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Capstone Reports Record First Quarter Copper Production & Operating Costs

Posted on: Tuesday, 14 April 2009, 06:30 CDT

VANCOUVER, April 14 /PRNewswire-FirstCall/ - Capstone Mining Corp. (CS: TSX) today announced its production for the three months ended March 31, 2009, with record production and operating costs from its two operations, the Cozamin and Minto mines. Combined production totalled 26.1 million pounds of copper in concentrates, with additional significant by-products of lead, zinc, silver and gold. The total cash cost, net of estimated by-product credits and estimated selling costs was US$1.05 per pound of payable copper* produced. Further, March represented the highest ever monthly mill throughput at both mines and highest pounds of copper produced, illustrating the progress in ramping up to full production during the quarter.

"Both of Capstone's operations, the Cozamin and Minto mines, achieved record quarterly copper production and operating costs in the first quarter of 2009 and the highest production month ever in March," said Stephen Quin, President & COO of Capstone Mining Corp. "While the ramp-up of the recent throughput expansions were still being completed at both mines during the first three months of the year, these results are a credit to the operating teams at the Cozamin and Minto mines, and bode well for achieving the Company's production guidance the balance of the year."

Operational Highlights for First Quarter of 2009 The following is a summary of operational highlights for Capstone during the first three months of 2009: - Production of 26.1 million pounds of contained copper, which is within previously published guidance of 95-105 million pounds of copper in concentrates for 2009. - By-product production of 2.4 million pounds of zinc, 1.2 million pounds of lead and 0.4 million ounces of silver in concentrates. Gold production is not available since assaying is done off site, but is estimated at 7,624 ounces for the quarter, based on the mineral reserve block model. - Production of 25.2 million pounds of payable copper in concentrates. - Total cash cost per pound of payable copper* produced of US$1.05 versus previously published guidance of approximately US$1.00 per pound, which represents good progress in cost reductions since year end 2008 and as production ramped up through the quarter. - Cozamin Mine: - Completed ramp-up of Phase III expansion to a nominal 3,000 tonnes per day ("tpd") of mill throughput, with production typically ranging from 3,000 to 3,300 tonnes per operating day (excluding maintenance days) and achieving a single day throughput record of 4,030 tonnes processed; - Produced 9.8 million pounds of contained copper in concentrates, along with by-product 2.4 million pounds of zinc, 1.2 million pounds of lead and 318,963 ounces of silver; - Processed 248,325 tonnes (2,759 tpd) of ore (100% of budget) averaging 1.96% copper, 0.81% zinc, 0.33% lead and 56 grams per tonne ("g/t") silver over the 90 day period, representing the highest throughput quarter ever and March being the highest throughput month ever at 85,000 tonnes processed; - Produced 18,461 dry metric tonnes ("dmt") of copper concentrate averaging 24.12% copper, 2,413 dmt of zinc concentrate averaging 44.8% zinc and 782 dmt of lead concentrate averaging 67.1% lead; - Estimated total cash cost, net of estimated by-product credits and estimated selling costs, was US$1.00 per pound of payable copper* produced; and - Announced a new mineral resource estimate for the Cozamin Mine on February 18, 2009. - Minto Mine: - Completed Phase III mine expansion to a nominal 3,200tpd of mill throughput, supported by increased mine production, which rates were regularly achieved in March 2009, where throughput typically ranged from 2,900 to 3,500 tonnes per operating day (excluding maintenance days) and achieved a single day throughput record of over 3,700 tonnes processed; - Produced 16.3 million pounds of contained copper in concentrates, along with by-product 101,991 ounces of silver (gold is assayed offsite, but is estimated at 7,624 ounces based on the mineral reserve block model); - Processed 233,529 tonnes over the 90 day period (2,595tpd) of ore averaging 3.4% copper, an estimated 1.4g/t gold and 16g/t silver, representing the highest quarterly throughput ever and March the highest throughput month at 90,000 tonnes processed; - Produced 17,283 dmt of copper concentrate averaging 42.6% copper; - Produced 15.7 million pounds of payable copper at an estimated total cash cost* of US$1.09 per pound; and - Discovered new zones of higher grade copper mineralization at Minto North and southeast of Ridgetop, as announced February 17 and April 7, 2009. - Kutcho Project: - Published a new mineral resource estimate on February 10, 2009 that demonstrates the high grade potential of the Kutcho Project; and - Began evaluation of options for the development of a smaller tonnage, higher grade operation with robust project economics. Operating Details - Cozamin Mine Key operating statistics for the Cozamin Mine for the first three months in 2009 are presented below: ------------------------------------------------------------------------- Q1 2009 ------------------------------------------------------------------------- Production(1) (contained in concentrates) ------------------------------------------------------------------------- - Copper (000s pounds) 9,812 ------------------------------------------------------------------------- - Zinc (000s pounds) 2,388 ------------------------------------------------------------------------- - Lead (000s pounds) 1,155 ------------------------------------------------------------------------- - Silver (000s ounces) 318 ------------------------------------------------------------------------- Mine ------------------------------------------------------------------------- - Tonnes of ore mined 248,507 ------------------------------------------------------------------------- Mill ------------------------------------------------------------------------- - Tonnes processed 248,325 ------------------------------------------------------------------------- - Tonnes processed per day 2,759 ------------------------------------------------------------------------- - Copper grade (%) 1.96 ------------------------------------------------------------------------- - Zinc grade (%) 0.81 ------------------------------------------------------------------------- - Lead grade (%) 0.33 ------------------------------------------------------------------------- - Silver grade (g/t) 56 ------------------------------------------------------------------------- Recoveries ------------------------------------------------------------------------- - Copper (%) 91.4 ------------------------------------------------------------------------- - Zinc (%) 53.9 ------------------------------------------------------------------------- - Lead (%) 64.8 ------------------------------------------------------------------------- - Silver (%) 71.0 ------------------------------------------------------------------------- Concentrate(1) ------------------------------------------------------------------------- - Copper (dmt) 18,461 ------------------------------------------------------------------------- - Copper (%) 24.1 ------------------------------------------------------------------------- - Silver (g/t) 463 ------------------------------------------------------------------------- - Zinc (dmt) 2,415 ------------------------------------------------------------------------- - Zinc (%) 44.8 ------------------------------------------------------------------------- - Lead (dmt) 782 ------------------------------------------------------------------------- - Lead (%) 67.1 ------------------------------------------------------------------------- - Silver (g/t) 1,738 ------------------------------------------------------------------------- On site Operating Costs* (US$/t milled)(1) US$34.97 ------------------------------------------------------------------------- Total cash cost per pound* of payable copper(1) US$1.00 ------------------------------------------------------------------------- (1) Adjustments based on final settlements will be made in future periods.

Overall, the Cozamin Mine performed well, with the new higher grade stopes on the 10 and 11 levels providing a majority of the ore feed, resulting in higher copper grades and lower zinc and lead grades. The mill achieved budgeted production, but periods of successive days in excess of 3,000 tpd of throughput is encouraging and suggests potential for outperformance. Improved metallurgical performance, especially in March, resulting from some improved reagents and regrinding of the copper-lead concentrate, has resulted in higher copper recoveries, which performance is expected to be sustainable over the longer term.

During the first quarter, the Cozamin Mine shipped 21,347 dmt of copper concentrate averaging 23.8% copper to smelters overseas, all of which will be recorded as revenue in the first quarter financial statements, when reported. In addition, there were some additional shipments made in later 2008 that will also be recognized as revenue in the first quarter of 2009 in the financial statements, when published.

Operating Details - Minto Mine Key operating statistics for the Minto Mine for the first three months of 2009 are presented below: ------------------------------------------------------------------------- Q1 2009 ------------------------------------------------------------------------- Production(2) (contained in concentrates) ------------------------------------------------------------------------- - Copper (000s lbs) 16,325 ------------------------------------------------------------------------- - Gold (oz)(1) 7,624 ------------------------------------------------------------------------- - Silver (oz) 101,991 ------------------------------------------------------------------------- Mining ------------------------------------------------------------------------- - Waste (tonnes) 2,196,728 ------------------------------------------------------------------------- - Ore (tonnes) 292,593 ------------------------------------------------------------------------- - Total material mined (tonnes) 2,489,321 ------------------------------------------------------------------------- Milling ------------------------------------------------------------------------- - Tonnes processed 233,529 ------------------------------------------------------------------------- - Tonnes processed per day 2,595 ------------------------------------------------------------------------- - Copper grade (%) 3.39 ------------------------------------------------------------------------- - Gold grade (g/t)(1) 1.40 ------------------------------------------------------------------------- - Silver grade (g/t) 16.2 ------------------------------------------------------------------------- Recoveries ------------------------------------------------------------------------- - Copper (%) 93.0 ------------------------------------------------------------------------- - Gold (%)(1) 72.2 ------------------------------------------------------------------------- - Silver (%) 83.6 ------------------------------------------------------------------------- Concentrate(2) ------------------------------------------------------------------------- - Dry tonnes produced 17,283 ------------------------------------------------------------------------- - Copper grade (%) 42.6 ------------------------------------------------------------------------- - Gold grade (g/t)(1) 13.8 ------------------------------------------------------------------------- - Silver grade (g/t) 184 ------------------------------------------------------------------------- On site Operating Costs* (US$/t milled)(2), (3) US$62.73 ------------------------------------------------------------------------- Total cash cost per pound* of payable copper(2), (3) US$1.09 ------------------------------------------------------------------------- (1) Gold is not assayed on site, resulting in a significant lag in receiving this data. (2) Adjustments based on final settlements will be made in future periods. (3) Operating costs include mining of ore and waste in excess of what is required to sustain operations, some of which costs will be capitalized in the financial statements.

The Minto Mine completed its ramp up to its Phase III capacity at the end of February 2009, with tonnes processed in March slightly exceeding budget. The Phase 3 North pit pushback of the pit was completed in March and attention is now focused on stripping the Phase 3 South with mill production coming entirely from stockpiles. As with prior pushbacks, the Minto Mine will deplete stockpiles in grade order, from highest to lowest, until the high grade from the Phase 3 South pit pushback is accessed in the third quarter of 2009.

During the first quarter, the Minto Mine shipped 19,664 dmt of copper concentrate averaging 43.1% copper to smelters overseas, all of which will be recorded as revenue in the first quarter financial statements, when reported. An additional 9,741 dmt of concentrate grading 42.8% copper were shipped in early April, revenue for which will be recognized in the second quarter financial statements. The ice bridge across the Yukon River is now closed, and no more concentrates will be trucked to Skagway until the barging seasons commences, likely in June 2009. Also during the period, provisional pricing adjustments on concentrates shipped but not settled in prior periods, are settling positively, as a result of higher copper prices on the settlement date versus the provisional pricing on shipment date. This should positively impact financial performance for the first quarter 2009. For 2009, Minto's concentrate off-taker has elected to settle on the basis of shipment date plus one month, as opposed to plus three months in 2009, reducing the time lag between provisional payment and final settlement, and likely thereby reducing the volatility of provisional pricing adjustments.

The TSX does not accept any responsibility for the adequacy or accuracy of this press release.

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 resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, 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", "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. 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, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; 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.

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 and news releases (collectively the "Disclosure Documents") available under Capstone Mining Corp.'s and Sherwood Copper 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 Information is subject to the assumptions and qualifications contained in the Disclosure Documents.

The following employees of Capstone, each a Qualified Person, reviewed Technical Information contained in this news release: Robert Barnes, Professional Engineer reviewed Technical Information related to the Cozamin Mine and Stephen Quin, Professional Geologist reviewed all Technical Information in this news release. In addition, Kevin Weston and Randall Thompson reviewed Technical Information related to the Minto Mine.

*Non-GAAP Performance Measures

"Total Cash Cost per Pound of Payable Copper" and "On site operating costs per tonne milled" are Non-GAAP 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 GAAP 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 GAAP.

SOURCE Capstone Mining Corp.

Source: PR Newswire

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