1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release. 1
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
1
July 27, 2021
Capstone Generated Record Operating Cash Flow of $110 Million in Q2
2021; Net Cash Grows to $172 Million With Zero Drawn Long-Term Debt
(All amounts in US$ unless otherwise specified)
Vancouver, British Columbia - Capstone Mining Corp. (“Capstone” or the “Company”) (TSX:CS) today
announced production and financial results for the three (“Q2 2021”) and six months ended June 30, 2021 (“2021
YTD”). Copper production totaled 43.3 million pounds at consolidated C1 cash costs1 of $1.91 per payable pound
of copper produced. Link HERE for Capstone’s Q2 2021 management’s discussion and analysis (“MD&A”) and
financial statements and HERE for the webcast presentation.
Darren Pylot, President and CEO of Capstone commented, “This was a strong quarter with record copper
production at Cozamin and completion of the majority of phase 2 PV3 Optimization work at Pinto Valley”. Mr.
Pylot added, “We also published our 2020 Sustainability Report, which details our ESG-related programs and
reaffirms our long-standing commitment to responsible mining practices.”
Raman Randhawa, SVP & CFO added, “Capstone has generated $205 million of operating cash flow2, so far in
2021 and with that, our net cash balance has increased to $172 million, plus we have an undrawn corporate
revolver of $225 million. Cashing up at the forefront of our transformational growth phase will allow Capstone to
execute on Santo Domingo and many other robust, high-impact projects”.
OPERATIONAL & FINANCIAL OVERVIEW
Net income of $49.4 million, or $0.12 per share and second quarter 2021. Adjusted net income1 of $68.7 million or
$0.17 per share.
• Record operating cash flow before changes in working capital1 of $140.4 million. Q2 2021 Operating
cash flow before changes in working capital1 includes $30 million received from Wheaton Precious
Metals Corp. (“Wheaton”) as part of the Santo Domingo precious metals purchase agreement (“Gold
Stream Agreement”). Operating cash flow before changes in working capital 1, excluding the $30 million
payment from Wheaton, of $110.4 million was the highest in Capstone’s history, driven by production
growth and record high copper prices.
• Net cash1 grew by $126.7 million to $171.5 million during Q2 2021, inclusive of $30 million in proceeds
from the Gold Stream Agreement. The balance sheet was significantly enhanced by solid operating
performance and cash flow during Q2 2021.
• Record adjusted EBITDA1 for Q2 2021 of $128.0 million. Q2 2021 adjusted EBITDA1 is reflective of
Capstone’s strong operational performance and financial leverage of the Company’s EBITDA 1 in a
robust copper price environment.
• Cozamin Mine underground expansion completed with record quarterly copper production of 13.8 million
pounds and attained targeted new run rate of 3,780 tonnes per day (“tpd”).
• Consolidated copper production of 43.3 million pounds at C1 cash costs 1 of $1.91 per payable pound of
copper produced. Consolidated copper production for the first half of 2021 (“H1 2021”) of 91.1 million
pounds at C1 cash costs of $1.80 per payable pound of copper produced was at the mid -range of 2021
guidance.
• Partnership discussions at Santo Domingo are advancing well and expected timeline for announcement
is now in Q3 2021. Santo Domingo remains an attractive project as it retains a Decree Law 600 (“DL
600”) tax invariability agreement which is expected to protect the project from any potential mining
royalty tax changes for the majority of the current Mineral Reserve life.
NEWS RELEASE
TSX:CS ● capstonemining.com
• Commenced a brownfield exploration drilling program at Santo Domingo project to potentially expand
the copper/iron ore mineralization resource and for geometallurgical samples for cobalt feasibility work.
• Issued a Sustainability Report. Published the 2020 Sustainability Report, prepared in accordance with
the Global Reporting Initiative Standards, Core option. This is Capstone’s fifth sustainability report and
highlights our commitment to excellence in ESG practices by providing details relating to our programs
and performance on topics material to our operations and projects.
Operational Overview
Refer to Capstone’s Q2 2021 MD&A and Financial Statements for detailed operating results .
Q2 2021 Q2 2020 2021 YTD 2020 YTD
Copper production (million pounds)
Pinto Valley 29.5 30.2 65.9 57.0
Cozamin2 13.8 8.3 25.2 17.0
Total 43.3 38.5 91.1 74.0
Copper sales
Copper sold (million pounds) 43.1 37.8 92.3 68.3
Realized copper price ($/lb.) 4.78 2.72 4.43 2.53
C1 cash costs1 ($/lb.) produced
Pinto Valley 2.33 2.12 2.12 2.25
Cozamin 1.00 0.98 0.96 0.97
Consolidated 1.91 1.87 1.80 1.96
2 Q2 2020 production was impacted by restrictions due to the COVID-19 government mandated decree
Consolidated
2021 YTD consolidated production of 91.1 million pounds of copper is at the mid -point of annual guidance of 175
to 190 million pounds of copper. The results are 22% higher than prior year, with Q2 2021 benefiting from
Cozamin achieving the new higher run rates (3,780 tpd) and benefits of PV3 Optimization Phase 1 projects at
Pinto Valley. The increase in production was the main driver for the $0.16 per payable pound decrease in C1
cash costs1 in 2021 YTD compared to 2020 YTD.
Pinto Valley Mine
Q2 2021 production was in line with the same period last year. Higher recoveries for Q2 2021 (88.6% versus 85.0%
in Q2 2020) were a result of improvements in th e flotation circuit and lower mill throughput (49,170 tpd in Q2 2021
versus 53,864 tpd in Q2 2020). Lower mill throughput in Q2 2021 compared to Q1 2020 was attributed to planned
maintenance downtime in the plant and the impacts of regional wildfires which restricted many employees access
to the mine due to area road closures.
2021 YTD production increased by 16% compared to the same period last year due to higher planned head
grades for 2021 YTD (0.34% versus 0.30% in 2020 YTD) and improved flotation plant recovery performance.
C1 cash cost1 of $2.33 per payable pound in Q2 2021 were higher than Q2 2020 mainly due to slightly lower
production and higher costs, which were impacted by planned mill maintenance work, and lower than expected
gold and molybdenum by-product credits.
A decrease in 2021 YTD C1 cash cost1 by $0.13 per payable pound was primarily attributed to higher production
compared to the same period last year.
Cozamin Mine
Production in Q2 2021 was 66% higher than the same period last year. This was primarily due to the successful
utilization of the Calicanto one-way ramp which increased mill rates from 2,583 tpd in Q2 2020 to 3,828 tpd in Q2
2021. Moreover, Q2 2020 operations were impacted by restrictions due to the COVID-19 government mandated
decree. In addition, with the optimized technical report, the mine plan is delivering significantly higher mine grades
(1.86% in Q2 2021 versus 1.68% in Q2 2020) from the copper rich San Jose and Calicanto zones.
2021 YTD production increased by 48% compared to the same period last year mainly due to mine and mill
expansion (3,588 tpd versus 2,808 tpd in 2020 YTD) and higher head grades (1.83% versus 1.59% in 2020 YTD).
C1 cash costs1 in Q2 2021 and 2021 YTD were in line with same periods last year, respectively, despite the
impact of the Cozamin Silver Stream with Wheaton for 50% of the silver, that closed in Q1 2021, which impacted
costs by $0.30 per payable pound in Q2 2021 and by $0.32 per payable pound in 2021 YTD. The cost per
payable pound impact of the Cozamin Silver Stream was offset by higher production.
Financial Overview
Refer to Capstone’s Q2 2021 MD&A and Financial Statements for detailed financial results.
2 Q2 2021 includes $30.0 million gold stream proceeds and 2021 YTD includes $180.0 million silver and gold stream proceeds.
June 30,
2021
December 31,
2020
Total assets ($ millions) 1,581.4 1,391.6
Long term debt (excluding financing fees) ($ millions) - 184.9
Total non-current financial liabilities ($ millions) 79.8 183.6
Total non-current liabilities ($ millions) 506.2 408.5
Cash and cash equivalents and short-term investments ($ millions) 171.5 60.0
Net cash/(debt)1 ($ millions) 171.5 (124.9)
Q2 2021 Q2 2020 2021 YTD 2020 YTD
Revenue ($ millions) 209.4 104.7 413.5 175.1
Net income (loss) ($ millions) 49.4 4.3 176.4 (17.6)
Net income (loss) attributable to shareholders
($ millions) 49.4 4.3 150.4 (17.4)
Net income (loss) attributable to shareholders per
common share – basic ($) 0.12 0.01 0.37 (0.04)
Net income (loss) attributable to shareholders per
common share – diluted ($) 0.12 0.01 0.36 (0.04)
Adjusted net income (loss)1 ($ millions) 68.7 (0.6) 133.1 (18.3)
Adjusted net income (loss) attributable to
shareholders1 ($ millions) 68.7 (0.6) 133.1 (18.1)
Adjusted net income (loss) attributable to
shareholders per common share – basic1($) 0.17 (0.00) 0.33 (0.05)
Adjusted net income (loss) attributable to
shareholders per common share – diluted1($) 0.17 (0.00) 0.32 (0.05)
Adjusted EBITDA1 ($ millions) 128.0 12.9 246.6 24.2
Cash flow from operating activities2 ($ millions) 168.5 45.1 388.8 52.1
Cash flow from operating activities per common
share1 - basic ($) 0.42 0.11 0.96 0.13
Operating cash flow before changes in working
capital1,2 ($ millions) 140.4 24.0 385.3 20.7
Operating cash flow before changes in working capital
per common share1 – basic ($) 0.35 0.06 0.95 0.05
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
5
CORPORATE UPDATE
PV3 Optimization Update
PV3 Optimization Phase 1 work was completed in 2020. Phase 1 work included improved blast fragmentation
processes, installation of a new secondary crusher and screen decks as well as a new mill shell. As a result, Pinto
Valley was able to reliably achieve throughput of 57k to 58k tpd for multiple quarters.
Phase 2 of the PV3 Optimization work continued during Q2 2021. Capital was invested into tailings management,
pumping upgrades and installation of a new ball mill shell and is expected to be completed in the second half of
2021 (“H2 2021”) with majority of the work completed in July. Phase 2 optimization work further enables the
reliability of higher throughput rates at Pinto Valley.
PV4 Study
Work continues on scenarios to take advantage of approximately one billion tonnes of Mineral Resource, not
currently in the Mineral Reserve mine plan, which is at similar grade to the current Mineral Reserves at Pinto
Valley. The PV4 pre-feasibility study is expected to be released in late 2022 and will contemplate utilizing existing
mill infrastructure rather than building new to achieve higher mining and milling rates, higher cut-off grades to the
mill and increased tonnage available for leaching. Extensive column leach test work in collaboration with Jetti
Resources LLC (“Jetti”) has commenced and will continue through early 2022. Jetti’s novel patented catalytic
technology allows for the efficient and effective heap and stockpile leach extraction of copper and has been a
success at Pinto Valley’s leaching operation, where we expect to recover up to 350 million pounds of cathode
copper over the next two decades from historic and new mineralized waste piles on the existing PV3 pit shell.
Capstone is a pioneer in the application of this leach technology, and we intend to use it to enhance the
economics of a future expansion at Pinto Valley.
Eriez HydroFloat
In December 2020, a pilot plant test demonstrated that a 6% to 8% increase in overall copper recovery is possible
with the installation of this coarse particle flotation technology at Pinto Valley. Additional benefits include the
potential to increase throughput by operating at a coarser grind size, potentially lowering power costs, and
providing options to improve water consumption and tailings management benefits.
Work continued on an internal feasibility study for Eriez HydroFloat coarse particle flotation. It was determined
that additional engineering is required to incorporate Eriez HydroFloat with the PV4 feasibility study allowing for
improved capital integration through potential synergies with tailings management. Current capital estimate of
approximately $90 million includes additional regrind milling capacity and this will be further refined as part of the
PV4 study.
Pyrite Agglomeration
Pinto Valley is studying the potential to add a pyrite agglomeration circuit to the dump leach process. Currently,
the copper concentrate cleaner circuit tailings contain ~0.2% Cu and significant pyrite mineral in a slurry
containing up to ~3,000 tpd solids. This material can be introduced into heap leach operations to produce
numerous benefits including the following:
1. Leaching the copper contained in tailings for added copper recovery;
2. Oxidation of the pyrite generates free acid and would offset the requirement to purchase sulfuric acid for
leaching;
3. Diverting this material from tailings disposition could enable higher milling rates coupled with ESG
benefits from reduced water consumption and a significant reduction in acid generating minerals
reporting to tailings.
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
6
Restart of Molybdenum Production at Pinto Valley
Due to favourable market conditions where year-to-date molybdenum prices have nearly doubled to over $18 per
pound in July, Pinto Valley has commenced restart plans to ramp up production of molybdenum over H2 2021.
New reagents will be tested with upgrades to pumping equipment to enhance recovery. Production guidance will
be given following successful ramp-up over the next two quarters.
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:
• Negotiations for strategic partnerships and financing for Santo Domingo’s development are advancing
well and are expected to be finalized in Q3 2021. Santo Domingo is currently the only fully permitted
copper-iron project in Chile.
• The Company and its partner, Puerto Ventanas, are working to finalize the port services agreement and
evaluating opportunities to optimize the Santo Domingo project by replacing the iron pipeline with a rail
option.
• With respect to potential increases in the Chilean mining royalty tax, Santo Domingo is expected to be
protected given the fact 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, 15 years represents the
majority of the 18-year reserve mine life in the 2020 PEA. As described in the 2020 Technical Report,
for the period covered by the tax invariability system, the Company expects that applicable taxes will
include a category 1 income tax (27%) and the existing royalty, which is a sliding scale between 5 -14%,
depending on operating margins.
• The cobalt feasibility study announced in Q1 2021 is progressing according to schedule . A geochemical
model has been developed to quantify pyrite-cobalt distribution throughout the orebody, which guided
the location of drillholes of the current drilling campaign from which more samples will be obtained for
further plant optimization test work. The drilling campaign started in May 2021 with 8,500m of
exploration drilling and continued into early July with 7,600m of geometallurgical drilling. The latter will
deliver 6,000m of PQ-sized core samples to be used for the development of a 3D geometallurgical
pyrite-cobalt flotation model and for confirmative testing with yearly composites according to mine plan.
This will allow the Santo Domingo team to refine both the pyrite oxidation process an d the downstream
hydrometallurgical options to produce battery-grade cobalt sulphate. In parallel, engineering activities
will continue to bring cobalt plant design from the current Preliminary Economic Assessment to
Feasibility Study level during 2022 including several trade-off studies at process level pyrite oxidation
and cobalt pregnant leaching solution purification. The Santo Domingo cobalt project is expected to
result in one of the lowest cost cobalt producers outside of the Democratic Republic of C ongo3. The
feasibility study is scheduled for completion in late 2022. The production of battery -grade cobalt
sulphate at Santo Domingo is expected to significantly add to the robust copper-iron-gold project and
maximizes the recovery of future-facing metals from the rich resource. The work program will consist of
two phases and several stage-gates. Following the Phase 1 work program, Capstone expects to provide
an update to the market on metallurgy work, process flowsheet design and updated cobalt reserves and
resources in Q1-2022. The feasibility report is expected by Q4 2022 with construction to start in 2023 or
2024 following permitting. The integration of the cobalt project with the copper-iron concentrator has
been designed so that the cobalt plant can be built later than the copper concentrator.
3 Darton Commodities Limited (2020-2021 Cobalt Market Review)
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
7
CONFERENCE CALL AND WEBCAST DETAILS
Capstone will host a conference call and webcast on Wednesday, July 28, 2021 at 08:30 am PT / 11:30 am ET.
Link to the audio webcast: https://produceredition.webcasts.com/starthere.jsp?ei=1473032&tp_key=6c0969ad6e
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 #21773965
A replay of the conference call will be available until August 4, 2021. Dial-in numbers for Toronto: (+1) 416-764-
8677 and North American toll free: 888-390-0541. The replay code is 773965#. 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 six months ended June 30,
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.
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.
For further information please contact:
Jerrold Annett, SVP, Strategy and Capital Markets
647-273-7351
Kettina Cordero, Director Investor Relations & Communications
604-262-9794
1 This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release.
8
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 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 our expectations or beliefs regarding future events and
the impacts of the ongoing and evolving COVID-19 pandemic. Forward-looking statements include, but are not limited to, statements with
respect to the estimation of Mineral Resources and Mineral Reserves, the expected timing, operations and success of the underground paste
backfill system study and tailings filtration project at Cozamin, the success of the Pinto Valley HydroFloat project, the outcome and timing of
the PV4 study, the timing and success of our use of the Jetti Technology, the successful completion of a port agreement with Puerto
Ventanas and/or rail agreement with Sigdo Kopper’s rail business, the success of our strategic process for the Santo Domingo project, the
expected reduction in capital requirements for the Santo Domingo Project, the timing and success of the Cobalt Study for Santo Domingo, the
timing and success of the PV3 Optimization project, the realization of Mineral Reserve estimates, the timing and amount of estimated future
production, costs of production and capital expenditures and reclamation, the success of our mining operations, the success of mineral
exploration, the estimations for potential quantities and grade of inferred resources and exploration targets, Capstone’s ability to fund future
exploration activities, Capstone’s ability to finance the Santo Domingo project, environmental risks, unanticipated reclamation expenses and
title disputes. The potential effects of the COVID-19 pandemic on our business and operations are unknown at this time, including Capstone’s
ability to manage challenges and restrictions arising from COVID-19 in the communities in which Capstone operates and our ability to continue
to safely operate and to safely return our business to normal operations. The impact of COVID-19 to Capstone is dependent on a number of
factors outside of our control and knowledge, including the effectiveness of the measures taken by public health and governmental authorities
to combat the spread of the disease, global economic uncertainties and outlook due to the disease, and the evolving restrictions relating to
mining activities and to travel in certain jurisdictions in which we operate.
In certain cases, forward-looking statements can be identified by the use of words such as “anticipates”, “approximately”, “believes”, “budget”,
“estimates”, expects”, “forecasts”, “guidance”, intends”, “plans”, “scheduled”, “target”, or variations of such words and phrases, or statements
that certain actions, events or results “be achieved”, “could”, “may”, “might”, “occur”, “should”, “will be taken” or “would” or the negative of
these terms or comparable terminology. In this document certain forward-looking statements are identified by words including “anticipated”,
“expected”, “guidance” and “plan”. By their very nature, forward-looking statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. Such factors include, amongst others, risks related to inherent hazards
associated with mining operations and closure of mining projects, future prices of copper and other metals, compliance with financial
covenants, surety bonding, our ability to raise capital, Capstone’s ability to acquire properties for growth, counterparty risks associated with
sales of our metals, use of financial derivative instruments and associated counterparty risks, foreign currency exchange rate fluctuations,
market access restrictions or tariffs, changes in general economic conditions, availability of water, accuracy of Mineral Resource and Mineral
Reserve estimates, operating in foreign jurisdictions with risk of changes to governmental regulation, compliance with governmental
regulations, compliance with environmental laws and regulations, reliance on approvals, licenses and permits from governmental authorities
and potential legal challenges to permit applications, contractual risks including but not limited to, our ability to meet the completion test
requirements under the Cozamin Silver Stream Agreement with Wheaton Precious Metals, our ability to meet certain closing conditions under
the Santo Domingo Gold Stream Agreement with Wheaton Precious Metals, acting as Indemnitor for Minto Exploration Ltd.’s surety bond
obligations post divestiture, impact of climate change and changes to climatic conditions at our Pinto Valley and Cozamin operations and
Santo Domingo project, changes in regulatory requirements and policy related to climate change and GHG emissions, land reclamation and
mine closure obligations, risks relating to widespread epidemics or pandemic outbreak including the COVID-19 pandemic; the impact of
COVID-19 on our workforce, suppliers and other essential resources and what effect those impacts, if they occur, would have on our business,
including our ability to access goods and supplies, the ability to transport our products and impacts on employee productivity, the risks in
connection with the operations, cash flow and results of Capstone relating to the unknown duration and impact of the COVID-19 pandemic,
uncertainties and risks related to the potential development of the Santo Domingo Project, increased operating and capital costs, increased
cost of reclamation, challenges to title to our mineral properties, increased taxes in jurisdictions the Company operates or is subject to tax,
changes in tax regimes we are subject to and any changes in law or interpretation of law may be difficult to react to in an efficient manner,
maintaining ongoing social license to operate, dependence on key management personnel, potential conflicts of interest involving our directors
and officers, corruption and bribery, limitations inherent in our insurance coverage, labour relations, increasing energy prices, competition in
the mining industry including but not limited to competition for skilled labour, risks associated with joint venture partners, our ability to integrate
new acquisitions and new technology into our operations, cybersecurity threats, legal proceedings, the volatility of the price of the Common
Shares, the uncertainty of maintaining a liquid trading market for the Common Shares, risks related to dilution to existing shareholders if stock
options or other convertible securities are exercised, the history of Capstone with respect to not paying dividends and anticipation of not
paying dividends in the foreseeable future, and sales of Common Shares by existing shareholders can reduce trading prices, 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 MD&A
of those statements and Annual Information Form, all of which are filed and available for review under the Company’s profile on SEDAR at
www.sedar.com. Although the Company has attempted to identify important factors that could cause our actual results, performance or
achievements to differ materially from those described in our forward-looking statements, there may be other factors that cause our results,
performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that our forward-looking statements
will prove to be accurate, as our actual results, performance or achievements could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on our forward-looking statements.
CAUTIONARY NOTE TO UNITED STATES INVESTORS REGARDING PRESENTATION OF MINERAL RESERVE AND MINERAL
RESOURCE ESTIMATES