1. This is an alternative performance measure; please refer to the "Alternative Performance Measures" section of the Company’s
1. This is an alternative performance measure; please refer to the "Alternative Performance Measures" section of the Company’s
MD&A for the three and twelve months ended December 31, 2021.
1
February 15, 2022
Capstone Generates Record Net Income in 2021 and Increases Net Cash1 to $264.4 Million
(All amounts in US$ unless otherwise specified)
Vancouver, British Columbia - Capstone Mining Corp. (“Capstone” or the “Company”) (TSX:CS) today announced
production and financial results for the quarter (“Q4 2021”) and full year (“FY 2021”) ended December 31, 2021.
Quarterly consolidated copper production totaled 51.6 million pounds at C1 cash costs1 of $1.72 per payable pound
of copper produced. Annual consolidated copper production totaled 187.1 million pounds at C1 cash costs1 of $1.81
per payable pound of copper produced. Link HERE for Capstone’s Q4 2021 management’s discussion and analysis
(“MD&A”) and financial statements and HERE for the webcast presentation.
Darren Pylot, CEO of Capstone , commented, “Our investments in optimization and expansion over the past two
years have allowed us to take advantage of robust copper prices, positioning us now with a large net cash balance
sheet ahead of a period of transformational growth.” Mr. Pylot continued, “We announced the upcoming business
combination with Mantos Copper on November 30th. After the special meeting of the shareholders on February 28th,
we look forward to building on the strengths of both organizations as we create Capstone Copper, a Canadian
copper champion that will deliver leading growth in our sector. We remain committed to strengthening communities
and building resilient long-life operations.”
Q4 2021 AND 2021 OPERATIONAL & FINANCIAL HIGHLIGHTS
• Record net income of $252.9 million, or $0.56 per share for 2021 and net income of $41.4 million, or
$0.10 per share for Q4 2021. Adjusted net income 1 of $241.6 million or $0.60 per share for 2021, and
$73.2 million or $0.18 per share for Q4 2021 ; main reconciling item for Q4 2021 was share based
compensation expense.
• Record Adjusted EBITDA1 of $432.2 million for 2021 and $113.3 million for Q4 2021. The increase in
adjusted EBITDA1 is reflective of Capstone’s 19% growth in production and strong operational performance
and financial leverage in a robust copper price environment.
• Record Operating cash flow before changes in working capital 1 of $556.3 million in 2021 and
$104.9 million in Q4 2021 driven by strong revenue in a plus $4.40 price copper environment. Included in
2021 Operating cash flow is the receipt of the $150.0 million upfront payment for the Cozamin Silver Stream
and $30.0 million upfront payment for the Santo Domingo Gold Stream Agreement.
• Cash and short term investments grew by $56.2 million during the three months ending December
31, 2021 and by $389.3 million during 2021 to $264.4 million. The Company's total available liquidity 1
was $489.4 million with nil long term debt. The balance sheet was further enhanced by continued strong
operating cash flow generation during Q4 2021.
• Consolidated copper production of 51.6 million pounds at C1 cash costs 1 of $1.72 per payable
pound of copper produced for Q4 2021. Full year guidance achieved with consolidated copper production
for 2021 of 187.1 million pounds at C1 cash costs1 of $1.81 per payable pound of copper produced.
• Cozamin Mine achieved another record quarterly copper production of 14.5 million pounds at $0.99
per payable pound of copper produced for Q4 2021. Q4 2021 production was 41% higher than in Q4
2020 following commissioning of the Calicanto one-way ramp in Q1 2021.
• Pinto Valley Mine produced 37.1 million pounds at $2.00 per payable pound of copper for Q4 2021.
The mine's processing plant achieved rates of approximately 58,500 tonnes per day (“tpd”) in Q4 2021
following completion of Phase 2 of PV3 Optimization.
• Capstone announced the Transaction to combine with Mantos Copper (Bermuda) Limited
(“Mantos”) to create Capstone Copper Corp. The Transaction will establish Capstone Copper Corp. as
a premier copper producer with a diversified portfolio of high -quality, long-life operating assets focused in
the Americas with an extensive pipeline of near -term fully -permitted organic growth opportunities.
Completion of the Transaction is expected in March or April 2022.
NEWS RELEASE
TSX:CS ● capstonemining.com
2
Operational Overview
Refer to Capstone’s Q4 2021 and FY 2021 MD&A and Financial Statements for detailed operating results.
Q4 2021 Q4 2020 FY 2021 FY 2020
Copper production (million pounds)
Pinto Valley 37.1 34.1 133.3 119.0
Cozamin 14.5 10.3 53.8 37.9
Total 51.6 44.4 187.1 156.9
Copper sales
Copper sold (million pounds) 46.8 39.3 178.7 147.4
Realized copper price ($/pound) 4.61 3.64 4.42 2.99
C1 cash costs1 ($/pound) produced
Pinto Valley 2.00 2.00 2.16 2.21
Cozamin 0.99 0.63 0.96 0.69
Consolidated 1.72 1.68 1.81 1.84
Consolidated
Q4 2021 production was 16% higher than Q4 2020 mainly as a result of higher mine grades at both mines plus
record copper production at Cozamin driven by the mine expansion related to the completion of the new one -way
ramp at the end of 2020.
2021 consolidated production of 187.1 million pounds of copper is at the upper end of the full year guidance of 175
to 190 million pounds of copper. The production results reflect a 19% increase compared to prior year, benefiting
from Cozamin achieving the higher mill rates (3,800 tpd) and benefits of the PV3 Optimization projects at Pinto
Valley. The increase in production was the main driver for the $0.03 per payable pound of copper decrease in C1
cash costs1 in 2021 compared to 2020, offset by $0.09/lb related to the Cozamin silver stream, thus overall pre -
stream the C1 cash costs1 were $0.12/lb lower than 2020. 2021 YTD C1 cash costs1 are within annual guidance of
$1.75 to $1.90 per payable pound of copper.
Pinto Valley Mine
Q4 2021 production was higher than the same period last year primarily on higher grades for Q4 2021 (0.37%
versus 0.31% in Q4 2020) as a result of mine sequencing and an increase in cut off grade to the mill, sending the
lower grade ore to leach, partially offset by lower recoveries in Q4 2021 compared to Q4 2020.
2021 production increased by 12% compared to the same period last year due to higher head grades for 2021
(0.35% versus 0.30% in 2020) and improved flotation plant recovery performance (85.7% versus 85.0% in 2020).
C1 cash costs1 of $2.00 per payable pound of copper in Q4 2021 were consistent with the same period last year.
Lower capitalized stripping costs of $0.12 per pound during the quarter ($0.2 million versus $4.1 million in Q4 2020)
were fully offset by higher Q4 2021 production compared to Q4 2020.
A decrease in 2021 C1 cash cost 1 by $0.05 per payable pound of copper was primarily attributed to higher
production compared to the same period last year.
Cozamin Mine
Production in Q4 2021 was 41% higher than the same period last year and another record production quarter for
Cozamin. Higher copper production was primarily due to the successful utilization of the Calicanto one -way ramp
which increased mill rates from 3, 086 tpd in Q4 2020 to 3,863 tpd in Q4 2021. In addition, with the optimized
technical report mine plan, the mine is delivering significantly higher mine grades (1.92% in Q4 2021 versus 1.72%
in Q4 2020) from the copper rich San Jose and Calicanto zones.
3
2021 production increased by 42% compared to the same period last year mainly due to higher mill throughput
(3,724 tpd versus 2,949 tpd in 2020 YTD) and head grades (1.86% versus 1.67% in 2020).
C1 cash costs1 in Q4 2021 were higher than the same period la st year due to $0.29 per payable pound of copper
impact of the Cozamin silver stream with Wheaton for 50% of the silver sales and higher production costs attributed
to higher operating development meters executed.
C1 cash costs1 in 2021 were higher than the same period last year due to $0.30 per payable pound of copper impact
of the Cozamin silver stream with Wheaton for 50% of the silver sales. The cost per payable pound impact of the
Cozamin silver stream was partially offset by higher production.
4
Financial Overview
Refer to Capstone’s Q4 2021 and FY 2021 MD&A and Financial Statements for detailed financial results.
December 31,
2021
December 31,
2020
Total assets ($ millions) 1,728.0 1,391.6
Long term debt (excluding financing fees) ($ millions) - 184.9
Total non-current financial liabilities ($ millions) 38.4 183.6
Total non-current liabilities ($ millions) 481.3 408.5
Cash and cash equivalents and short-term investments ($ millions) 264.4 60.0
Net cash/(debt)1 ($ millions) 264.4 (124.9)
($ millions, except per share data) Q3 2021 Q3 2020 2021 YTD 2020 YTD
Revenue 165400000 130500000 578900000 305600000
Net income (loss) 35000000 2300000 211500000 -15300000
Net income (loss) attributable to shareholders 35000000 2350000 185400000 -15067000
Net income (loss) attributable to shareholders per common share - basic ($) 0.09 0.01 0.46 -0.04
Net income (loss) attributable to shareholders per common share - diluted ($) 0.08 0.01 0.45 -0.04
Net income (loss) attributable to shareholders per common share - basic and diluted ($) basic =/= diluted 0.01 basic =/= diluted -0.04
Adjusted net income (loss)1 35300000 9500000 168400000 -8700000
Adjusted net income (loss) attributable to shareholders1 35300000 9500000 168400000 -8500000
Adjusted net income (loss) attributable to shareholders per common share - basic 0.09 0.0241394748568541 0.42 -
0.0221421099193637
Adjusted net income (loss) attributable to shareholders per common share - diluted 0.09 0.0236029164200804 0.41 -
0.0221421099193637
Adjusted net income (loss) attributable to shareholders per common share - basic and diluted 0.09 0.0241394748568541 basic =/= diluted -
0.0221421099193637
Adjusted EBITDA1 72300000 51600000 318900000 75700000
Cash flow from operating activities 70000000 27700000 458900000 79800000
Cash flow from opting activities pershare1 - basic ($) 0.17 0.07 1.13 0.2
Op 2 2021 includes $180.0 million silver and gold stream proceeds
before changes in working capital12 67100000 44900000 451600000 65600000
Q4 2021 Q4 2020 FY 2021 FY 2020
Revenue ($ millions) 215.9 148.1 794.8 453.8
Net income ($ millions) 41.4 27.6 252.9 12.4
Net income attributable to shareholders ($ millions) 41.4 27.6 226.8 12.6
Net income attributable to shareholders per common
share – basic ($) 0.10 0.07 0.56 0.03
Net income attributable to shareholders per common
share – diluted ($) 0.10 0.07 0.55 0.03
Adjusted net income1 ($ millions) 73.2 35.6 241.6 26.4
Adjusted net income attributable to shareholders1
($ millions) 73.2 35.6 242.1 26.4
Adjusted net income attributable to shareholders per
common share – basic1($) 0.18 0.09 0.60 0.07
Adjusted net income attributable to shareholders per
common share – diluted1($) 0.18 0.09 0.58 0.07
Adjusted EBITDA1 ($ millions) 113.3 63.5 432.2 139.2
Cash flow from operating activities2 ($ millions) 94.5 67.4 553.3 147.2
Cash flow from operating activities per common
share1 - basic ($) 0.23 0.17 1.36 0.37
Operating cash flow before changes in working
capital1,2 ($ millions) 104.9 65.3 556.3 131.2
Operating cash flow before changes in working capital
per common share1 – basic ($) 0.26 0.16 1.37 0.33
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
5
CORPORATE UPDATE
Mantos Transaction
On November 30, 2021, the Company announced it had entered into a definitive agreement (the "Agreement") with
Mantos to combine, pursuant to a plan of arrangement (the “Transaction”). Mantos is a copper-producing company
that, through its subsidiaries, is engaged in the exploration, development, extraction, and processing of sulphide
and oxide ores, and the production and sale of London Market Exchange Grade “A” copper cathodes and clean
copper concentrates, with gold and silver by-products from its mining assets. Mantos Copper currently operates the
open pit copper mines and processing plants of Mantos Blancos, located forty -five kilometers northeast of
Antofagasta, and Mantoverde, located fifty kilometers southeast of Chañaral, in the region of Atacama.
The Transaction will require the approval of at least 66 2/3% of the votes cast by the shareholders of Capstone
voting at a special meeting of shareholders to be held on February 28th, 2022. Officers and directors of Capstone,
along with Capstone’s largest shareholder, have entered into support and voting agreements, agreeing to vote their
shares in favour of the Transaction (representing approximately 26.5% of the issued and outstanding common
shares of Capstone). T he management information circular dated J anuary 27th, 2022 has been posted to the
Company’s website and filed on its profile on SEDAR.
Institutional Shareholder Services (“ISS”) and Glass Lewis (“GL”), two leading independent third party proxy
advisory firms, have recommended that shareholders vote FOR the proposed business combination with Mantos.
ISS and GL, among other services, provide proxy-voting recommendations to pension funds, investment managers,
mutual funds and other institutional shareholders.
In its report, ISS stated, “The arrangement makes strategic sense as the combined company will possess a
diversified collection of long-life operating assets, planned and fully financed copper production growth of 45% by
2024, and material production growth opportunities represented by the Santo Domingo project as well as expansion
projects across the combined company asset portfolio.”
Glass Lewis’ report noted, “We ultimately believe the board and special committee established a sound basis upon
which to conclude the proposed transaction represents an attractive opportunity for the Company and its
shareholders. The merger will result in a larger, more diversified copper producer with an opportunity to achieve
meaningful synergies.”
Upon completion of the Transacti on, the combined company is expected to be renamed Capstone Copper Corp.
("Capstone Copper"). Capstone Copper will remain headquartered in Vancouver, B.C. and has received conditional
approval to be listed on the TSX. Pursuant to the Agreement, each Capsto ne shareholder will receive 1 newly
issued Capstone Copper share per Capstone share (the "Exchange Ratio") and the existing Mantos shareholders
will continue to hold Capstone Copper shares. Upon completion of the Transaction, former Capstone and Mantos
shareholders will collectively own approximately 60.75% and 39.25% of Capstone Copper, respectively, on a fully-
diluted basis. The Transaction is subject to certain regulatory approvals, consents from certain third parties and
other customary closing conditions for a transaction of this nature, including approvals by the security holders, the
TSX and the Supreme Court of British Columbia. The Agreement includes a non -solicitation provision, a right to
match a superior proposal and a C$75 million termination fee payable in certain circumstances. Completion of the
Transaction is expected in March or April 2022.
Subject to shareholder approval and the satisfaction of all other conditions, the Transaction is anticipated to close
in March or April 2022.
PV3 Optimization Completed
PV3 Optimization work was completed in Q3 2021. The $31 million two year program involved investments in the
fine crushing plant, two new ball mill shells, tailings thickeners, and tailings pumping upgrades. The optimization
work has enabled the reliability of higher throughput rates at Pinto Valley from 51,000 tpd average in 2019 to over
58,000 tpd average in Q4 2021.
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
6
PV4 Study
During 2021, the study work progressed on the pre -feasibility study ("PFS") for PV4 which aims to maximize the
conversion of approximately one billion tonnes of mineral resources to mineral reserves, significantly extending
Pinto Valley’s mine life and inc reasing the mine’s copper production profile. The application of the following new
technologies and innovation is being considered:
• Expansion of the use of Jetti Catalytic Leach Technology which has the potential to increase mill cut -off-
grades and increase tonnage available for leaching. Column leach testing is ongoing through H1 2022 and
results will be included in the PV4 Study.
• Pyrite Agglomeration has strong Environmental, Social and Governance ("ESG") implications as it will divert
acid-generating m inerals including pyrite and chalcopyrite from tailings to the dump leach operation.
Additional copper recovery and lower costs via self–generation of free acid are also key economic drivers
for this project. The project’s initiation is targeted for H2 202 2 subject to board approval. Based on
preliminary study results, the project is expected to require a low capex with a short payback period.
Higher mill throughput will be considered targeting up to 65,000 to 70,000 tpd. Key areas of investment include
upgrades to ball mill motors, grinding circuit cyclones, and improvements to the rougher flotation circuit and
evaluation of coarse particle flotation. A low capital strategy is currently under review to improve coarse particle
recovery with some modest inv estment in the current conventional flotation circuit. An expanded dump leach
strategy would translate to higher grades sent to the mill for processing and increased copper cathode production
by expanding dump leach tonnage.
Santo Domingo Project
Following consolidation of Capstone’s 100% ownership of the Santo Domingo Project ("Santo Domingo" or “the
Project") in Region III, Chile during Q1 2021, the Company continued to advance the Project on several fronts:
• With respect to the reduced initial capital estimate, the Company and its port partner, Puerto Abierto, S.A.,
a subsidiary of Puerto Ventanas, S.A., are executing on early works in the framework agreement. In
addition, the Company is advancing the analysis of the pipeline versus rail capital trade -off in which the
proposals replace the pipeline capital to become a rail customer. This work is now being done in conjunction
with the Mantoverde synergies analysis discussed below.
• With respect to the proposed Transaction with Mantos, scoping level work is being performed by the Santo
Domingo and Mantos teams starting in late Q4 2021 to identify and refine potential synergies between the
Santo Domingo Project with the Mantoverde mine (owned 70% by Mantos). Santo Domingo is situated ~35
kilometres northeast of the Mantoverde mine; significant potential opportunities exist for:
o Infrastructure sharing (including power, water, pipelines, port),
o Transportation synergies for concentrates,
o Potential enabling of product lines (additional iron and cobalt production from Mantoverde,
processing oxide ore from Santo Domingo),
o Potential integrated operating approach, and
o Construction synergies (including project teams and camp).
• With respect to potential increases in the Chile an mining royalty tax, Santo Domingo is expected to be
protected given the Company retains a foreign investment contract with the state of Chile, which fell under
the provisions of DL600. One of the benefits to the Company of this agreement is a tax invariability system
for a period of 15 years post commercial production.
• Cobalt Feasibility Update: The drilling program from Q3 and Q4 of 2021 generated sufficient sample mass
for 2022 pilot scale testing of the cobalt recovery process. The first of a total of two stages of the cobalt
feasibility engineering work, covering pre -feasibility level activities, started in September 2021 and is
expected to finalize in March 2022. The proposed cobalt recovery process takes advantage of a tailings
side-stream containing pyrite laden with ~0.6% cobalt, which will be recovered through a conventional
flowsheet. The concentrate will be sent to pyrite roasting and solvent extraction followed by crystallization
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
7
to produce battery grade cobalt sulphate heptahydrate. At an expe cted 10.4 million pounds of cobalt
production per year, this will be one of the largest and lowest cost cobalt producers in the world at C1 cash
costs1 of minus $4 per pound. Additional benefits of this project include the production of by -product
sulphuric acid from the pyrite roasting process, which can be used for heap or dump leaching to produce
low-cost copper cathodes at Santo Domingo, Mantoverde, and elsewhere in the district.
Corporate Exploration Update
Cozamin exploration: The focus during Q4 2021 was on testing the Mala Noche Footwall Zone and Mala Noche
Main Vein West Target with three surface rigs, along with the in-parallel development of the west exploration drift
and crosscuts which will allow more efficient testing of the target from underground once completed in early 2022.
One additional surface rig tested other brownfield targets on the property.
Copper Cities, Arizona: On January 20, 2022, Capstone announced that it had entered into an 18-month access
agreement with BHP Copper Inc. ("BHP") to conduct drill and metallurgical test-work at BHP's Copper Cities project
("Copper Cities"), located ~10 km east of the Pinto Valley Mine. In 2022, Capstone plans to spend $6.7 million in a
two-phase drill program aimed at twinning historical dri ll holes and to select a portion of these for metallurgical
testing.
Planalto, Brazil: Step-out drilling at the Planalto Iron Ore-Copper-Gold prospect in Brazil, under Earn In
agreement with Lara Exploration Ltd., commenced in Q4 2021 and will continue into 2022. Lara Exploration Ltd. is
expected to report results when appropriate.
Capstone Copper 2022 Catalysts
The following chart demonstrates key catalysts this year and assumes the completion of the combination with
Mantos Copper by the end of Q1 2022. Of note, Capstone Copper's ESG Vision and Objectives will be rolled out in
Q2 2022. The Mantoverde-Santo Domingo synergies study & integration plan is expected in September and will be
followed by a site visit and investor day for institutional investors and analysts.
At Pinto Valley, the PV4 prefeasibility study is expected to be released by year -end and at San to Domingo, the
updated feasibility and mine plan including the cobalt feasibility study is also expected to be released in Q4 2022.
At Cozamin, the paste backfill and dry stack tailings plant is expected to be commissioning by the end of 2022.
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
8
2022 PRODUCTION AND COST GUIDANCE
In 2022, Capstone Mining expects to produce between 82,000 and 90,000 tonnes of copper at C1 cash costs 1 of
between $1.85 and $2.00 per pound payable copper produced from the Pinto Valley and Cozamin mines.
Our cost control strategy included the following actions:
During 2020, financial hedges were executed on foreign exchange rates to protect approximately half of the
Company’s Mexican Peso exposure from August 2020 through December 2021. The realized gain on the Mexican
Peso zero cost collars was $2.6 million for the twelve months ended December 31, 2021. In November 2021,
additional financial hedges were executed for approximate 75% of the Mexican Peso and Chilean Peso operating
and capital cost exposure at the Cozamin mine and at Santo Domingo, respectively. The Mexican Peso collars
have a floor of 20 and a cap of 24.75 Mexican Pesos to the US dollar, and the Chilean Peso collars have a floor of
750 and a cap of 931 and 939 Chilean Pesos to the US dollar.
Pinto Valley fixed diesel prices with a supplier on its expected 2021 and 2022 diesel consumption at $1.76/gallon
and $2.13/gallon, respectively. The fixed diesel prices have resulted in cost savings of $3.0 million and $6.3 million
during the three months and year ended December 31, 2021, respectively. At current prices the price fixing is
expected to yield additional savings of approximately $4.5 million during 2022.
CONFERENCE CALL AND WEBCAST DETAILS
Capstone will host a conference call and webcast on Wednesday, February 16, 2022 at 08:30 am PT/11:30 am ET.
Link to the audio webcast:
https://produceredition.webcasts.com/starthere.jsp?ei=1524721&tp_key=1dedc36dcb
Dial-in numbers for the audio -only portion of the conference call are below. Due to an increase in call volume,
please dial-in at least five minutes prior to the call to ensure placement into the conference line on time.
Toronto: (+1) 416-764-8650
Vancouver: (+1) 778-383-7413
North America toll free: 888-664-6383
Confirmation #50217755
A replay of the conference call will be available until March 2, 2022. Dial-in numbers for Toronto: (+1) 416-764-8677
and North American toll free: 888-390-0541. The replay code is 217755#. Following the replay, an audio file will be
available on Capstone’s website at: https://capstonemining.com/investors/events-and-presentations/default.aspx.
This release is not suitable on a standalone basis for readers unfamiliar with Capstone and should be read in
conjunction with the Company’s MD&A and Financial Statements for the three and twelve months ended December
31, 2021, which are available on Capstone’s website and on SEDAR, all of which have been reviewed and approved
by Capstone's Board of Directors.
ABOUT CAPSTONE MINING CORP.
On November 30, 2021, Capstone Mining and Mantos Copper announced that they have entered into a definitive
agreement to combine pursuant to a plan of arrangement under the Business Corporations Act (British Columbia).
Upon completion of the Transaction, the new Company would be renamed Capstone Copper Corp. (Capstone
Copper).
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 copper -silver mine in Zacatecas State,
Mexico. In addition, Capstone owns 100% of Santo Domingo, a large scale, fully permitted, copper-iron-gold project
in Region III, Chile, 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) under the symbol CS. Further
information is available at www.capstonemining.com.