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2014
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Capstone Mining 2014 Operating and Capital Guidance

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Guidance for Cozamin and Minto, Development Projects and Exploration

(All amounts in US$ unless otherwise specified)

VANCOUVER, Jan. 16, 2014 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today provided its production and capital expenditure guidance for 2014 for two of its three operating mines, Cozamin and Minto, and its development and exploration projects. Capstone expects to produce 38,500 tonnes (±5%) of copper in concentrates from Cozamin and Minto, slightly higher than 2013 production of 37,500 tonnes.

"The mine plans at Cozamin and Minto in 2014 call for a similar production level to last year," said Darren Pylot, President and CEO of Capstone. "Our focus for 2014 will be on cost efficiencies at all of our operations, including Pinto Valley, for which guidance will be provided before the end of the first quarter."

"On the development side, we are advancing the Santo Domingo Project under a stage-gate decision process, where we are continuing to move the project forward to each decision point. In 2014 we will advance the engineering and work towards the Environmental Impact Assessment approval by early 2015," continued Mr. Pylot.

2014 Production Guidance - Cozamin and Minto

       
  Cozamin Minto Total
Tonnes milled (millions) 1.2 1.4 2.6
Copper grade (%) 1.85 1.49 1.66
Copper recovery (%) 93.4 92.4 93.0
 
Production (contained in concentrates)
Copper (tonnes) 20,000 18,500 38,500
Zinc (tonnes) 9,000 - 9,000
Lead (tonnes) 1,700 - 1,700
Silver (million ounces) 1.6 0.2 1.8
Gold (ounces) - 17,670 17,670
       
C1 cash costs per pound of payable
copper produced net of by-product
credits and selling costs(1)
$1.30 -$1.40 $2.45 - $2.55 $1.85-$1.95

(1) This is an alternative performance measure; please see "Alternative Performance Measure" at the end of this release. C1 cash cost per pound is per pound of payable copper produced. All amounts in US$ unless otherwise specified.


Cozamin: The majority of the ore will continue to come from the San Roberto blocks in 2014, however mining is transitioning to lower grade blocks within the zone. New development for 2014 will be required for stopes in the Mala Noche Footwall Zone, which is expected to contribute approximately 23% of ore production in 2014 at an average grade of 1.77%. Cash costs at Cozamin in 2014 are expected to increase over 2013, as savings in site operating costs are offset by higher treatment and selling costs.

Minto: The 2014 mine plan at Minto optimizes mill throughput, grade and production, while minimizing operating costs and development capital, and reflects the following:

  • Surface Mining - The Area 2 Stage 2 pit will be completed in January 2014, following which surface mining will move to the Area 118 pit which will finish in mid-August. The mine plan calls for a reduced surface mining rate during the first half of the year to balance mining and milling activities.
  • Underground Mining - Capstone is able to defer the development and production from the Area 118 underground for one year without a negative impact on 2014 production. The underground plan in 2014 calls for high grade ore just below the bottom of the mined out Area 2 pit to be recovered prior to that pit being utilized for water storage.
  • Mill Operations - The mill will process ore from the Area 2 and Area 118 pits, supplemented with ore from underground and stockpile for the first half of the year, with primarily stockpiled ore processed in the second half of the year until the next pit (Minto North) begins to feed the mill in mid-2015. Mill throughput in 2014 will remain relatively constant throughout the year, however grade will decline starting in August when lower grade material from stockpile is scheduled to be milled.

Pre-stripping of Minto North is set to begin on August 15, 2014, contingent upon receipt of the necessary permits and licenses. A delay in the Phase V/VI permit application has resulted in the shift of the most significant production from Minto North by one year from 2015 to 2016, but brings high grade open pit ore from Minto North in ahead of ongoing underground development of Minto South underground, which is expected to resume in 2015. Cash costs for 2014 are budgeted to be higher than 2013, primarily due to higher underground mining costs and treatment and selling costs.

2014 Capital Expenditure Guidance - Operating Mines - Cozamin and Minto (excluding exploration and deferred stripping)

     
  Cozamin Minto
  (US$ millions)
Total 2014 Budgeted Capital Expenditures (all sustaining) $18.0 $17.4
     
     

Major capital expenditures at Cozamin include $10.8 million for underground development, infrastructure and communications and $6.4 million in underground and surface equipment.

Major capital expenditures at Minto include $5.2 million in underground development of the underground zone that is scheduled for 2014, $4.3 million for renovations to the camp and other site upgrades (partially carried from 2013), $5.3 for various improvement projects and $2.0 million in permitting and environmental activities related primarily to the joint Phase V/VI Yukon Environmental and Socio-economic Assessment Board ("YESAB") review that is currently underway, and subsequent water licensing, to bring all remaining known reserves at Minto into the mine plan. In addition, Minto expects to capitalize pre-stripping costs of $16.1 million in the second half of 2014, related solely to the initial development of the Minto North pit, with no corresponding production from Minto North planned for 2014.

2014 Capital Expenditure Guidance - Development Projects

   
  (US$ millions)
Santo Domingo (70% basis) $20.9
Kutcho 0.9
Total $21.8
   
   


Santo Domingo, Chile: The Definitive Feasibility Study ("DFS") for Santo Domingo is expected to be completed at the end of the first quarter of 2014. Capstone elected to take a more conservative approach to the metallurgical work and lengthened the timeline for completion of the DFS. Capstone formally submitted the Environmental Impact Assessment ("EIA") for the Santo Domingo project in October 2013, which initiated the formal environmental assessment process, and expects to have the port concession finalized before the change in government. In 2014, the company intends to continue to de-risk the project and will maintain the owner's team, advance the EIA process and community relations, pursue power and third party port opportunities and continue to advance engineering. The total Santo Domingo budget for 2014 is $29.8 million of which Capstone's 70% share is $20.9 million.

Kutcho, BC: Kutcho's production profile and mine life no longer fits with Capstone's growth strategy and strategic alternatives are being evaluated. The 2014 budget of $0.9 million consists primarily of ongoing environmental baseline studies as well as some operational costs related to the camp.

2014 Exploration Program

   
  (US$ millions)
Cozamin $ 3.0
Project Providencia - Chile 6.7
Cumbral Project - Mexico 2.9
Other 0.5
Total $13.1
   
   

Brownfield:

At Cozamin, the multi-year underground infill drilling program in the Mala Noche Footwall Zone that focused on adding mine life was completed in 2013. A mineral reserve update including resources resulting from the 2012 drilling will be released during the first quarter. A mineral resource update is planned in the first half of 2014 that will incorporate all drilling up to the end of 2013. The 2014 exploration drill program at Cozamin will consist of up to 10,000 metres of surface drilling, targeting Mala Noche splays that have not previously been tested.

Brownfield exploration at Minto remains paused for the second consecutive year, as the mine life currently runs to 2022 and the most compelling targets can be accessed from underground once the ramp reaches an optimum point to resume drilling.

Greenfield:

Greenfield exploration is principally focussed on two projects, with up to 15,000 metres of drill testing scheduled for the second half of the year at Project Providencia in Chile, Capstone's earn-in project with Sociedad Química y Minera de Chile S.A. ("SQM") and up to 10,500 metres of drill testing at the Cumbral earn-in property in Sonora, Mexico.

About Capstone Mining Corp.

Capstone Mining Corp. is a Canadian base metals mining company, committed to the responsible development of our assets and the environments in which we operate. We are focused on copper, with three producing mines; the Pinto Valley copper-molybdenum mine located in Arizona, US, the Cozamin copper-silver-zinc-lead mine in Zacatecas State, Mexico and the Minto copper-gold-silver mine in Yukon, Canada. In addition, Capstone has two development projects; the large scale 70% owned Santo Domingo copper-iron-gold project in Region III, Chile, in partnership with Korea Resources Corporation, and the 100% owned Kutcho copper-zinc-gold-silver project in British Columbia, Canada, as well as exploration properties in Chile and Mexico. Using our cash flow and strong balance sheet as a platform, Capstone's strategy is to continue to grow with mineral resource and reserve expansions and exploration, and through acquisitions in politically stable, mining-friendly regions. We will pace our growth with our financial capacity, ensuring we retain, as a priority, sufficient financial flexibility to meet the requirements of our existing operations and our committed development projects, while maintaining an adequate cushion to deal with market volatility and operating risks inherent in the mining industry. 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 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 anticipated production from the Pinto Valley Mine, the realization of mineral reserve estimates, the timing and amount of estimated future production, success of mining operations, environmental risks, 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", "outlook", "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. In this document certain forward-looking statements are identified by words including "scheduled", "guidance", "plan", "planned", "estimated", "projections", "projected" and "expected". Forward-looking statements are based on a number of assumptions which may prove incorrect, including, but not limited to, the development potential of the project, current and future commodity prices and exchange rates and continued daily operation of the Pinto Valley Mine. 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 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; the completion of development 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 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.

National Instrument 43-101 Compliance

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 Brad Skeeles, P. Eng., Vice President of North American Operations (Technical Information related to mining and production), Brad Mercer, P. Geol., Vice President, Exploration (Technical Information related to mineral exploration activities), and Gregg Bush, P. Eng., Senior Vice President and Chief Operating Officer, all Qualified Persons under NI 43-101.

Alternative Performance Measures

The item marked with (1) "C1 Cash Cost per Pound of Payable Copper Produced" is an Alternative Performance Measure. This performance measure is included because this statistic is a key performance measure that management uses to monitor performance. Management uses this statistic to assess how the Company is performing to plan and to assess the overall effectiveness and efficiency of mining operations. This performance measure does not have a meaning within IFRS and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. This performance measure should not be considered in isolation as a substitute for measures of performance in accordance with IFRS.

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 U.S. securities laws. Without limiting the foregoing, this news release may refer to technical reports that use the terms "indicated" and "inferred" resources. U.S. investors are cautioned that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under U.S. 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. U.S. investors are cautioned not to assume that all or any part of indicated resources will ever be converted into reserves. U.S. 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, U.S. 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 U.S. companies subject to the reporting and disclosure requirements of the SEC.

 

SOURCE Capstone Mining Corp.



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