Capstone Reports Production & Cash Operating Costs for the First Half of 2010
By Capstone Mining Corp., PRNESunday, July 18, 2010
38.8 Million Pounds of Copper in Concentrates With an Estimated Total Cash Cost(1) of US$1.23 per Pound of Payable Copper
VANCOUVER, July 19, 2010 - Capstone Mining Corp. (CS: TSX) today announced its operating results for
the three and six months ended June 30, 2010 from its two operations, the
Cozamin and Minto mines. Combined production totalled 17.9 and 38.8 million
pounds of copper in concentrates in the second quarter and first six months,
respectively, with additional significant by-products of lead, zinc, silver
and gold. The total cash costs(1), net of estimated by-product credits and
selling costs, were US$1.31 and $1.23 per pound of payable copper produced,
respectively. At June 30, 2010 Capstone had a cash balance of US$151.5
million (including restricted cash of US$10.7 million), a significant
increase partially attributable to the sale during the quarter of higher than
normal concentrate inventory accumulated at the Cozamin Mine in the first
quarter of 2010, and sale of some investments. Full financial results will
be reported on August 10, 2010, as discussed below.
"As previously disclosed, Capstone's two operations, the Cozamin and
Minto mines, were expected to have lower than planned production during the
second quarter due to previously discussed production constraints and
interruptions," said Stephen Quin, President of Capstone Mining Corp.
"Production should return to design levels during the third quarter as the
root causes of the production constraints have been identified, are temporary
in nature and are being addressed." As a result of these production
shortfalls, Capstone has reduced its guidance for 2010 to a total of 80 to 85
million pounds of copper in concentrates, but maintains its guidance for
total cash costs of production of US$1.10 to US$1.20/lb of payable copper."
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Q1 2010 Q2 2010 YTD 2010
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Copper in concentrates
(millions of pounds)
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- Cozamin 9.9 7.8 17.7
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- Minto 12.0 10.1 21.1(xx)
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Total 21.9 17.9 38.8
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Total Cash Costs(1)
(US$/lb of payable copper)
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- Cozamin $0.82 $1.27 $1.02
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- Minto(x) $1.37 $1.34 $1.41
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Average $1.12 $1.31 $1.23
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(x) Minto's operating costs are adjusted to exclude mining of ore and
waste not related to concentrate produced in the period, these costs
are capitalized or inventoried in the financial statements, then
expensed when the associated ore is processed.
(xx) Minto realized negative adjustments to previously reported copper
production based on the final settlement of copper sales during the
first six months in the amount of one million pounds. As these
amounts are related to shipments made over the first six months, but
relate to production in the latter part of 2009 and early 2010, the
adjustments are only reflected in the year to date column, therefore
certain lines will not sum across.
Operational Highlights for the three and six months ended June 30, 2010
The following is a summary of operational highlights for Capstone during
the three and six months, respectively, ended June 30, 2010:
- Production of 17.9 and 38.8 million pounds of copper contained in
concentrates, respectively.
- By-product production of 3.9 and 7.7 million pounds of zinc, 2.3 and
5.8 million pounds of lead and 335,142 and 798,838 ounces of silver
in concentrates, for the three and six months, respectively. Final
gold production is not available since assaying is done off site,
but is estimated at 5,802 and 13,358 ounces for the respective
periods.
- Production of 17.3 and 37.4 million pounds of payable copper in
concentrate for the second quarter and first six months of 2010,
respectively.
- Total cash cost per pound of payable copper produced(1) of US$1.31
and $1.23 in the three and six months, respectively, versus
previously published guidance of approximately US$1.10 to $1.20 per
pound.
- Cozamin Mine results for the three and six months ended June 30,
2010, respectively, were:
- Produced 7.8 and 17.7 million pounds of copper contained in
concentrates, along with by-products of 3.9 and 7.7 million
pounds of zinc, 2.3 and 5.8 million pounds of lead and 285,933
and 687,370 ounces of silver, respectively, for the second
quarter and first six months of 2010;
- Processed 232,847 tonnes (2,559 tpd) and 492,503 tonnes
(2,721 tpd) of ore averaging 1.69% and 1.80% copper, 1.28% and
1.22% zinc, 0.65% and 0.82% lead, with 55 and 60 grams per
tonne ("g/t") silver respectively, for the second quarter and
first six months;
- Total tonnes processed was below potential capacity of the
process plant because of lower than anticipated production
from the wider, higher grade stopes, which limited the number
of operating days for the process plant. When feed was
available, the plant typically averaged 3,200 to 3,500tpd;
- Produced 14,343 and 32,937 dry metric tonnes ("dmt") of copper
concentrate averaging 24.7% and 24.4%, 3,682 and 7,363 dmt of
zinc concentrate averaging 47.9% and 47.2% and 1,516 and
4,068 dmt of lead concentrate averaging 67.5% and 65.0%; and
- Produced 7.5 and 17.0 million pounds of payable copper at an
estimated total cash cost(1), net of estimated by-product
credits and estimated selling costs, was US$1.27 and $1.02 per
pound of payable copper produced; and
- Copper production in Q2/10 was below plan primarily as a
result of lower than anticipated production from the higher
copper grade, wider stopes, as discussed below.
- Minto Mine results for three and six months ended June 30, 2010,
respectively, were:
- Produced 10.1 and 21.1 million pounds of copper contained in
concentrates, along with by-product 49,210 and 111,468 ounces
of silver and gold estimated at 5,802 and 13,358 ounces,
respectively, for the second quarter and first six months;
- Processed 185,296 tonnes (2,036 tpd) and 414,634 tonnes
(2,291 tpd) of ore averaging 2.66% and 2.48% copper, an
estimated 1.3g/t and 1.3g/t gold and 10g/t and 9.5g/t silver;
- Produced 10,362 and 23,534 dmt of copper concentrate averaging
44.4% and 40.6%;
- Produced 9.8 and 20.4 million pounds of payable copper at an
estimated total cash cost(1) of US$1.34 and $1.41 per pound of
payable copper;
- Copper production in Q2/10 was significantly below plan as a
result of(1) operations being suspended for a week due to a
forest fire within the area which resulted in a seven day
suspension of operations at the mine site and(2) throughput
restrictions in the tailings plant (see discussion below);
- Announced additional high grade copper-gold results from Minto
East on April 27, 2010 and reported a mineral resource
estimate for Minto East on June 23, 2010. Also, on June 8,
2010, provided information for the proposed Minto mine Phase V
expansion and permit application.
- Kutcho Project:
- Subsequent to quarter end, completed an enhanced preliminary
economic assessment (filed on July 13, 2010) which followed
through on several opportunities identified in the 2009
preliminary assessment, such as enhanced metallurgical
performance and reduction in power expenditures.
Operating Details - Cozamin Mine
Key operating statistics for the Cozamin Mine for the first and second
quarter and year-to-date for 2010 are presented below:
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Q2 2010 YTD 2010
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Production(2)
(contained in concentrates)
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- Copper (000s pounds) 7,803 17,743
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- Lead (000s pounds) 2,257 5,826
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- Zinc (000s pounds) 3,891 7,664
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- Silver (ounces) 285,933 687,370
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Mine
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- Tonnes of ore mined 230,150 491,019
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Mill
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- Tonnes processed 232,847 492,503
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- Tonnes processed per day 2,559 2,721
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- Copper grade (%) 1.69 1.80
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- Lead grade (%) 0.65 0.82
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- Zinc grade (%) 1.28 1.22
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- Silver grade (g/t) 55 60
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Recoveries
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- Copper (%) 89.9 90.6
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- Lead (%) 67.4 65.4
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- Zinc (%) 59.2 57.7
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- Silver (%) 69.9 72.5
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Concentrate(2)
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- Copper (dmt) 14,343 32,937
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- Copper (%) 24.7 24.4
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- Silver (g/t) 492 498
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- Lead (dmt) 1,517 4,068
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- Lead (%) 67.5 65.0
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- Silver (g/t) 1,207 1,115
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- Zinc (dmt) 3,682 7,363
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- Zinc (%) 47.9 47.2
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On site Operating Costs (US$/t milled)(1) US$50.19 US$46.55
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Total cash cost per pound of payable copper(1) US$1.27 US$1.02
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(2) Adjustments based on final settlements will be made in future
periods.
Production constraints underground at the Cozamin Mine limited mill
throughput during the quarter. Key high copper grade, wide stopes on the 11
level produced less tonnes than anticipated during the quarter due to a
continued focus on ensuring the geotechnical stability of these important
production areas. Mine production was supplemented by mining areas higher in
the system, which had higher lead and zinc grades, and the opportunistic
mining of high lead grade areas in the hanging wall of the main Mala Noche
vein system that are not carried in mineral resources or mineral reserves.
Production was also affected by the previously reported fatality in April,
which resulted in a three-day cessation of operations. Capstone continues to
work with its geotechnical consultants to ensure the geotechnical stability
of the widest, high copper grade areas, installing additional cable bolts,
which reduces productivity from and increases costs in these areas. In order
improve mine production, Capstone has advanced development on the 12 level,
and has opened up two new high copper grade stopes on this level, which
commenced production in early July. As a result of lower tonnage mined and
processed, unit operating costs per tonne were higher than anticipated,
resulting in higher total cash costs per pound of payable copper, partially
offset by higher by-product credits.
During the three months ended June 30, 2010, the Cozamin Mine shipped
and recorded as revenue 21,300 dmt of copper, 2,713 dmt of lead and 3,710 dmt
of zinc concentrates. These numbers reflect the sale of higher than normal
levels of concentrates stockpiled during Q1/10 that were shipped and sold in
Q2/10. During the first six months of 2010, a total of 32,509 dmt of copper,
4,628 dmt of lead and 7,332 dmt of zinc concentrates were shipped and
recorded as revenue.
Operating Details - Minto Mine
Key operating statistics for the Minto Mine for the first and second
quarter and year-to-date for 2010 are presented below:
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Q2 2010 YTD 2010(5)
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Production(3)
(contained in concentrates)
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- Copper (000s lbs) 10,139 21,061
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- Gold (oz)(2) 5,802 13,358
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- Silver (oz) 49,210 111,468
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Mining
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- Waste (tonnes) 1,614,494 4,234,257
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- Ore (tonnes) 317,265 1,116,722
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- Total material mined (tonnes) 1,931,759 5,350,979
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Milling
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- Tonnes processed 185,296 414,634
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- Tonnes processed per day 2,036 2,291
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- Copper grade (%) 2.66 2.48
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- Gold grade (g/t)(2),(3) 1.3 1.3
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- Silver grade (g/t) 10 9.5
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Recoveries
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- Copper (%) 91.6 92.8
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- Gold (%)(2),(3) 77.5 77.1
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- Silver (%) 80.6 80.5
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Concentrate
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- Dry tonnes produced 10,362 23,534
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- Copper grade (%) 44.4 40.6
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- Gold grade (g/t)(2),(3) 17.4 17.7
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- Silver grade (g/t) 148 147
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On site Operating Costs(1) (US$/t milled)(4) US$65.29 US$63.67
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Total cash cost per pound(1) of payable copper(4) US$1.34 US$1.41
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(2) Gold is not assayed on site, resulting in a significant lag in
receiving this data.
(3) Adjustments based on final settlements will be made in future
periods.
(4) Minto's operating costs are adjusted to exclude mining of ore and
waste not related to concentrate produced in the period, these costs
are capitalized or inventoried in the financial statements, then
expensed when the associated ore is processed.
(5) Adjustments are only reflected in year to date column relating to
negative adjustments of previously reported copper production.
Throughput at the Minto Mine continued to be constrained by the
performance of the tailings filter plant. The previously reported sliming
has not been a significant issue for some time however, the tailings filter
plant has continued to underperform previously achieved throughput levels.
This underperformance has been partially attributed to degradation of the
wear parts in the filter presses, resulting in reduced availability and lower
tonnes per hour filtered. A staged replacement of wear parts has gradually
improved performance so that plant throughput has steadily increased and has
been periodically achieving in excess of 3,000 tpd since early July.
However, installation of new filter plates, a key component of the
performance improvement process, will not begin until later in July and
should be completed by mid-August. As a result, plant performance is
expected to slowly ramp up to sustained design levels of 3,200 tpd or more by
mid- to late-third quarter.
During the three months ended June 30, 2010, the Minto Mine shipped and
recorded as revenue on 8,103 dmt of copper concentrate. For the six months a
total of 27,687 dmt were shipped and recorded as revenue. The ice bridge
across the Yukon River closed in early April due to the spring break up and,
as expected, the barging season commenced in early June 2010, limiting the
amount of concentrate that could be trucked from the mine during the second
quarter. Two shipments are expected during the third quarter.
Outlook
In order to improve underground production from the high copper grade,
widest areas at the Cozamin mine, two additional long hole stopes have been
developed on the 12 level and an enhanced cable bolting and geotechnical
program has been instituted in the very wide, high copper grade stopes on the
11 level. These additional production areas, along with other operational
improvements, are expected to result in underground mine production being
ramped up during Q3/10. Given the process plant's proven ability to operate
well in excess of the design 3,000 tpd, it can easily handle these higher
tonnages. As a result of these factors, guidance for Cozamin production has
been reduced to 40 to 42 million pounds of copper in concentrates for 2010,
at the lower end of guidance provided on December 17, 2009, requiring
sustained stronger performance for the balance of the year. Given improved
access to the higher copper grade ore and the plant's ability to process
significantly more tonnage than in the previous two quarters, such
performance is reasonably achievable with steadily increasing production into
Q3/10 and Q4/10. Due to higher than projected lead by-products, cash costs
are likely to remain within prior guidance.
As noted above, production at the Minto mine has been hampered by
underperformance in the tailings filter plant during 2010, well below
previously achieved throughputs. While a number of improvements have been
made that have gradually seen an increase in throughout to levels near the
original budget by mid-July, sustained higher throughputs require replacement
of the filter plates in all five filters, which will be completed between now
and mid-August at an approximate cost of C$1.5 million, after which
throughput should steadily increase. As a result of the production shortfall
to date, the Minto Mine will not achieve the prior guidance of 50 to 55
million pounds of copper in concentrates for 2010, and guidance has been
reduced to 40 to 43 million pounds of copper in concentrates for 2010.
Given the timing of the change out of the filter plates, mill throughput
should increase quarter on quarter in Q3/10 and Q4/10, but copper production
is expected to remain relatively constant during this period since higher
throughput will be offset by declining grades of stockpiled material over
this time. Since there is in excess of one million tonnes of ore in
stockpiles awaiting processing, mining will not be a limiting factor in
Minto's performance. With lower production, cash costs are expected to be
above prior guidance.
Overall, Capstone therefore has revised its guidance to 80 to 85 million
pounds of copper in concentrates in 2010, with total cash costs(1) net of by
product credits anticipated to remain within the prior guidance of US$1.10 to
US$1.20 per pound of payable copper, but likely towards the upper end of that
range. Further, given the timing of the production improvements noted above,
Q4/10 will likely have higher production than Q3/10.
Second Quarter Financial Results Timing
Capstone will report its second quarter 2010 financial results on
Tuesday, August 10, 2010 after market close and will host a conference call
and webcast to discuss these results as noted below.
Conference call and webcast details are as follows:
Date: Wednesday August 11, 2010
Time: 8:30 AM PST (11:30 AM EST)
Dial in: North America - 1-888-231-8191, International - 1-647-427-7450
Webcast: www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3141380
Replay: North America - 1-800-642-1687, International - 1-416-849-0833
Replay Pass code: 87497768
Forward-Looking Information
This document may contain "forward-looking information" within the
meaning of Canadian securities legislation and "forward-looking statements"
within the meaning of the United States Private Securities Litigation Reform
Act of 1995 (collectively, "forward-looking statements"). These
forward-looking statements are made as of the date of this document and
Capstone Mining Corp. (the "Company") does not intend, and does not assume any
obligation, to update these forward-looking statements, except as required
under applicable securities legislation.
Forward-looking statements relate to future events or future performance
and reflect Company management's expectations or beliefs regarding future
events and include, but are not limited to, statements with respect to the
estimation of mineral reserves and resources, the realization of mineral
reserve estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, success of mining operations,
environmental risks, unanticipated reclamation expenses, title disputes or
claims and limitations on insurance coverage. In certain cases,
forward-looking statements can be identified by the use of words such as
"plans", "expects" or "does not expect", "is expected", "budget", "scheduled"
"estimates", "forecasts", "intends", "anticipates" or "does not anticipate",
or "believes", or variations of such words and phrases or statements that
certain actions, events or results "may", "could", "would", "might" or "will
be taken", "occur" or "be achieved" or the negative of these terms or
comparable terminology. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such factors include,
among others, risks related to actual results of current exploration
activities; changes in project parameters as plans continue to be refined;
future prices of resources; possible variations in ore reserves, grade or
recovery rates; accidents, labour disputes and other risks of the mining
industry; delays in obtaining governmental approvals or financing or in the
completion of development or construction activities; as well as those
factors detailed from time to time in the Company's interim and annual
financial statements and management's discussion and analysis of those
statements, all of which are filed and available for review on SEDAR at
www.sedar.com. Although the Company has attempted to identify important
factors that could cause actual actions, events or results to differ
materially from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward looking
statements.
43-101 Compliance
Unless otherwise indicated, Capstone has prepared the technical
information in this news release ("Technical Information") based on
information contained in the technical reports and news releases
(collectively the "Disclosure Documents") available under Capstone Mining
Corp.'s and Sherwood Copper Corp.'s company profile on SEDAR at
www.sedar.com. Each Disclosure Document was prepared by or under the
supervision of a qualified person (a "Qualified Person") as defined in
National Instrument 43-101 - Standards of Disclosure for Mineral Projects of
the Canadian Securities Administrators ("NI 43-101"). Readers are encouraged
to review the full text of the Disclosure Documents which qualifies the
Technical Information. Readers are advised that mineral resources that are
not mineral reserves do not have demonstrated economic viability. The
Disclosure Documents are each intended to be read as a whole, and sections
should not be read or relied upon out of context. The Technical Information
is subject to the assumptions and qualifications contained in the Disclosure
Documents.
The following employees of Capstone, each a Qualified Person, reviewed
Technical Information contained in this news release: Robert Barnes,
Professional Engineer reviewed Technical Information related to the Cozamin
Mine and Stephen Quin, Professional Geologist reviewed all Technical
Information in this news release. In addition, Randall Thompson, General
Manager, reviewed Technical Information related to the Minto Mine and
Telesforo Martinez, General Manager, reviewed the Technical Information
related to the Cozamin Mine.
(1) Non-GAAP Performance Measures
"Total Cash Cost per Pound of Payable Copper" and "On site operating
costs per tonne milled" are Non-GAAP Performance Measures. These performance
measures are included because these statistics are key performance measures
that management uses to monitor performance. Management uses these statistics
to assess how the Company is performing to plan and to assess the overall
effectiveness and efficiency of mining operations. These performance measures
do not have a meaning within GAAP and, therefore, amounts presented may not
be comparable to similar data presented by other mining companies. These
performance measures should not be considered in isolation as a substitute
for measures of performance in accordance with GAAP.
For further information: about Capstone, please contact: Darren Pylot,
Vice Chairman & CEO or Stephen Quin, President Or Zobeida Slogan, Investor
Relations, at +1(604)684-8894 or toll free at +1(866)684-8894,
info@capstonemining.com
For further information: about Capstone, please contact: Darren Pylot, Vice Chairman & CEO or Stephen Quin, President Or Zobeida Slogan, Investor Relations, at +1(604)684-8894 or toll free at +1(866)684-8894, info at capstonemining.com
Tags: canada, Capstone Mining Corp, July 19, Vancouver
