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Higher prices revive Capstone outlook for Minto mine

27th April 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – Vancouver-based base metals producer Capstone Mining believes that copper prices have risen and stabilised enough to warrant it keeping the Minto mine, in Canada’s Yukon Territory open until at least 2020, and perhaps beyond.

The company has been threatening to close the mine because of low metal prices for some time, and previously advised it will transition to care and maintenance by December this year. However, buoyant copper prices in recent months, with the price consistently above $2.50/lb since January, is giving the operation a new lease on life.

“At current copper prices, we anticipate the continuation of operations at Minto until mid-2020, with a potential mine life extension beyond 2020,” at current copper prices, we anticipate the continuation of operations at Minto until mid-2020 with a potential mine life extension beyond 2020,” president and CEO Darren Pylot said in the company’s first-quarter results press statement.

Capstone also noted that subject to permitting and regulatory approvals, the operation is also evaluating further deposits for re-inclusion into reserves, which may support additional mine life beyond 2020.

During the three months ended March, Minto accounted for 23.6% of Capstone’s revenues, despite output falling 22% year-over-year to 5 520 t copper, as the grade for the quarter was lower than originally planned, owing to mine plan sequencing changes. All-in cost came in at $2.10/lb of payable copper produced, down from $2.33/lb in the comparable period a year earlier.

Meanwhile, Pinto Valley, in the US, produced 11 300 t of copper during the first quarter, down 31% year-over-year as several factors such as scheduled down time, significant plant maintenance, adverse weather and mine plan sequencing changes weighed on output. All-in costs rose 36.5% to $2.77/lb.

Pinto Valley accounted for 56.5% of Capstone’s revenue in the quarter.

At the company’s smallest mine, Cozamin, in Mexico, Capstone recorded 4 130 t of copper production, up 13% year-over-year, as grade and throughput both improved for the period, with recovery comparable to the first quarter of 2016. All-in cost of $1.94/lb of payable copper produced rose 23%.

Capstone noted that after quarter end, on April 4, the precious metal streaming arrangement with Silver Wheaton expired. After this date, the full silver by-product credit is earned by Cozamin, which is expected to lift by-product credits by about $0.40/lb.

Consolidated output for the period was down 14.5% at 20 230 t of copper, with fully loaded all-in cost per payable pound of copper produced rising 19% to $2.80/lb.

Capstone narrowed its net loss to $7.4-million, or 0.02 a share, compared with a loss of $12.8-million, or 0.03a share a year earlier. Removing single items, the adjusted net loss rose to $2-million, or 0.01 a share, up from $1.5-million, or nil per share a year earlier.

Revenue of $128-million in the period was higher when compared with $126.2-million a year earlier, boosted by higher realised copper prices at $2.68/lb and an increase in gold and zinc revenue, partially offset by lower copper volumes sold.

Working capital was $148.3 million at March 31, compared with $171.1-million at December 31.

Capstone expects to produce 94 000 t of copper at all-in cost of $2.15/lb to $2.25/lb in 2017. Minto and Cozamin are expected to complete the year on, or slightly above, plan and Pinto Valley is expected to attain higher run rates for the remainder of 2017 since the significant planned maintenance activity was completed in the first quarter.

Edited by Creamer Media Reporter

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