Capstone Completes Prefeasibility Study on Phase V Expansion of Minto Copper-Gold Mine

By Capstone Mining Corp., PRNE
Sunday, March 13, 2011

Study Extends Mine Life to 2020 With Yearly Average Copper Production of 43 Million Pounds at an Average Cash Cost of $1.34/lb of Payable Copper

VANCOUVER, British Columbia, March 14, 2011 - Capstone Mining Corp. (CS: TSX) today reported the results of a
Prefeasibility Study for the Phase V expansion ("Phase V PFS") of its high
grade Minto copper-gold mine in the Yukon. This study recommends a ramp up in
mill throughput to an average production rate of 3,750 tonnes per day ("tpd")
throughput or 1.37 million tonnes per year processed in an optimized mill,
with ore to be extracted from new mineralized areas discovered in 2009 to
2010 not considered in previous studies. The Phase V PFS targets 400 million
pounds of copper in concentrate to be produced over a 10 year mine life,
commencing January 2011. New deposits not considered in the Phase IV study,
issued in December 2009, provided the basis to initiate the Phase V PFS.

"This Phase V PFS represents another significant milestone in the
development of the Minto Mine," said Darren Pylot, President & CEO of
Capstone. "The Phase V PFS at the Minto Mine has successfully translated
recent new mineral discoveries into increases in mineral reserves that are
shown to be amenable to a combination of open pit and underground mining that
will increase life of mine copper production."

"Furthermore, as a result of the successful exploration in 2009 and 2010,
the Phase V PFS outlines an attractive option for yet more increases in the
future. We are already in the planning stage to crystallize this potential
additional value, with a significant exploration campaign underway focused on
recent discoveries at Wildfire and Inferno and extensions to Copper Keel. We
anticipate new mineral resource models in 2011 that we expect to drive
further feasibility work needed to evaluate future expansion scenarios or
additional mine life. The commencement of underground mining in the second
quarter of 2011 will result in an extended mine life, processing of higher
grade ore earlier in the mine life, and continued improvement with respect to
environmental considerations."


(All amounts in Canadian dollars unless otherwise stated)

    - Net present value, at a constant US$2.75/lb copper price for un-hedged
      production and a 7.5% discount rate, of $284 million before tax and
      $206 million after tax;

    - Proven and probable Open Pit and Underground mineral reserves have
      increased to 12.9 million tonnes grading 1.53% copper, 0.60 g/t gold,
      and 5.2 g/t silver, for a contained 435 million lbs of copper,
      247,000 oz of gold,and 2.2 million oz of silver;

    - Mine life extended to 2020 with an average of 43 million pounds of
      copper production per year, with additional upside opportunities
      identified, as discussed below;

    - Life-of-mine capital cost of $76.0 million (excluding a closure cost
      allowance of $16 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; and

    - Life-of-mine cash costs of US$1.34/lb* of payable 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).

* This is a non-GAAP performance measure and readers should refer to
Non-GAAP Performance Measures note at the end of this news release for
further details.

Phase V PFS

The Phase V PFS was completed by SRK Consulting (Canada) Inc. ("SRK") who
were engaged by Capstone's wholly owned subsidiary, Minto Explorations Ltd.
("MintoEx") to detail new mineral resource and mineral reserve estimates for
the Minto Mine property, explore plant capacity improvements based upon
mineral reserve increases, design the new-life-of mine plan ("LOMP") with
open pit as well as underground mining and update operating and capital cost
estimates. The details of this PFS are provided in a technical report that
will be filed on SEDAR within 45 days.

New mineral resource estimates were completed for Area 2/118, Minto East
and Ridgetop based on exploration drilling results from 2009 and 2010. The
Minto Main mineral resource estimate was updated to reflect changes due to
mining, while the Minto North estimate remains unchanged. A new LOMP was
generated using mineral reserves generated from the above mineral resource
estimates after appropriate economic and technical considerations were
applied. This new PFS incorporates underground mineral reserves and
incorporates in-pit tailings disposal methodology.

The Phase V PFS supersedes and replaces prior development studies, which
should no longer be relied upon.

Mineral Resource Estimation

The combined mineral resource estimate generated for this Phase V PFS is
shown in the table below. For additional information, including the
contribution of each deposit to the overall mineral resource, the mineral
resource estimates at different cut-off grades, the parameters used to
conduct the estimate, and the appropriate National Instrument 43-101 ("NI
43-101") disclosure, readers should refer to the technical report.

Combined Mineral Resource Statement at 0.5% Cu Cut-off for Area 2/118,
Ridgetop, Minto Main, Minto North and Minto East Deposits. (1)

        Class     Tonnes  Copper Gold  Silver    Copper      Gold     Silver
                 (000's)  (%)   (g/t) (g/t)   (thousands  (000s oz) (000s oz)

    Measured (M)   13,136  1.40   0.57   4.71   406,624       239      1,989
    Indicated (I)  24,341  0.93   0.31   3.33   498,917       240      2,604
    M & I          37,476  1.10   0.40   3.82   905,540       479      4,592
    Inferred        5,955  0.83   0.25   2.82   107,879        48        540

    (1) Numbers may not total due to rounding

In the opinion of SRK, the block model mineral resource estimate and
mineral resource classification reported herein are a reasonable
representation of the mineral resources at Area2/118, Ridgetop, Minto North
and Minto East 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' NI 43-101. Mineral resources are not mineral reserves and do
not have demonstrated economic viability. Only Measured and Indicated mineral
resources have been used in the preliminary feasibility study described in
this report.

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. NI 43-101 Qualified Person
Garth Kirkham, P.Geo., estimated resources for Minto North and Minto East
deposits and audited the Minto North and Minto East database and modelled
mineralization boundaries.

SRK is 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 order to demonstrate a reasonable expectation of economic extraction,
SRK constrained the overall mineral resource with a Whittle(TM) pit
optimization software shell using the factors shown in the table below. Only
the mineral resources within the shell that met the cut-off grade were
considered as resources.

Whittle Optimization Parameters for Mineral
Resource Estimate Constraint

    Constraining Parameter         Unit        Value

    Copper Price                  US$/lb       2.85
                                   C$/lb       3.17
    Gold Price
                                  US$/oz        900
                                   C$/oz       1000
    Silver Price
                                  US$/oz         12
                                   C$/oz      13.33
    Exchange Rate                C$: US$       1.11
    Mining Cost               C$/t mined       1.50
    Processing and G&A Cost  C$/t milled       5.00
    Royalty                            %        0.5
    Slope angles        degrees (overall)        50

Mineral Reserves

The mine plan for the study assumes a start date of January 1, 2011. Open
pit mining on the Main deposit is projected to be finished with the
completion of Stage V in the second quarter of 2011. The Ridgetop and Minto
North deposits are proposed to be developed exclusively as open pits
following completion of mining in the Minto Main deposit. The Area 2/118
deposit is proposed to be mined using a combination of open pit and
underground mining methods. The Minto East deposit is to be developed as an
underground mine with access coming from an extension of the Area 2/118

Based on a start date of January 2011, the Minto Phase V open pit and
underground mines will produce a total of 12.9 million tonnes ("Mt") of ore
(includes the Main pit stockpile balance at the end of 2010) and 58.5 Mt of
waste to be placed in dumps or back-filled into open pits. Mining takes place
over 7.5 years ending in mid-2018. Mill operations will continue processing
stockpiled ore for an additional two years to mid-2020. In order to attain
the proposed LOMP schedule, amendments to the current mining permits and
water licence are required in the third quarter of 2012. Mineral reserves by
deposit are detailed below.

Detailed mine design, planning and scheduling was then conducted on the
optimal pit shells to produce the current pit designs. The Whittle parameters
for open pit mine design are shown in the following table.

Summary of Whittle(TM) Parameters Used for Pit Design

    Item                               Unit    Value
    Metal Prices and Exchange Rate
    Copper                           US$/lb     2.25
    Gold*                            US$/oz   300.00
    Silver*                          US$/oz     3.90
    Exchange rate                    US$/C$     0.86
    Copper recovery to concentrate      max       92%
    Gold recovery to concentrate        max       70%
    Silver recovery to concentrate      max       80%

*Based on terms of royalty stream agreement with Silver Wheaton.

Underground mine planning also started with the Net Smelter Return
("NSR") block model and then assumed a 1.2% Cu equivalent cut-off grade
("COG"). Datamine(TM) MRO software was utilized to determine economic mining
shapes for underground extraction. Small mineralized zones distant from any
proposed access were excluded from the mine plan.

Mineral Reserves by Class for Phase V

      Deposit     Mineral          Diluted grade    Contained Metal
                  Reserve  Tonnes
                   Class    (Mt)
                                   Cu    Au    Ag    Cu      Au  Ag
                                  (%)   (g/t) (g/t) (Mlb) (koz) (koz)
       Main*      Proven    2.25  1.35   0.46  4.79  67    33     346
                 Sub-total  2.25  1.35  0.46  4.79   67    33    346
       North      Proven    1.52  2.36  1.28  8.55   79    63    419
                 Probable   0.01  2.25  0.81  9.38    0     0      2
                 Sub-total  1.53  2.36  1.27  8.56   79    63    421
      Ridgetop    Proven    0.63  1.10  0.25  2.05   15     5     41
                 Probable   0.71  1.11  0.37  3.55   17     9     81
                 Sub-total  1.34  1.11  0.32  2.85   33    14    122
       Area 2     Proven    3.37  1.41  0.53  4.94  105    58    536
                 Probable   1.45  1.08  0.31  3.59   35    15    167
                 Sub-total  4.82  1.32  0.47  4.53  140    72    703
        118       Proven
                 Probable   0.49  1.29  0.09  1.73   14     1     27
                 Sub-total  0.49  1.29  0.09  1.73   14     1     27
    Under-ground  Proven
                 Probable   2.44  1.90  0.82  6.71  102    64    527
                 Sub-total  2.44  1.90  0.82  6.71  102    64    527
       Total      Proven    7.77  1.56  0.63  5.37  266   158  1,343
                 Probable   5.09  1.50  0.54  4.91  169    89    804
                 Total     12.87  1.53  0.60  5.19  435   247  2,146

*includes stockpile balance of 1,631 kt at beginning of 2011 for Main pit
but excludes approximately 0.25Mt of partially oxidized material from

Life of Mine Production Schedule

The mining sequence was divided into various stages. The first stage sees
the completion of mining in the Main Pit (Stage 5) followed by the first
stage of Area 2 (contractor mined), followed by mining of Minto North, Area
118, second stage of Area 2, then two stages in Ridgetop, and finally the
last two stages in Area 2. As noted in the table below, underground
production supplements the open pit mine ore feed. The stages were designed
to provide the required mill feed per period, to process higher grade ore
sooner, to defer stripping of waste as long as possible and to accommodate
in-pit tailings storage.

Life-Of-Mine Production Schedule (excluding existing stockpiles)

        Area     Unit 2011  2012  2013  2014   2015   2016  2017  2018
    Main Stage 5  Kt  618      -     -      -      -     -     -    -
         UG       Kt   13    630   730    730    338     -     -    -
    Minto North   Kt    -      -   281  1,248      -     -     -    -
      Ridgetop    Kt    -      -     -      -      -   773   564    -
    A2 Stage 1&2  Kt  188  1,338     -     65  1,217   742     -    -
        118       Kt    -      -     -    491      -     -     -    -
    A2 Stage 3&4  Kt    -      -     -      -      -     -   449  822
       Total      Kt  819  1,968 1,011  2,534  1,555 1,515 1,013  822


The mill processing profile used in the Phase V PFS is based upon a
combination of three years of operating experience of the Minto Mill,
combined with new metallurgical and comminution test work undertaken on each
of the deposits comprising the Phase V PFS mineral reserves. Metal recoveries
were averaged over all deposits but concentrate grades were individually
determined for each deposit. The LOM processing schedule is shown below:

Life-Of-Mine Mill Processing Schedule

    Parameter  UNIT   2011-                        Y E A R
                                     '11     '12      '13     '14     '15

    Mill Feed  tpd      3,718     3,442    3,750    3,750   3,750   3,750
    Mill Feed   Mt       12.9     1.256    1.373    1.369   1.369   1.369
    Feed Grade Cu %      1.53      1.60     1.86     1.70    2.86    1.62
                Au        0.6       0.6      0.7      0.7     1.5     0.6
                Ag        5.2       6.0      7.2      5.4    10.0     5.8
     Recovery  % Cu        92        92       92       92      92      92
     to Conc.
               % Au        70        70       70       70      70      70
               % Ag        78        78       78       78      78      78
      Conc.    % Cu        39      41.5     38.0     39.0    38.0    38.0
      Conc.    dmt    470,478    44,633   61,728   54,846  94,937  53,519
      Conc.    Mlb      400.4      40.8     51.7     47.2    79.5    44.8
      Metal     Cu
                oz    173,146    16,807   22,531   22,259  45,118  19,488
                oz  1,673,940   188,612  246,680  184,654 341,791 197,647

(table continued)

                     Y E A R

        '16      '17      '18     '19     '20

      3,750    3,750    3,750   3,750   3,750
      1.373    1.369    1.369   1.369   0.653
       1.68     1.11     0.96    0.78    0.78
        0.7      0.3      0.3     0.2     0.2
        5.7      2.9      3.2     2.2     2.2
         92       92       92      92      92
         70       70       70      70      70
         78       78       78      78      78
       38.0     38.6     38.6    38.7    38.7
     55,956   36,066   31,201  25,449  12,134
       46.9     30.7     26.6    21.7    10.4
     20,538    9,375    8,246   5,948   2,836
    194,509  100,627  110,290  73,897  35,234

Capital Cost Estimate

Life-of-mine capital costs are estimated at $76.0 million, of which $32.0
is primarily related to the conversion to self-mining in 2012 and
$34.1 million is related to the commencement of underground mining; the
balance is contingency and sustaining capital incurred over the remaining
mine life. An additional closure cost allowance of $16M was used in the cash
flow analysis, as per an estimation completed in 2010. The earlier 2009 PFS
closure cost allowance was $20M, but was considered to be a preliminary
estimate. The 2010 estimate was done in more detail with increased accuracy.

Phase V PFS Capital Cost Estimate

                      Area                   Unit - C$ Cost Estimate

    Open Pit Mining Equipment Fleet             M$         32.0
    Underground Equipment (fixed and mobile)    M$         18.3
    Underground Development                     M$         15.8
    Process Plant                               M$          5.0
    Contingency                                 M$          3.1
    Sustaining Capital                          M$          1.8
    TOTAL CAPITAL COST                          M$         76.0

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 on self-mining has been made. Alternatively,
contract mining could continue, if contractors can achieve the objectives set
out under "Operating Cost Estimate" section below, eliminating the need for
the open pit mining capital noted above.

Operating Cost Estimate

The direct operating costs for the Phase V PFS were estimated using
actual operating data from the Minto Mine using contract mining and from
various planned optimizations related to the Phase V expansion and
Underground Mining.

Phase V PFS Operating Cost Estimate

                      Area                   Unit - C$  Cost Estimate

    Open Pit Mining*                         $/t milled     13.37
    Underground Mining*                      $/t milled     35.17
    Total Mining                             $/t milled     20.04
    Processing                               $/t milled     12.94
    General, administration, camp, royalties $/t milled     12.13
    Total                                    $/t milled     45.11

*Of the 12.87 M tonnes in reserves, 2.44 M tonnes are extracted with
underground mining methods

The operating cost estimate 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 payable copper. Actual annual average reported costs in Capstone's
financial statements could vary from this amount due to treatment of
inventory, deferred stripping costs and stockpiles on an annual basis.


SRK reports that the estimated economic benefit of mining the Minto Phase
V deposits is sufficient to proceed with further work such as underground
development and, in particular securing the required licence and permit
amendments from the various regulatory agencies.

The Phase V mine expansion adds economic benefit to the mine, yielding a
Base Case "A" (US$2.75 / lb for non-hedged copper production) pre-tax Net
Present Value at a 7.5% discount rate ("NPV7.5%") of $284M. NPV's and copper
price assumptions for all three cases used in the study are:

                                                   Pre-tax        After-tax
                                                   NPV7.5%         NPV7.5%

      - Case A (Base Case) (US$2.75/lb Cu):         $284M           $206M
      - Case B (US$2.25/lb Cu):                     $180M           $142M
      - Case C (variable US$3.60/lb Cu to           $266M           $194M
      US$2.25/lb Cu):

Case B represents the metal price used in the latest mineral reserve

The following table summarizes the three economic scenarios:

Comparison of Phase V PFS Base and Alternate Cases

                 Item                    Unit       Case A   Case B   Case C

              Waste mined                 Mt                  58.5
               Ore mined                  Mt                  11.2
              Total mined                 Mt                  69.7
              Mill Feed*                  Kt                  12.9
         Copper millhead grade           % Cu                 1.53
          Gold millhead grade           g/t Au                0.60
         Silver millhead grade          g/t Ag                 5.2
            Copper in cons                Mlb                  400
             Gold in cons                 Koz                  173
            Silver in cons                Koz                1,674
           Concentrate Grade             % Cu                   39
    Base Copper Price (ex. hedging)     US$/lb       2.75     2.25   3.60 to
    Ave. Copper Price (inc.             US$/lb       2.73     2.25      2.65
       Gold price (inc. hedging)        US$/oz        331      324       333
      Silver price (inc. hedging)       US$/oz       3.90     3.90      3.90
      Exchange rate (LOM average)       C$/US$       1.09     1.16      1.08
         NSR (inc. royalties)         C$/t milled   84.29    73.99     80.63
            Unit Total OPEX           $/t milled             45.11
           Unit On-site OPEX           US$/lb Cu              1.50
          Unit Off-site OPEX           US$/lb Cu     0.30     0.31      0.30
        Unit By-product Credit         US$/lb Cu     0.16     0.15      0.16
    Unit OPEX net by-product           US$/lb Cu     1.34     1.35      1.34
    credits                             payable
    Total Capital (initial &              C$M                   76
      Allowance for closure cost          C$M                   16
            NPV7.5% pre-tax               C$M         284      180       266

*Mill Feed includes ore stockpile.

Permitting & Reclamation

In the Yukon, mining projects require an environmental assessment prior
to the issuance or amendment of significant operating permits for mining,
including a Type A Water Use Licence and a Quartz Mining Licence ("QML").
Elements of the Minto Project have undergone environmental assessment
previously. A milling and mining rate increase (2008) and the Phase IV
expansion (2010) have recently been assessed by the Yukon Environmental and
Socioeconomic Assessment Board ("YESAB").

The major instruments permitting and governing operations for the project
include Type A and B Water Use Licences, issued by the Yukon Water Board, and
a QML issued by Yukon Government, Energy Mines and Resources.

Water management planning, as expected, is of particular interest to the
stakeholders. The amendment to the Type A Water Use Licence is expected to be
issued in the first quarter of 2011. The expansion of the Minto Mine in the
Phase IV development received an environmental assessment under the Yukon
Environmental and Socioeconomic Assessment Act ("YESAA") and will require QML
amendments. The first such QML amendment is anticipated to be issued in the
first quarter of 2011, with the remaining necessary QML amendments expected
during the second quarter of 2011. Certain components of Phase IV will
require another amendment to the Type A Water Use Licence, which may be
issued by the end of the third quarter of 2011.

The project is about to enter the YESAA process again for the Phase V
expansion project with the assumption that the applicable licence amendments
will be issued by the end of 2012.

Risks & Opportunities

The major risk areas identified in this study are:

1. Timing and approval of Phase IV and Phase V mine permit revisions;

2. Exchange rates, metal prices and external influences;

3. The ability to develop the underground mine as per the mining

4. The ability to transform open pit mining operations to an
owner-operated fleet; and

5. The ability to maintain minimum dilution through effective grade
control practices.

The most important opportunities to improve the project are:

1. Optimization of mine plan;

2. Discovering new mineral resources and converting them to mineral
reserves; and

3. Plant capacity expansion potential.

Looking Forward

With the Phase V PFS in hand, MintoEx can now proceed towards submission
of the Phase V permit, developing an underground access decline and
constructing supporting infrastructure such as surface ventilation systems.

Technical Report

The full Phase V PFS, prepared as a NI 43-101 compliant Technical Report,
will be filed under Capstone's profile on SEDAR at
within 45 days.

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 John Sagman, P. Eng, Manager of Projects,
Capstone Mining Corp. Gordon Doerksen, P.Eng. of SRK has reviewed this news
release for accuracy to the Phase V PFS report. Exploration activities at the
Minto Mine are carried out under the supervision of Brad Mercer, P. Geol.,
VP, Exploration of Capstone Mining Corp.

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 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 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. The Company provides 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

* Non-GAAP Performance Measures

"Total Cash Costs" and "Unit Total Operating Costs" 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.

For further information:

    Capstone Mining Corp.
    Cindy Burnett, VP Investor Relations
    Telephone: +1-604-637-8157


Capstone Mining Corp., Cindy Burnett, VP Investor Relations, Telephone: +1-604-637-8157, Email: cburnett at

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