(All amounts in US$ unless otherwise specified
and reflect 100% of the project)
VANCOUVER, Nov. 26, 2018 /CNW/ - Capstone Mining Corp.
("Capstone" or the "Company") (TSX:CS) releases positive results of
an updated Technical Report for its Santo Domingo Iron
Oxide-Copper-Gold ("IOCG") project ("Santo Domingo" or the
"Project") in Region III, Chile
and announces the start of a strategic process for the Project. The
strategic process will explore several alternatives, including
selling a portion of the Project. Santo
Domingo is owned 70% by Capstone and 30% by Korea Resources
Corporation ("KORES"). The Technical Report updates project
economics, which benefits from significantly lower power costs and
several engineering changes, including the use of desalinated water
in lieu of seawater; the report also includes the addition of
cobalt to the mineral resources.
"There is a shortage of high-quality, large scale copper
projects and the completion of our updated Technical Report comes
at an ideal time. Capstone, with the support of KORES, is
commencing a strategic process for Santo
Domingo which will evaluate alternatives relating to the
ownership of the Project. In addition, we will consider the
potential for streaming opportunities given the gold reserve and
cobalt resource to help finance the Project," said Darren Pylot, President and CEO of Capstone.
"Capstone is committed to the advancement of Santo Domingo and maximizing the value of the
Project for our shareholders in a responsible manner that ensures
our participation maintains financial flexibility for continued
growth and financial security for the Company's existing
operations."
"This positive Technical Report reconfirms the value of
Santo Domingo as a desirable
copper-iron-gold project that has an approved Environmental Impact
Assessment ("EIA") in a mining-friendly jurisdiction with local
community support," added Mr. Pylot. "The Project has an after-tax
Net Present Value ("NPV") of $1.03
billion and an Internal Rate of Return ("IRR") of 21.8%.
Additionally, there are a number of opportunities related to cobalt
recovery, improving gold recovery, automation and infrastructure
sharing that we will evaluate in 2019 to further enhance the value
of Santo Domingo."
"In addition to the approved EIA, Santo Domingo also has the Maritime Concession
for a new port for the export of copper and iron concentrates,"
continued Mr. Pylot. "We are advancing engineering and have
received three of the five long lead construction permits, with the
rest expected to be received in 2019. We are targeting Santo Domingo to be construction-ready by
early 2020."
Highlights
|
Results Highlights
- Santo Domingo 2018 Technical Report
|
Life of Mine
("LOM") (years)
|
17.9
|
|
First Five Years
of Full Production
|
Initial
construction cost
(US$ billions)
|
$1.51
|
|
Average annual
contained copper production for first five
years of full
production (million pounds)
|
259
|
NPV (after-tax, 8%
discount) (US$
billions)
|
$1.03
|
|
C1 cash
cost2 per pound of payable copper produced
|
$0.47
|
IRR (after-tax)
(%)
|
21.8
|
|
|
Payback period
(after-tax)
(years)
|
2.8
|
|
Average Annual for
Life of Mine
|
|
|
|
|
Average annual
production
|
|
|
|
Copper (million
pounds)
|
134
|
|
|
|
Iron concentrate
(million tonnes)
|
4.2
|
|
|
|
Gold
(ounces)
|
17,000
|
|
|
|
C1 cash
cost2 per pound of payable copper produced
|
$0.02
|
- Approximate 18 year mine life with operations expected to
commence two years after a final construction decision.
- Nominal average LOM plant throughput rate of 60,000 tonnes per
day.
- Initial construction costs are estimated to be $1.51 billion which includes a 15% contingency on
total costs. The 11.1% decrease from the 2014 Feasibility
Study1 is a result of improved project infrastructure
design which includes a water purchase agreement and a more
favourable exchange rate.
- On a co-product basis, total C1 cash cost3 is
estimated at approximately $1.38 per
pound of payable copper produced and $38.88 per tonne of magnetite iron concentrate
produced.
- Sustaining capital over the LOM is estimated to be $378.6 million.
- Total LOM operating costs are estimated to be $5.57 billion, which is lower than the 2014
Feasibility Study1, primarily due to a reduction in the
price of electricity in Chile.
- The LOM average production is 210,000 tonnes of copper
concentrate per year over a period of approximately 18 years, at a
29% copper grade. The LOM average production is 4.2 million dry
metric tonnes ("dmt") of iron concentrate per year over a period of
approximately 18 years, at a 67% iron grade.
- Metal price assumptions used for the Technical Report were a
constant $3.00 per pound of copper,
and utilized a consensus long-term price of $69 per tonne for 62% iron fines, to arrive
at an effective $80 per tonne
magnetite iron concentrate at a 66% iron content FOB Santo Domingo
port (which incorporates several value-in-use adjustments to
reflect the specific quality of iron-ore expected to be produced by
Santo Domingo), and $1,290 per ounce of gold.
Additional Opportunities
In 2019, Capstone will commence work to incorporate potential
opportunities to increase the value of the Project:
- Cobalt – This 2018 Technical Report includes an initial
cobalt resource for Santo Domingo
which was not included in the Project's economic model. To date, we
have performed metallurgical testing which suggests that the cobalt
is recoverable. A high-level trade-off study of several flowsheets
was completed which suggests that the addition of a cobalt recovery
circuit could be economically feasible. In 2019, the Company will
continue to develop the technical and financial feasibility of
producing cobalt as a by-product by conducting a preliminarily
economic assessment for the cobalt opportunity.
- Gold – We will undertake additional metallurgical test
work with the goal of improving gold recoveries.
- Automation – Potential to utilize autonomous equipment
to increase safety, reduce costs and reduce overall project
capital.
- Infrastructure sharing – This Technical Report
contemplates the construction of a port and associated
infrastructure at an estimated cost of $169
million. Capstone is currently engaged in discussions with
other parties to share the infrastructure opportunities.
National Instrument 43-101
A National Instrument 43-101 ("NI 43-101") Technical Report will
be prepared on the results of the updated feasibility by the
Qualified Persons and will be filed on SEDAR within 45 days of this
news release.
Readers are cautioned that the conclusions, projections and
estimates set out in this news release are subject to important
qualifications, assumptions and exclusions, all of which will be
detailed in the Technical Report. To fully understand the summary
information set out above, the Technical Report that will be filed
on SEDAR at www.sedar.com should be read in its entirety.
Conference Call and Webcast Details
Capstone will host a conference call and webcast for investors
and analysts to discuss the details of this Santo Domingo Technical
Report later today, Monday, November 26,
2018, at 11:30 am Eastern Time
(8:30 am Pacific Time).
Date:
|
Monday, November 26,
2018
|
Time:
|
11:30 am Eastern Time
(8:30 am Pacific Time)
|
Dial in:
|
North America: +1 888
390 0546, International: +1 416 764 8688
|
Webcast:
|
https://event.on24.com/wcc/r/1884522/8B76D6FC9B84C09A17D295209D064F24
|
Replay:
|
North America: +1 888
390 0541, International: +1 416 764 8677
|
Replay
Passcode:
|
696500 #
|
The conference call replay will be available until December 21, 2018. Following the call, an audio
file and transcript will be available on Capstone's website at
https://capstonemining.com/investors/events-and-presentations/default.aspx.
Summary of Results
|
Santo Domingo 2018
Technical Report
|
LOM
(years)
|
17.9
|
Initial construction
cost (US$ billions)
|
$1.51
|
NPV (after-tax, 8%
discount) (US$ billions)
|
$1.03
|
IRR (after-tax)
(%)
|
21.8
|
Payback period
(after-tax) (years)
|
2.8
|
First Five Years
of Full Production
|
|
Average annual
contained copper production for first five years of full
production
(million pounds)
|
259
|
C1 cash
cost2 per pound of payable copper produced
|
$0.47
|
Strip ratio (waste to
ore)
|
3.4:1
|
Average Annual for
Life of Mine
|
|
Average annual
production
|
|
Copper (million
pounds)
|
134
|
Iron concentrate
(million tonnes)
|
4.2
|
Gold
(ounces)
|
17,000
|
C1 cash
cost2 per pound of payable copper produced
|
$0.02
|
On co-product basis,
C1 cash cost3
|
|
Copper (per pound of
payable copper produced)
|
$1.38
|
Magnetite iron
concentrate (per tonne)
|
$38.88
|
Total ore mined
(million tonnes)
|
392.3
|
Strip ratio (waste to
ore)
|
3.3:1
|
Head Grade
|
|
Copper (%
Cu)
|
0.30
|
Iron (% Fe)
|
28.16
|
Gold (g/t
Au)
|
0.04
|
Recovery
|
|
Copper
|
93.4%
|
Iron Mass
|
19.1%
|
Gold
|
60.1%
|
Metal Price
Assumptions
|
|
Copper (per
pound)
|
$3.00
|
Magnetite iron
concentrate at 66% iron content FOB Santo Domingo port (per
tonne)
|
$80.00
|
Gold (per
ounce)
|
$1,290
|
Technical Report
The Technical Report is being completed using engineering and
consulting firms experienced in the Chilean mining industry (Amec
Foster Wheeler Ingeniería y Construcción Limitada, a Wood company,
BRASS Chile S.A., Knight Piesold S.A., NCL Ingeniería y
Construcción Ltda., Aminpro Chile, Sunrise Americas and Roscoe
Postle Associates Inc.), with significant contributions to the
report made by authors detailed below in "Qualified Persons". The
report is being compiled by the Wood Group's Santiago office with an accuracy range of -10%
to +15% for construction and operating costs. The estimates
presented in the technical report are current as of November 2018.
The Santo Domingo Project will include development of two open
pit mines using conventional drilling, blasting, loading with
diesel hydraulic shovels, and truck haulage, and a copper-iron
concentrator designed to process a nominal 65,000 tonnes per day
("tpd") to 60,000 tpd (throughput is reduced in the latter years as
the ore becomes slightly harder) using Semi-Autogenous Grinding
("SAG") and ball milling, with conventional flotation utilizing
desalinated water to produce a copper concentrate. Magnetite iron
will be recovered from the copper rougher tailings using Low
Intensity Magnetic Separation ("LIMS"). The planned infrastructure
for the Project also includes a tailings storage facility, an iron
concentrate pipeline and a third party desalinated water supply
pipeline; a port-located magnetite iron concentrate filter plant
and stockpile; a port-located copper concentrate storage building;
a desalination plant; ship loading facilities; and on-site and
off-site infrastructure and support facilities.
The mine is located 50 kilometres southwest of Codelco's
El Salvador copper mine and 130
kilometres north-northeast of Copiapó, near the town of Diego de
Almagro, in Region III, Chile. The
elevation at the site varies between 1,000 metres above sea level
("masl") and 1,280 masl with relatively gentle topographic relief.
Access to the Project is one kilometre off the paved highway C-17
from Diego de Almagro to Copiapó. The magnetite filter plant and
stockpile, the copper storage building, the desalination plant and
other port infrastructure will be located in Punta Roca Blanca, 41
kilometres north of Caldera. The name of the proposed port
development is Puerto Santo
Domingo.
For the first five years of full operation, Santo Domingo will have an annual average
copper production of approximately 259 million pounds
(approximately 117,500 tonnes). The LOM average production is 134
million pounds of copper (approximately 61,000 tonnes) per year
over a period of approximately 18 years. The total LOM copper
production is estimated at 2.4 billion pounds (approximately 1.1
million tonnes).
For the first five years of full operation, the annual average
iron ore concentrate production is estimated to be 3.3 million dmt.
Over the LOM, the iron ore concentrate production will increase to
an annual average of 4.2 million dmt, with a total estimated
production of approximately 75.1 million dmt.
Mineral Resource Estimate
Following is the most recent Resource Estimate as at
October 31, 2018 prepared by
David W. Rennie, P. Eng., of Roscoe
Postle Associates Inc. ("RPA").
|
Santo Domingo
Mineral Resource Estimate as at October 31, 2018
|
Category
|
Deposit
|
Mt
|
CuEq
(%)
|
Cu
(%)
|
Au
(g/t)
|
Fe
(%)
|
Co
(ppm)
|
Measured
|
66
|
0.81
|
0.61
|
0.081
|
30.9
|
254
|
Indicated
|
SDS/IN
|
416
|
0.49
|
0.24
|
0.033
|
26.4
|
238
|
|
Estrellita
|
55
|
0.40
|
0.38
|
0.039
|
13.7
|
125
|
|
Sub-Total
|
471
|
0.48
|
0.26
|
0.034
|
25.0
|
225
|
Total Measured and
Indicated
|
537
|
0.52
|
0.30
|
0.039
|
25.7
|
229
|
Inferred
|
SDS/IN
|
43
|
0.42
|
0.17
|
0.024
|
25.0
|
208
|
|
Estrellita
|
5
|
0.32
|
0.31
|
0.030
|
12.3
|
108
|
Total
Inferred
|
48
|
0.41
|
0.19
|
0.025
|
23.6
|
197
|
|
|
(1)
|
Mineral Resources are
classified according to CIM (2014) guidelines.
|
(2)
|
Mineral Resources are
reported inclusive of Mineral Reserves.
|
(3)
|
Mineral Resources for
SDS are reported at a cut-off grade of 0.125% CuEq, and for
Estrellita at 0.125% CuEq.
|
(4)
|
Mineral Resources are
constrained by Lerchs-Grossman pits.
|
(5)
|
Bulk density was
estimated for each block and varies between 2.49 and 4.04
t/m3.
|
(6)
|
Cu equivalence was
calculated using metallurgical recoveries, transport costs, smelter
terms and royalties provided by Capstone.
|
(7)
|
Mineral Resources are
estimated using metal prices of US$3.50/lb Cu, US$1,300/oz Au, and
US$99/t FeO conc.
|
(8)
|
Numbers may not add
due to rounding.
|
(9)
|
Only copper, gold and
iron were recognized in the CuEq calculation; cobalt was excluded
until further studies are completed to confirm reasonable prospects
for eventual economic extraction.
|
The estimate was carried out using a block model constrained by
three-dimensional wireframe envelopes. The wireframes were
constructed primarily from lithological boundaries. The principal
rock types used for these models were the manto-hosting volcanic
and sedimentary units which were clipped against fault boundaries
and wireframe models of post-mineral dykes or sills. Eight domains
were created within the deposit and three of these (Zones 1, 2 and
3) were further subdivided into magnetite-rich and magnetite-poor
variants. Much of the geological interpretation had been done for
the 2009 and previous estimates. For the current estimate the
wireframe modelling consisted of updating the earlier work with the
latest drilling results. RPA notes that only minor modifications to
the interpretations were required.
Grades for copper, gold, total iron and magnetic susceptibility
("MS") were estimated into the blocks using Ordinary Kriging
("OK"). Estimates of recoverable iron ("Fe_rec") and bulk density
were carried out from the estimated iron and MS grades using linear
regression relationships. Copper equivalent ("CuEq") grades were
calculated from the estimated copper, gold, and Fe_rec, using
recoveries estimated from recent metallurgical testing.
The Mineral Resources for SDS/IN were reported at a cut-off
grade of 0.125% CuEq, which is consistent with the previous
estimate.
Readers are advised that 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.
Even though test mining has been undertaken in areas with Measured
and Indicated class Mineral Resources, there is no certainty that
inferred Mineral Resources will be converted to Measured and
Indicated categories through further drilling, or into Mineral
Reserves, once economic considerations are applied.
Mineral Reserve Estimate
The current Mineral Reserve estimate of November 14, 2018, prepared by Carlos Guzmán,
(FAusIMM of NCL Ingeniería y Construcción Ltda.) for the Project is
summarized below. Based on the Mineral Resource estimate, a
standard methodology for pit limit analysis, mining sequence, and
cut-off grade optimization, including application of mining
dilution, process recovery, economic criteria and physical mine and
plant operating constraints, has been followed to design the open
pit mines and determine the Mineral Reserve estimate for each
deposit as summarized in the Mineral Reserve table.
|
Santo Domingo
Mineral Reserve Estimate as at November 14, 2018
|
Reserve
Category
|
Ore
Grade
|
Contained
Metal
|
Ore
(Mt)
|
Cu
(%)
|
Fe
(%)
|
Au
(g/t)
|
Cu
(Mlbs)
|
Fe Conc.
(Mt)
|
Au
(kOz)
|
Proven
Reserves
|
65.4
|
0.61
|
30.9
|
0.08
|
878.5
|
8.2
|
169.9
|
Probable
Reserves
|
326.9
|
0.24
|
27.6
|
0.03
|
1,694.2
|
66.9
|
336.8
|
Total
Reserves
|
392.3
|
0.30
|
28.2
|
0.04
|
2,572.7
|
75.1
|
506.7
|
|
|
(1)
|
Mineral Reserves are
reported as constrained within Measured and Indicated pit designs
and supported by a mine plan featuring variable throughput rates
and cut-off optimization. The pit designs and mine plan were
optimized using the following economic and technical parameters:
metal prices of US$3.00/lb Cu, US$1,280/oz Au and US$100/dmt of FeO
concentrate; the average recovery is 93.4% for Cu and 60.1% for Au,
with magnetite concentrate recovery varying on a block-by-block
basis; copper concentrate treatment charges of US$80/dmt,
US$0.08/lb of Cu refining charges, US$5.00/oz of Au refining
charges, US$33/wet metric tonnes ("wmt") and US$20/wmt for shipping
Cu and Fe concentrates respectively; waste mining cost of $1.75/t,
mining cost of US$1.75/t ore, and process and G&A costs of
US$7.53/t processed; average pit slope angles that range from 37.6º
to 43.6º; a 2% royalty rate assumption.
|
(2)
|
Rounding as required
by reporting guidelines may result in apparent summation
differences between tonnes, grade and contained metal
content.
|
(3)
|
Tonnage and grade
measurements are in metric units. Contained gold ounces are
reported as troy ounces.
|
Mine Production Schedule
The cash flow model is supported by a mine plan developed to an
annual level of detail, which can be accessed HERE. Approximately
45 million tonnes of material would be pre-stripped in the year
prior to start-up of operations. The LOM plan contemplates mining
1.7 billion tonnes of material consisting of 1.3 billion tonnes of
waste rock and overburden and 0.4 billion tonnes of ore over an
approximately 18 year mine life. The overall strip ratio for the
LOM is 3.3:1. The plan developed for the Project mines higher
copper grades in the first five years of the mine life with
progressively lower copper grades and higher iron grades for the
remaining 13 years.
Processing
The copper and magnetite recovery plant and associated service
facilities will process run of mine ("ROM") ore delivered to a
primary crusher feeding a conventional process of crushing and
grinding of the ROM ore, copper flotation, and magnetite recovery
from copper rougher tailings. Copper concentrate will be produced
and dewatered at the process facility for trucking to (and
stockpiling at) the port. Magnetite concentrate will be thickened
on site prior to being pumped via a concentrate pipeline to the
port. At the port, the magnetite concentrate will be dewatered and
stockpiled. Both the copper and magnetite concentrates will be
loaded onto ships for transportation to third-party smelters.
Grinding and flotation test-work has established mill design
parameters and copper recovery estimates for the Technical Report.
The mill will process a total of 392 million tonnes of ore over an
approximate 18 year mine life at an average grade of 0.30% copper,
0.04 grams per tonne gold and 28.2% iron. Mill throughput will vary
from 65,000 tpd in the first five years, to 60,000 tpd in the
latter years when throughput will be reduced as the ore becomes
slightly harder. Average mill throughput over the 18 year mine life
is projected to be 60,500 tpd. Metal recoveries for copper and gold
are estimated at 93.4% and 60.1% respectively, averaged over the
mine life.
Iron recovery was determined from magnetic separation testing on
the copper flotation rougher tailings. The Technical Report does
not consider any process to recover the specular hematite portion
of the iron. Therefore, iron recovery is presented in terms of the
total mill feed mass recovery. For the life of the project this
averages 19.1%, and ranges from a low of 10.1% in year five of the
project to a high in excess of 25% in the last four years of the
project. Testing via pilot plant indicates that a magnetite
concentrate grading 66% to 67% iron can be maintained throughout
the life of the project.
A detailed Mine Production Summary and Plant Feed Production
Schedule showing tonnes processed, grades and recoveries can be
accessed HERE.
The tailings storage system will consist of a tailings storage
facility ("TSF") located north of the proposed mine. The TSF is
designed to store approximately 314 million tonnes of conventional
thickened tailings, which is sufficient capacity for the
approximately 18 years of the project life. Storage of both
desalinated and process water is proposed in lined ponds near the
plant site. Water make-up is proposed to be desalinated water.
Based on the conventional thickened tailings disposal method, the
estimated water make-up will be approximately 1,260 m3/h (~350
L/s).
Offsite Infrastructure and Services
The Level 3 Capital construction estimate for this Technical
Report included 100% of the capital requirements of a greenfield
port in the Punta Roca Blanca area (Puerto
Santo Domingo) on the coast 41 kilometres north of Caldera
in the Atacama Region. Included in the cost estimates is the
terminal station of the concentrate pipeline, storage tanks and
filter plant for magnetite concentrate, a copper concentrate
storage building, a magnetite concentrate stockpile, integrated
building (offices, laboratories, change house and lunch room),
guard checkpoint, workshop and warehouse; and ancillary facilities
to support the operation. The port facility is designed to
accommodate the maximum throughout requirements of 5.4 million
tonnes per annum.
Access to the mine site is six kilometres south of Diego de
Almagro on Highway C-17. This section is paved and in good
condition. Due to the location of the planned Iris Norte pit, process facility and tailings
storage facility, approximately 18.7 kilometres of the existing
C-17 road will require relocation. The existing C-17 road will
remain in service during the relocation effort. In addition, a new
bypass road will be built around Diego de Almagro to minimize
traffic impacts from the Project. The Diego de Almagro bypass is
approximately 4.7 kilometres in length and will be built in the
early stage of the Project.
Water and Concentrate Transport
The Project has been rescoped to use desalinated water which
will be pumped to the mine/process site. Capstone has received an
indicative proposal for the supply of desalinated water from a
local supplier with a proven record of delivery. Desalinated water
was adopted due to several compelling considerations, including
improved gold and copper recoveries, lower electricity costs for
the desalination process and potential access to premium pricing
for iron fines.
A magnetite concentrate pipeline will transport magnetite
concentrate from the process plant to the filter plant at the port
via a pipeline starting at an elevation of 1,027 masl and ending at
the port at an elevation of 16 masl. The copper concentrate will be
trucked from the site to Puerto Santo
Domingo.
Both the water and the concentrate pipelines will use the same
right-of-way and will run parallel to existing roads for the
majority of the distance from the mine area to the port. The
pipeline route will largely follow the valleys with the single
route high point located approximately 45 kilometres from the mine
site near Mantos Copper's Mantoverde mine operation.
Power
Santo Domingo's mine and port
sites will be connected to the national grid system (Sistema
Eléctrico Nacional, or "SEN") which includes coal, natural gas,
hydroelectric and non-conventional renewable energy (NCRE)
generation. The closest connection point between the SEN and the
mine site is via a direct connection to the Diego de Almagro
substation, located about five kilometres from the mine area.
A 220 kV transmission line has been designed to supply power
from the Diego de Almagro substation to the Santo Domingo site. The line is 8.9 kilometres
long, running underground for the first 0.5 kilometres. In
addition, a 220 kV transmission line has been designed to supply
power from Port Totoralillo to Puerto Santo
Domingo. This line is 14 kilometres long.
The Technical Report has assumed a price of $72 per MWh, including all system-related
charges, for electricity delivered to the nearest electrical
substations to the mine site and the port site. The price is
consistent with current contract rates for electricity in the SEN
and has been verified with power generators currently operating in
the SEN. The estimated peak demand for the mine and port is 109
MW.
Construction Cost Estimate
The construction cost has been updated and estimated at
$1.51 billion as shown in the
following table. This estimate is based upon a constant foreign
exchange rate of 600 Chilean Pesos ("CLP") to US$1.00 during the development period and for the
LOM.
|
|
Construction Cost
Estimate – Santo Domingo 2018 Technical Report
|
(US$
thousands)
|
Mine
Equipment
|
106,769
|
Mine Pre-Production
Stripping
|
57,117
|
Crushing
|
43,396
|
Grinding
|
114,962
|
Flotation
|
57,966
|
Magnetic
Separation
|
40,076
|
Thickening and
Tailings Handling
|
52,976
|
Reagents
|
9,388
|
Copper
Concentrate
|
12,018
|
Tailings Storage
Facility
|
23,659
|
Plant/Mine
Infrastructure
|
156,723
|
Magnetite Concentrate
Pipeline
|
89,086
|
Port -
Process
|
25,729
|
Port - Concentrate
Handling/Loading
|
121,641
|
Port -
Infrastructure
|
21,887
|
Total Direct
Cost
|
933,395
|
Development –
Indirects (includes EP and CM costs)
|
156,835
|
Construction Admin
Costs
|
112,372
|
Owner
Costs
|
111,831
|
Contingency (15% of
total costs)
|
197,845
|
Total Indirect
Costs
|
578,882
|
TOTAL PROJECT
CONSTRUCTION COSTS
|
1,512,277
|
Mine pre-production stripping costs are estimated at
$57.1 million and are included in the
construction cost estimate. LOM sustaining capital, estimated at
$378.6 million over the approximately
18 year mine life, is not included in the above figure. Mine
closure costs have been estimated at $102
million and have been included in the financial evaluation
model.
Total Project Operating Costs3
|
Total Project
Operating Costs3 – Santo Domingo 2018 Technical
Report
|
|
LOM Total
(US$ thousands)
|
LOM Average
(US$/t milled)
|
LOM C1 Cash
Cost2
(US$/lb payable Cu)
|
Mining
|
2,619,572
|
6.68
|
1.13
|
Process
|
2,547,558
|
6.49
|
1.10
|
G&A
|
402,844
|
1.03
|
0.17
|
Sub-Total
|
5,569,973
|
14.20
|
2.40
|
By-Product
Credits
|
|
|
(2.70)
|
Treatment and
Refining Charges and Selling Costs
|
|
|
0.31
|
TOTAL C1 cash
cost2 per pound of payable copper
produced
|
|
|
0.02
|
As shown, the estimated total C1 cash cost2 over LOM
are estimated at $0.02 per pound of
payable copper produced, when including gold and iron credits. The
co-product LOM C1 cash costs3 are estimated at
approximately $1.38 per pound of
payable copper and $38.88 per tonne
of magnetite concentrate produced.
Sensitivities
|
Sensitivities –
Santo Domingo 2018 Technical Report
|
Parameter or
Variation
|
Value
|
Pre-Tax
|
After-Tax
|
IRR
|
NPV
|
IRR
|
NPV
|
(%)
|
@
8.0%
|
(%)
|
@
8.0%
|
|
($M)
|
|
($M)
|
Copper Price
($/lb)
|
-20%
|
2.40
|
18.5
|
904
|
15.2
|
548
|
-10%
|
2.70
|
22.6
|
1,248
|
18.5
|
792
|
Base
Case
|
3.00
|
26.6
|
1,592
|
21.8
|
1,032
|
10%
|
3.30
|
30.5
|
1,936
|
25.0
|
1,270
|
20%
|
3.60
|
34.4
|
2,280
|
28.0
|
1,506
|
Magnetite Iron
Price ($/dmt Fe)
|
-20%
|
64
|
23.1
|
1,155
|
18.8
|
730
|
-10%
|
72
|
24.9
|
1,373
|
20.3
|
881
|
Base
Case
|
80
|
26.6
|
1,592
|
21.8
|
1,032
|
10%
|
88
|
28.2
|
1,810
|
23.1
|
1,182
|
20%
|
96
|
29.7
|
2,028
|
24.4
|
1,331
|
Total Operating
Costs ($/t LOM average)
|
-20%
|
11.73
|
30.5
|
2,029
|
25.0
|
1,332
|
-10%
|
13.19
|
28.6
|
1,810
|
23.4
|
1,183
|
Base
Case
|
14.66
|
26.6
|
1,592
|
21.8
|
1,032
|
10%
|
16.13
|
24.5
|
1,373
|
20.0
|
880
|
20%
|
17.59
|
22.3
|
1,154
|
18.2
|
726
|
Initial
Construction Costs ($M)
|
-20%
|
1,209.8
|
33.5
|
1,835
|
28.5
|
1,276
|
-10%
|
1,361.0
|
29.7
|
1,713
|
24.8
|
1,154
|
Base
Case
|
1,512.3
|
26.6
|
1,592
|
21.8
|
1,032
|
10%
|
1,663.5
|
23.9
|
1,470
|
19.2
|
910
|
20%
|
1,814.7
|
21.6
|
1,348
|
17.0
|
788
|
Permitting
In July 2015, Capstone received
approval of the EIA for the Project. The EIA will require minor
modifications as a result of improvements assessed in this
Technical Report update.
In July 2017, long-lead permit
applications required to start construction were submitted. Of
these, we have received the Mine Development, Plant and Waste Rock
Storage Facility permits. We await receipt of the Tailings Permit,
upon its approval the application for the Closure and Reclamation
Plan permit will be submitted.
Iron Ore Pricing
The Technical Report uses a constant metal price assumption of
$80 per tonne of magnetite iron
concentrate received by the Project. This assumption reflects
value-in-use adjustments to the conventionally quoted 62% iron
ore price. Specifically, there are premiums for producing iron ore
with 66% iron content, as well as for producing a product that is
low in impurities such as alumina. The $80 per tonne figure is expressed FOB Santo
Domingo port.
2018 Technical Report vs. 2014 Feasibility
Study1
|
|
|
|
Santo Domingo
Project
|
2018 Technical
Report
|
2014
Feasibility
Study1
|
Change
|
Life of mine ("LOM")
(years)
|
17.9
|
18
|
-
|
Initial construction
cost (US$ billions)
|
$1.5
|
$1.7
|
(11%)
|
NPV (after-tax, 8%
discount) (US$ billions)
|
$1.0
|
$0.8
|
30%
|
IRR
(after-tax)
|
22%
|
18%
|
22%
|
Payback period
(after-tax) (years)
|
2.8
|
4.2
|
(33%)
|
Avg. annual contained
copper production for first five years of full production (million
pounds)
|
259
|
248
|
4%
|
C1 cash
cost2 per pound of payable copper produced for first
five years of full production
|
$0.47
|
$0.49
|
($0.02)
|
Average annual
production for LOM
|
|
|
|
Copper (million
pounds)
|
134
|
128
|
5%
|
Iron concentrate
(million tonnes)
|
4.2
|
4.2
|
-
|
Gold
(ounces)
|
17,000
|
16,000
|
6%
|
C1 cash
cost2 per pound of payable copper produced for
LOM
|
$0.02
|
($0.06)
|
$0.08
|
Next Steps
Capstone is advancing Santo
Domingo under a disciplined stage-gate approach. The next
stage-gate will be the approval of the final design criteria upon
conclusion of the 2019 pilot plant trials, which is anticipated in
mid-2019. The following stage-gate will be when engineering is
advanced to approximately 60% to 65% with an estimate accuracy of
±10%, expected in the third quarter of 2019 and will result in the
initiation of purchasing key capital equipment. The final gate will
be at the point when financing is confirmed, which is expected to
be in the first quarter of 2020. At each stage-gate, Capstone will
evaluate the status of the Project and communicate the next steps.
Each decision will reflect, among other factors, the progress made
in the areas outlined above, general and project specific market
conditions, the financing market, project economics and
alternatives available to the Company at that time. The decisions
will be targeted at maximizing the value of the Project to Capstone
shareholders in a manner that ensures financial flexibility for
continued growth and financial security for the Company's existing
operations.
Qualified Persons
The following Qualified Persons (QPs), as defined by NI 43-101
are independent from Capstone and have reviewed and approved the
content of this news release and are responsible for the
preparation of their relevant portions of the Technical Report:
- Joyce Maycock, P. Eng., Amec
Foster Wheeler Ingeniería y Construcción Limitada, a Wood
company
- Antonio Luraschi, CMC, Amec
Foster Wheeler Ingeniería y Construcción Limitada, a Wood
company
- Marcial Mendoza, CMC, Amec
Foster Wheeler Ingeniería y Construcción Limitada, a Wood
company
- Mario Bianchin, P. Geo., Amec
Foster Wheeler Ingeniería y Construcción Limitada, a Wood
company
- Roy G. Betinol, P. Eng., BRASS
Chile S.A
- Carlos Guzmán, CMC, FAusIMM, NCL Ingeniería y Construcción
Ltda
- Roger Amelunxen, APEG, Aminpro
Chile
- Tom Kerr, P. Eng., Knight
Piésold S. A.
- David Rennie, P. Eng., Roscoe
Postle Associates Inc.
- Michael Gingles, MMSA, Sunrise
Americas
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian base metals mining company,
focused on copper. We are committed to the responsible development
of our assets and the environments in which we operate. Our two
producing mines are the Pinto Valley copper mine located in
Arizona, US and the Cozamin
polymetallic mine in Zacatecas State, Mexico. In addition, Capstone has the large
scale 70% owned copper-iron Santo
Domingo development project in Region III, Chile, in partnership with Korea Resources
Corporation, the Minto copper mine
in Yukon, Canada currently on care
and maintenance, as well as a portfolio of exploration properties.
Capstone's strategy is to focus on the optimization of operations
and assets in politically stable, mining-friendly regions, centred
in the Americas. Our headquarters are in Vancouver, Canada and we are listed on the
Toronto Stock Exchange (TSX). Further information is available at
www.capstonemining.com.
Cautionary Note Regarding 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 mineral resources, the conversion of mineral resources to
mineral reserves, the ability to successfully complete the
strategic review process, the ability to further enhance the value
of the project, the expected timing for commencement of
construction of the Santo Domingo Project, the market for project
debt, Capstone's ability to raise its equity contribution to the
Project, the realization of mineral reserve estimates, the timing
and amount of estimated future production, costs of production,
capital and construction expenditures, success of mining
operations, environmental risks, the timing of the receipt of
permits, the timing and terms of a power purchase agreement,
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",
"outlook", "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. In this document certain
forward-looking statements are identified by words including
"explore", "potential", "will", "scheduled", "plan", "planned",
"estimates", "estimated", "estimate", "projections", "projected",
"await receipt" and "expected". Forward-looking statements are
based on a number of assumptions which may prove incorrect,
including, but not limited to, the development potential of the
Santo Domingo Project and current and future commodity prices and
exchange rates. 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,
changes in project parameters as plans continue to be refined;
future prices of commodities; possible variations in mineral
reserves, grade or recovery rates; accidents; dependence on key
personnel; labour pool constraints; labour disputes; availability
of infrastructure required for the development of mining projects;
delays in obtaining governmental approvals, financing or in the
completion of development or construction activities; objections by
the communities or environmental lobby of the Santo Domingo Project
and associated infrastructure and other risks of the mining
industry 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.
Alternative Performance Measures
"Total C1 Cash Cost" and "Total Project Operating Costs" are
Alternative 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
International Financial Reporting Standards ("IFRS") 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 IFRS.
Cautionary Note to United States Investors
This news release contains disclosure that has been prepared in
accordance with the requirements of Canadian securities laws, which
differ from the requirements of U.S. securities laws. Without
limiting the foregoing, this news release refers to a technical
report that uses the terms "indicated" and "inferred" resources.
U.S. investors are cautioned that, while such terms are recognized
and required by Canadian securities laws, the SEC does not
recognize them. Under U.S. standards, mineralization may not be
classified as a "reserve" unless the determination has been made
that the mineralization could be economically and legally produced
or extracted at the time the reserve determination is made. U.S.
investors are cautioned not to assume that all or any part of
indicated resources will ever be converted into reserves. U.S.
investors should also understand that "inferred resources" have a
great amount of uncertainty as to their existence and as to whether
they can be mined legally or economically. It cannot be assumed
that all or any part of "inferred resources" will ever be upgraded
to a higher category. Therefore, U.S. investors are also cautioned
not to assume that all or any part of inferred resources exist, or
that they can be mined legally or economically. Accordingly,
information concerning descriptions of mineralization and resources
contained in this news release may not be comparable to information
made public by U.S. companies subject to the reporting and
disclosure requirements of the SEC.
1. See Capstone News
Release dated June 4, 2014 titled "Capstone Mining Reports Positive
Feasibility Study Results for Santo Domingo Project in Chile" and
the Technical Report effective May 14, 2014 for full details. 2.
These are alternative performance measures; please see "Alternative
Performance Measures" at the end of this news release. C1 cash
costs are net of magnetite iron and gold by-product credits and
selling costs. 3. These are alternative performance measures;
please see "Alternative Performance Measures" at the end of this
news release.
|
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SOURCE Capstone Mining Corp.