The expansion project at the Cozamin mine, in Mexico, is set to deliver an even better outcome than previously thought, with base metals miner Capstone Mining now forecasting an increase in production of between 50-million and 55-million pounds of copper and 1.4-million to 1.5-million ounces of silver.

The expansion project, which was announced in late 2018, involves debottlenecking the mine with a one-way ramp system. It was previously forecast to improve production by between 40-million and 45-million pounds.

However, Capstone reported that the expected production targets had increased, owing to the results of an additional 103 drill holes, to date, pointing to higher grades and thickness than in the current reserves.

Capstone has intersected 20.1 m grading 5.53% copper, including 6.4 m of 11.32% copper at the Cozamin mine.

"Never have I been this excited about Capstone's future,” said president and CEO Darren Pylot in a news release, noting that Cozamin and Pinto Valley had clear organic growth strategies in place.

"Cozamin will leverage incredible growth from expansionary capital of less than $5-million, expanding copper and silver production by 50% in 2021 and beyond. The continued exploration success achieved by our team is a paradigm shift for an already low cost and highly profitable mine. Cozamin has already delivered over $400-million in cumulative free cash flow for Capstone and it appears the best is yet to come in the decade ahead of us."

At Pinto Valley, in Arizona, US, preliminary work on the Phase 4 expansion study is under way to evaluate expansion scenarios to take advance of nearly one-billion tonnes of mineral resources not currently scheduled in the Phase 3 pit shell.

Pinto Valley has also identified a $10-million to $15-million project to modernise the crushing equipment and other front-end upgrades to improve mill reliability and overall performance. The project would deliver a “double-digit rate of return”, Capstone noted.

The return on investment is calculated based on increasing throughput from current levels to targeted production levels between 56 000 t/d to 57 000 t/d in 2021 and beyond, and reduced maintenance and power costs.

The project is subject to board approval in the fourth quarter.

WEAKER THIRD QUARTER
Meanwhile, Capstone reported third-quarter production of 39-million pounds and C1 cash costs of $1.85/lb. Copper sales were lower at 31-million pounds, owing to the timing of the last shipment of the quarter at Pinto Valley.

Its net loss for the quarter was $10.7-million, compared with a net income of $1.3-million. Lower realised copper prices and negative provisional pricing adjustments impacted on its financial performance.

The adjusted net loss came to $8.7-million, compared with adjusted net income of $1-million a year earlier.

Capstone expects to achieve consolidated production guidance of 145-million to 160-million pounds and consolidated C1 cash costs guidance of $1.80/lb to $2.00/lb.