JOHANNESBURG (miningweekly.com) – TSX-listed copper miner Capstone Mining expects to produce 90 000 t of copper in concentrate and cathode from its Pinto Valley, Cozamin and Minto mines at a C1 cash cost of $2/lb to $2.10/lb.

Capstone president and CEO Darren Pylot explained on Tuesday that in light of the current copper market, the company developed its 2015 budget in a manner that maintained its financial flexibility, preserved the value of its development projects and increased its existing operations.

"We have put a flexible financing structure in place and have developed a capital plan that will allow us to quickly adjust our spending if required," he added, noting that the company flagged $36-million in its capital budget, which may be deferred or cancelled should ongoing low copper prices persist.

“Our current cash balance and available credit facilities, along with tightly managed capital spending, will allow us to weather the volatility in the copper market well into the foreseeable future," Pylot said.

Further, Capstone’s primary focus for the year would be to deliver sustainable performance at Pinto Valley and to advance the next stage of cost reduction and operational improvement initiatives at the mine.

"At Cozamin, activities are under way with the goal of upgrading the resource to extend the mine life and at Minto the focus remains on preparing the Minto North openpit for mining this year," Pylot added.

At Pinto Valley, Capstone planned to complete a prefeasibility study (PFS) – which would extend the mine life from 5 to 12 years – to consider resources not in the current mine plan. The company also intended to continue to advance its Santo Domingo development project, in Chile, in a “measured and disciplined manner”, with a number of steps in Capstone’s stage-gate process to be completed before it committed to large capital expenditure (capex).

The primary focus for Pinto Valley remained mill stability and ongoing cost reduction activities. The mill frequently operated at a throughput rate above 50 000 t/d, reaching the highest average monthly throughput of 51 180 t/d in December. However, ongoing work was needed to reliably sustain that rate. The company would implement a systematic maintenance programme to monitor and address equipment reliability issues in the mill to reduce unplanned downtime.

Capex at Pinto Valley this year would include $6.9-million for mining fleet component replacement and $2.5-million for tailings and water management, while the implementation of the PFS recommendations was estimated at $45.5-million.

The majority of the ore from Cozamin would continue to come from the San Roberto blocks in the year ahead, with the Mala Noche footwall zone expected to contribute about 37% of ore production in 2015 at an average copper grade of 1.78%.

Major capex at Cozamin would include $4.6-million for underground development, $5.1-million for infrastructure and communications, $2.9-million on the construction of a paste fill plant and $2.5-million on underground and surface equipment.

The mine plan at Minto reflected the delay in receiving surface mining permits for Minto North, which contained the highest-grade, openpit reserves remaining on the property, shifting the bulk of production from Minto North into 2016. Minto's 2015 guidance assumed receipt of all permits and the prestripping of Minto North to start in March.

Minto’s 2015 mine plan called for the first Minto North ore to be delivered to the mill in September, with high-grade ore release planned to start in December, continuing until December 2016, at which time the Minto North pit would be fully depleted.

Meanwhile, Minto South underground ore production, which started in late 2014, was scheduled to continue until November, pausing while the mill processed Minto North ore and access was developed for the next area of underground mining. Production was expected to resume underground in mid-2016.

Capex at Minto would include $7.5-million on underground development and equipment and $2.6 million for various improvement projects. Permitting and environmental activities were budgeted to be $1.1-million, related primarily to the Yukon Water Board review that was currently under way to bring all remaining known reserves at Minto into the mine plan.

In addition, Minto expected to capitalise stripping costs of $23.6-million from March through to December, relating to the development of the Minto North pit once permitted, contingent on the final decision to strip Minto North.

OTHER PROJECTS

The company had also budgeted $11.8-million to advance its Santo Domingo project, in Chile, using a stage-gate project management process.

Once an environmental-impact assessment had been received, anticipated around the end of the first quarter, Capstone would evaluate the status of the project and communicate the next steps. It expected to spend $4.6-million on the project in this time.

“The decision to proceed to the second gate will reflect, among other factors, ongoing social license, long-term power availability, receipt of the port concession, awarding of the project execution contract, general and project specific market conditions, the financing market, project economics and alternatives available to the company at that time,” Capstone said.

Should economic conditions improve and the fundamentals of the project continued to warrant it, the budget for Santo Domingo could be increased to up to $33.7-million for the full year.

Greenfield exploration would principally focus on Project Providencia, in Chile, Capstone's earn-in project with Sociedad Química y Minera de Chile (SQM).  The company had budgeted 15 000 m of drill testing –  a continuation of the drill programme that started in 2014 – and would continue geophysics and geochemistry work on Project Providencia and an adjacent property. The minimum expenditure required for the year, under the SQM agreement, was $1.5-million.