Capstone Outlines Capital Investment Plans to Achieve 20% Production Growth by 2021
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January 22, 2020
Capstone Outlines Capital Investment Plans to Achieve
20% Production Growth by 2021
(All amounts in US$ unless otherwise specified)
Vancouver, British Columbia - Capstone Mining Corp. (“Capstone” or the “Company”) (TSX:CS) provides 2020
production, cost and capital guidance. Capstone’s 2019 actual production was above the mid-point range of 145 to
160 million pounds of copper and actual costs were below the bottom end of the guidance range of $1.80 to $2.00
per pound payable copper. The Company will further expand on 2019 results when it releases its 2019 fourth
quarter results on Tuesday, February 11, 2020 after market close, followed by an investor webcast and conference
call on Wednesday, February 12, 2020 at 11:30 am Eastern Time.
2020 PRODUCTION, COST AND CAPITAL GUIDANCE
In 2020, Capstone expects to produce between 140 and 155 million pounds of copper at C1 cash costs1 of
between $1.85 and $2.00 per pound payable copper produced.
“Capstone has redefined itself as we enter this new decade. Our business is supported by an expansion at our high
grade and high margin Cozamin mine, while Pinto Valley is positioning to amplify best in class leverage to copper,”
said Darren Pylot, President and CEO. “We are making small, high return and quick payback investments to
ensure both operations are optimized to maximize cash flow in this improving copper market. We have made
substantial and sustainable reductions to our cost base, achieving our goal of ~$30 million per year. This coupled
with a strong balance sheet gives us confidence we can invest in our organic growth opportunities without
hesitation. I’m proud to say that Capstone is positioned for 20% production growth with a 10% decrease in costs by
2021 and beyond.”
Mr. Pylot continued, “For 2020, Capstone is anticipating a similar year as 2019, with a slight decrease at Pinto
Valley (~5 million pounds lower) to account for the installation of new secondary crushers. The less than one- year
payback is expected to deliver higher throughput, lower costs and improved recovery. At Cozamin, the one-way
ramp project is proceeding on schedule, allowing for confidence in the expected increased annual production rates
of 50 to 55 million pounds of copper and 1.5 million ounces of silver for 2021 and beyond. The capital investments
included in our expansionary spend for 2020 at Pinto Valley and Cozamin will increase throughput rates enabling
growth to a sustainable run rate of approximately 180 million pounds of copper per year by 2021, and for several
years after supported by a steady grade profile at both mines.”
2020 Guidance Pinto Valley Cozamin Santo Domingo Total
Production and Cost (US$)
Copper production (million pounds) 110 – 120 30 – 35 - 140 – 155
C1 Cash Cost1 $2.10 - $2.25 $0.95 - $1.10 - $1.85 - $2.00
Capital Expenditure (US$ millions, rounded)
Sustaining $28 $24 - $52
Capitalized Stripping $8 - - $8
Expansionary $19 $2 $92 $30
Total Capital Expenditure $55 $26 $9 $90
Exploration (US$ millions, rounded)
Brownfield - $6 - $6
Greenfield - - - $4
Total Exploration - $6 - $10
Suite 2100 – 510 West Georgia Street
Vancouver, BC, V6B 0M3, Canada
Tel: 604-684-8894 Fax: 604-688-2180
www.capstonemining.com
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Guidance Notes:
1. This is an alternative performance measure; please see "Alternative Performance Measures" at the end of this release. C1 cash cost per
pound of payable copper produced net of by-product credits and selling costs.
2. On a 100% basis the figure is $12 million; ownership is 70% Capstone and 30% Korea Resources Corporation.
2020 CAPITAL INVESTMENTS AND FUTURE GROWTH
Cozamin: Near-Term Production Expansion
Development work on the one-way ramp system at Cozamin continues to be on budget and on schedule for
completion by the end of 2020. The concurrent development of the raisebore to improve ventilation is two months
ahead of schedule and is expected to be completed in early 2020. Phase 1 of the raisebore finished ahead of
schedule when the reaming head broke through to surface in December 2019, and immediately improved
ventilation to the upper section of the one-way ramp. Once these two underground expansion projects are
completed, Cozamin’s annual production for 2021 and beyond is expected to increase to between 50 and 55
million pounds of copper and 1.5 million ounces of silver.
Cozamin: Doubling the Mine Life
The Cozamin 2019/2020 infill drilling program to move Inferred Mineral Resources to the Mineral Reserve
category, with the expectation of adding additional Mineral Resources to support doubling the mine life, is more
than two months ahead of schedule, allowing us flexibility to add more holes than originally planned, for a new
mineral resource and mineral reserve estimate before the end of 2020. Positive drill results pointing to higher
grades and wider intercepts than in the current reserve were released on November 5, 2019, December 2, 2019
and January 16, 2020.
Pinto Valley: Modernization
Pinto Valley’s 2020 guidance of between 110 to 120 million pounds of copper production accounts for scheduled
downtime for secondary crusher and screen installations. In Q4 2019, the Board approved the $15 million capital
project to improve mill reliability and overall performance at Pinto Valley. The expected result is for throughput to
reliably achieve between 56,000 to 57,000 tonnes per day in 2021 and beyond. The one- year payback is calculated
based on higher throughput, reduced maintenance and power costs, as well as increased copper recovery
associated with improved copper mineral liberation prior to flotation.
Pinto Valley: Future Expansion Study
Preliminary work on the Pinto Valley future expansion study (PV4) continues, with an update expected mid-2020.
The study is focused on evaluating potential scenarios to take advantage of the nearly one billion tonnes of mineral
resources not currently scheduled in the current mine plan pit shell (PV3).
Santo Domingo
Capital expenditures for the fully permitted Santo Domingo project will be kept to a minimum in 2020 to preserve
the optionality of the project, as we continue the strategic process in an improving copper market to right size or
monetize Capstone’s ownership. Work on the updated study is being finalized and the results will be released
soon.
Cost Reduction Program
Capstone has achieved its cost reduction target of ~$30 million in annualized savings. More details will be provided
when the Company releases its fourth quarter results on February 11, 2020.
2020 TD CONFERENCE
Capstone management will be attending the TD Securities Mining Conference in Toronto, Ontario. Raman
Randhawa, CFO will be presenting on Thursday, January 23, 2020. An updated Capstone corporate presentation
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will be available on January 22, 2020 at http://capstonemining.com/investors/events-and-
presentations/default.aspx.
Q4 2019 RESULTS AND CONFERENCE CALL AND WEBCAST DETAILS
Capstone will release its 2019 fourth quarter results on Tuesday, February 11, 2020 after market close, followed by
an investor webcast and conference call on Wednesday, February 12, 2020 at 11:30 am ET, details below.
Date: Wednesday, February 12, 2020
Time: 11:30 am Eastern Time (8:30 am Pacific Time)
Dial in: North America: (877) 823-8676, International: +(825) 312-2240
Webcast: https://event.on24.com/wcc/r/2171294/F77AA7266B25430ED323CFD920385B1B
The conference call replay will be available until February 26, 2020.
Replay: North America: (800) 585-8367, International: +(416) 621-4642
Passcode: 3664037
Following the replay, an audio file will be available on Capstone's website at
https://capstonemining.com/investors/events-and-presentations/default.aspx.
ABOUT CAPSTONE MINING CORP.
Capstone Mining Corp. is a Canadian base metals mining company, focused on copper. 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 has the large scale 70% owned copper-iron Santo Domingo development project in
Region III, Chile, in partnership with Korea Resources Corporation, 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. We are committed to the responsible development of our assets and the
environments in which we operate. Our headquarters are in Vancouver, Canada and we are listed on the Toronto
Stock Exchange (TSX). Further information is available at www.capstonemining.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
Jerrold Annett, VP, Strategy and Capital Markets
416-572-2272
Virginia Morgan, Manager, IR and Communications
604-674-2268
ALTERNATIVE PERFORMANCE MEASURES
“C1 cash cost”, “cash cost”, “adjusted EBITDA”, “operating cash flow before changes in working capital” and “net
debt” are Alternative Performance Measures. Alternative performance measures are furnished to provide additional
information. These non-GAAP performance measures are included in this news release because these statistics
are key performance measures that management uses to monitor performance, 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 standard meaning within 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. For full information, please refer to
the Company’s latest Management Discussion and Analysis dated September 30, 2019 published on its Financial
Reporting webpage or on SEDAR.
NATIONAL INSTRUMENT 43-101 COMPLIANCE
Unless otherwise indicated, Capstone has prepared the technical information in this news release (“Technical
Information”) based on information contained in the technical reports, Annual Information Form and news releas es
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(collectively the “Disclosure Documents”) available under Capstone Mining Corp.’s company profile on SEDAR at
www.sedar.com. Each Disclosure Document was prepared by or under the supervision of a qualified person (a
“Qualified Person”) as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects of the
Canadian Securities Administrators (“NI 43-101”). Readers are encouraged to review the full text of the Disclosure
Documents which qualifies the Technical Information. Readers are advised that mineral resources that are not
mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be
read as a whole, and sections should not be read or relied upon out of context. The Technical Infor mation is
subject to the assumptions and qualifications contained in the Disclosure Documents.
The disclosure of Technical Information related to mineral exploration activities and to mineral resources at
Cozamin in this news release was reviewed and approved by Brad Mercer, P. Geol., Senior Vice President,
Operations and Exploration.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release, and the documents incorporated by reference herein, 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. (“Capstone” or
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. Forward-looking statements
include, but are not limited to, statements with respect to the continuing success of mineral exploration, Capstone’s
ability to fund future exploration activities, the estimation of mineral resources and mineral reserves, the realization
of mineral reserve estimates, the timing and amount of estimated future production, costs of production and capital
expenditures, the success of our mining operations, the estimations for potential quantities and grade of inferred
resources and exploration targets, environmental risks, unanticipated reclamation expenses and title disputes. In
certain cases, forward-looking statements can be identified by the use of words such as “plans”,
“expects”,”expected” “aiming”, “approximately”, “guidance”, “scheduled”, “target”, “targeting” “estimates”,
“forecasts”, “extends”, “convert”, “potential”, “intends”, “anticipates”, “believes” or variations of such words and
phrases, or statements that certain actions, events or results “may”, “could”, “should”, “would”, “will”, “might” or “will
be taken”, “occur” or “be achieved” or the negative of these terms or comparable terminology. By their very nature,
forward-looking statements involve known and unknown risks, uncertainties and other fact ors 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, the inherent
uncertainty of mineral exploration and estimations of exploration targets, 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, foreign currency exchange rate
fluctuations, changes in general economic conditions, 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, licences and permits from
governmental authorities, impact of climatic conditions on our operations, impact of trade policies of governments,
aboriginal title claims and rights to consultation and accommodation, land reclamation and mine closure
obligations, uncertainties and risks related to the potential development of the Cozamin project, increased
operating and capital costs, challenges to title to our mineral properties, 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, risks associated with joint venture partners , our ability to integrate new
acquisitions into our operations, cybersecurity threats, legal proceedings, 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
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MD&A of those statements, 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 mater ially from those
anticipated in such statements. Accordingly, readers should not place undue reliance on our forward- looking
statements.