Capstone Reports First Quarter Copper Production & Operating Costs
22 million pounds of Copper in Concentrates with estimated Total Cash Cost of US$1.12 per Pound of Payable Copper*
VANCOUVER, April 20 /CNW/ - Capstone Mining Corp. (CS: TSX) today announced its production for the three months ended March 31, 2010, of 22 million pounds of copper in contained concentrates, plus significant additional by-products of lead, zinc, silver and gold. The total cash cost, net of estimated by-product credits and estimated selling costs was US$1.12 per pound of payable copper* produced.
"Capstone's operations, the Cozamin and Minto mines, produced 22 million pounds of copper in concentrates at an estimated total cash cost of US$1.12 per pound of payable copper*," said Stephen Quin, President & COO of Capstone Mining Corp. "Production at the Cozamin Mine was essentially on track, while the Minto Mine had reduced throughput related to constrictions within the crusher system and then the tailings area; however Minto is well prepared for increased throughput and spring freshet, with almost one million tonnes of ore mined and stockpiled ahead of the crusher."
Operational Highlights for First Quarter of 2010
The following is a summary of operational highlights for Capstone during
the first three months of 2010:
- Production of 22 million pounds of contained copper. Previously
published guidance is for 90-100 million pounds of copper in
concentrates for 2010, with production levels forecast to ramp up
during the year.
- By-product production of 3.8 million pounds of zinc, 3.6 million
pounds of lead and 0.5 million ounces of silver in concentrates.
Actual gold production is not available since assaying is done off
site, but is estimated at 7,651 ounces for the quarter, based on the
mineral reserve block model.
- Production of 21.2 million pounds of payable copper in concentrates.
- Total cash cost per pound of payable copper* produced of US$1.12
versus previously published guidance of approximately US$1.10 to
$1.20 per pound.
- Cozamin Mine:
- Produced 9.9 million pounds of contained copper in
concentrates, along with by-products of 3.8 million pounds of
zinc, 3.6 million pounds of lead and 401k ounces of silver;
- Processed 259,656 tonnes (2,885 tpd) of ore averaging 1.90%
copper, 1.17% zinc, 0.97% lead and 65 grams per tonne ("g/t")
silver over the 90 day period, representing the highest
throughput quarter ever and March being the highest throughput
month ever at 96,215 tonnes processed (3,103 tpd);
- Produced 18,594 dry metric tonnes ("dmt") of copper concentrate
averaging 24.3% copper, 3,681 dmt of zinc concentrate averaging
46.5% zinc and 2,551 dmt of lead concentrate averaging 63.5%
lead;
- Estimated total cash cost, net of estimated by-product credits
and estimated selling costs, was US$0.82 per pound of payable
copper* produced; and
- Announced a new mineral reserve and resource estimate for the
Cozamin Mine on March 17, 2010.
- Minto Mine:
- Produced 11.9 million pounds of contained copper in
concentrates, along with by-products of 62,258 ounces of silver
and an estimated 7,651 ounces of gold based on the mineral
reserve block model;
- Processed 229,338 tonnes of ore over the 90 day period
(2,548tpd) averaging 2.54% copper, an estimated 1.3g/t gold and
10.3g/t silver, with throughput constrained by crusher and
tailings performance (as discussed below);
- Produced 13,172 dmt of copper concentrate averaging 41.0%
copper;
- Produced 11.7 million pounds of payable copper at an estimated
total cash cost* of US$1.37 per pound, with costs affected by
lower throughput and the high Canadian dollar exchange rate;
and
- Reported high grade copper-gold results from Minto East and
Area 2 as part of an evaluation of the underground potential at
Minto, as announced March 4, 2010.
- Kutcho Project:
- Continued optimization from the results of the Kutcho
preliminary economic assessment, specifically focused on
metallurgical performance and power.
Operating Details
Key operating statistics for the Cozamin and Minto mines for the first
three months in 2010 are presented below:
Capstone Operating Statistics for Q1/2010
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Cozamin Minto Total
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Production(1)
(contained in concentrates)
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- Copper (000s pounds) 9,940 11,917 21,857
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- Zinc (000s pounds) 3,773 - 3,773
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- Lead (000s pounds) 3,569 - 3,569
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- Gold (ounces) - 7,651 7,651
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- Silver (000s ounces) 401 62 463
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Mine
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- Waste mined (tonnes) - 2,619,763 -
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- Ore mined (tonnes) 260,869 799,457 -
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- Total material mined (tonnes) - 3,419,220 -
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Mill
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- Tonnes processed 259,656 229,338 488,994
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- Tonnes processed per day 2,885 2,548 -
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- Copper grade (%) 1.90 2.54 -
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- Zinc grade (%) 1.17 - -
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- Lead grade (%) 0.97 - -
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- Gold grade (g/t) - 1.3 -
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- Silver grade (g/t) 65 10 -
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Recoveries
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- Copper (%) 91.2 92.7 -
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- Zinc (%) 56.2 - -
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- Lead (%) 64.1 - -
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- Gold (%) - 76.7 -
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- Silver (%) 74.5 81.7 -
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Concentrates(1)
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- Copper Concentrates (dmt) 18,594 13,172 -
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- Copper (%) 24.3 41.0 -
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- Gold grade (g/t) - 17.8 -
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- Silver grade (g/t) 502 147 -
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- Zinc Concentrates (dmt) 3,681 - -
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- Zinc (%) 46.5 - -
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- Lead Concentrates (dmt) 2,551 - -
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- Lead (%) 63.5 - -
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- Silver grade (g/t) 1,060 - -
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On site Operating Costs*
(US$/t milled)(1) US$43.29 US$62.34 -
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Total cash cost per pound*
of payable copper(1) US$0.82 US$1.37 US$1.12
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(1) Adjustments based on final settlements will be made in future
periods.
The Cozamin Mine performance was generally in line with budget, but was affected by production constraints from underground (with the mill well able to outperform mine production), slightly lower copper grades as high lead grade feed supplemented production, and low zinc recoveries caused by poor performance of the flash cell (which was rectified at the end of the quarter). This performance was offset by significantly higher lead production from opportunistic mining of high lead grade hangingwall veins, much of which is not part of the mineral reserve. Unit operating costs were somewhat higher than expected due to higher development costs as more production areas are being developed, some unbudgeted increases in electricity rates, rental of two scoops used to offset two units being out for rebuild and higher reagent costs to manage the higher lead feed grades.
During the first quarter, the Cozamin Mine shipped and recorded revenue on 11,209 dmt of copper, 1,915 dmt of lead and 3,622 dmt of zinc concentrates. Trucking logistics limited the amount of copper concentrates trucked to the port of Manzanillo in the first quarter, which resulted in lower revenue and higher than normal concentrate inventory at the mine site at the end of the quarter, with 13,800 dmt as compared to 6,500 dmt at December 31, 2009. This excess inventory will be and is being trucked to port and the revenue recognized during the second quarter of 2010.
Performance of the Minto Mine was affected by underperformance of the crusher system during the first two months of the year, with those issues resolved in March, followed by unanticipated constraints in the tailings plant, where excessive sliming has been causing issues with both the tailings thickener and tailings filter presses. The cause of this sliming has not been determined and continues into April; appropriate expertise has been retained to address these concerns. The Minto Mine is well prepared for the onset of freshet, which is anticipated to commence around the end of April, with 994,000 tonnes of ore in stockpiles outside of the pit (sufficient to sustain milling for the rest of the year), a water conveyance net work in place to divert unaffected water around the site and to divert water affected by operations to the appropriate locations, and a new water treatment plant completed. In addition, water volumes contained in snowpack are estimated to be less than in 2009.
During the first quarter, the Minto Mine shipped and recorded revenue on 19,584 dmt of copper concentrate. The ice bridge across the Yukon River is now closed, and no more concentrates will be trucked to Skagway until the barging season commences, likely in early June 2010.
Safety Performance & Fatality
Capstone strives to maintain the very highest standards of worker safety at its operations. During 2009, Capstone and contractor personnel worked a total of 2.1 million hours and recorded a total recordable injury frequency rate (as defined by US MSHA) of just 2.38, well below the rate typical for surface and underground operations in North America. However, it is with great regret that Capstone reports that a fatality occurred at its Cozamin mine in early April, when one of its underground miners entered a prohibited area in an open stope and was killed instantly by a rock fall. The subsequent investigation by the authorities determined that the incident was an accident. Capstone has redoubled its efforts to ensure all of its workers clearly understand the Company's safety policies, including a site wide shut down at Cozamin following the accident while safety policies and the need to follow them was reviewed in detail.
Outlook
The Cozamin Mine is well positioned to meet production objectives for the year, with underground production being ramped up and mill capacity easily able to process more ore than is currently being mined. Production in early April has been affected by the fatality noted above, and the subsequent shut-down and investigation. However, continued emphasis on developing more working faces should allow the Company to meet its objectives for the year. With the ore stockpiles noted above, the Minto Mine has considerable ore available for processing; therefore the emphasis is on mill throughput. The sliming noted above is believed to be a temporary issue as it has not been encountered in almost three years of operations. The Company is working to determine whether it relates to water chemistry, temporary changes in ore characteristics, equipment issues or reagents used to settle the tailings particles. In the interim, however, the issue persists and is restricting throughput to 2,000-2,400 tonnes per day. Once resolved, the Company will report improved mill performance.
The TSX does not accept any responsibility for the adequacy or accuracy of this press release.
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 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 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.
43-101 Compliance
Unless otherwise indicated, Capstone has prepared the technical information in this news release ("Technical Information") based on information contained in the technical reports and news releases (collectively the "Disclosure Documents") available under Capstone Mining Corp.'s and Sherwood Copper Corp.'s company profile on SEDAR at www.sedar.com. Each Disclosure Document 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"). Readers are encouraged to review the full text of the Disclosure Documents which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents.
The following employees of Capstone, each a Qualified Person, reviewed Technical Information contained in this news release: Robert Barnes, Professional Engineer reviewed Technical Information related to the Cozamin Mine and Stephen Quin, Professional Geologist reviewed all Technical Information in this news release. In addition, Randall Thompson, General Manager, reviewed Technical Information related to the Minto Mine and Telesforo Martinez, General Manager, reviewed the Technical Information related to the Cozamin Mine.
(1) Non-GAAP Performance Measures
"Total Cash Cost per Pound of Payable Copper" and "On site operating costs per tonne milled" are Non-GAAP 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 GAAP 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 GAAP.
* These are non-GAAP performance measures and readers should refer to
Non-GAAP Performance Measures note at the end of this news release for
further details.
For further information: Darren Pylot, Vice Chairman & CEO or Stephen Quin, President & COO Or Zobeida Slogan, Investor Relations, at (604) 684-8894 or toll free at (866) 684-8894, [email protected]
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