 1,000 to 1,280 metres above sea level, with relatively
gentle topographic relief. Access to the project is 1 kilometre off the
paved highway C-17 from Diego de Almagro to Copiapó. Regional
infrastructure is good and highways connect the site to the main
regional towns and cities. Regularly scheduled air services are
available between Santiago and El Salvador and the Atacama airport
located northwest of Copiapó.
Mineral Resource Estimate
Indicated and Inferred Mineral Resources (May 15, 2010)
____________________________________________
| Zone | Mt |% CuEq|% Cu|g/t Au|% Fe|
|_______________|____|______|____|______|____|
|Indicated | | | | | |
|_______________|____|______|____|______|____|
|SDS |275 | 0.64 |0.41|0.056 |27.8|
|_______________|____|______|____|______|____|
|Iris |111 | 0.50 |0.23|0.033 |26.3|
|_______________|____|______|____|______|____|
|Iris Norte |99.5| 0.47 |0.16|0.019 |26.4|
|_______________|____|______|____|______|____|
|Total indicated|486 | 0.57 |0.32|0.043 |27.2|
|_______________|____|______|____|______|____|
|Inferred | | | | | |
|_______________|____|______|____|______|____|
|SDS |30.5| 0.46 |0.26|0.037 |23.7|
|_______________|____|______|____|______|____|
|Iris |5.52| 0.47 |0.19|0.026 |26.0|
|_______________|____|______|____|______|____|
|Iris Norte |25.3| 0.47 |0.10|0.011 |27.9|
|_______________|____|______|____|______|____|
|Total Inferred |61.3| 0.46 |0.19|0.025 |25.7|
|_______________|____|______|____|______|____|
Notes: CIM definitions were followed for Mineral Resources. Mineral Resources
for SDS/Iris are estimated at a cut-off grade of 0.25% CuEq. CuEq
grades are calculated using average long-term prices of $2.25/lb Cu,
$950/oz Au, and $0.74/dmtu Fe ($50/dmt conc. at 67.5% Fe). CuEq
calculations and metallurgical recovery factors are as stated in the
Scott Wilson RPA Technical report. Due to rounding, some figures may
not add up to the totals shown. Mineral resources that are not mineral
reserves do not have demonstrated economic viability. See 'Quality
Assurance and NI 43-101 Compliance' at the end of this news release for
further information.
Mineral Reserves
Santo Domingo Open Pit Probable Mineral Reserve
____________________________________________________________________
| | | Ore Grade | Contained Metal |
| | |_______________|_____________________________|
| | | | | | |Magnetite |
|Stage |Ore (Mt)|Cu (%)|Au (g/t)|Cu (Mlbs)|Au (kOz)|Conc. (Mt)|
|_____________|________|______|________|_________|________|__________|
|SDS/Iris | | | | | | |
|_____________|________|______|________|_________|________|__________|
|SDS Stage 1 | 71.8 | 0.61 | 0.08 | 958 | 193 | 11 |
|_____________|________|______|________|_________|________|__________|
|SDS Stage 2 | 63.7 | 0.41 | 0.06 | 574 | 113 | 10 |
|_____________|________|______|________|_________|________|__________|
|SDS Stage 3 | 170.5 | 0.23 | 0.03 | 848 | 173 | 32 |
|_____________|________|______|________|_________|________|__________|
|SDS Stage 4 | 38.8 | 0.36 | 0.05 | 304 | 60 | 3 |
|_____________|________|______|________|_________|________|__________|
|Subtotal | | | | | | |
|SDS/Iris | 344.8 | 0.35 | 0.05 | 2,684 | 539 | 57 |
|_____________|________|______|________|_________|________|__________|
|Iris Norte | | | | | | |
|_____________|________|______|________|_________|________|__________|
|IRN Stage 1 | 21.4 | 0.23 | 0.03 | 108 | 20 | 4 |
|_____________|________|______|________|_________|________|__________|
|IRN Stage 2 | 28.0 | 0.13 | 0.01 | 78 | 12 | 7 |
|_____________|________|______|________|_________|________|__________|
|IRN Stage 3 | 23.7 | 0.11 | 0.01 | 60 | 8 | 5 |
|_____________|________|______|________|_________|________|__________|
|Subtotal Iris| | | | | | |
|Norte | 73.1 | 0.15 | 0.02 | 246 | 41 | 17 |
|_____________|________|______|________|_________|________|__________|
|Grand Total | 418.0 | 0.32 | 0.04 | 2,930 | 580 | 73 |
|_____________|________|______|________|_________|________|__________|
Notes: NSR cut-off of $5.79/t (incremental operating cost; does not
include mining costs). Mineral Reserves based on Indicated Mineral
Resources only. Magnetite concentrate tonnage based on average 65% iron
grade. Due to rounding, some figures may not add up to the totals
shown.
Life of Mine Production Schedule
The cash flow model is supported by a mine plan developed to an annual
level of detail. Approximately 50 million tonnes of material would be
pre-stripped in the year prior to start-up of operations. The life of
mine plan contemplates mining of 1.7 billion tonnes of material
consisting of 1.3 billion tonnes of waste rock and overburden and 0.4
billion tonnes of ore over an 18-year mine life. The overall strip
ratio for the project is 3:1.
The plan developed for the project mines higher copper grades in the
first five years of the mine life with progressively lower copper
grades and higher iron grades for the remaining 13 years.
A detailed mine plan can be accessed at http://capstonemining.com/i/pdf/NR-AUG-15-2011-Santo-Domingo-Physicals-Summary.pdf.
Processing
The copper and magnetite recovery plant and associated service
facilities will process run of mine (ROM) ore delivered to a primary
crusher feeding a conventional process of crushing and grinding of the
ROM ore, copper flotation (in seawater), and magnetite recovery from
copper rougher tailings. Copper and magnetite concentrates will be
thickened on site prior to being pumped via a concentrate pipeline to
the port. At the port, the concentrates will be washed, dewatered and
loaded onto ships for transportation to third-party smelters.
Grinding and flotation testwork has established mill design parameters
and copper recovery estimates for the study. The mill will process a
total of 418 million tonnes of ore over an 18-year mine life at an
average grade of 0.32% Copper, 0.04 grams per tonne gold, and 27.6%
iron. Mill throughput will vary from 70,000 tonnes per day in the
first five years, to 60,000 tonnes per day in the latter years. Average
mill throughput over the 18-year mine life is 63,500 tonnes per day.
Metal recoveries for copper and gold are 88.7% and 46% respectively,
averaged over the mine life.
Iron recovery was determined from magnetic separation testing on the
copper flotation rougher tailings. Iron recoveries vary directly with
the mineralogy of the iron present in the ore. The present study does
not consider any process to recover the specular hematite portion of
the iron. Therefore iron recovery is presented in terms of the total
mill feed mass recovery. For the life of the project this averages
17.5%, and ranges from a low of 10.3% in the first year of the project
to a high in excess of 25% in the last two years of the project.
Testing indicates that a magnetite concentrate grading 65% iron can be
maintained throughout the life of the project. All metallurgical data
used in the development of the recovery and concentrate grade estimates
for the cash flow models are based on tests conducted using seawater,
which produced results equivalent to, or better than, tests performed
in fresh water.
An annual production schedule showing tonnes processed, grades, and
recoveries can be accessed at http://capstonemining.com/i/pdf/NR-AUG-15-2011-Santo-Domingo-Physicals-Summary.pdf.
The tailings storage system consists of a tailings storage facility
('TSF') located north of the proposed mine. The TSF is designed to
store approximately 353 Mt of conventional thickened tailings - enough
for the approximately 18 years of the project life. Storage of both
seawater and process water is proposed in lined ponds near the plant
site. Water make-up is proposed to be untreated seawater. Based on the
conventional thickened tailings disposal method, the estimated water
make-up will be approximately 1,450 m(3)/h (~400 L/s).
Infrastructure
Access to the mine site is 6 kilometres to the south of Diego de Almagro
on Highway C-17. This section is paved and in good condition. Due to
the location of the Iris Norte pit and process facility, approximately
2 kilometres of the existing road will require diversion and an
overpass. The overpass will allow vehicle access to the tailings
storage facility without crossing Highway C-17.
High-voltage transmission will be achieved using a 220 kV double-circuit
overhead line from Diego de Almagro. The high voltage power line will
feed a 220/13.8 kV transformer yard at the project main substation.
Correspondence with the Chilean government organisation for the
coordination of electrical installations, SDEC-SIC, suggests there is
sufficient 220 kV power available on the central grid which services
the project area to meet the demands of the project.
Due to the scarcity of fresh water in Region III in Chile, the Project
will be designed to use seawater, which will be brought to the site via
pipeline from the coast.
The PFS is based on the port facility being located near the coastal
township of Chañaral, approximately 74 kilometres west of the Santo
Domingo project. The port facility will receive magnetite and copper
concentrate from the project by pipeline.
Both the concentrate and seawater pipelines are anticipated to run
together in a pipeline corridor along the north side of the C-57 road
and Route 5. The ground is gravel, clay and sand with no high points
and a continuous slope.
Capital Cost Estimate
The total project capital cost estimate is summarized below and has ±25%
accuracy as of July 2011. This estimate is based on a foreign exchange
rate of 1 US$ = 466 Chilean Pesos (CLP).
Summary of Capital Costs
____________________________________________________________________________
|Area | $M |
|______________________________________________________________________|_____|
|Mining equipment | 172 |
|______________________________________________________________________|_____|
|Pre-strip | 54 |
|______________________________________________________________________|_____|
|Process plant | 283 |
|______________________________________________________________________|_____|
|Tailings | 29 |
|______________________________________________________________________|_____|
|On-Site Infrastructure | 27 |
|______________________________________________________________________|_____|
|Off-Site Infrastructure | |
|______________________________________________________________________|_____|
| Site | |
|Power | |
| 6 | |
|______________________________________________________________________|_____|
| Concentrate | |
|Pipeline 49 | |
|______________________________________________________________________|_____|
| Seawater | |
|Pipeline | |
|76 | |
|______________________________________________________________________|_____|
| Concentrate Dewatering, Storage and Load Out 121 | |
|______________________________________________________________________|_____|
|Off-Site Infrastructure (Total) | 253 |
|______________________________________________________________________|_____|
|Total Direct Costs | 818 |
|______________________________________________________________________|_____|
|Indirect Costs | 186 |
|______________________________________________________________________|_____|
|Owners Cost | 89 |
|______________________________________________________________________|_____|
|Total Indirect Costs | 275 |
|______________________________________________________________________|_____|
|Contingency | 149 |
|______________________________________________________________________|_____|
|Total Project Cost |1,242|
|______________________________________________________________________|_____|
Life of mine sustaining capital, estimated at $495 million over the 18-year mine
life including mine closure estimates, are not included in the above
figure.
Operating Cost Estimate
The total project operating costs, excluding costs associated with
concentrate sales, are summarized below. The costs are presented as
life-of-mine ('LOM') averages per tonne of ore processed.
Summary of Average LOM Operating Costs
_________________________________
|Cost Centre |$M/a|$/t ore|
|____________________|____|_______|
|Mining |107 | 4.62 |
|____________________|____|_______|
|Process plant |101 | 4.37 |
|____________________|____|_______|
|Concentrate pipeline| 2 | 0.09 |
|____________________|____|_______|
|Seawater pipeline | 10 | 0.43 |
|____________________|____|_______|
|G&A | 13 | 0.55 |
|____________________|____|_______|
|Port Facility | 11 | 0.46 |
|____________________|____|_______|
|Total |244 | 10.52 |
|____________________|____|_______|
The operating costs estimate was prepared with a base date of July 2011
to an accuracy level of ±25%. The estimate excludes sustaining capital
expenditure requirements which have been included as part of the
financial model.
The estimated total cash production costs for copper over the life of
the project are estimated at $0.11 per pound of payable copper, when
including gold and iron credits and selling costs. The co-product
total cash production costs are estimated at $1.12 per pound of payable
copper and $30.46 per tonne of magnetite concentrate.
Economics
The overall economic performance of the project (as measured by the IRR,
NPV and payback period) is summarized below. Base case and spot price
economic models were developed. These models are based on the
commodity prices, and operating and capital costs listed below.
Base Case Economic Analysis
____________________________________________________________________
|Economic Parameters |EBITD&A|After Tax|
|__________________________________________________|_______|_________|
|NPV ($M @ 8%) | 1,620 | 1,092 |
|__________________________________________________|_______|_________|
|IRR% | 29.4 | 22.0 |
|__________________________________________________|_______|_________|
|Simple Payback Period (years) | 2.5 | 3.0 |
|__________________________________________________|_______|_________|
|Total Cash Production Costs (per lb of payable Cu)| 0.11 |
|__________________________________________________|_________________|
Notes: Total Cash Production Costs (per lb of payable Cu) are inclusive
of by-product credits and selling costs.
Spot Price Case Economic Analysis
____________________________________________________________________
|Economic Parameters |EBITD&A|After Tax|
|__________________________________________________|_______|_________|
|NPV ($M @ 8%) | 5,472 | 3,985 |
|__________________________________________________|_______|_________|
|IRR% | 60.2 | 45.4 |
|__________________________________________________|_______|_________|
|Simple Payback Period (years) | 1.5 | 1.7 |
|__________________________________________________|_______|_________|
|Total Cash Production Costs (per lb of payable Cu)| negative 1.75 |
|__________________________________________________|_________________|
Notes: Total Cash Production Costs (per lb of payable Cu) are inclusive
of by-product credits and selling costs.
Summary of Inputs into Economic Model
_____________________________________________
|Parameter |Base | Spot |
|_______________________________|______|______|
|NPV discount rate, % | 8 |
|_______________________________|_____________|
|Copper price, $/lb | 2.50 | 4.00 |
|_______________________________|______|______|
|Magnetite price, $/dmtu |1.00* |2.00**|
|_______________________________|______|______|
|Gold Price, $/oz |1,000 |1,400 |
|_______________________________|______|______|
|Capital Cost, $M | 1,242 |
|_______________________________|_____________|
|LOM Site Operating Cost, $M | 4,403 |
|_______________________________|_____________|
|LOM Sustaining Capital Cost, $M| 495 |
|_______________________________|_____________|
|LOM Selling Costs, $M | 1,091 |
|_______________________________|_____________|
*US$65/t conc. at 65% Fe; ** US$130/t conc. at 65% Fe.
Sensitivities
EBITD&A AFTER TAX
PARAMETER IRR NPV IRR NPV
OR VALUE (%) @ 8.0% (%) @ 8.0%
VARIATION ($M) ($M)
Copper Price ($/lb)
-20% $2.00 21.3 967 15.9 589
-10% $2.25 25.4 1,294 19.0 841
Base Case $2.50 29.4 1,620 22.0 1,092
10% $2.75 33.3 1,946 24.9 1,341
20% $3.00 37.1 2,272 27.7 1,589
Total Operating Costs ($/t LOM average)
-20% $8.42 34.1 2,125 25.6 1,469
-10% $9.47 31.8 1,872 23.9 1,282
Base Case $10.52 29.4 1,620 22.0 1,092
10% $11.57 26.9 1,367 20.1 899
20% $12.63 24.3 1,115 17.9 704
Initial Capital Costs ($M)
-20% $994 37.4 1,882 28.2 1,334
-10% $1,118 33.1 1,751 24.8 1,213
Base Case $1,242 29.4 1,620 22.0 1,092
10% $1,366 26.3 1,489 19.6 971
20% $1,491 23.7 1,357 17.6 850
Magnetite Iron Price ($/dmtu Fe)
-20% $0.80 26.2 1,232 19.3 791
-10% $0.90 27.9 1,426 20.7 942
Base Case $1.00 29.4 1,620 22.0 1,092
10% $1.10 31.0 1,814 23.3 1,241
20% $1.20 32.4 2,008 24.5 1,390
Permitting
The land and territory investigations regarding the project's current
footprint indicate there would be no impact on natural parks,
biodiversity conservation priority sites, or indigenous development
land in the Atacama Region. Additional baseline studies are required
for the project in order to achieve a proper characterization of the
environmental components that should be included in the future
Environmental Impact Study ('EIS').
Next Steps
A project implementation schedule has been developed for a FS with
additional test work and engineering, to be followed by procurement and
construction of the process plant, related facilities, and
infrastructure, with commissioning completed in late-2015. The plan
includes additional environmental baseline studies and the preparation
of the EIS and permitting process for the plant and associated
infrastructure. Due to the advanced nature of the testwork, the FS can
commence in parallel or slightly ahead of the testwork program and
still allow the results to be incorporated in the study. Capstone is
in the process of recruiting key personnel in Chile to move the project
forward.
The critical, long-lead items for development of the plant are the
grinding mills. SAG and ball mills delivery is currently forecast to
be in excess of 18 months from manufacture to delivery at port of
export and timelines will be monitored closely.
The PFS does not include recovery of the hematite iron in the mill feed
or the processing of approximately 30 million tonnes of oxide material
in the indicated resource category. The FS has upside potential in the
recovery of the hematite iron with an additional processing step.
There is also potential to recover copper from the oxide material in a
satellite leaching operation. In addition, further geotechnical
drilling is planned for the FS with the goal of improving the overall
strip ratio.
Technical Report
The full Santo Domingo PFS, prepared as a National Instrument 43-101
compliant Technical Report, will be filed under Capstone's profile on
SEDAR at www.sedar.com within 45 days.
Conference Call and Webcast
Capstone will host a conference call on Tuesday, August 16, 2011 to
discuss the Santo Domingo PFS and second quarter results. The
conference call and webcast details are as follows:
Date: Tuesday, August 16, 2011
Time: 11:30 am Eastern Time (8:30 am Pacific Time)
Dial in: North America -- 1.888.231.8191, International -- 1.647.427.7450
Webcast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3595240
Replay: North America -- 1.800.642.1687, International -- 1.416.849.0833
Replay 81625702
Passcode:
The conference call replay will be available until August 25, 2011. A
transcript of the call will also be made available on Capstone's
website (http://capstonemining.com/s/ConferenceCalls.asp) within approximately 24 hours of the call.
About Capstone Mining Corp.
Capstone Mining Corp. is a TSX listed Canadian mining company with two
producing copper mines in the Americas: the Cozamin
copper-silver-zinc-lead mine located in Zacatecas State, Mexico and the
Minto copper-gold-silver mine in Yukon, Canada.
Using its operations as a springboard, Capstone aims to grow organically
and through acquisitions in politically stable, mining-friendly
jurisdictions, with a focus in the Americas: organic growth through
continued mineral resource and reserve expansions as well as expanding
operations at its operating mines, development of its large scale 70%
owned Santo Domingo copper-iron-gold project in Chile in partnership
with Korea Resources Corporation, development of its Kutcho
copper-zinc-gold-silver project in British Columbia and exploration at
properties in Chile, British Columbia and Australia. Capstone's cash
flow and strong balance sheet provide the platform to enhance that
growth profile. Capstone is included in the S&P/TSX Composite Index and
S&P/TSX Global Mining Index. Additional information is available at
www.capstonemining.com.
Quality Assurance and NI 43-101 Compliance
The technical information in this news release has been prepared in
accordance with Canadian regulatory requirements by, or under the
supervision of, David Brimage of Ausenco, (an independent 'Qualified
Person') as set out in National Instrument 43-101 Standards of
Disclosure for Mineral Projects of the Canadian Securities
Administrators ('NI 43-101') and reviewed by John Sagman, P. Eng., a
Qualified Person and Vice President, Technical Services, Capstone
Mining Corp. In addition, Gregg Bush, Senior Vice President and Chief
Operating Officer for Capstone, reviewed all Technical Information in
this news release.
The PFS was prepared with input from the following: David Brimage of
Ausenco, Dave Rennie of Scott Wilson RPA, John Nilsson of Nilsson Mine
Services Limited, Art Winckers of Arthur H. Winckers & Associates,
Robert Braun of Ausenco, and Humberto Rivas of Knight Piésold, who are
responsible for certain sections of the PFS as detailed in the PFS and
this release.
Readers are advised that mineral resources that are not mineral reserves
do not have demonstrated economic viability. Mineral resource
estimates do not account for mineability, selectivity, mining loss and
dilution. These mineral resource estimates include inferred mineral
resources that are normally considered too speculative geologically to
have economic considerations applied to them that would enable them to
be categorized as mineral reserves. Even though test mining has been
undertaken in areas with M&I class mineral resources there is no
certainty that inferred mineral resources will be converted to measured
and indicated categories through further drilling, or into mineral
reserves, once economic considerations are applied.
Based on the resource estimate, a standard methodology for pit limit
analysis, mining sequence, and cut-off grade optimization, including
application of mining dilution, process recovery, economic criteria and
physical mine and plant operating constraints, has been followed to
design the open pit mines and determine the mineral reserve estimate
for each deposit as summarized in the Mineral Reserve table.
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 Mining Corp. (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 Company management's expectations or beliefs regarding
future events and include, but are not limited to, statements with
respect to the estimation of mineral reserves and mineral resources,
the realization of mineral reserve estimates, the timing and amount of
estimated future production, costs of production, capital expenditures,
success of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims and limitations on
insurance coverage. In certain cases, forward-looking statements can be
identified by the use of words such as 'plans', 'expects' or 'does not
expect', 'is expected', 'budget', 'scheduled', 'estimates',
'forecasts', 'intends', 'anticipates' or 'does not anticipate', or
'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. By their very nature forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. Such factors include, among others, risks related to actual
results of current exploration activities; changes in project
parameters as plans continue to be refined; future prices of mineral
resources; possible variations in ore reserves, grade or recovery
rates; accidents; dependence on key personnel; labour pool constraints;
labour disputes; delays in obtaining governmental approvals or
financing or in the completion of development or construction
activities; 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 actual
actions, events or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward looking
statements.
Alternative Performance Measures
'Cash Production Costs', 'Total Cash Production Costs', 'Total Project
Operating Costs' and 'LOM Operating Costs' are Alternative Performance
Measures. These performance measures are included because these
statistics are key performance measures that management uses to monitor
performance. Management uses these statistics to assess how the Company
is performing to plan and to assess the overall effectiveness and
efficiency of mining operations. These performance measures do not have
a meaning within International Financial Reporting Standards ('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.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/15/c3894.html
Capstone Mining Corp.
Cindy Burnett, VP, Investor Relations
Telephone: 604-637-8157
Email: cburnett@capstonemining.com
Website: www.capstonemining.com