Capstone Reports Significant Increase in Grade and Classification of Esso Mineral Resource at Kutcho

Dec 06, 2010, 16:01 ET from Capstone Mining Corp.

VANCOUVER, Canada, December 6, 2010 /PRNewswire-FirstCall/ --

- Higher Grades and a Reclassification of Resources Expected to Enhance Economics of the Pending Pre-feasibility Study

Capstone Mining Corp. (CS: TSX) today announced the results of a National Instrument 43-101 compliant mineral resource estimate for the Esso deposit at its high grade copper-zinc-gold-silver Kutcho Project in British Columbia, in which all mineral resources in the Esso deposit were converted to the indicated category.

The net result of the successful 2010 infill drill program was significantly improved continuity of the mineralization in the high grade Esso deposit, resulting in all of the mineralization being moved into the indicated mineral resource category, including mineralization previously classified in the inferred category. Using a 1.5% copper cut-off for illustrative purposes, grades for zinc and silver increased by approximately 50% versus prior estimates and increased gold by more than 15% even though this was just an infill-focussed drill program. The updated mineral resource estimate for Esso, at a 1.5% copper cut-off, is tabulated below and at various other copper cut-off grades in the table attached; the actual cut-off grade applicable to Esso will be established as part of the pre-feasibility study ("PFS") currently nearing completion and will be based upon an NSR formula including by-product credits and accounting for metallurgical recovery rates.

         Mineral Resources by Class for Esso Deposit, Kutcho Project (at
                   a 1.5% copper cut-off) - November 2010


      Classification     Tonnes  Copper (%) Zinc Gold  Silver
                        (000's)*            (%)  (g/t) (g/t)
       Measured (M)        -         -       -     -     -
       Indicated (I)    1,816.2     2.69    6.18 0.66   64.8
     Sub-total (M+I)**  1,816.2     2.69    6.18 0.66   64.8
    Additional Inferred    -         -       -     -     -

    (table continues)

      Classification      Contained    Contained Zinc Contained    Contained
                         Copper (000s    (000s lb)       Gold    Silver (000s
                             lb)                      (000s oz)       oz)
       Measured (M)           -              -            -            -
       Indicated (I)       107,709        247,450         39         3,783
     Sub-total (M+I)**     107,709        247,450         39         3,783
    Additional Inferred       -              -            -            -


    *Rounded to nearest thousand **Totals may not add exactly due to rounding

"The significant increase in the grade and confidence level of the mineral resources at the Esso deposit should enhance the overall economics of the Kutcho Project," said Stephen Quin, Capstone's President. "Combining very high grade feed from Esso with high grade tonnage from the Main deposit in the early years of operation should boost production and reduce costs per pound in the pre-feasibility study that is currently nearing completion."

Change in Mineral Resource Estimates 2009-2010

The 2010 updated mineral resource estimate for the Esso deposit resulted in an overall gain in tonnage, grade and contained metal, as well as a substantial positive upgrade in the classification of the mineral resource over that reported in February 2009, prior to the commencement of the 2010 infill drill program. All of the previously inferred mineral resource in the table below was upgraded into the indicated category, allowing it to be included in the PFS. For reference and comparative purposes the prior mineral resource estimate for the Esso deposit as reported on February 9, 2009 and that was included on the preliminary economic assessment (and filed on SEDAR on July 13, 2010) at the same 1.5% copper cut-off is tabulated below.

            Prior Mineral Resources by Class for Esso Deposit, Kutcho
                Project (at a 1.5% copper cut-off) - Feb.2009


      Classification     Tonnes  Copper (%) Zinc Gold  Silver
                        (000's)*            (%)  (g/t) (g/t)
       Measured (M)        -         -       -     -     -
       Indicated (I)     950.9      2.60    4.10 0.56   43.4
     Sub-total (M+I)**   950.9      2.60    4.10 0.56   43.4
    Additional Inferred  802.9      2.57    4.15 0.61   37.6

     (table continues)

      Classification     Contained    Contained Zinc Contained Gold Contained
                         Copper (000s    (000s lb)      (000s oz)     Silver
                            lb)                                     (000s oz)
       Measured (M)           -              -              -            -
       Indicated (I)        54,406         85,940           17         1,326
     Sub-total (M+I)**      54,406         85,940           17         1,326
    Additional Inferred     45,230         73,377           16          970



    *Rounded to nearest thousand

**Totals may not add exactly due to rounding

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. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.

Timing of Prefeasibility Study

Capstone also reports that the PFS for the Kutcho Project will be completed in January 2011. All major components of the PFS are nearing completion, with final metallurgical testing on the Esso deposit and annual composites of Main and Esso mineralization currently underway.

Resource Estimation Methodology & Responsibility

Mr. Garth Kirkham, P.Geo. of Kirkham Geosystems Ltd. ("KGL") estimated the mineral resources at Esso in November 2010 and on February 9, 2009.

The Esso mineral resource estimation was completed in MineSight(R) using a 3 dimensional block model consisted of 5 x 5 x 5 m block sizes using 1.5m composites and the mineralization was coded to the assay database. A wireframe was created and geostatistical analysis completed on both the assay data and the composite data for each of the metals estimated. The resulting interpretation is a moderately dipping mineralized zone with good continuity. The block grades were interpolated using independently derived ordinary kriged parameters. Resource classification methodology takes into account both continuity of the mineralization and sample density of the exploration drilling. In summary, the parameters used are as follows:

    - Composite Length is 1.5 meters.

    - Block size is 5m X 5m X 5m.

    - Estimation strategy was Ordinary Kriging.

    - Ellipse direction is 0 degrees azimuth and -50 degrees dip to follow
      bedding.

    - Three passes were used; 100m X 100m X 30m; 50m X 50m X 20m; 25m X 25m X
      15m.

    - Minimum# of composites was 4.

    - Maximum# of composites was 16.

    - Maximum# of composites per drill hole was 3.

    - Grade cutting was applied to outlier data where grades exceeded the
      following thresholds:

    - 11% Cu

    - 27% Zn

    - 2.2 gpt Au

    - 300 gpt Ag

Classification of resources were determined to be in the Indicated category.

The prior mineral resources for the Kutcho Project were also estimated by Garth Kirkham, P.Geo., an independent Qualified Person as defined by National Instrument 43-101 ("NI 43-101") and were reported in a news release dated February 9, 2009 but are summarized herein for convenience. Readers should review the February 9, 2009 news release for additional information, including the mineral resource estimates at different cut-off grades, the parameters used in the estimate and the required NI 43-101 disclosure.

Quality Assurance

The technical information in this news release has been prepared in accordance with Canadian regulatory requirements set out in National Instrument 43-101 and reviewed by Stephen P. Quin, P. Geo., President of Capstone Mining Corp. The exploration activities at the Kutcho project site are carried out under the supervision of Brad Mercer, P. Geo., VP Exploration of Capstone, who has reviewed and approves the content of this news release.

The analytical method for the copper, zinc and silver analyses is aqua regia digestion of the samples followed by atomic absorption spectroscopy. Where zinc values exceed 30%, a subsequent volumetric analysis is performed. Gold is analysed by fire assay fusion with atomic absorption spectroscopy finish for gold. Analyses are carried out by ALS CHEMEX in North Vancouver. When visible gold is noted in drill core samples or regular fire assay values appear unusually high, the pulp and screen metallic assay method is used to determine the total gold content and gold contents of different size fractions. This is considered industry best practice when dealing with coarse gold mineralization where a nugget effect is suspected. This determination is accepted as the most representative value and is used in the assay database for mineral resource calculations. Blank and standard samples are used for quality assurance and quality control. Where more than two check samples assay outside expected ranges, the entire batch is re-assayed. After the completion of planned drill programs at Kutcho, random check assays will be carried out by Inspectorate-IPL of Vancouver.

Forward-Looking Statements

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.

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, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; 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.

          Esso Deposit, Kutcho Project - Mineral Resources by Class at
                           Select Copper Cut-offs

                To Accompany News Release dated December 06, 2010


    Classification    Cut-Off      Tonnes    Copper  Zinc   Gold  Silver
                       (Cu%)      (000's)*    (%)     (%)   (g/t)  (g/t)

    Measured (M)         -            -        -       -      -      -

    Indicated (I)      0.00       2,891,374   2.06   4.96   0.53   50.99
                       0.25       2,879,304   2.07   4.98   0.53   51.18
                       0.50       2,822,614   2.10   5.07   0.54   51.99
                       0.75       2,604,362   2.22   5.35   0.57   55.02
                       1.00       2,381,015   2.35   5.63   0.60   57.98
                       1.25       2,080,553   2.52   5.91   0.63   61.61
                       1.50       1,816,191   2.69   6.18   0.66   64.78
                       1.75       1,555,743   2.87   6.42   0.70   68.12
                       2.00       1,328,624   3.04   6.70   0.72   71.36
                       2.25       1,088,241   3.25   7.07   0.76   74.65
                       2.50        853,070    3.48   7.27   0.80   79.26
                       2.75        672,885    3.72   7.62   0.84   83.53
                       3.00        518,707    3.97   8.14   0.87   87.21

    Additional           -            -        -       -      -      -
    Inferred

    (table continues)

    Classification      Contained   Contained Zinc    Contained      Contained
                         Copper       (000s lb)*        Gold          Silver
                       (000s lb)*                    (000s oz)*    (000s oz)*

    Measured (M)             -             -               -              -

    Indicated (I)         131,147       316,380          49.4           4,740
                          131,088       316,164          49.4           4,737
                          130,586       315,241          49.0           4,718
                          127,545       306,914          47.5           4,607
                          123,252       295,359          45.6           4,439
                          115,799       271,165          42.2           4,121
                          107,752       247,460          38.7           3,782
                           98,433       220,247          34.9           3,407
                           89,101       196,172          31.0           3,048
                           77,872       169,736          26.6           2,612
                           65,540       136,691          21.9           2,174
                           55,142       112,988          18.1           1,807
                           45,367        93,057          14.5           1,454

    Additional Inferred        -             -               -              -


    *Rounded to nearest thousand **Totals may not add exactly due to rounding
    For further information about Capstone, please contact:

Darren Pylot, Vice Chairman & CEO or Stephen Quin, President at +1(604)-684-8894 or +1(866)-684-8894 or e-mail Capstone at info@capstonemining.com

SOURCE Capstone Mining Corp.