Mr. Darren Pylot reports

CAPSTONE MINING REACHES AGREEMENT TO SELL KUTCHO PROJECT

Capstone Mining Corp. has entered into a definitive share purchase agreement, pursuant to which it has agreed to sell its Kutcho development project to Desert Star Resources Ltd. Under the terms of the agreement, Capstone will receive $28.8-million in cash and common shares of Desert Star representing 9.9 per cent of the issued and outstanding shares upon completion of the transaction, and it will have the right to nominate one representative to the Desert Star board of directors under certain circumstances.

"The divestiture of Kutcho is consistent with our strategy to focus on our core assets," said Darren Pylot, president and chief executive officer of Capstone. "This agreement allows us to retain exposure to the Kutcho project while strengthening our balance sheet. We look forward to seeing the Kutcho project advance under Desert Star's ownership."

The transaction is subject to financing and other customary closing conditions and is expected to close in the third quarter of 2017. Capstone intends to use net proceeds from the sale primarily to reduce outstanding borrowings under its revolving credit facility.

About Capstone Mining Corp.

Capstone Mining is a Canadian base metals mining company, focused on copper. The company's three producing mines are the Pinto Valley copper mine located in Arizona, United States; the Cozamin polymetallic mine in Zacatecas state, Mexico; and the Minto copper mine in Yukon, Canada. In addition, Capstone has two development projects: the large-scale, 70-per-cent-owned Santo Domingo copper-iron project in Region III, Chile, in partnership with Korea Resources Corp., and the 100-per-cent-owned Kutcho copper-zinc project in British Columbia, Canada, as well as exploration properties in Chile and the United States.

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