Independent Scoping Study Evaluates Parallel Open Pit and Underground Mining of Multiple Deposits
VANCOUVER, June 8 /PRNewswire-FirstCall/ - Capstone Mining Corp. ("Capstone") (CS: TSX) today reported that it has completed an independent life-of-mine scoping study (the "Phase V Scoping Study") in connection with its proposed application for an amendment to its quartz mining licence under the Quartz Mining Act (Yukon) (the "Quartz Mining Act") and other requisite permits and licences for the expansion of the Minto Mine, which requires, among other things, a review under the Yukon Environmental and Socio-economic Assessment Act ("YESAA"). The application process will also involve a procedure for public notification and consultation as required under YESAA.
The Phase V Scoping Study was prepared for the purposes of this application and will form the basis for permit application documents, discussions with regulators, Selkirk First Nation and other stakeholders and public consultation during the regulatory process. The study considered the risks and opportunities highlighted in the pre-feasibility study for the Phase IV expansion of Capstone's high grade Minto copper-gold mine in the Yukon, results of which were announced in Capstone's news release dated December 15, 2009. This Phase V Scoping Study is not a National Instrument 43-101 Standards of Disclosure for Minerals Projects ("NI 43-101") compliant technical report but a planning document prepared in order to facilitate the permitting process described above.
The YESAA public notification and consultation process implies that much of the information contained in the Phase V Scoping Study will be in the public domain. Capstone has therefore determined that it is appropriate to provide some of the key information contained in the Phase V Scoping Study to prevent selective disclosure of that information. However, since such disclosure is not based on a NI 43-101 compliant technical report, readers are cautioned to not rely on the disclosure herein and the Phase V Scoping Study as anything other than an indication as to Capstone's future plans for the Minto Mine and the contents of this entire news release should therefore be considered forward-looking information and readers are referred to additional disclosure at the end of this release about the nature of such forward-looking information..
Phase V Scoping Study Highlights
The Phase V Scoping Study is preliminary in nature and includes unclassified material that is considered too speculative geologically to support a mineral resource estimate or to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the results of this study will be realized.
Brief highlights of the Phase V Scoping Study are summarized below. Normally such information would not be disclosed by Capstone until a NI43-101 compliant pre-feasibility study is completed; however, the majority of this information is a necessary component of the environmental and socio-economic impact assessment process, as well as consultations with stakeholders during the review and assessment process. Therefore, since it is recognized that this information will become publicly available in the near term, Capstone has determined that it is appropriate, in this particular instance, to release the following information:
- The Minto Mine life-of-mine plan is based on the parallel development of open pit and underground mineralization. - Development will be split into two phases: (1) "Phase IV", which entails the permitting, development and open pit and underground extraction of the Area 2 and Area 118 deposits, as well as underground exploration in the Minto East and Copper Keel areas; and (2) "Phase V", which will entail the subsequent permitting for the open pit mining of the Minto North and Ridgetop deposits and, if sufficient mineral resources are defined, the underground development of the Minto East and Copper Keel areas. There are currently no mineral resources defined at Minto East or Copper Keel, although exploration is continuing. - As a result of the decision to develop underground mineral resources previously beyond the limits of the proposed Area 2 open pit as detailed in the Phase IV PFS, the third push back at Area 2 is now eliminated and this material is proposed to be extracted by underground methods; - There will be a staged increase in mill throughput to 4,000 tonnes per operating day, resulting in a sustained 1.46 million tonnes of ore per year; - Mining will extract an estimated 9.9 million tonnes of measured and indicated mineral resources over an estimated six year period with average grades of 1.7% copper, 0.66 g/t gold, and 6.1 g/t silver, for a contained 361 million lbs of copper, 210,000 oz of gold, and 1.9 million oz of silver, with an additional 1.0 million tonnes in stockpiles accumulated prior to 2010 processed on an as required basis to sustain mill production. This includes an estimated 1.4 million tonnes of material mined by underground methods from Area 2 and Area 118. For planning purposes, an additional 600,000 tonnes of unclassified material is assumed to be mined from the Minto East and/or extensions of the Area 2 mineralization by underground methods. It is important to note that this 600,000 tonnes is unclassified material and is not currently defined to standards sufficient to support a NI43-101 compliant mineral resource estimate and requires additional drilling prior to inclusion as mineral reserves in a pre-feasibility study. See comments on unclassified material below. - The Phase V Scoping Study assumes processing of an estimated 11.5 million tonnes of material over an approximately eight year life grading 1.67% copper, 0.64 g/t gold, and 6.0 g/t silver, for a contained 423 million lbs of copper, 236,000 oz of gold, and 2.2 million oz of silver, of which 600,000 tonnes comes from the unclassified material. Due to the uncertainty that may be attached to unclassified material, it cannot be assumed that all or any part of this material will be upgraded to an indicated or measured mineral resource (as defined in NI43-101) as a result of continued exploration. However, the unclassified material is included in the life-of-mine plan since it will form an integral part of the regulatory process. - Mining continues through 2015, while processing continues into early 2018, with an average of 54 million pounds of copper produced in concentrates for the first six years, followed by 2.1 years of processing of low grade stockpiles producing an average of 27 million pounds of copper in concentrates over that period; - Life-of-mine capital cost of C$75.7 million including: C$33.7 million for open pit equipment in 2011 as the operation converts to self- mining, C$21.5 million for underground development and equipment, C$9.1 million for plant expansion, plus sustaining capital and a 15% contingency; - Open pit mining costs are estimated to average C$2.41/tonne mined, underground mining is assumed to be by room and pillar methods, with access provided by a decline, with operating costs of C$26.88/tonne mined. Milling costs are estimated at C$13.98/tonne, with camp, power, technical and administration costs forecast to average C$13.83/tonne milled.
Permitting & Reclamation
In order to implement the life-of-mine plan established in the Phase V Scoping Study, amendments will be required to the current operating permits and licences at the Minto Mine for production in 2011 and beyond. Utilizing the Phase V Scoping Study as a guide, MintoEx has commenced discussions with regulators, Selkirk First Nations and other stakeholders in preparation for the filing an application for such amendments with the Yukon regulators in the summer of 2010. The initial Phase IV application will trigger a review under YESAA, which will entail detailed assessments of the various project components with the Yukon Environmental and Socio-economic Assessment Board ("YESAB") designated office, with Selkirk First Nation (on whose land the Minto Mine is located), various regulators, and other stakeholders. The review process under YESAA requires a period of stakeholder, community and public consultation, during which the information, plans and objectives discussed in this release will be contained in the licence application and generally available through YESAB's website. This will be followed by a subsequent application for the Phase V developments.
Phase V Pre-feasibility Study
Based on the recommendations in the Phase V Scoping Study, Capstone is working towards completion of a NI 43-101 compliant pre-feasibility study (the "Phase V PFS"). However, such a study is dependent on completion of definition drilling in the Minto East and Area 2 South extension areas to convert the unclassified material included in the Phase V Scoping Study to mineral reserves. Given the nature of these estimates, readers are cautioned that there is no certainty that such a conversion will occur and the results of the Phase V Scoping Study may not be maintained in the Phase V PFS. Preparations are underway to resume exploration drilling, starting at Minto East by mid-June.
The TSX does not accept any responsibility for the adequacy or accuracy of this press release.
The technical information in this news release has been prepared and reviewed by Stephen P. Quin, P. Geo., President for Capstone Mining Corp. The exploration activities at the Minto project site are carried out under the supervision of Brad Mercer, P. Geol., V.P. Exploration for Capstone.
The following employees of SRK Consulting (Canada) Inc. are the Qualified Persons ("QP") under National Instrument 43-101 responsible for the Phase V scoping study Mike Levy, P.E. - Geotechnical; Dino Pilotto, P.Eng. - OP Mining; Gordon Doerksen, P.Eng. - UG Mining. Garth Kirkham of Kirkham Geosystems is the QP for the resource estimate for Minto North.
The analytical method for the copper and silver analyses is aqua regia digestion of the samples followed by atomic absorption spectroscopy. 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 abnormally 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 Minto, random check assays will be carried out by Inspectorate America Corporation.
Forward-Looking Information and Statements
This document contains "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 anticipated application for a renewal of the Company's quartz mining and other licences for its Minto Mine, the likelihood of such application and the Phase V Scoping Study being made available to the public through the public notification and consultation process, Capstone's future plans for the Minto Mine, 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", "perhaps", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. In this news release, forward-looking statements can be identified by the use of words (or variations of words) such as "resulting", "further" "planning", "planned", "could", "will", "proposed", "would", "scenario", "may", "intends", "opportunities", "potential", and relate to the Company's expectations with respect to the expansion of the Minto Mine based on the Phase IV PFS and Phase V Scoping Study. 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 can 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. Specific risks identified in this news release are risks related to the timing and receipt of permit amendments required to implement the mine expansion; exchange rates, metal prices and external influences; and grade control in mining the Phase IV pits. In making the forward-looking statements in this news release, the Company has applied several material assumptions, including, but not limited to, the assumption that: (1) permits will be granted in a timely manner, allowing uninterrupted operations at the Minto Mine; (2) the opportunity identified in the Phase IV PFS and analysis of such opportunity in the Phase V Scoping Study is viable operationally and economically; (3) the unclassified material used in the Phase V Scoping Study will be converted to mineral reserves and (4) any additional financing needed will be available on reasonable terms. Other assumptions are discussed throughout this news release. 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.
SOURCE Capstone Mining Corp.