(All amounts in US$ unless otherwise
specified)
Capstone Mining Corp. (“Capstone” or the “Company”) (TSX:CS) has
taken a strong stance with regards to the Coronavirus (COVID-19)
and is following the requirements and advice of government
authorities and the World Health Organization. Capstone’s priority
is to ensure the health and safety of our people and the
communities in which we operate. We have a dedicated response team
in place and are assessing any potential health and business
impacts across all our operations. In addition, due to current
copper prices, the Company updated its 2020 guidance on
discretionary capital and exploration expenditures, reducing the
total by $32 million.
To date, COVID-19 has not impacted production or concentrate
shipments at Pinto Valley or Cozamin, nor has there been any
significant impact on, or disruption of, the Company’s supply
chain.
2020 Capital and Exploration Expenditure Guidance
Update
Due to the recent drop in copper prices, Capstone has taken
prudent financial measures to defer discretionary capital and
exploration expenditures of $32 million in 2020, as shown in the
table below. Importantly, the Company does not expect this will
impact production and operating cost guidance for 2020, nor will it
materially impact its growth plans for 2021 and beyond. The first
of two secondary crushers and screen decks have arrived at Pinto
Valley and are now scheduled to be installed in July. The Cozamin
one-way ramp project, expected to result in 50% production growth
of copper and silver in 2021, remains on schedule.
2020 Expenditure
Guidance
Original Guidance
Revised Guidance
Pinto Valley
Sustaining
$28
$18
Capitalized Stripping
$8
$3
Expansionary
$19
$12
Total Pinto Valley
Capital
$55
$33
Cozamin
$26
$24
Santo Domingo
$91
$62
Total Capital
$90
$63
Total Exploration
$10
$5
1. On a 100% basis, the figure is $12
million; ownership is 70% Capstone and 30% Korea Resources
Corporation.
2. On a 100% basis, the figure is $9
million; ownership is 70% Capstone and 30% Korea Resources
Corporation.
In terms of operating costs, the recent drop in oil prices and
the depreciation of the Mexican Peso will be material on an
annualized basis. Diesel costs are currently ~40% lower than budget
at Pinto Valley at spot prices, which could translate to ~$8
million in annual savings, while the current Mexican Peso would
yield ~$8 million in lower costs at Cozamin. Other input costs at
both operations, like grinding media, mill liners and reagents, are
also expected to track lower than budget.
“Capstone is in a solid position to weather the storm presented
by the COVID-19 crisis. Over the past two years, we have cut nearly
$30 million of costs from our business and our debt is manageable,”
said Darren Pylot, President and CEO. “We have the flexibility to
defer over $30 million of capital and exploration expenditures
without impacting our future company-wide growth of 20% higher
production and 10% lower costs by 2021, while preserving the
optionality of our fully-permitted Santo Domingo project in
Chile”.
“Above all, the health and safety of our employees and the
communities in which we operate is our principle focus, as well as
focusing on the health and long-term sustainability of our
exceptional copper business,” added Mr. Pylot.
We have focused our actions within four key principles aimed at
supporting the health of our employees and the health of our
business:
- PREVENT the workplace from becoming a vector for the
COVID-19 virus to spread.
- SUPPORT our employees who are ill or who are tending to
family members affected by COVID-19.
- ENABLE full value chain capacity by enlisting the
support of our vendors and employees.
- STOP all non-essential spending and focus on cash today
without jeopardizing our future growth.
Capstone has implemented rigorous control and prevention
measures in order to ensure the health of our workers. Following
are some examples:
- Those who do not need to be onsite to support copper production
are working from home.
- Onsite clinic staff are using a thermal scanner to assess the
body temperature of everyone coming to our sites, as a way to be
more accurate in our monitoring of “flu-like” symptoms. Anyone
displaying “flu-like” symptoms or having an elevated temperature is
sent home. We will follow CDC guidelines as they evolve for
personnel who have elevated risk.
- Medical checks for any employee who has been absent from work
due to displaying “flu-like” symptoms or because of a
self-initiated request for sick leave.
- All visits to any of our mine sites are cancelled. Only direct
employees and pre-approved contractors have permission to access
our operations.
- Janitorial services have expanded to focus on common areas and
at our operations, sanitation duties have been incorporated into
routine safety checks prior to each shift commencing. Sanitizing
supplies are provided to mobile equipment operators so they can
perform a full wipe down of the cab environment at the beginning of
each shift.
- At the operations, we have implemented an outdoor crew lineout
process to allow for maximum space between people.
- Strong focus on education for social distancing outside of the
workplace, to keep our employees, their families and communities
safe.
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.
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
impact of COVID-19, 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”, “aiming”, “approximately”,
“guidance”, “scheduled”, “target”, “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 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,
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,
aboriginal title claims and rights to consultation and
accommodation, 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; 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 MD&A of those statements, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200325005196/en/
Jerrold Annett, VP, Strategy & Capital Markets 416-572-2272
jannett@capstonemining.com Virginia Morgan, Manager, IR &
Communications 604-674-2268 vmorgan@capstonemining.com
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