Capstone Mining to Acquire Far West Mining and Form Strategic Partnership and Joint Venture With Korea Resources Corporation

By Capstone Mining Corp., PRNE
Saturday, April 16, 2011

Creating a Financially Strong Copper Growth Story

VANCOUVER, April 17, 2011 - Capstone Mining Corp. ("Capstone" or the "Company") (TSX: CS) and Far
West Mining Ltd. ("Far West") (TSX: FWM) have entered into a definitive
agreement (the "Agreement") pursuant to which Capstone will acquire all of
the issued and outstanding common shares of Far West, by way of a
court-approved plan of arrangement. Under the terms of the Agreement, Far
West shareholders will be entitled to elect to receive, in exchange for each
Far West share held, 1.825 shares of Capstone and C$1.00 in cash. The
consideration implies a total transaction value of approximately C$725
million
. The consideration represents a total of C$9.19 per Far West share,
based on the volume weighted average price of Capstone shares on the TSX for
the 30 trading days ended April 15, 2011 and a premium of 30% to the volume
weighted average price of Far West shares on the TSX for the same period.

Far West's 100% owned Santo Domingo project ("Santo Domingo" or the
"Project") is a large-scale copper-iron-gold development project located in
Region III, Chile. Santo Domingo has the potential to be a long lived
significant copper and iron ore producer, based on an indicated mineral
resource of 486 million tonnes at a copper-equivalent(1) grade of 0.57% and
an additional inferred mineral resource of 61 million tonnes at a
copper-equivalent grade of 0.46%. The Project is strategically located near
key infrastructure (highway, rail, power, port, smelter and airport) in a
prolific, established mining district with several significant copper and
iron mining and smelting operations. A Preliminary Economic Assessment
("PEA") completed in May 2008, using indicated and inferred resources,
projected life of mine average annual production of 65,000 tonnes of
copper(2) and 4 million tonnes of iron concentrate. Since completion of the
PEA, the indicated mineral resource has more than doubled. The
pre-feasibility study, which the Company anticipates completing in Q3 2011,
is currently underway based on the updated mineral resource estimate.
If warranted by the pre-feasibility study, the Company may also consider
higher throughput rates, which could potentially increase copper production
significantly.

KORES Partnership

Capstone has also entered into agreements with Korea Resources
Corporation ("KORES") to form a long-term strategic partnership for the
development of Far West's Santo Domingo Project, subject to completion of the
Far West transaction. Under these agreements:

- Upon completion of the Far West acquisition, KORES will acquire a 30%
interest in Santo Domingo for cash consideration of approximately C$210
million
to Capstone.

- KORES will arrange for a debt financier to offer to provide funding, on
then prevailing market terms, for 65% of the capital costs of the Project and
fund 30% of the balance of the capital requirements at the Project.

- KORES will enter into an off-take agreement for 50% of all copper
concentrate and iron concentrate produced from the Project over the life of
the Santo Domingo mine, on then prevailing market terms (at the appropriate
time).

- Upon completion of the acquisition, KORES will subscribe for an
approximate 11% interest in Capstone to become Capstone's largest
shareholder. The private placement will represent approximately 39 million
Capstone shares and Capstone will receive proceeds of approximately C$170
million
, based on the volume weighted average price of Capstone shares on the
TSX for the 5 trading days ended April 15, 2011.

- KORES will appoint one representative to Capstone's board of directors
upon completion of the acquisition.

The agreements between Capstone and KORES are subject to a number of
conditions, including completion of the acquisition of Far West by Capstone.

Transaction Benefits

- Highly compelling transaction delivering fully-funded growth from Santo
Domingo
.

- Santo Domingo is favourably located with access to nearby
infrastructure and ongoing studies continue to demonstrate the potential for
significant copper and iron ore production.

- Consistent with Capstone's strategy of building a mid-tier copper
producer focused in the Americas forming a combined portfolio of high quality
operating mines and a strong pipeline of copper production growth in mining
friendly jurisdictions.

- Over 200% growth in anticipated copper production from 2011 to 2016 and
over 125% increase in measured and indicated copper contained in mineral
resources.

- Further asset diversification in a preferred mining geography.

- Robust cash flow generation in a company with a strong pro-forma
balance sheet and a strategic partnership with KORES to fund a leading copper
production growth profile.

- No future share dilution to fund Santo Domingo as Capstone expects to
fund its portion of Santo Domingo capital requirements through pro-forma
balance sheet and ongoing cash flow from operations.

- Enhanced capital markets profile through increased market
capitalization, which should further improve trading liquidity for
shareholders of Capstone.

Compelling Offer for Far West Shareholders

- Immediate premium to current share price.

- Opportunity to participate in the future potential of an Americas-based
mid-tier copper producer with a fully-funded growth pipeline.

- Santo Domingo project de-risking through Capstone and KORES'
development and operational expertise and funding capabilities.

- Exposure to a diverse portfolio of producing and development assets in
a robust commodity price environment.

- A platform through which to participate in future industry
consolidation.

- Increased trading liquidity through ownership of Capstone shares.

- Tax free roll-over option for Canadian shareholders, upon election of
share consideration.

Darren Pylot, Capstone's President and CEO commented, "The proposed
acquisition of Far West is consistent with Capstone's strategy of building a
growth focused mid-tier copper producer in the Americas and represents an
excellent value opportunity for our shareholders. Santo Domingo is a robust
development opportunity that will substantially increase Capstone's leverage
to copper and long-term growth profile. Our strategic partnership with KORES
brings significant financial support and mitigates risk for all
shareholders."

Rick Zimmer, Far West's President and CEO commented, "The proposed
transaction delivers an immediate premium to our shareholders. Moreover, it
provides our shareholders with the opportunity to participate in the future
potential of the combined portfolio of producing and development assets. We
are pleased to be announcing this transaction with Capstone. Their financial
strength and current base of operations, combined with the KORES partnership,
provide a clear path forward for the funding and development of Santo
Domingo
. This transaction has the potential to unlock the full value of Santo
Domingo
for all shareholders."

Transaction Overview

The proposed transaction will be carried out by way of a court-approved
plan of arrangement whereby Capstone will acquire all of the issued and
outstanding common shares of Far West and Far West would be held through a
newly-formed subsidiary of Capstone, to be owned 70% by Capstone and 30% by
KORES. Far West shareholders will be entitled to elect to receive, in
exchange for each Far West share held (i) 1.825 shares of Capstone and C$1.00
in cash, (ii) 2.047 shares of Capstone and C$0.001 in cash, or (iii) C$9.19
cash, subject to proration on the basis of an aggregate maximum cash amount
of approximately up to C$79 million and provided that no Far West shareholder
that elects option (iii) above, will receive less than C$1.00 in cash per Far
West share. The proposed transaction is subject to certain customary
conditions including the approval of not less than 66-2/3% of the votes cast
at a special meeting of Far West securityholders that is expected to be held
in June 2011 and not less than a majority of the votes cast at a special
meeting of Capstone shareholders that is expected to be held at approximately
the same time. The Far West annual general meeting will be rescheduled and
may be combined with the special meeting for Far West securityholders.
Pursuant to the terms of the Agreement, the proposed transaction is also
subject to applicable regulatory approvals and the satisfaction of certain
closing conditions customary for transactions of this nature. The arrangement
agreement also provides for, among other things, customary board support and
non-solicitation covenants from Far West (subject to customary "fiduciary
out" provisions that entitle Far West to consider and accept a superior
proposal and a 5-business day "right to match" in favour of Capstone). The
arrangement agreement also provides for the payment of a break fee of C$20
million
to Capstone and to Far West in certain specified circumstances.

The boards of directors of Capstone and Far West have each unanimously
determined that the proposed transaction is in the best interest of their
respective companies and fair to their respective shareholders and recommend
that their respective shareholders vote in favour of the proposed
transaction, other than those directors who were recused from meetings
regarding the Agreement. Scotia Capital provided a fairness opinion to
Capstone's board of directors that the transaction is fair, from a financial
point of view, to Capstone. The Far West Board's determinations are based on
the recommendations of a special committee of independent Far West directors.
BMO Capital Markets, financial advisor to Far West and its board of
directors, and National Bank Financial, fairness opinion provider to the
special committee of the board of directors of Far West, have each provided
an opinion to the effect that the consideration to be received by Far West
shareholders is fair, from a financial point of view, to Far West
shareholders. Far West's directors, senior management, Quadra FNX Mining Ltd.
and certain other shareholders, representing, in aggregate, approximately 38%
of Far West's fully diluted shares outstanding, have entered into customary
voting support agreements pursuant to which, among other things, they have
agreed to vote their Far West shares in favour of the proposed transaction.
Capstone's directors and senior management have entered into customary voting
support agreements pursuant to which, among other things, they have agreed to
vote their Capstone shares in favour of the proposed transaction.

If it is approved by securityholders of Far West and shareholders of
Capstone, the proposed transaction is expected to be completed in July 2011
and is subject to certain customary conditions, including receipt of all
necessary court, TSX and securityholder approvals. Upon completion of the
proposed transaction, a Far West nominee will be appointed to the board of
directors of Capstone. In order to accommodate the appointment of the Far
West and KORES nominees to the Capstone board, Stephen Quin has agreed to
resign from the board of Capstone upon the effective date.

The terms and conditions for the proposed transaction will be summarized
in the respective Management Information Circulars to be mailed to Far West
securityholders and Capstone shareholders in May 2011. Copies of the
Agreement, the agreements between Capstone and KORES, the Management
Information Circulars, and certain related documents and agreements will be
filed with Canadian securities regulators and will be available at the SEDAR
website at www.sedar.com under Capstone's and Far West's profiles, as
applicable.

Advisors

Scotia Capital is acting as lead financial advisor to Capstone and its
board of directors and a finders fee is payable upon closing of the
transaction to RCI Capital Group in respect of the KORES agreement. Scotia
Capital has provided a fairness opinion to Capstone's board of directors.
Capstone's legal counsel is Blake, Cassels & Graydon LLP.

BMO Capital Markets is acting as financial advisor to Far West and its
board of directors and National Bank Financial is acting as fairness opinion
provider to the special committee of the board of directors of Far West. Far
West's legal counsel is Davis LLP and Borden Ladner Gervais LLP is acting as
legal counsel to the special committee of the board of directors of Far West.

Gryphon Partners acted as financial advisor to KORES with respect to the
Capstone private placement. KORES' legal counsel is Stikeman Elliott LLP.

Conference Call

Capstone and Far West will hold a conference call at 8:30 a.m. Eastern
time
(5:30 a.m. Pacific time) on April 18, 2011 to allow shareholders,
securities analysts and investors the opportunity to hear management discuss
the transaction outlined herein. The call can be accessed by dialing (toll
free) (888)231-8191 or International (647)427-7450. The call will also be
webcast at:
event.on24.com/r.htm?e=307644&s=1&k=1E15C4AA5C5B8ACD107644F2D3F55E17.

The webcast and presentation can be accessed at Capstone or Far West's
websites at www.capstonemining.com or www.farwestmining.com,
respectively. The call will also be available for replay by dialing (toll
free) 1-800-642-1687 or International 1-416-849-0833 Password: 61244676 for
14 days. A slide presentation will be available on Capstone and Far West's
websites before the conference call.

Capstone Mining Corp.

Capstone Mining Corp. is a TSX-listed Canadian mining company whose
principal business activity is the production of copper from the Company's
two producing copper mines: the 100% owned Cozamin copper-silver-zinc-lead
mine located in Zacatecas State, Mexico and the 100% owned Minto
copper-gold-silver mine in the Yukon, Canada.

Using its operations as a springboard, Capstone aims to grow both
organically and through mergers and acquisitions: organic growth through
continued mineral resource and reserve expansions at its operating mines and
through the development of its 100% owned high grade Kutcho
copper-zinc-gold-silver deposit in British Columbia, while M&A provides
opportunities to accelerate that growth profile by combining with other
current producers or acquiring operating mines or development projects.

Capstone is included in the S&P/TSX Global Mining Index and S&P/TSX
Composite Index.

Additional information on Capstone Mining is available on Capstone's
website at www.capstonemining.com.

Far West Mining Ltd.

Far West Mining Ltd. is an international mineral exploration company
headquartered in Vancouver, Canada. Far West is primarily engaged in the
evaluation, acquisition, and exploration of mineral properties in Chile and
Australia. Far West's main project is the wholly owned Santo Domingo
copper-iron-gold deposit in Chile. The deposit has NI 43-101 compliant
indicated mineral resources of 486 million tonnes at a copper-equivalent
grade of 0.57% and inferred resources of 61 million tonnes at a
copper-equivalent grade of 0.46% (See news release dated July 12, 2010 for
the key assumptions, conditions and other factors on which these estimates
were based). The Project is located at low elevation (1000m), approximately
800km north of Santiago. There is superior infrastructure nearby, with a
paved highway (1km), power (7km), railway (7km), deep water port (60km) and
smelter (60km), which all provide an ideal scenario for rapid development of
the Project. Since the completion of the Preliminary Economic Assessment in
May 2008, the indicated mineral resource has more than doubled and the
recovery of copper and magnetite iron has been confirmed by detailed test
work. Far West is currently working towards completing a pre-feasibility
study due in Q3 2011 on Santo Domingo (news release dated April 16, 2011).

Additional information on Far West Mining is available on Far West's
website at www.farwestmining.com.

Korea Resources Corporation

Korea Resources Corporation is wholly-owned by the Korean government and
is charged with a policy mandate to further Korea's access to strategically
important mineral resources, both domestically and internationally. The
company carries out the Korean government's mineral resources policy
objectives by engaging directly, or indirectly through joint ventures or in
the form of minority investments, in overseas exploration, development and
production of strategically important mineral resources, and managing the
nation's stockpile of rare mineral resources.

Additional information on KORES is available on KORES' website at
eng.kores.or.kr.

Compliance With NI 43-101

The technical information in this news release has been prepared in
accordance with Canadian regulatory requirements set out in National
Instrument 43-101 and technical information related to Capstone has been
reviewed by John Sagman, P. Eng, Vice President, Technical Services,
Capstone, Qualified Person under NI 43-101. In addition, Gregg Bush, Senior
Vice President and Chief Operating Officer for Capstone, reviewed all
Capstone technical information in this news release. Richard Zimmer, P. Eng,
Chief Executive Officer of Far West has reviewed and approved all technical
information related to Far West.

Cautionary Note Regarding Estimates of Measured, Indicated and Inferred
Resources

This press release uses the terms "measured, indicated and inferred
resources." We advise U.S. investors that while these terms are recognized
and required by Canadian rules, they are not recognized by the SEC.
"Measured, indicated and inferred resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to their economic
and legal feasibility. It cannot be assumed that all or any part of a
"measured, indicated or inferred mineral resource" will ever be upgraded to a
higher category. Under Canadian rules, estimates of "inferred mineral
resources" may not form the basis of a feasibility study or pre-feasibility
studies. The SEC normally only permits issuers to report mineralization that
does not constitute "reserves" as in-place tonnage and grade without
reference to unit measures. U.S. investors are cautioned not to assume that
any part or all of a measured, indicated or inferred resource exists or is
economically or legally mineable.

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.

Forward-looking statements relate to future events or future performance
and reflect Capstone and Far West management's expectations or beliefs
regarding future events and include, but are not limited to, statements with
respect to the timing and implementation of the proposed transaction, the
integration of Capstone and Far West following the transaction, estimation of
mineral reserves and mineral resources, availability of cash flow to fund
capital requirements, the timing and amount of estimated future production,
availability of project financing, and success of mining and development
operations. Assumptions upon which such forward-looking statements are based
include that Capstone and Far West will be able to satisfy the conditions in
the Agreement, that the required approvals will be obtained from the
shareholders of each of Capstone and Far West, that all third party, court,
regulatory and governmental approvals to the transaction will be obtained,
tax treatment of the transaction and that all other conditions to completion
of the transaction will be satisfied or waived. Many of these assumptions are
based on factors and events that are not within the control of Capstone or
Far West and there is no assurance they will prove to be correct.

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", "potential", "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 Capstone and Far West 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 and
development activities; changes in project parameters as plans continue to be
refined; future prices of metals; possible variations in mineral 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 Capstone's and Far West'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 each of Capstone and Far West have 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. Capstone and Far West
provide 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.

1 Copper-equivalent grades calculated using prices of US$2.25/lb copper,
US$950/oz gold and US$0.74/dmtu iron (US$50 per tonne concentrate at 67.5%
iron content).

2 Based on AMEC International (Chile) S.A. Preliminary Assessment dated
April 30, 2008. Refer to "Forward-Looking Statements" and "Compliance With NI
43-101" for additional information.

Mineral Resources that are not mineral reserves do not have demonstrated
economic viability. Mineral resource estimates do not account for
mineability, selectivity, mining loss and dilution. These mineral resource
estimates include inferred mineral resources that are normally considered too
speculative geologically to have economic considerations applied to them that
would enable them to be categorized as mineral reserves. There is also no
certainty that these inferred mineral resources will be converted to measured
and indicated categories through further drilling, or into mineral reserves,
once economic considerations are applied. Also there is no certainty that
this Preliminary Economic Assessment will be realized.

For further information:

    Capstone Mining Corp.                    Far West Mining Ltd.
    Cindy Burnett, VP Investor Relations     Richard Zimmer, President & CEO
    Telephone: +1-604-637-8157               Telephone: +1-604-602-9144
    Email: cburnett@capstonemining.com       Email: info@farwestmining.com
    Website: www.capstonemining.com   Website:
                                             www.farwestmining.com

CO: Capstone Mining Corp.

.

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