Capstone Reports Production Results for the First Nine Months of 2010
Year-to-Date Production of 58.0 million pounds of Copper in Concentrates
VANCOUVER, Oct. 5 /CNW/ - Capstone Mining Corp. (CS: TSX) today announced its operating results for the three and nine months ended September 30, 2010 from its two operations, the Cozamin and Minto mines. Combined production totalled 19.2 million and 58.0 million pounds of copper in concentrates in the third quarter and first nine months, respectively, with additional significant by-products of lead, zinc, silver and gold. At September 30, 2010 Capstone had a cash balance of US$170 million (including restricted cash of US$11 million and a short-term deposit balance of US$20 million), a significant increase primarily attributable to the cash generated from sales at higher metal prices as well as the sale of some investments. Full financial results will be reported on November 9, 2010, as discussed below.
As previously disclosed, operational performance has improved at both the Cozamin and Minto mines during the course of the third quarter of 2010. Mining rates at Cozamin continued to improve through September, with higher copper grades reporting to the mill as well. Minto's tailings filter plant performance continues to restrict mill throughput, but to a lesser degree than experienced previously, as improvements to the tailings filtration circuit have begun to take effect. Results at both operations are in line with mid-year revised guidance and full year guidance remains unchanged at 80 to 85 million pounds of copper in concentrates.
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Q1 2010 Q2 2010 Q3 2010 YTD 2010
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Copper in concentrates
(millions of pounds)
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- Cozamin 9.9 7.8 9.6 27.3
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- Minto 12.0 10.1 9.6 30.7*
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Total 21.9 17.9 19.2 58.0
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* Minto realized negative adjustments to previously reported copper
production based on the final settlement of copper sales during the
first six months in the amount of one million pounds. As these
amounts are related to shipments made over the first six months, but
relate to production in the latter part of 2009 and early 2010, the
adjustments are only reflected in the year to date column, therefore
certain lines will not sum across.
These operating results have been provided earlier than normal in order to accommodate an investor and analyst tour of Capstone's mines taking place October 4-8, 2010 and, as a result, do not contain operating cost information, which will be included in Capstone's financial reporting for the third quarter, 2010.
Operational Highlights for the three and nine months ended September 30, 2010
The following is a summary of operational highlights for Capstone during the three and nine months, respectively, ended September 30, 2010:
- Production of 19.2 million and 58.0 million pounds of copper
contained in concentrates, respectively.
- By-product production of 6.0 million and 13.7 million pounds of zinc,
1.8 million and 7.6 million pounds of lead and 427,289 and 1,225,357
ounces of silver in concentrates, for the three and nine months,
respectively. Final gold production is not available since assaying
is done off site, but is estimated at 4,788 and 18,156 ounces for the
respective periods.
- Detailed operating statistics for both operating mines are provided
in the tables below.
Cozamin Highlights and Outlook
Cozamin Mine results for the three and nine months ended September 30, 2010, respectively, were:
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Q3 2010 YTD 2010
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Production(2)
(contained in concentrates)
- Copper (000s pounds) 9,601 27,343
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- Lead (000s pounds) 1,819 7,645
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- Zinc (000s pounds) 5,990 13,654
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- Silver (ounces) 381,050 1,068,419
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Mine
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- Tonnes of ore mined 273,247 764,265
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Mill
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- Tonnes processed 273,676 766,179
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- Tonnes processed per day 2,975 2,806
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- Copper grade (%) 1.74 1.78
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- Lead grade (%) 0.43 0.68
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- Zinc grade (%) 1.46 1.31
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- Silver grade (g/t) 62 61
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Recoveries
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- Copper (%) 91.4 90.9
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- Lead (%) 70.0 66.4
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- Zinc (%) 68.2 61.9
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- Silver (%) 70.1 71.6
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Concentrate(2)
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- Copper (dmt) 17,232 50,169
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- Copper (%) 25.3 24.7
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- Silver (g/t) 569 523
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- Lead (dmt) 1,199 5,267
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- Lead (%) 68.8 65.8
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- Silver (g/t) 1,709 1,250
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- Zinc (dmt) 5,551 12,914
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- Zinc (%) 49.0 48.0
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(2) Adjustments based on final settlements will be made in future periods
- Mined tonnes and milled tonnes were essentially at design levels for
the full quarter.
- However, as previously disclosed, mine production increased around
mid-August and, since then, mine and mill production tonnage have
averaged approximately 3,400 tonnes per day, well above the mill
design capacity of 3,000 tonnes per day.
- Average copper grade for the quarter remain lower than indicated in
prior guidance due to the previously disclosed reduced production
from the high copper grade, wider Avoca stopes. In September, copper
grades increased as production in the Avoca zone increased following
completion of the additional cable bolting recommended by the
Company's geotechnical consultant.
- Copper grades for the fourth quarter are expected to increase and
lead grades be lower than has been the situation so far in 2010 as a
result of increased production from the Avoca area and less reliance
on the upper and hangingwall workings, where zinc, and especially
lead, grades are higher than is typical for the overall mineral
reserves.
- Full year guidance remains unchanged at Cozamin for 40-42 million lbs
of copper.
Minto Highlights and Outlook
Minto Mine results for three and nine months ended September 30, 2010, respectively, were:
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Q3 2010 YTD 2010(4)
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Production(3)
(contained in concentrates)
- Copper (000s lbs) 9,614 30,675
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- Gold (oz) (2) 4,788 18,156
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- Silver (oz) 46,239 156,938
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Mining
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- Waste (tonnes) 1,874,283 6,108,540
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- Ore (tonnes) 0 1,116,722
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- Total material mined (tonnes) 1,874,283 7,225,262
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Milling
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- Tonnes processed 242,295 656,930
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- Tonnes processed per day 2,633 2,406
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- Copper grade (%) 1.94 2.28
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- Gold grade (g/t)(2),(3) 0.83 0.95
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- Silver grade (g/t) 7.1 8.6
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Recoveries
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- Copper (%) 92.7 92.7
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- Gold (%)(2),(3), 73.7 74.4
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- Silver (%) 83.6 81.6
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Concentrate
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- Dry tonnes produced 11,051 34,456
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- Copper grade (%) 39.5 40.4
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- Gold grade (g/t)(2),(3) 13.3 13.5
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- Silver grade (g/t) 130 142
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(2) Gold is not assayed on site, resulting in a significant lag in
receiving this data. Data for Q3 is an estimate based on prior
production experience.
(3) Adjustments based on final settlements will be made in future
periods.
(4) Adjustments are only reflected in year to date column relating to
negative adjustments of previously reported copper production.
- Improvements in the tailings filtration plant resulted in
significantly improved mill throughput compared with the second
quarter, following completion of rebuilds of three of the five
filters, with two more rebuilds to be completed in October.
Cumulative throughput remains below guidance for the year.
- August and September mill throughput averaged over 2,700tpd compared
with just over 2,000tpd in the second quarter following the
improvements in tailings filtration noted above.
- Throughput is expected to further increase with installation of
higher performance filter cloths in the tailings filters during
October and November.
- No ore was mined from the pit during the third quarter due to the
continued presence of water in the Minto Main pit that was either
collected during freshet or resulted from relatively high rainfall in
late-July and August and which was not discharged at that time in
order to ensure compliance with Minto's water use licence. Minto has
applied for and is working through the regulatory process to amend
its water licence standards to improve overall water management while
remaining protective of the environment.
- The inability to mine high grade ore from the Stage 4 push-back of
the Minto Main pit adversely affected the copper grade in the third
quarter as operations were reliant on previously stockpiled ore with
no supplementary higher grade ore from the open pit.
- The new water treatment facility has been on line and treating and
discharging water since July 2010. Mining is expected to recommence
from the Stage 4 push-back in late October following removal of the
remaining water from the pit.
- The delays in dewatering the Minto Main pit were anticipated in the
mid-year forecast and full year guidance remains unchanged at 40-43
million lbs of copper.
Forward Sales
Capstone continues to reduce its forward copper sales commitments through a combination of deliveries of metal produced at its mines and entering into offsetting forward copper purchase contracts that increase Capstone's exposure to rising copper prices. During the quarter Capstone reduced its net forward sales obligations by more than 50% versus the net positions on June 30, 2010. The market to mark of the Company's hedge book will be reflected in Capstone's future financial statements. The Company's net forward copper sales contracts at September 30, 2010 are tabulated below.
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Price
Year Tonnes lbs (US$/lb)
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Q4-2010 2,832 6,243,491 2.10
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2011 5,127 11,303,100 2.32
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2012 1,200 2,645,547 3.25
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2013 1,200 2,645,547 3.24
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2014 900 1,984,160 3.18
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Total 11,259 24,821,846 2.53
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Minto Project Debt Fully Repaid
On October 1, 2010 Capstone repaid the entire C$10 million balance of its Subordinated Loan Facility. This repayment represents the final payment on the Minto Project Debt Facility.
Third Quarter Financial Results Timing
Capstone will report its third quarter 2010 financial results on Tuesday, November 9, 2010 after market close and will host a conference call and webcast to discuss these results as noted below.
Conference call and webcast details are as follows:
Date: Wednesday November 10, 2010
Time: 8:30 AM PST (11:30 AM EST)
Dial in: North America - 1.888.231.8191, International -
1.647.427.7450
Webcast:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3242580
Replay: North America - 1.800.642.1687, International -
1.416.849.0833
Replay Pass code: 14853632
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, Gregg Bush, Chief Operating Officer for Capstone, Jaime Delgado, Acting General Manager, reviewed Technical Information related to the Minto Mine and Gregg Bush, COO, and Telesforo Martinez, General Manager, reviewed the Technical Information related to the Cozamin Mine.
For further information: Darren Pylot, Vice Chairman & CEO or Stephen Quin, President Or Zobeida Slogan, Investor Relations, at (604) 684-8894 or toll free at (866) 684-8894, [email protected]
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