Capstone Reports Commencement of Pre-feasibility Work Program at Kutcho
Project

    
    Hole KC10-171 intercepts 5.7% Cu, 8.0% Zn & 160g/t Ag over 13.0m
             (including 7.5% Cu, 11.7% Zn & 253g/t Ag over 6.9m)
    

VANCOUVER, Aug. 5 /CNW/ - Capstone Mining Corporation (CS: TSX) today announced that it has commenced a work program on its Kutcho Copper-Zinc Project designed to advance the project towards completion of a pre-feasibility study. As recommended in the recently completed Preliminary Economic Assessment ("PEA"), the major components of the work program are: (1) in fill and step out drilling on the Esso deposit, (2) continued metallurgical optimization test work, and (3) other capital and operating cost optimizations. Drilling on the Esso deposit, one of three known massive sulphide deposits that comprise the Kutcho Project, is already in progress and results of the first two drill holes have been received. Highlights from these two holes are summarized in the table below.

    
                 Highlights of Esso Drilling, Kutcho Project
    -------------------------------------------------------------------------
    Hole ID  Target From  To  Interval* Interval* Copper Zinc Gold Silver
              Area  (m)   (m)    (m)        (ft)      (%)    (%)  (g/t) (g/t)
    -------------------------------------------------------------------------
    KC10-169  Esso 532.5 539.4   6.9(6.8)  22.6(22.3) 2.02 12.20  1.94  43.1
    -------------------------------------------------------------------------
    KC10-171  Esso 468.2 481.2 13.0(12.4)  42.6(40.7) 5.69  7.99  0.80 159.9
    -------------------------------------------------------------------------
    including      471.6 478.5   6.9(6.6)  22.6(21.6) 7.47 11.71  1.18 252.6
    -------------------------------------------------------------------------
    * Estimated true widths in brackets.
    

"The Kutcho Project comprises three high grade copper-zinc deposits with significant gold and silver by-products, the combination of which represents a significant value opportunity for Capstone," said Stephen Quin, President of Capstone. "The recently completed preliminary economic assessment demonstrated potentially robust project economics and the recently initiated work program is designed to more fully define the project to standards suitable for inclusion in a pre-feasibility study," he said. "The results of the first two holes confirm the presence of exceptional grades within the Esso deposit, which remains open to expansion."

Kutcho Work Program

As reported on July 13, 2010, Capstone received the results of an independent PEA on the Kutcho Project that demonstrated potential for robust economics through the underground extraction of high grade copper-zinc-gold-silver mineralization from the "Main" and "Esso" deposits, followed by conventional flotation and production of copper and zinc concentrates for sale overseas. The PEA recommended advancing the project through completion of a Pre-feasibility Study ("PFS") and included a number of recommendations in order to achieve that objective, including:

    
    1.  Infill drilling the inferred mineral resources utilized in the PEA to
        at least indicated category so they could be used in the PFS.
        Inferred mineral resources comprised approximately 10.1% of the
        mineral resource utilized in the PEA mine plan, and lies principally
        within the Esso deposit.

    2.  Continued metallurgical optimization focused on copper recoveries,
        copper concentrate grade and zinc recoveries. While there is
        significant core from the Main deposit available for such
        metallurgical work, there is no core available from the Esso deposit.
        The infill drill program discussed above will provide the requisite
        material for testing of the Esso deposit.

    3.  Step out drilling on the Esso deposit, where the high grade mineral
        resource remains open to expansion, particularly up and down dip.

    4.  Continued optimization of capital and operating parameters, with a
        particular emphasis on power cost reductions.
    

In order to implement these recommendations, Capstone's wholly owned subsidiary Kutcho Copper Corp. has initiated a work program, including drilling of the Esso deposit.

Additional Kutcho Drilling

The planned drilling program currently underway at Kutcho is comprised of 23 holes totalling approximately 13,000 metres. Seven holes have been completed, two were abandoned and two are in progress. All drilling is directed toward defining the high grade Esso deposit. Assays have been received for the first two holes, the results of which are tabulated above. These two holes were designed to infill inferred mineralization and returned results that both confirm the presence of particularly high grade zones within the Esso deposit, and which should assist in establishing the continuity of this high grade. Subsequent drill holes will be targeted on possible extensions of the high grade mineralization up and down dip of the current mineral resource, which remains open to expansion.

For current drillhole locations please view the accompanying map:

http://www.capstonemining.com/i/photos/kutcho/2010-32CS_DrillholeLocationsWithCuXmetres.jpg

For a current view of drill results in priority areas across the property please view the accompanying map:

http://www.capstonemining.com/i/photos/kutcho/2010-32CS_DrillholeLocationsWithZnXmetres.jpg

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 Corporation. The exploration activities at the Minto project site are carried out under the supervision of Brad Mercer, P. Geol., V.P., Exploration of Capstone.

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 Acme Analytical 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.

For further information: Darren Pylot, Vice Chairman & CEO, Stephen Quin, President, or Investor Relations' Zobeida Slogan, at [phone], or [phone], or e-mail Capstone at [email protected]