Capstone Completed Pre-feasibility Study on Phase IV Expansion of Minto Copper-Gold Mine
By Capstone Mining Corp., PRNEMonday, December 14, 2009
Study Extends Mine Life, Sustains Higher Production and Identifies Focus for Phase V Expansion
VANCOUVER, December 15 - Capstone Mining Corporation (TSX:CS) today reported the results of a
pre-feasibility study for the Phase IV expansion ("Phase IV PFS") of its high
grade Minto copper-gold mine in the Yukon. This study details the basis of
ramp up in mill throughput to a nominal 4,100 tonnes per day ("tpd")
throughput and 91.3% availability, resulting in 1.37 million tonnes per year
processed in an optimised mill, with ore to be extracted from new mineralized
areas discovered since 2006. The Phase IV PFS results in a total of 366
million pounds of copper in concentrate produced over an eight year mine
life, commencing January 2010. Permit amendments are required for production
in 2012 and beyond.
The Phase IV PFS also discusses two possible options for further
increases in production and/or increases in mine life and mineral reserves:
(1) a possible further increase in mill capacity to 7,500 tpd of throughput,
focused on open pit mining of mineral resources outside of the current
proposed open pits, and (2) the possible development of a 1,000-2,000 tpd
underground mine to provide higher grade feed relatively earlier in the mine
life than an expanded open pit operation. On preliminary analysis, the
underground option appears to have a more attractive investment profile. As a
result, the underground option will be prioritized in 2010, offering the
potential for higher production than outlined in the Phase IV PFS.
"This Phase IV pre-feasibility study represents another significant
milestone in the development of the Minto Mine," said Stephen Quin, President
& COO of Capstone Mining. "The Minto Mine continues to deliver increases in
mineral resources that we have successfully translated into increased mineral
reserves, copper production and mine life," he said. "Furthermore, as a
result of the successful exploration in 2006-2009, the Phase IV PFS outlines
an attractive option for yet more increases in the future, and we are already
planning how to crystallize this potential additional value, likely focused
on the development of an underground mine operating in parallel with the open
pits. This could allow higher feed grade, which could result in higher annual
copper production and an extended mine life."
Phase IV PFS Highlights
Brief highlights of the Phase IV PFS are summarized below, while
additional detail follows:
- Increase in mill throughput to 4,100 tonnes per operating day,
resulting in a sustained 1.37 million tonnes of ore per year
(3,750tpd after allowances for maintenance and availability).
- Proven and probable mineral reserves increased to 10.9 million tonnes
grading 1.64% copper, 0.64 g/t gold, and 5.9 g/t silver, for a
contained 395 million lbs of copper, 224,000 oz of gold, and
2.0 million oz of silver.
- Mine life extended to 2018 with an average of 45 million pounds of
copper production per year, with additional upside opportunities
identified, as discussed below.
- Life-of-mine capital cost of C$48.2 million, primarily based on an
assumption of conversion to self mining, which decision will be
subject to a cost-benefit analysis vs. remaining with contract
mining.
- Life-of-mine cash costs of US$1.34/lb of copper, after by-product
credits (with gold at US$300/oz and silver at US$3.90/oz, as per the
agreement with Silver Wheaton).
- Net present value, at a constant US$2.25/lb copper price for unhedged
production and a 7.5% discount rate, of C$199 million before tax and
C$160 million after tax, which amounts increase to C$291 million
before tax and C$218 million after tax at a flat US$2.60/lb copper
price for unhedged production, and to C$395 million before tax and
C$281 million after tax at a flat US$3.00/lb copper price for
unhedged production.
- Important opportunities identified for incremental higher grade
production relatively early in the mine life from underground mineral
resources not within the current Phase IV pits or the current mineral
reserve.
- A C$20 million allowance has been made in the cash flow model for
post-closure abandonment and reclamation.
Phase IV Pre-feasibility Study
The Phase IV Pre-feasibility Study was undertaken by SRK Consulting
(Canada) Inc. who were engaged by Capstone's wholly owned subsidiary, Minto
Explorations Ltd. ("MintoEx") to detail a new mineral resource and mineral
reserve estimate for the Minto Mine property and to describe the new-life-of
mine plan with costs and plant capacity improvements. Additional details are
provided in a technical report that will be filed on SEDAR within
approximately one week.
Mineral Resources
Updated mineral resources were estimated for each of the Area 2/118,
Ridgetop and Minto North deposits. The mineral resource estimates are
summarized below and are broken out by deposit at the end of this release.
Combined Mineral Resource Estimate at 0.5% Cu Cut-off for
---------------------------------------------------------
Area 2/118, Ridgetop, and Minto North Deposits(x)
-------------------------------------------------
(inclusive of reserves)(x)
--------------------------
-------------------------------------------------------------------------
Contained Contained Contained
Copper Gold Silver
Classifi- Tonnes Copper Gold Silver (000s (000s (000s
cation (000's)(x) (%) (g/t) (g/t) lbs)(x) oz)(x) oz)(x)
-------------------------------------------------------------------------
Measured
(M) 10,348 1.37 0.55 4.57 311,887 183 1,519
-------------------------------------------------------------------------
Indicated
(I) 13,920 0.94 0.30 3.39 287,179 136 1,519
-------------------------------------------------------------------------
Sub-total
(M+I)(xx) 24,267 1.12 0.41 3.89 599,066 319 3,038
-------------------------------------------------------------------------
Additional
Inferred 5,827 0.91 0.25 2.93 116,520 46 548
-------------------------------------------------------------------------
(x) This table excludes the remaining Minto Main Deposit mineral
resource
(xx) Totals may not add exactly due to rounding
The mineral resource estimate in the Area 2/118 and Ridgetop deposits
was completed by Dr. Wayne Barnett, Ph.D., Pr.Sci.Nat., an independent
qualified person as this term is defined in National Instrument 43-101. The
effective date of this resource estimate is June 1, 2009. Marek Nowak,
P.Eng., analyzed the data, reviewed and validated the mineral resource
estimates. The Minto North mineral resource estimate was completed by Garth
Kirkham, P.Geo., of Kirkham Geosystems, an independent qualified person as
this term is defined in National Instrument 43-101; the effective date of
this mineral resource estimate is December 1, 2009. See "Mineral Resource
Estimation" and "QA/QC" sections below for additional information.
Mineral Reserves
The Area 2/118, Ridgetop and Minto North ("Phase IV") deposits are
proposed to be developed as open pits following completion of mining in the
Minto Main deposit. The planning for this pre-feasibility study assumes a
start date of January 1, 2010. The proposed Main pit mine plan (as provided
by MintoEx) was incorporated into this Phase IV PFS.
Based on a start date of January 2010, the Main/Phase IV mine will
produce a total of 10.9 million tonnes ("Mt") of ore (includes Main pit
stockpile balance at end of 2009) and 70.4 Mt of waste and low grade material
over approximately an eight-year mine operating life ending in early 2018.
Permit amendments are required for production in 2012 and beyond. Mineral
reserves by deposit are detailed below.
Minto - Mineral Reserves Estimate by Deposit and Class for
----------------------------------------------------------
Main/Phase IV (including stockpiles)(x)
---------------------------------------
-------------------------------------------------------------------------
Cut-
off Diluted grade Contained Metal
Grade ----------------------------------------
(% Sil- Copper
Reserve Tonnes Copper Copper Gold ver (millions Gold Silver
Deposit Class ('000s) equiv) (%) (g/t) (g/t) lb) (oz) (oz)
-------------------------------------------------------------------------
Minto Proven 3,920 0.62 1.64 0.58 6.51 142 72 820
Main Probable 206 0.62 1.20 0.45 5.25 5 3 35
pit -----------------------------------------------------------------
Sub-total 4,126 0.62 1.62 0.57 6.45 147 75 855
-------------------------------------------------------------------------
Minto Proven 1,346 0.55 2.50 1.37 9.04 74 59 391
North Probable 3 0.55 2.91 1.07 13.11 0 0 1
Pit -----------------------------------------------------------------
Sub-total 1,349 0.55 2.50 1.37 9.05 74 60 393
-------------------------------------------------------------------------
Ridge- Proven 802 0.58 1.17 0.31 2.33 21 8 60
top Probable 522 0.58 1.39 0.50 4.90 16 8 82
Pit -----------------------------------------------------------------
Sub-total 1,324 0.58 1.26 0.38 3.34 37 16 142
-------------------------------------------------------------------------
Area Proven 3,707 0.56 1.56 0.59 5.36 127 71 639
2/118 Probable 387 0.56 1.09 0.19 2.79 9 2 35
Pit -----------------------------------------------------------------
Sub-total 4,094 0.56 1.51 0.56 5.12 137 73 674
-------------------------------------------------------------------------
Total Proven 9,775 0.58 1.69 0.67 6.08 364 211 1,911
Probable 1,118 0.58 1.25 0.38 4.26 31 14 153
-----------------------------------------------------------------
Total 10,893 0.58 1.64 0.64 5.89 395 224 2,064
-------------------------------------------------------------------------
(x) Totals may not add exactly due to rounding
The life-of-mine ("LOM") plan focuses on the mining and milling
high-grade ore first, with lower grade material stockpiled for blending and
processing later in the mine life. This is a strategy MintoEx has
successfully employed since production commenced, based on repeated
exploration success that has supported successive deferrals in the timing of
the processing of this lower grade material as additional higher grade
mineralization is discovered, defined and advanced to reserve status.
Open Pit Mining Production Schedule
The post-2009 mining sequence was divided into eight stages. The first
stage sees the completion of mining in the Main pit followed by Minto North,
the two stages in Ridgetop, Area 118 and finally three stages in Area 2. The
stages were designed to provide the required ore per period, to maximize
grade and defer stripping waste as long as possible.
Life-Of-Mine Open Pit Production Schedule (excluding existing stockpiles)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Year
------------------------------------------------------------
2010 2011 2012 2013 2014 2015 2016 2017 2018
Para- -----------------------------------------------------
meter Units Total Main pit Phase IV Pits
-------------------------------------------------------------------------
Mining
Ore Mt 10.0 2.0 1.3 0.3 1.4 1.2 1.4 1.3 1.1 -
Over-
burden Mt 16.9 4.9 3.4 2.3 1.2 1.6 1.0 1.9 0.7
Waste
Rock Mt 53.5 3.3 3.0 7.1 6.0 8.6 7.9 9.7 8.0
-------------------------------------------------------------------------
Total
Waste Mt 70.4 8.2 6.3 9.4 7.2 10.2 8.9 11.6 8.6 -
-------------------------------------------------------------------------
Total
Mat-
erial Mt 80.4 10.2 7.6 9.7 8.6 11.4 10.3 12.9 9.8 -
-------------------------------------------------------------------------
Strip Waste:
ratio Ore t 7.0 4.1 5.0 33.2 5.1 8.6 6.3 8.7 7.6 -
Daily
produ- 000s
ction t/day 27.5 27.8 20.9 26.4 23.5 31.1 28.3 35.3 26.8 -
Mined
Copper
grade % 1.66 1.71 1.59 1.20 2.43 1.28 1.42 1.42 1.80 -
Mined
Gold
grade g/t 0.65 0.52 0.67 0.50 1.24 0.43 0.51 0.51 0.73 -
Mined
Silver
grade g/t 5.93 7.04 6.23 2.27 8.71 3.76 5.23 4.48 6.00 -
-------------------------------------------------------------------------
Mil-
Mined lions
Copper lbs 367 74 45 7 75 33 44 42 45 -
Mined 000s
Gold oz 210 33 28 5 56 16 23 22 27 -
Mined 000s
Silver oz 1,912 447 257 21 394 143 238 192 221 -
-------------------------------------------------------------------------
Processing
Based on recent operating experience at the Minto Mine, combined with
metallurgical and comminution test work undertaken on each of the deposits
forming the Phase IV pits, recoveries and processing characteristics were
determined for each deposit, resulting in the mill processing profile
tabulated below.
Life-Of-Mine Mill Processing Schedule
-------------------------------------
-------------------------------------------------------------------------
Year
------------------------------------------------------------
2010 2011 2012 2013 2014 2015 2016 2017 2018
Para- -----------------------------------------------------
meter Units Total Main pit Phase IV Pits
-------------------------------------------------------------------------
Pro-
cessing
Process-
ed Ore Mt 10.9 1.2 1.4 1.4 1.4 1.4 1.4 1.4 1.4 0.1
Process
rate tpd 3,704 3,334 3,750 3,750 3,750 3,750 3,750 3,750 3,750 3,750
Process-
ed Cu
grade % 1.64 2.33 1.68 1.10 2.47 1.22 1.44 1.40 1.64 0.81
Process-
ed Au
grade g/t 0.64 0.80 0.67 0.35 1.27 0.40 0.52 0.50 0.65 0.25
Process-
ed Ag
grade g/t 5.89 9.84 6.48 3.64 8.88 3.66 5.32 4.44 5.52 2.67
-------------------------------------------------------------------------
Recovery
Copper % 92.8 94.0 94.0 93.6 92.0 92.3 92.0 92.0 92.4 92.0
Gold % 73.8 80.0 80.0 77.9 70.0 71.3 70.0 70.2 71.8 70.0
Silver % 81.3 86.7 86.7 84.9 78.0 79.1 78.0 78.2 79.6 78.0
-------------------------------------------------------------------------
Metal in Concentrates
Mil-
lions
Copper lbs 366 59 48 31 69 34 40 39 46 1
000s
Gold oz 164.8 25.0 23.5 12.2 39.2 12.5 16.0 15.6 20.4 0.5
000s
Silver oz 1,685 334 247 136 305 127 183 153 193 6
-------------------------------------------------------------------------
As noted in the Phase IV PFS, the mining schedule is not fully optimized
and will be reworked to smooth out production, particularly in the 2012-2014
period. Nor does this production profile include any contribution from
possible underground production, which could result in higher grade
underground feed displacing lower grade open pit feed, which would be
deferred into future years (see below).
Production Opportunities
In order to assess the possible opportunity for larger scale open pits
and their potential impact on future permitting requirements, a preliminary
study was conducted where an optimistic copper price and lower operating
costs were used to understand these potential pit limits. Although the large
scale pits provide the potential for more tonnage through the mill (due to
the lower operating costs and higher copper prices assumed), they do so at a
reduced copper grades and also would require significant increases in waste
dump capacities, as well as tailings storage requirements. It should be noted
that this large open pit scenario is preliminary in nature and only serves as
a rough indication of potential pit size.
Exploration on the Minto project has historically been focused on
finding near-surface deposits conducive to open pit mining. In the course of
exploration, several deeper deposits have been discovered that may provide an
opportunity to add mill feed material using underground mining methods. Both
deep penetrating geophysical surveys and core drilling have provided some
preliminary definition of deposits below 150m in depth, and these deposits
and targets may be amenable to underground exploitation. Additional details
on the potential for underground production are provided below.
Both scenarios will undergo continued evaluation, with the underground
potential being the preferred option due to the potential for the extraction
and processing of relatively higher copper grades sooner, with lower capital
than the large pit scenario.
Capital Cost Estimate
Life-of-mine capital costs are estimated at C$48.2 million, of which
$42.8 million is primarily related to the expansion of the process plant and
conversion to self mining in 2010 and 2011; the balance is sustaining capital
incurred over the remaining mine life.
Phase IV PFS Capital Cost Estimate
----------------------------------
--------------------------------------
Area C$ millions
--------------------------------------
Plant expansion 9.1
--------------------------------------
Open pit mining equipment 33.7
--------------------------------------
Sub-total 42.8
--------------------------------------
Sustaining Capital 5.4
--------------------------------------
Life-of-mine capital 48.2
--------------------------------------
The method of funding the possible acquisition of open pit mining
equipment, which could be by cash, capital lease or other method, will be
evaluated once a decision to proceed with self-mining has been made.
Alternatively, contract mining could continue, if contractors can achieve the
objectives set out under 'Operating Cost' section below, eliminating the need
for the open pit mining capital noted above. C$20 million has been allowed
for post-closure abandonment in the cash flow model. This amount is just an
allowance; actual costs will be estimated in conjunction with regulators
during the permitting process.
Operating Cost Estimate
The direct operating costs for the Phase IV PFS were estimated using
historical operating data from the Minto Mine and various planned
optimizations related to the Phase IV expansion.
Phase IV PFS Operating Cost Estimate
------------------------------------
------------------------------------------------------------
Area C$/t
------------------------------------------------------------
Mining ($/t material mined) 2.31
------------------------------------------------------------
------------------------------------------------------------
Mining ($/t milled) 17.02
------------------------------------------------------------
Processing ($/t milled) 13.90
------------------------------------------------------------
General, administration, camp, royalties ($/t milled) 11.94
------------------------------------------------------------
Total ($/t milled) 42.86
------------------------------------------------------------
This equates to a life-of-mine average total cash cost, after selling
costs and net of by-product credits, of US$1.34 per pound of copper. Actual
annual average reported costs in Capstone's financial statements could vary
from this amount due to treatment of inventory and stockpiles on an annual
basis.
Economics
SRK reports that the estimated economic benefit of mining the Minto
Phase IV deposits is sufficient to take the Phase IV expansion project to
the next level. While more detailed work will be required to optimize the
project, there is adequate economic justification for MintoEx to proceed
with further work and, in particular, the application for licence and
permit amendments from the Yukon Government.
The table below shows the comparison of Phase IV PFS Base Case (at a
flat US$2.25/lb for unhedged copper production) and Alternate Cases (at a
flat US$2.60 and US$3.00/lb for unhedged copper production, respectively).
The Phase IV deposits add economic benefit to the mine, yielding a Base Case
pre-tax Net Present Value at a 7.5% discount rate ("NPV7.5%") of C$199
million. The Alternate Case models yield a substantial improvement in the
project economics due to higher metal prices based on current forward
projections.
Comparison of Phase IV Base and Alternate Cases
-----------------------------------------------
-------------------------------------------------------------------------
Phase IV Phase IV Phase IV
PFS Base PFS PFS
Item Unit Case Case 2 Case 3
-------------------------------------------------------------------------
Waste mined (millions) tonnes 70.4 70.4 70.4
-------------------------------------------------------------------------
Ore mined (millions) tonnes 10.0 10.0 10.0
-------------------------------------------------------------------------
Total mined (millions) tonnes 80.4 80.4 80.4
-------------------------------------------------------------------------
Strip ratio (waste: ore) W:O 7.0 7.0 7.0
-------------------------------------------------------------------------
Mill Feed(x) Mt 10.9 10.9 10.9
-------------------------------------------------------------------------
Copper mill head grade % Cu 1.64% 1.64% 1.64%
-------------------------------------------------------------------------
Gold mill head grade g/t Au 0.64 0.64 0.64
-------------------------------------------------------------------------
Silver mill head grade g/t Ag 5.9 5.9 5.9
-------------------------------------------------------------------------
Copper in concentrates
(millions) lb 366 366 366
-------------------------------------------------------------------------
Gold in concentrates (000s) oz 166 166 166
-------------------------------------------------------------------------
Silver in concentrates (000s) oz 1,685 1,685 1,685
-------------------------------------------------------------------------
Concentrate Grade % Cu 40% 40% 40%
-------------------------------------------------------------------------
Copper Price Unhedged
production, flat) US$/lb $2.25 $2.60 $3.00
-------------------------------------------------------------------------
Copper Price (LOM average,
including hedging) US$/lb US$2.25 US$2.55 US$2.90
-------------------------------------------------------------------------
Gold price (net received from
Silver Wheaton) US$/oz $300.00 $300.00 $300.00
-------------------------------------------------------------------------
Silver price (net received
from Silver Wheaton) US$/oz $3.90 $3.90 $3.90
-------------------------------------------------------------------------
Exchange rate US$/C$ $0.91 $0.91 $0.91
-------------------------------------------------------------------------
NSR C$/t milled $75 $86 $99
-------------------------------------------------------------------------
Unit Mining Costs C$/t mined $2.31 $2.31 $2.31
-------------------------------------------------------------------------
Unit Total OPEX (incl.
royalties) C$/t milled $42.86 $42.92 $42.98
-------------------------------------------------------------------------
Unit On-site OPEX (inc. US$/lb Cu
royalties) payable $1.20 $1.20 $1.20
-------------------------------------------------------------------------
US$/lb Cu
Unit Off-site OPEX payable $0.29 $0.29 $0.29
-------------------------------------------------------------------------
US$/lb Cu
Unit By-product Credit payable $0.15 $0.15 $0.15
-------------------------------------------------------------------------
Unit OPEX net by-product US$/lb Cu
credits payable $1.34 $1.34 $1.34
-------------------------------------------------------------------------
Total Capital (initial,
sustaining) C$ millions $48 $48 $48
-------------------------------------------------------------------------
Allowance for closure costs C$ millions $20 $20 $20
-------------------------------------------------------------------------
NPV7.5% pre-tax C$ millions $199 $291 $395
-------------------------------------------------------------------------
NPV7.5% after tax C$ millions $160 $218 $281
-------------------------------------------------------------------------
(x) Note: Mill Feed includes Ore Stockpile
Base case sensitivity analyses were run for copper grade, copper price,
capital expense ("CAPEX"), and operating expense ("OPEX"). Each variable was
changed from -20% to +20% of the base case value. Each variable was changed
independently of the other variables so there is no compounding effect of
multiple variable modifications. The results show the project is most
sensitive to copper grade followed closely by copper prices. Normally grade
and metal price effects are equal but in Minto's case, the copper price is
hedged for some of the production so the effect of copper price is tempered
with some metal price certainty.
For Case 1 Sensitivity of Project Economics, please click:
files.newswire.ca/842/CapstoneMiningCase1.doc
Permitting & Reclamation
In order to implement the life-of-mine plan set out in the Phase IV PFS,
amendments will be required to the current operating permits and licences at
the Minto Mine for production in 2012 and beyond. With the Phase IV PFS as a
guide, MintoEx has commenced the process of preparing an application for such
amendments, which application it intends to file with the Yukon regulators in
the first half of 2010.
In the financial model, C$20 million has been allowed for mine site
reclamation following closure. However, it should be noted that this amount
is an allowance; the actual reclamation cost will be estimated in conjunction
with regulators during the permitting process.
Risks & Opportunities
The major risk areas identified in this study are:
1. Timing and approval of permit revisions, which could delay access to
new mining areas if not granted in time to allow stripping of Minto
North in 2012;
2. Exchange rates, metal prices and external influences;
3. Grade control, given the relatively narrower mineralized horizons in
the Phase IV pits as compared to the Minto Main pit.
The most important opportunities to improve the project are:
1. Optimization of mine plan to smooth out the production profile and
optimize stripping;
2. Underground production potential, bringing currently defined ex-pit
high grade feed to the mill relatively early in the mine life. A
conceptual level review was completed that involves underground
extraction of higher grade ore, eliminating the need for further
plant expansions and allowing processing of higher grade ore sooner
than in an expanded open pit scenario:
3. Conversion of current inferred mineral resources within existing
Phase IV pit outlines to higher classifications, increasing the
mineral reserve and reducing strip ratios:
4. Conversion of current higher grade inferred mineral resources
outside the existing Phase IV pit outlines to higher
classifications, possibly resulting in increased mineral reserves;
and
5. Discovery of new mineral resources and mineral reserves.
Underground Mining Opportunity
As part of the review of the mineral resources for the Phase IV PFS,
options for extracting deeper portions of the resources that remain outside
of the open pit limits were examined. One consideration was the potential for
underground extraction of mineral resources, particularly in the Area 2/118
areas, and the potential of other deeper, but higher grade discoveries such
as Minto East and Copper Keel.
Potentially Underground Mineable Mineralization in Area 118 and Area 2
----------------------------------------------------------------------
(Using Measured and Indicated Mineral Resources only)
-------------------------------------------------------------------------
Diluted Grade Thickness
(10%) (Min. 3m)
-------------------------------------
Cut-off In situ Max Average %
Value Tonnes Cu Au Ag Thickness Thickness Ben-
Deposit ($/t NSR) (000s t) (%) (g/t) (g/t) (m) (m) ching
-------------------------------------------------------------------------
60 1,340 1.98 0.79 8.3 15.9 7.1 40
Area 118 75 783 2.34 0.96 10.4 16.0 6.9 38
90 515 2.63 1.10 12.3 13.5 6.9 37
-------------------------------------------------------------------------
60 1,814 1.83 0.75 6.0 33.0 11.2 64
Area 2(x) 75 1,186 2.04 0.87 6.8 30.0 8.8 53
90 555 2.34 1.07 7.8 27.5 7.3 42
-------------------------------------------------------------------------
(x) Includes some mineralization currently in the Area 2 mine plan.
Based on geologic and geotechnical information, mining conditions in
these areas appear to be good and may be able to support high extraction,
relatively low cost, room and pillar mining. In order to access both the Area
2 and Area 118 mineralization, a 1,650m long, 5m by 5m decline at -15% has
been considered, with additional development required to access
mineralization and provide ventilation, with capital costs for such
development estimated at C$11.3 million (which includes leased underground
equipment, along with required infrastructure). Should the underground mining
potential of the Area 2/118 (and possibly the Minto East) zones be shown to
be favourable, it is estimated that an additional $8-10 million would be
required to purchase mining equipment, additional infrastructure and mine
development to build the potential mine production to a level of 1,000 to
2,000 tpd. Such production could be used to supplement open pit production,
providing higher grade feed within 2-3 years, thereby increasing overall
metal production, without further plant expansions, and extending the mine
life by stretching out the open pit production. Should underground
development occur, it could (a) provide supplemental higher grade feed
relatively quickly and (b) provide further impetus for the exploration of
other deeper, underground mining targets that have not been pursued to date.
If a $30/t average underground mining cost is assumed and a processing
and G&A cost of $23.09/t is used (as in Phase IV PFS) then the estimated
underground cut-off grade would be about 1.5% copper in situ. This equates to
an approximate cut-off NSR value of $60.00/t. The underground option has not
been factored into the Phase IV PFS and represents a significant upside
opportunity that MintoEx intends to pursue in the near term.
Large Pit Scenario
The work leading up to the Phase IV PFS also included the preliminary
examination of the possibility of a further increase in mill capacity, to
7,500 tpd, concurrent with expanded mining capacity, resulting in a reduction
in unit operating costs as efficiencies of scale come to bear. A reduction in
unit operating costs could result in conversion of mineral resources
currently outside the Phase IV pits into mineral reserves, particularly at
higher metal prices, justifying the higher throughput. However, such a
scenario involves more capital investment up front than the underground
option discussed above, and reaches the highest grades toward the end of the
mine life, and would thus appear to result in a less attractive investment
scenario than the underground option, except at high metal prices over the
entire mine life. MintoEx therefore intends to focus on evaluating the
underground option for its Phase V of the Minto Mine.
Mineral Resource Estimation
In the opinion of SRK, the block model mineral resource estimate and
mineral resource classification reported herein are a reasonable
representation of the global mineral resources at Area 2/118, Ridgetop, and
Minto North deposits at the current level of sampling. The mineral resources
presented herein have been estimated in conformity with generally accepted
CIM "Estimation of Mineral Resource and Mineral Reserves Best Practices"
guidelines and are reported in accordance with Canadian Securities
Administrators' National Instrument 43-101. Mineral resources are not mineral
reserves and do not have demonstrated economic viability. The estimated
mineral resources have been used in the preliminary feasibility study
described in this news release.
The database used to estimate the Area 2/118 and Ridgetop deposits was
audited by SRK and the mineralization boundaries were modelled by SRK based
on lithological and structural interpretations. Kirkham Geosystems audited
the Minto North database and modelled mineralization boundaries. SRK and
Kirkham Geosystems are of the opinion that the current drilling information
is sufficiently reliable to interpret with confidence the boundaries of the
mineralized domains and that the assaying data is sufficiently reliable to
support estimating mineral resources in respect of the mineral resource
estimates they are responsible for.
The "reasonable prospects for economic extraction" requirement for a
mineral resource generally implies that the quantity and grade estimates meet
certain economic thresholds, and that the mineral resources are reported at
an appropriate cut-off grade taking into account extraction scenarios and
processing recoveries. In order to meet this requirement, SRK and Kirkham
Geosystems consider that the Area 2/118, Ridgetop, and Minto North deposits
are amenable for open pit extraction.
In order to constrain the overall mineral resource envelope to
demonstrate reasonable prospects for economic extraction, for the Area 2/118
and Ridgetop deposits, the mineral resources are based on a combined
processing and G&A cost of C$5.00 per tonne of material processed (assuming a
much larger operation) and metal prices of US$2.85 per pound for copper,
US$900 per ounce gold, and US$12 per ounce silver. This upside pit shell puts
outside limits on the overall resource shell. Mineral resources at these
lower cut-offs were reported in a news release dated June 9, 2009.
The open pit resource is constrained by an optimized Whittle shell based
on the NSR model, overall slope angles of 50 degrees and the site operating
costs noted above. At Minto North, global resources have been reported.
Technical Report
—————-
A technical report summarizing the information in the Phase IV PFS will
be filed on SEDAR within approximately one week.
The TSX does not accept any responsibility for the adequacy or accuracy
of this press release.
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 & COO
for 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 (Canada) for Capstone.
The following SRK employees are the Qualified Persons ("QP") under
National Instrument 43-101 responsible for this project: Wayne Barnett,
P.Eng. - Geology as well as resource estimates for Area 2/118 and Ridgetop;
Cam Scott, P.Eng. - Waste dumps and Tailings Impoundments; Mike Levy, P.E. -
Geotechnical; Dino Pilotto, P.Eng. - Mining and Reserves; Gordon Doerksen,
P.E. - Project Overview. Clint Donkin of Ausenco is the QP for the Mineral
Processing and 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 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",
"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. 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. 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.
Mineral Resource Estimates for Individual Deposits
--------------------------------------------------
(excluding Main Deposit)
------------------------
Mineral Resource Statement at 0.5% Cu Cut-off for the Area 2/118
Deposit, SRK Consulting June 9, 2009
-------------------------------------------------------------------------
Contained Contained Contained
Copper Gold Silver
Classifi- Tonnes Copper Gold Silver (000s (000s (000s
cation (Kt)(x) (%) (g/t) (g/t) lbs)(x) oz)(x) oz)(x)
-------------------------------------------------------------------------
Measured
(M) 6,936 1.25 0.47 4.3 190,638 104 956
-------------------------------------------------------------------------
Indicated
(I) 11,301 0.92 0.29 3.4 230,198 106 1,220
-------------------------------------------------------------------------
Sub-total
(M+I)(xx) 18,237 1.05 0.36 3.7 420,836 210 2,176
-------------------------------------------------------------------------
Inferred 5,116 0.91 0.24 3.0 102,420 40 492
-------------------------------------------------------------------------
(x) Rounded to nearest thousand
(xx) Totals may not add exactly due to rounding
Mineral Resource Statement at 0.5% Cu Cut-off for the
Ridgetop Deposit, SRK Consulting June 9, 2009
-------------------------------------------------------------------------
Contained Contained Contained
Copper Gold Silver
Classifi- Tonnes Copper Gold Silver (000s (000s (000s
cation (000's)(x) (%) (g/t) (g/t) lbs)(x) oz)(x) oz)(x)
-------------------------------------------------------------------------
Measured
(M) 1,568 0.98 0.26 2.1 33,719 13 107
-------------------------------------------------------------------------
Indicated
(I) 2,355 0.98 0.33 3.3 50,926 25 250
-------------------------------------------------------------------------
Sub-total
(M+I)(xx) 3,923 0.98 0.30 2.8 84,645 38 357
-------------------------------------------------------------------------
Inferred 686 0.90 0.26 2.4 13,644 6 53
-------------------------------------------------------------------------
(x) Rounded to nearest thousand
(xx) Totals may not add exactly due to rounding
Mineral Resource Statement at 0.5% Cu Cut-off for the Minto North
Deposit, Kirkham Geosystems, Dec. 1, 2009
------------------------------------------------------------------------
Contained Contained Contained
Copper Gold Silver
Classifi- Tonnes Copper Gold Silver (000s (000s (000s
cation (000's)(x) (%) (g/t) (g/t) lbs)(x) oz)(x) oz)(x)
------------------------------------------------------------------------
Measured
(M) 1,844 2.15 1.11 7.7 87,530 66 456
Indicated
(I) 264 1.04 0.6 5.8 6,055 5 49
-------------------------------------------------------------------------
Sub-total
(M+I)(xx) 2,108 2.01 1.04 7.5 93,585 71 505
-------------------------------------------------------------------------
Additional
Inferred 25 0.84 0.40 4.4 457 0 3
-------------------------------------------------------------------------
(x) Rounded to nearest thousand
(xx) Totals may not add exactly due to rounding
For further information: about Capstone, please contact: Darren Pylot,
Vice Chairman & CEO, Stephen Quin, President & COO Or Investor Relations'
Jason Howe at +1(604)-684-8894 or +1(866)-684-8894, info@capstonemining.com
(CS.)
For further information: about Capstone, please contact: Darren Pylot, Vice
Chairman & CEO, Stephen Quin, President & COO Or Investor Relations' Jason
Howe at (604) 684-8894 or (866) 684-8894, info(at)capstonemining.com
Tags: canada, Capstone Mining Corp, Vancouver
