Capstone Reports Production & Operating Costs for Q4/09 & Full Year 2009
By Capstone Mining Corp., PRNESunday, January 31, 2010
2009 Production of 90m lbs of Copper in Concentrates at an Estimated Total Cash Cost(1) of US$1.03 per lb of Payable Copper
VANCOUVER, February 2 - Capstone Mining Corp. (CS: TSX) today announced its operating results for
the three and twelve months ended December 31, 2009. Combined production
totalled 24.7 million and an adjusted 90 million pounds of copper in
concentrates for the three and twelve months ended December 31, 2009, 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$1.04 and US$1.03 per pound of payable copper produced in the three and
twelve months ended December 31, 2009, respectively.
"Strong fourth quarter operating results resulted in an adjusted 90
million pounds of copper in concentrates at a total cash cost of US$1.03 per
payable pound of copper during 2009, helped by a return to normal operations
at both mines in the fourth quarter," said Stephen Quin, President & COO of
Capstone Mining Corp. "Our mining operations in the Yukon and Mexico are well
positioned to meet their objectives for 2010, and both operations have some
excellent opportunities to further optimize and enhance their performance,"
he said. "In addition, our land holdings surrounding each of our mines have
excellent exploration potential and will be the subject of sustained
exploration during the year as we look to realize on that potential."
Capstone Mining - Production Highlights for 2009
------------------------------------------------
-------------------------------------------------------------------------
Total 2009
Q1 2009 Q2 2009 Q3 2009 Q4 2009 (Adjusted)
-------------------------------------------------------------------------
Copper in
concentrates
(millions of
pounds)
-------------------------------------------------------------------------
- Cozamin 9.8 9.9 8.2 8.9 36.1
-------------------------------------------------------------------------
- Minto 16.2 13.2 9.5 15.8 53.7
-------------------------------------------------------------------------
Total 26.0 23.1 17.7 24.7 89.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total cash
costs of
payable copper(1)
(US$/lb)
-------------------------------------------------------------------------
- Cozamin $1.00 $0.81 $0.75 $0.94 $0.90
-------------------------------------------------------------------------
- Minto(2) $0.87 $1.09 $1.48 $1.10 $1.12
-------------------------------------------------------------------------
Average $0.92 $0.97 $1.14 $1.04 $1.03
-------------------------------------------------------------------------
(2) 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.
Both mines realized negative adjustments to previously reported copper
production based on the final settlement of copper sales during the year, 1.0
million pounds at Minto and 0.7 million pounds at Cozamin. As these amounts
are related to adjustments to shipments made over the full year, the
adjustments are only reflected in the year to date column, therefore certain
lines will not sum across.
Operational Highlights for the three and twelve months ended December 31,
2009
The following is a summary of Capstone's operational highlights for the
three and twelve months ended December 31, 2009:
- Production of 24.7 million and 90 million pounds of contained copper
respectively, with the quarterly production reflecting a return to
more typical operating parameters, while the annual numbers reflect
the coincident low production cycles at both mines during Q3/09 and
the negative 1.7 million pound adjustment related to final sales
settlements applicable to shipments over the whole year.
- By-product production of 4.7 million and 15.5 million pounds of zinc,
3.5 and 10.1 million pounds of lead and 476,883 and 1,762,245 ounces
of silver in concentrates, respectively. Lead and zinc production are
higher than would be typical for the mineral reserve as a result of
the Cozamin mine focusing on lower copper, higher lead-zinc areas of
the mine while new, deeper, high grade copper areas were being
developed and while lead and zinc prices remain high. In addition,
access to some of the low copper, higher lead-zinc areas would have
been permanently lost in the normal mining process if not extracted
now, and so were mined while lead and zinc prices make these areas
profitable. Final by-product gold production is not available since
assaying is done off site, but is estimated at 8,790 and
28,579 ounces, respectively.
- Production of 23.9 million pounds of payable copper in the fourth
quarter and 86.6 million pounds of payable copper for the full year
of 2009 after adjustments.
- Total cash cost per pound of payable copper produced(1) of US$1.04
in Q4/09 and US$1.03 for the year versus previously published
guidance of approximately US$1.00 per pound for the year. This
performance reflects good cost containment during the low production
cycles at both mines and the return to higher production levels in
Q4/09. Higher by-product credits at Cozamin and higher throughput at
Minto helped offset the lower copper feed grades.
- Cozamin Mine results for the three and twelve months ended
December 31, 2009, respectively, were:
- Produced 8.9 million and 36.1 million pounds of copper contained
in concentrates, respectively, along with by-products of
4.7 million and 15.5 million pounds of zinc, 3.5 million and
10.1 million pounds of lead and 387,665 and 1,462,478 ounces of
silver;
- Produced 8.6 million and 34.6 million pounds of payable copper at
an estimated total cash cost(1), net of estimated by-product
credits and estimated selling costs, of US$0.94 and $0.90 per
pound of payable copper produced; and
- Tonnes of ore processed during Q4/09 remained below design and
below actual processing capacity as a result of the larger, higher
grade stopes being ramped up to full capacity more slowly than was
previously anticipated as a result of management's decision to add
more ground support in the larger stopes to ensure there are no
future hanging wall stability issues. This shortfall of ore
processed was partially mitigated by bringing back on line some of
the stopes in the upper portions of the mine with higher lead and
zinc grades, taking advantage of the current high prices for these
metals.
- Minto Mine results for the three and twelve months ended December 31,
2009, respectively, were:
- Produced 15.8 million and 53.7 million pounds of copper contained
in concentrates, along with by-product 89,218 and 299,767 ounces
of silver and gold estimated at 8,790 and 28,579 ounces;
- Produced 15.3 million and 51.9 million pounds of payable copper at
an estimated total cash cost(1), net of estimated by-product
credits and estimated selling costs, was US$1.10 and $1.12 per
pound of payable copper produced;
- Plant throughput in Q4/09 was similar to that in Q3/09 and
primarily reflects commissioning and optimization of the modified
crushing circuit, which has had a dedicated hydra-cone crusher
installed in anticipation of the Phase IV expansion of the mine;
and
- Completion of the Phase IV pre-feasibility study, demonstrating a
longer life for the Minto Mine and opportunities for further
expansions.
- Kutcho Project:
- Based on the results of a preliminary economic assessment for a
smaller tonnage, higher grade, underground mining operation, the
focus in the latter part of 2009 has been on the two most
significant opportunities for enhanced project economics -
improved metallurgical performance and access to lower cost power.
Metallurgical test programs are underway at both SGS Lakefield and
at Capstone's Cozamin mine metallurgical facilities.
Operating Details - Cozamin Mine
Key operating statistics at the Cozamin Mine for 2009 are presented
below:
Capstone Mining - Cozamin Mine Production Statistics
----------------------------------------------------
-------------------------------------------------------------------------
Total 2009
Q1 2009 Q2 2009 Q3 2009 Q4 2009 (Adjusted)(3)
-------------------------------------------------------------------------
Production
(contained in
concentrates)(2)
-------------------------------------------------------------------------
Copper (000s)
pounds 9,813 9,881 8,196 8,934 36,121
-------------------------------------------------------------------------
- Lead (000s
pounds) 1,157 2,332 3,193 3,452 10,134
-------------------------------------------------------------------------
- Zinc (000s
pounds) 2,386 3,324 5,062 4,704 15,476
-------------------------------------------------------------------------
- Silver
(ounces) 317,963 390,639 366,210 387,665 1,462,478
-------------------------------------------------------------------------
Mine
-------------------------------------------------------------------------
- Tonnes of
ore mined 248,507 243,494 236,803 243,795 972,599
-------------------------------------------------------------------------
Mill
-------------------------------------------------------------------------
- Tonnes
processed 248,325 249,975 236,938 240,490 975,728
-------------------------------------------------------------------------
- Tonnes
processed per
day 2,759 2,741 2,581 2,614 2,673
-------------------------------------------------------------------------
- Copper grade (%) 1.96 1.92 1.73 1.83 1.84
-------------------------------------------------------------------------
- Lead grade (%) 0.33 0.61 0.89 0.93 0.69
-------------------------------------------------------------------------
- Zinc grade (%) 0.81 1.01 1.51 1.33 1.17
-------------------------------------------------------------------------
- Silver grade
(g/t) 56 66 67 69 64
-------------------------------------------------------------------------
Recoveries
-------------------------------------------------------------------------
- Copper (%) 91.4 93.4 91.3 92.0 91.2
-------------------------------------------------------------------------
- Lead (%) 64.8 69.4 67.6 70.0 68.4
-------------------------------------------------------------------------
- Zinc (%) 59.3 59.5 63.2 66.7 61.7
-------------------------------------------------------------------------
- Silver (%) 71.0 73.6 72.0 73.1 72.5
-------------------------------------------------------------------------
Concentrate
-------------------------------------------------------------------------
- Copper
concentrate
produced (dmt) 18,461 17,595 14,711 16,221 66,977
-------------------------------------------------------------------------
- Copper (%) 24.1 25.5 25.3 25.0 24.5
-------------------------------------------------------------------------
- Silver (g/t) 463 561 595 569 571
-------------------------------------------------------------------------
- Lead concentrate
produced (dmt) 782 1,500 2,060 2,233 6,575
-------------------------------------------------------------------------
- Lead (%) 67.1 70.5 70.3 70.2 69.9
-------------------------------------------------------------------------
- Silver (g/t) 1,738 1,511 1,282 1,264 1,382
-------------------------------------------------------------------------
- Zinc concentrate
produced (dmt) 2,415 3,312 4,782 4,499 15,008
-------------------------------------------------------------------------
- Zinc (%) 44.8 45.5 48.0 47.4 46.8
-------------------------------------------------------------------------
On site Operating
Costs
($/t milled)(1) $34.97 $34.03 $38.93 $51.60 $39.79
-------------------------------------------------------------------------
Payable pounds
of copper
produced
(000s lbs) 9,405 9,493 7,872 8,577 34,645
-------------------------------------------------------------------------
Total cash cost
per pound of
payable copper(1) $1.00 $0.81 $0.75 $0.94 $0.90
-------------------------------------------------------------------------
(1) The cash cost per pound of payable copper measure shown is an
estimate of the cash cost on a production basis. This is a non-GAAP
performance measure; please see "Non-GAAP Performance Measure" below.
(2) Adjustments based on final settlements will be made in future
periods.
(3) Some totals will not sum, due to adjustments on final settlements on
copper sales during the year. These adjustments are only reflected in
the year to date column.
Unit operating costs at the Cozamin mine during Q4/09 were higher than
earlier in 2009 as a result of additional development following the design
and implementation of a more conservative approach to the ground support and
back filling of the very wide, high grade areas of the Cozamin deposit in
order to ensure long term stability of this critical mining area. In
addition, there were additional costs in the quarter for one time equipment
rentals and power generation related to the completion of the 115kV power
line, and capital equipment purchases that will be done early in 2010, and an
accounting provision for employee benefits and profit sharing related to all
of calendar 2009.
As previously disclosed, development of very wide (20-30m) high grade
areas of the Cozamin deposit were delayed because the wide mineralization
extended deeper and wider than anticipated and this mineralization needs to
be extracted from the bottom up in order to ensure geotechnical stability. As
a result, development needed to be pushed deeper in order to get to the
bottom of the high grade before commencing ore extraction and, in the
interim, production came from shallower areas with lower copper but higher
lead and zinc content. This affected Q3/09 and, to a lesser extent, Q4/09
production and operating costs.
Development of the wider ore zones was completed at the end of Q3/09 and
production drilling and ore extraction has been underway throughout Q4/09.
Production from these high grade areas has ramped more slowly than was
originally projected as a result of a cautious approach to implementing and
extracting ore from these critical areas to ensure long term geotechnical
stability. A cable bolting and waste backfill ground support system was
implemented to support the hanging wall in the wide ore zone and ensure
geotechnical stability and reduce risk of dilution. The resulting lower
copper production was been somewhat offset by significantly higher than
planned lead production as shallower, high lead-zinc stopes were brought back
into production following the rapid rise in lead and zinc prices over the
past several months.
Given continued high lead and zinc prices, Cozamin will continue to take
a flexible approach to production from higher grade lead and zinc areas in
order to crystallize profitability from these areas while maintaining overall
operational cash flow.
During the three months ended December 31, 2009, the Cozamin Mine shipped
and recorded as revenue 14,672 dmt of copper, 1,906 dmt of lead and 5,322 dmt
of zinc concentrates. During the full year of 2009, a total of 68,206 dmt of
copper concentrates, 6,762 dmt of lead concentrates and 18,569 dmt of zinc
concentrates were shipped and recorded as revenue.
Operating Details - Minto Mine
Key operating statistics at the Minto Mine for 2009 are presented below:
Capstone Mining - Minto Mine Production Statistics
--------------------------------------------------
-------------------------------------------------------------------------
Total 2009
Q1 2009 Q2 2009 Q3 2009 Q4 2009(Adjusted)(5)
-------------------------------------------------------------------------
Production(3)
(contained in
concentrates)
-------------------------------------------------------------------------
- Copper (000s
pounds) 16,228 13,178 9,455 15,772 53,657
-------------------------------------------------------------------------
- Gold
(ounces)(2) 8,527 7,564 3,698 8,790 28,579
-------------------------------------------------------------------------
- Silver
(ounces) 100,714 64,637 45,198 89,218 299,767
-------------------------------------------------------------------------
Mining
-------------------------------------------------------------------------
- Waste
(tonnes) 2,196,728 2,845,300 3,401,120 2,689,363 11,132,511
-------------------------------------------------------------------------
- Ore (tonnes) 292,594 289,010 7,698 561,786 1,151,088
-------------------------------------------------------------------------
- Total
material mined
(tonnes) 2,489,322 3,134,310 3,408,818 3,251,149 12,283,599
-------------------------------------------------------------------------
Milling
-------------------------------------------------------------------------
- Tonnes
processed 233,529 267,254 269,411 260,996 1,031,190
-------------------------------------------------------------------------
- Tonnes
processed
per day 2,595 2,937 2,870 2,837 2,825
-------------------------------------------------------------------------
- Copper grade (%) 3.39 2.41 1.76 2.95 2.55
-------------------------------------------------------------------------
- Gold grade
(g/t)(2),(3) 1.57 0.97 0.60 1.14 1.14
-------------------------------------------------------------------------
- Silver grade
(g/t) 16.0 9.6 6.7 12.7 11.0
-------------------------------------------------------------------------
Recoveries
-------------------------------------------------------------------------
- Copper (%) 93.0 92.6 91.9 92.4 92.6
-------------------------------------------------------------------------
- Gold (%)(2),(3) 72.8 71.9 71.6 83.7 75.3
-------------------------------------------------------------------------
- Silver (%) 83.5 79.6 80.0 83.4 81.9
-------------------------------------------------------------------------
Concentrate
-------------------------------------------------------------------------
- Dry tonnes
produced 17,283 14,667 10,834 17,079 59,863
-------------------------------------------------------------------------
- Copper grade (%) 42.6 40.8 40.3 41.9 40.7
-------------------------------------------------------------------------
- Gold grade
(g/t)(2),(3) 15.5 12.5 10.3 16.0 14.9
-------------------------------------------------------------------------
- Silver grade
(g/t) 183 139 133 163 156
-------------------------------------------------------------------------
On site Operating
Costs(1)
($/t milled)(4) $47.85 $44.52 $42.72 $55.42 $47.64
-------------------------------------------------------------------------
Payable pounds of
copper produced
(000s lbs) 15,700 12,749 9,147 15,252 51,913
-------------------------------------------------------------------------
Total cash cost
per pound(1)
of payable
copper(4) $0.87 $1.09 $1.48 $1.10 $1.12
-------------------------------------------------------------------------
(1) The cash cost per pound of payable copper measure shown is an
estimate of the cash cost on a production basis. This is a non- GAAP
performance measure; please see "Non-GAAP Performance Measure" below.
(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) Some totals will not sum, due to adjustments on final settlements on
copper sales during the year. These adjustments are only reflected in
the year to date column.
The Minto Mine made excellent progress in recovering from the production
shortfalls encountered in Q3/09 related to excess water diverted into the
open pit and subsequently treated and discharged. While mill throughput
remained strong at levels seen in the prior two quarters, the installation
and commissioning of a new hydra-cone crusher to provide secondary crushing
ahead of the SAG mill, in line with the Phase IV expansion study
recommendation limited overall net mill throughput for the period and this
set up is still being optimized in Q1/10.
Unit operating costs for the Minto Mine in Q4/09 were higher than in
prior quarters due to impact of Capstone's decision to accelerate mining with
extended shift schedules in order to ensure maximum ore extraction from the
pit prior to freshet in 2010 so that any resulting impact on production can
be avoided or minimized. As a result of this decision, accelerated extraction
of ore and waste from the Phase 4 push back in the pit, with the higher strip
ratio related to the Phase 4 push back, increased operating costs, even after
adjustments for stockpiling and inventory adjustments. In addition, on an
annual basis, the strengthening of the Canadian dollar relative to the US$
(up 15.9%) affects Minto's operating costs, which are reported in US$ but
mostly incurred in Canadian dollars.
During the three months ended December 31, 2009, the Minto Mine shipped
and recorded as revenue 10,517 dmt of copper concentrate. For the twelve
months a total of 59,459 dmt were shipped and recorded as revenue. Only one
shipment was made in the fourth quarter as truck access to the mine was not
available due to the Yukon River freeze-up. Concentrate trucking commenced
again on January 11, 2010 with the opening of the ice bridge across the Yukon
River.
Minto PFS
As announced December 15, 2009, Capstone reported the results of an
independent preliminary feasibility study on the Phase IV expansion of the
Minto Mine that detailed an extended mine life from the Minto Mine from open
pit sources (the "Phase IV PFS"). This study also identified opportunities
for the potential development of underground, higher grade production to
supplement open pit production. This opportunity has become the focus for
consideration of a potential Phase V expansion of the Minto Mine during 2010.
Phase V would most likely comprise underground production in parallel with
open pit production at the same mill throughput rates as proposed in the
Phase IV PFS, resulting in an overall higher feed grade and the open pit
production being spread over a longer time period.
Outlook
The production guidance for 2010 was provided in a news release dated
December 17, 2009.
2009 Financial Results Timing
Capstone will report its 2009 financial results after market close on
Wednesday, March 24, 2010 and will host a conference call and webcast to
discuss these results as noted below.
Conference call and webcast details are as follows:
Date: Thursday, March 25, 2010 Time: 8:00 AM Pacific Time (11:00 AM
Eastern Time) Dial in: North America - 1.888.231.8191, International -
1.647.427.7450 Webcast:
www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2937660
Replay: North America - 1.800.642.1687, International - 1.416.849.0833 Replay
Pass code: 51468567
The TSX does not accept any responsibility for the adequacy or accuracy
of this press release.
(1) These are non-GAAP performance measures and readers should refer to
Non-GAAP Performance Measures note at the end of this news release for
further details.
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 & COO Or Jason Howe, VP,
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 & COO Or Jason Howe, VP, Investor Relations, at +1-604-684-8894 or toll free at +1-866-684-8894, info at capstonemining.com
