07:08:00 EDT Fri 14 Aug 2020
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Capstone Mining Corp
Symbol CS
Shares Issued 400,045,604
Close 2020-06-11 C$ 0.76
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Capstone releases NI 43-101 estimate on Cozamin

2020-06-11 07:28 ET - News Release

Mr. Brad Mercer reports

CAPSTONE EXPANDS MNFWZ VEIN 20 M&I RESOURCE BY 118% AT COZAMIN TO 13.1 MILLION TONNES AT 2.35% COPPER AND 52 G/T SILVER

Capstone Mining Corp. has released the results of an updated mineral resource estimate for the Cozamin mine in Zacatecas, Mexico. The total measured and indicated (M&I) resource estimate tonnes increased by 66 per cent, with an 83-per-cent increase to contained copper metal to 949 million pounds and a 71-per-cent increase to contained silver metal to 39 million ounces of silver. M&I resource for vein 20, the principal zone in the Mala Noche footwall zone (MNFWZ), increased by 118 per cent to 13,086,000 tonnes at 2.35 per cent copper and 52 grams per tonne silver. The company is currently updating mineral reserves and an updated technical report is expected in Q3 2020.

Highlights

           CHANGES OF THE NEW MINERAL RESOURCE ESTIMATE COMPARED WITH DEC. 31, 2019

Measured and indicated
resource estimate             As of April 30, 2020                 Compared with Dec. 31, 2019
Copper-silver zones
                                         13,086 kt                     118% increase in tonnes
                                          2.35% Cu                 4% increase in copper grade
MNFWZ with vein 20                       52 g/t Ag                 3% increase in silver grade
defining the                       307.7 kt copper     127% increase in contained copper metal
Principal zone              21.9 million oz silver    124% increase in contained silver ounces

                                         21,790 kt                      64% increase in tonnes
                                          1.92% Cu                12% increase in copper grade
                                         46 g/t Ag                 4% increase in silver grade
                                   418.1 kt copper      84% increase in contained copper metal
All veins                   32.3 million oz silver     71% increase in contained silver ounces

Zinc-lead-silver
zones
                                          4,668 kt                      72% increase in tonnes
                                          3.46% Zn                         5% lower zinc grade
                                          1.21% Pb                       26% higher lead grade
                                         43 g/t Ag                                   no change
                                     161.3 kt zinc        63% increase in contained zinc metal
                                      56.3 kt lead       117% increase in contained lead metal
All veins                    6.4 million oz silver     72% increase in contained silver ounces

Total (copper-silver
plus zinc-lead-silver
zones)
                                         26,458 kt                      66% increase in tonnes
                                          1.63% Cu                11% increase in copper grade
                                         45 g/t Ag                 3% increase in silver grade
                                   430.5 kt copper      83% increase in contained copper metal
                                     285.1 kt zinc        44% increase in contained zinc metal
                                      76.8 kt lead        72% increase in contained lead metal
Total                       38.7 million oz silver     71% increase in contained silver ounces



Brad Mercer, senior vice-president, exploration and operations, said: "Since the resource stated in the 2018 technical report, our exploration team has drilled 108,000 metres within a budget of $10-million (U.S.). This new resource estimate has exceeded our expectation to upgrade vein 20, the principal zone in the MNFWZ, to indicated class, previously estimated as inferred in 2018. We also extended high grades into a previously undrilled area, thus adding unexpected tonnage in a key part of our development plan, and luckily the vein is wider updip, which bodes well for mining costs, dilution control and lower development rates per tonne. We believe there is additional exploration potential and we are making plans to test new stepout targets in the second half of 2020."

Resource estimate of vein 20, as of April 30, 2020, compared with Dec. 31, 2019:

  • 13,086,000 t, 118-per-cent increase in tonnes;
  • 2.35 per cent Cu, 4-per-cent increase in copper grade;
  • 52 g/t Ag, 3-per-cent increase in silver grade;
  • 678 million lb copper, 127-per-cent increase in contained copper metal;
  • 21.9 million oz silver, 124-per-cent increase in contained silver ounce.

Darren Pylot, Capstone's president and chief executive officer, said: "These results demonstrate why I have been saying 'the best has yet to come at Cozamin,' which is incredible given the mine has generated over $450-million (U.S.) in cumulative free cash flow since 2007. We are nearly six months away from seeing a new chapter for Cozamin, as copper and silver production expands by at least 50 per cent to over 50 million pounds of copper and 1.5 million ounces of silver per year, respectively."

Next steps

Capstone is taking the next steps to convert mineral resources to mineral reserve and is aiming to publish an updated mineral reserve and technical report in Q3 2020.

There are three key infrastructure improvements required to debottleneck mine production by the end of 2020, of which the first two were completed early in Q2 2020:

  1. A new 818 m long ventilation raise;
  2. Increased underground electrical substation capacity;
  3. A new section of ramp to complete a one-way traffic circuit, remaining on schedule for completion in Q4 2020.

The company is currently looking at opportunities to further increase value, such as paste backfill and improved mining dilution control, and will report the status of these either in the technical report update in Q3 or later in 2020.

                   ESTIMATE OF COPPER-SILVER ZONE MINERAL RESOURCES BY 
                CLASS AT A $50 (U.S.) NSR/T CUT-OFF AS AT APRIL 30, 2020 

                                                           Copper   Silver    Zinc    Lead
Classification     Tonnes  Copper  Silver   Zinc   Lead     metal    metal   metal   metal
                     (kt)     (%)   (g/t)    (%)    (%)      (kt)    (koz)    (kt)    (kt)
MNFWZ vein 20
Measured (M)            -       -       -      -      -         -        -       -       -
Indicated (I)      13,086    2.35      52   0.33   0.03       308   21,936      43       4
Total M+I          13,086    2.35      52   0.33   0.03       308   21,936      43       4
Inferred            3,068    1.41      45   0.67   0.04        43    4,441      21       1
MNFWZ other
copper-silver
veins
Measured (M)            -       -       -      -      -         -        -       -       -
Indicated (I)       5,383    1.38      31   0.58   0.07        74    5,412      31       4
Total M+I           5,383    1.38      31   0.58   0.07        74    5,412      31       4
Inferred            1,448    1.38      36   0.97   0.13        20    1,693      14       2
MNV San Roberto
copper-silver
zone
Measured (M)          407    1.24      53   1.23   0.40         5      698       5       2
Indicated (I)       2,914    1.06      45   1.55   0.39        31    4,206      45      11
Total M+I           3,321    1.08      46   1.51   0.39        36    4,903      50      13
Inferred            3,813    0.70      37   1.53   0.14        27    4,555      58       5
Total --
copper-silver
zones
Measured (M)          407    1.24      53   1.23   0.40         5      698       5       2
Indicated (I)      21,383    1.93      46   0.56   0.09       413   31,591     119      19
Total M+I          21,790    1.92      46   0.57   0.09       418   32,284     124      20
Inferred            8,330    1.08      40   1.12   0.10        90   10,689      93       9

Mineral resources are classified according to CIM (2014) (Canadian Institute of Mining, Metallurgy and Petroleum) definitions, estimated following CIM (2019) guidelines and have an effective date of April 30, 2020. Mineral resources are reported inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The independent qualified person for the estimates is Garth D. Kirkham, PGeo, FGC, of Kirkham Geosystems Ltd. Mineral resources are reported using NSR350 formula: Cu times 65.024 plus Ag times 0.438 plus Zn times 10.755 plus Pb times 6.981. Metal price assumptions (in U.S. dollars) used to calculate the NSR for all deposits are: Cu -- $3.50/lb, Ag -- $18.00/oz, Zn -- $1.20/lb and Pb -- $1.00/lb. An exchange rate of 18.50 Mexican pesos per $1 (U.S.) is assumed. The following metal recoveries are used: 90 per cent Cu, 74 per cent Ag, 79 per cent Zn and 76 per cent Pb. Totals may not sum exactly due to rounding. The NSR cut-off of $50 (U.S.)/tonne is based on historical mining and milling costs plus general and administrative costs. The mineral resources consider underground mining by long-hole stoping and mineral processing by flotation. No dilution is incorporated in the mineral resource. All metals are reported as contained. Mineral resource estimates do not account for minability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources considered too speculative geologically to apply economic considerations for categorization as mineral reserves. However, it is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated resources.

The current mineral reserves at the MNFWZ are primarily located in the principal vein, vein 20, with some additional material within an adjacent structure called vein 10, that are actively being mined. These two veins, of the eight MNFWZ veins modelled, are best suited to the current mining method and are the principal target of an upcoming mineral reserve estimate predicated on the large increase in indicated class mineral resources. The potential of the remaining six veins represent a future exploration opportunity. Because of their relative position in the hangingwall, five of the six adjacent MNFWZ veins are intercepted coincidentally by drill holes targeting the principal ore structures, vein 20 and vein 10. All holes are terminated after testing for vein 22 in the footwall of the principal ore zone, vein 20. Therefore, each drill hole testing the principal targets incidentally adds to the company's knowledge base for all other veins.

              ESTIMATE FOR ZINC-LEAD-SILVER ZONE MINERAL RESOURCES BY CLASS 
                    AT A $50 (U.S.) NSR/T CUT-OFF AS AT APRIL 30, 2020

                                                           Copper   Silver     Zinc     Lead
Classification      Tonnes  Copper  Silver   Zinc   Lead    metal    metal    metal    metal
                      (kt)     (%)   (g/t)    (%)    (%)     (kt)    (koz)     (kt)     (kt)
MNFWZ
zinc-lead-silver
veins
Measured (M)             -       -       -      -      -        -        -        -        -
Indicated (I)        2,830    0.25      42   3.33   1.63        7    3,821       94       46
Total M+I            2,830    0.25      42   3.33   1.63        7    3,821       94       46
Inferred             2,682    0.21      37   4.28   2.60        6    3,182      115       70
MNV San Rafael
zinc-lead-silver
zone
Measured (M)             -       -       -      -      -        -        -        -        -
Indicated (I)        1,570    0.30      46   3.59   0.52        5    2,312       56        8
Total M+I            1,570    0.30      46   3.59   0.52        5    2,312       56        8
Inferred             3,060    0.24      37   3.26   0.35        7    3,633      100       11
MNV San Roberto
zinc-lead-silver
zone
Measured (M)             -       -       -      -      -        -        -        -        -
Indicated (I)          268    0.20      31   4.05   0.72        1      270       11        2
Total M+I              268    0.20      31   4.05   0.72        1      270       11        2
Inferred               523    0.13      25   3.49   0.43        1      423       18        2
Total --
zinc-lead-silver
zones
Measured (M)             -       -       -      -      -        -        -        -        -
Indicated (I)        4,668    0.27      43   3.46   1.21       12    6,403      161       56
Total M+I            4,668    0.27      43   3.46   1.21       12    6,403      161       56
Inferred             6,265    0.22      36   3.71   1.32       14    7,239      233       83

Mineral resources are classified according to CIM (2014) (Canadian Institute of Mining, Metallurgy and Petroleum) definitions, estimated following CIM (2019) guidelines and have an effective date of April 30, 2020. Mineral resources are reported inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The independent qualified person for the estimates is Garth D. Kirkham, PGeo, FGC, of Kirkham Geosystems Ltd. Mineral resources are reported using NSR350 formula: Cu times 65.024 plus Ag times 0.438 plus Zn times 10.755 plus Pb times 6.981. Metal price assumptions (in U.S. dollars) used to calculate the NSR for all deposits are: Cu -- $3.50/lb, Ag -- $18.00/oz, Zn -- $1.20/lb and Pb -- $1.00/lb. An exchange rate of 18.50 Mexican pesos per $1 (U.S.) is assumed. The following metal recoveries are used: 90 per cent Cu, 74 per cent Ag, 79 per cent Zn and 76 per cent Pb. Totals may not sum exactly due to rounding. The NSR cut-off of $50 (U.S.)/tonne is based on historical mining and milling costs plus general and administrative costs. The mineral resources consider underground mining by long-hole stoping and mineral processing by flotation. No dilution is incorporated in the mineral resource. All metals are reported as contained. Mineral resource estimates do not account for minability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources considered too speculative geologically to apply economic considerations for categorization as mineral reserves. However, it is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated resources.

                    ESTIMATE FOR ALL ZONES MINERAL RESOURCES BY CLASS 
                    AT A $50 (U.S.) NSR/T CUT-OFF AS AT APRIL 30, 2020 

                                                          Copper    Silver    Zinc    Lead
Classification      Tonnes  Copper  Silver  Zinc   Lead    metal     metal   metal   metal
All zones             (kt)     (%)   (g/t)   (%)    (%)     (kt)     (koz)    (kt)    (kt)
(copper-silver
plus
zinc-lead-silver)
Measured (M)           407    1.24      53  1.23   0.40        5       698       5       2
Indicated (I)       26,051    1.63      45  1.08   0.29      425    37,993     280      75
Total M+I           26,458    1.63      45  1.08   0.29      431    38,687     285      77
Inferred            14,594    0.71      38  2.23   0.62      104    17,928     326      91

Mineral resources are classified according to CIM (2014) (Canadian Institute of Mining, Metallurgy and Petroleum) definitions, estimated following CIM (2019) guidelines and have an effective date of April 30, 2020. Mineral resources are reported inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The independent qualified person for the estimates is Garth D. Kirkham, PGeo, FGC, of Kirkham Geosystems Ltd. Mineral resources are reported using NSR350 formula: Cu times 65.024 plus Ag times 0.438 plus Zn times 10.755 plus Pb times 6.981. Metal price assumptions (in U.S. dollars) used to calculate the NSR for all deposits are: Cu -- $3.50/lb, Ag -- $18.00/oz, Zn -- $1.20/lb and Pb -- $1.00/lb. An exchange rate of 18.50 Mexican pesos per $1 (U.S.) is assumed. The following metal recoveries are used: 90 per cent Cu, 74 per cent Ag, 79 per cent Zn and 76 per cent Pb. Totals may not sum exactly due to rounding. The NSR cut-off of $50 (U.S.)/tonne is based on historical mining and milling costs plus general and administrative costs. The mineral resources consider underground mining by long-hole stoping and mineral processing by flotation. No dilution is incorporated in the mineral resource. All metals are reported as contained. However, it is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated resources.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for minability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources considered too speculative geologically to apply economic considerations for categorization as mineral reserves.

Mineral resource estimate methodology

The mineral resource estimate reported herein was prepared by Garth Kirkham of Kirkham Geosystems Ltd. of Burnaby, B.C., Canada, an independent qualified person under Canadian Securities Administrators' National Instrument 43-101. 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 NI 43-101. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate was completed using MineSight software using a three-dimensional block model (12 m by five m by 10 m block size with four m by 0.5 m by five m subblocks). The MNFWZ model comprises eight interpreted three-dimensional wireframes, which were the primary estimation domains, and hard boundaries were used to constrain the interpolation of grades into the block model. Interpolation parameters have been derived based on geostatistical analysis conducted on one-metre composited drill holes. Block grades have been estimated using ordinary kriging (OK) methodology and the mineral resources have been classified based on proximity to sample data and the continuity of mineralization in accordance with CIM definition standards along with mineral resource and mineral reserve estimation best practice guidelines (2019). The MNFWZ resource has been estimated using a total of 1,128 diamond drill holes with 4,371 sample composites.

About Capstone Mining Corp.

Capstone Mining is a Canadian base metal mining company, focused on copper. It is committed to the responsible development of its assets and the environments in which it operates. Its two producing mines are the Pinto Valley copper mine located in Arizona, United States, and the Cozamin copper-silver mine in Zacatecas state, Mexico. In addition, Capstone has the large-scale 70-per-cent-owned copper-iron Santo Domingo development project in Region III, Chile, in partnership with Korea Resources, as well as a portfolio of exploration properties.

National Instrument 43-101 compliance

Unless otherwise indicated, Capstone has prepared the technical information in this news release based on information contained in the technical reports, news releases and MD&As (management discussion and analysis) available under Capstone Mining's company profile on SEDAR. Each disclosure document was prepared by, or under the supervision of, a qualified person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators. 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 technical information in this news release has been prepared in accordance with NI 43-101 and reviewed and approved by Brad Mercer, PGeol, Capstone's senior vice-president, operations and exploration, a qualified person and the person who oversees exploration activities on the Cozamin mine property.

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