|
Capstone Mining
Year-End and Fourth Quarter Results
November 14, 2007
Vancouver, B.C. - Capstone Mining Corp. ("Capstone")
announces its financial results for the year and quarter ending August 31,
2007 including production and sales for the Cozamin mine located in Zacatecas
State, Mexico. All dollar amounts are stated in U.S. dollars unless
otherwise indicated.
Overview and Highlights
For the year ended August 31, 2007, Capstone's
earnings before future income tax allowance were $25.2 million or $0.31 per
share ($0.30 per share diluted), and earnings after future income tax
allowance were $22.7 million or $0.28 per share ($0.27 per share diluted),
compared to a loss of $2.6 million or $0.04 loss per share ($0.04 loss per
share diluted) in fiscal 2006.
- For
the fourth quarter of fiscal 2007, earnings before future income tax
allowance were $10.7 million or $0.13 per share. Earnings after
future income tax allowance were $8.2 million or $0.10 per share.
- Revenue
for fiscal 2007 was $55.3 million. The average realized price for
sales of copper, zinc, lead and silver in fiscal 2007 was $3.20/lb,
$1.60/lb, $0.96/lb and $10.76/oz respectively.
- At
year end, Capstone had working capital of $52.9 million including $36
million in cash and no bank debt, compared with working capital of $20.6
million and a cash balance of $20.6 million in the previous year.
- Copper
cash costs for fiscal 2007 were $0.54/lb of copper (net of by-product
credits and including smelter, refining, transportation and all site costs).
Copper cash costs
for Q4 were $0.63/lb.
- Total
costs (the aggregate of cash costs, royalty, depletion and amortization
and accretion) for fiscal 2007 were $0.87/lb.
- During
the year, Capstone issued 679,080 shares to Grupo Bacis to complete its option
to purchase the Cozamin Mine, giving Capstone a 100% ownership interest
subject to a 3% Net Smelter Royalty paid to Grupo Bacis.
- Capstone
sold its silver during the year to Silverstone Resources Corp. ("Silverstone"),
whereby Capstone received $44 million ($20 million in cash and $24
million in Silverstone shares) plus the lesser of $4.00 per ounce of
silver and the prevailing market price upon delivery in exchange for
selling the next 10 years of silver production from the Cozamin
mine. Fair market value of the Silverstone shares today is $57
million.
- Mineral
reserves at year end for Cozamin were increased by 65% to 3.7 million
tonnes, boosting recoverable copper from 93 million pounds in 2006 to
173 million pounds in 2007. Recoverable zinc increased from 24 million
pounds to 48.5 million pounds, recoverable lead increased from 1.6
million pounds to 2 million pounds and recoverable silver increased from
4 million ounces to 7.3 million ounces.
|
|
Year ended August
31, 2007
|
Year ended August
31, 2006
|
|
|
|
|
|
Revenue
|
$55.3M
|
$Nil
|
|
Copper
|
$37.7M
|
$Nil
|
|
Zinc
|
$8.0M
|
$Nil
|
|
Lead
|
$2.7M
|
$Nil
|
|
Silver
|
$6.9M
|
$Nil
|
|
Operating
profit
|
$28.0M
|
$Nil
|
|
Earnings
(before tax)
|
$25.2M
|
($2.6M)
|
|
EPS -
basic (before tax)
|
$0.31
|
($0.04)
|
|
Earnings
(after tax)
|
$22.7M
|
($2.6M)
|
|
EPS -
basic
|
$0.28
|
($0.04)
|
Cozamin Mine
Fiscal
2007 Production and Sales Highlights
- Capstone
produced the following metals during the year.
- 13.9 million pounds of copper
- 6.8 million pounds of zinc
- Concentrate
sales for the year were dry metric tonnes ("DMT"), containing;
- 11.8 million pounds of copper
- 2.8 million pounds of lead
Concentrate inventory at August 31, 2007 was 8,150
DMT (containing 2.6 million pounds of copper, 2.0 million pounds of zinc and
0.4 million pounds of lead).
2007 Production Results and 2008
Forecast
The forecasted copper, zinc, lead and silver
production for fiscal 2007 was estimated to be 13 - 14 million pounds of
copper, 8 million pounds of zinc, 3.5 million pounds of lead and 700,000 ounces of
silver.
The following table is a summary of the actual
operating statistics for fiscal 2007 and forecast for 2008.
|
|
Fiscal 2007 (A)
|
Fiscal 2008 (F)
|
|
Total tons mined
|
484,641
|
750,000
|
|
Tons of ore milled
|
461,933
|
750,000
|
|
Copper grade (%)
|
1.59
|
1.8
|
|
Zinc grade (%)
|
1.47
|
1.3
|
|
Silver grade (g/t)
|
71
|
69
|
|
Lead grade (%)
|
0.6
|
0.5
|
|
Copper recovery (%)
|
86
|
88
|
|
Zinc recovery (%)
|
44.9
|
50
|
|
Silver recovery (%)
|
73
|
74
|
|
Lead recovery (%)
|
52.6
|
50
|
|
Copper production (million DMT lbs)
|
13.9
|
26
|
|
Zinc production (million DMT lbs)
|
6.8
|
11.3
|
|
Silver production ('000 ounces)
|
747
|
1,100
|
|
Lead
production (million DMT lbs)
|
3.0
|
4.1
|
Note:
Silver reports to all concentrates.
Fourth
Quarter Production Highlights
Copper
- Copper in concentrate produced
during the quarter was 4.9 million pounds of copper, 37% higher than the
previous quarter.
- Copper concentrate sales for
the quarter were 8,372 dry metric tons ("DMT"), containing 3.9
million pounds of copper, an increase from the 5,947 DMT sold during the
previous quarter, containing 2.9 million pounds of copper.
- The average price for sales of
copper in the quarter was $3.34/lb.
- Copper concentrate inventory
at August 31, 2007 was 5,447 DMT, an increase in inventory from the
3,842 DMT of concentrate on hand at the end of the previous quarter.
- Silver in the copper
concentrate produced during the quarter totaled 205,000 ounces,
44% higher than the previous quarter.
Zinc
- Zinc in concentrate produced
during the quarter was 2.1 million pounds of zinc, 31% more than the
previous quarter.
- Zinc sales for the quarter
were 1,977 DMT, containing 1.6 million pounds of zinc, an increase from
the 1,949 DMT sold during the previous quarter, containing 1.5 million
pounds of zinc.
- The average price for sales of
zinc in the quarter was $1.65/lb.
- Zinc concentrate inventory at
August 31, 2007 was 2,413 DMT, an increase in inventory from the 1,820
DMT of concentrate on hand at the end of the previous quarter.
- Silver in the zinc concentrate
produced during the quarter totaled 10,000 ounces,
67% higher than the previous quarter.
Lead
- Lead in concentrate produced
during the quarter was 1.0 million pounds of lead, 67% more than the
previous quarter.
- Lead concentrate sales for the
quarter were 498 DMT, containing 0.7 million pounds of lead, equal to
the 502 DMT sold during the previous quarter, containing 0.7 million
pounds of lead.
- The average price for sales of
lead in the quarter was $1.48/lb.
- Lead concentrate inventory at
August 31, 2007 was 290 DMT, an increase in inventory from the 120 DMT
of concentrate on hand at the end of the previous quarter.
- Silver in the lead concentrate
produced during the quarter totaled 49,000 ounces,
63% higher than the previous quarter.
Fourth
Quarter Production Results
The following
table is a summary of the operating statistics for the year by quarter.
|
|
Q1 - 2007
|
Q2 - 2007
|
Q3 - 2007
|
Q4 - 2007
|
|
Total tons mined
|
90,281
|
100,620
|
131,325
|
162,415
|
|
Tons of ore milled
|
93,055
|
95,439
|
112,277
|
161,162
|
|
Copper grade (%)
|
1.50
|
1.58
|
1.65
|
1.60
|
|
Zinc grade (%)
|
1.80
|
1.45
|
1.65
|
1.25
|
|
Silver grade (g/t)
|
72
|
68
|
71
|
71
|
|
Lead grade (%)
|
0.70
|
0.53
|
0.60
|
0.55
|
|
Copper recovery (%)
|
85.3
|
84.5
|
85.7
|
86.7
|
|
Zinc recovery (%)
|
49.3
|
42.6
|
43.0
|
43.4
|
|
Silver recovery (%)
|
74.6
|
70.0
|
70.4
|
71.5
|
|
Lead recovery (%)
|
60.3
|
49.0
|
48.0
|
50.4
|
|
Copper production (million DMT lbs)
|
2.7
|
2.8
|
3.5
|
4.9
|
|
Zinc production (million DMT lbs)
|
1.9
|
1.2
|
1.6
|
2.1
|
|
Silver production ('000 ounces)
|
161
|
149
|
174
|
263
|
|
Lead production (million DMT lbs)
|
0.9
|
0.5
|
0.6
|
1.0
|
Note:
Silver reports to all concentrates.
Mill
Expansion Project
Tons mined and
processed were higher in the fourth quarter of fiscal 2007 compared to
previous 2007 quarters as expansion start up commenced ahead of schedule in
July at the 2200 tpd rate. July and August production rates averaged
approximately 94% of design throughput. Capital expenditures were $11
million, with approximately $2 million remaining to be spent on final land
payment, underground crusher installation and ramp completion versus $15
million budget.
Labour
There were 11
minor lost time accidents during the year from both operations and
construction. The number of personnel at the end of the year was 526,
of which approximately 146 were contractors related to the expansion project.
Fourth
Quarter Actual Sales Compared to Previous Quarters
Actual sales
and costs for the year are tabulated below.
|
|
Q1 (A) Sales
|
Q2 (A) Sales
|
Q3 (A) Sales
|
Q4 (A) Sales
|
Fiscal 2007 Sales
|
|
Copper (million lbs)
|
2.9
|
2.1
|
2.9
|
3.9
|
11.8
|
|
Zinc (million lbs)
|
1.9
|
Nil
|
1.5
|
1.6
|
5.0
|
|
Lead (million lbs)
|
Nil
|
1.4
|
0.7
|
0.7
|
2.8
|
|
Silver ('000 ounces)
|
120
|
169
|
143
|
209
|
641
|
|
Copper production costs, net of by
product credits, per lb of copper
|
$(0.04)
|
$(0.02)
|
$0.20
|
$0.25
|
$0.12
|
|
Off property costs for transport,
smelting and refining per lb of copper
|
$0.48
|
$0.41
|
$0.41
|
$0.38
|
$0.42
|
|
Total cash costs of production per lb of
copper
|
$0.44
|
$0.39
|
$0.61
|
$0.63
|
$0.54
|
Copper
production costs in the fourth quarter were $0.05 above plan reflecting the
impact of the company having sold all its silver production to Silverstone
Resources Corp. at $8.40 per ounce.
Mineral
Reserves and Resources
An updated
reserve and resource estimate has been completed for the Cozamin mine, as of
August 31, 2007. The new reserve and resource estimate increases both
the tonnage and contained metal within all of the reserve and resource
categories, while maintaining its high grade. The Company completed 5
surface and 70 underground NQ-core drill holes totaling 26,266 metres.
Modeling also included channel samples from mined areas.
The
exploration drilling program was carried out in 2006/7 to upgrade and expand
the mineral resources. The program resulted in an increase of mineable
reserves of 65% after allowing for ore production during the year shown
below, at a $40 cut-off.
|
Classification
|
Tonnes
|
Cu (%)
|
Ag (g/t)
|
Pb (%)
|
Zn (%)
|
|
Proven
|
1,809,719
|
2.32
|
84
|
0.45
|
1.17
|
|
Probable
|
1,915,248
|
2.42
|
81
|
0.34
|
1.19
|
|
Total
|
3,724,967
|
2.37
|
82
|
0.40
|
1.18
|
The resources
shown below indicate the successful conversion from inferred resources to
measured and indicated resources, while maintaining a similar tonnage in the
inferred category. Overall resources increased 47% after allowing for mined
out tonnage.
The resource
and reserve estimation was completed by Cozamin mine staff under the
supervision of Michelle Stone and Bob Barnes, Qualified Persons under
National Instrument 43-101. The estimates used long term metal prices of
$2.25/lb for copper, $1.00/lb for zinc, $0.60/lb for lead and $8.50/oz for
silver. A technical report will be filed on www.sedar.com
in November 2007.
In addition to
the above reserves, the mineral resources which include the reserves are
estimated to be:
|
Resource Category*
|
Tonnes (1%
Cu Cut-off)
|
Cu (%)
|
Ag (g/t)
|
Zn (%)
|
Pb (%)
|
Au (g/t)
|
Million lbs**
|
Million ozs**
|
|
Cu
|
Zn
|
Pb
|
Ag
|
|
Measured
|
2,591,705
|
2.48
|
87.11
|
0.43
|
1.18
|
0.03
|
141.7
|
24.6
|
67.4
|
7.3
|
|
Indicated
|
2,896,158
|
2.59
|
86.37
|
0.32
|
1.14
|
0.04
|
165.4
|
20.4
|
72.8
|
8.0
|
|
M & Ind.
|
5,487,863
|
2.54
|
86.56
|
0.37
|
1.15
|
0.04
|
307.1
|
45.0
|
140.2
|
15.3
|
|
Inferred
|
3,162,838
|
2.36
|
80.50
|
0.18
|
1.03
|
0.04
|
164.6
|
12.6
|
71.8
|
8.2
|
|
Total
|
8,650,702
|
2.47
|
84.35
|
0.30
|
1.11
|
0.04
|
471.7
|
57.6
|
212.0
|
23.5
|
*These
resources included a non-material update to the resources released October
15, 2007.
** 1 kilogram = 2.2 lbs; 31.103 grams = 1 oz. Troy.
The Company
has already commenced a program of underground infill drilling to further
expand and upgrade the inferred resources. Priority will be on inferred
resources within established mining block areas. In addition, the
Company plans to undertake both surface and underground drilling in 2008 to
explore along strike and down dip of the updated resources.
With the
promising results encountered in the 2006/7 drilling program, the company is
managing a focused program to further expand the Cozamin mineral reserves.
Financial
Results
The
information in this news release and the selected financial information
contained in the following pages should be read in conjunction with the
audited Consolidated Financial Statements and Management Discussion and Analysis
for the year ended August 31, 2007, which will be available at Capstone's
website at www.capstonemining.com
and at www.sedar.com .
The Company's
earnings before future income tax accruals for the year ended August 31, 2007
increased to $25.2 million or $0.31 per share compared to a loss of $2.6
million or ($0.04) per share for the year ended August 31, 2006. The
Company's net earnings for August 31, 2007 increased to $22.7 million or
$0.28 per share, compared to $(2.6) million or $(0.04) per share for August
31, 2006.
The Company
reported revenues of $55.3 million (2006 - $Nil). Revenues consisted of
copper concentrate sales of $37.7 million, zinc concentrate sales of $8.0
million, lead concentrate sales of $2.7 million and silver in concentrate
sales of $6.9 million.
Cost of sales
for the year was $14.2 million (2006 - $Nil), treatment and transportation
charges were $10.1 million (2006 - $Nil), royalty charges were $1.4 million
(2006 - $Nil) and depletion was $1.7 million (2006 - $Nil).
The increased
general and administrative expenditures for the year ended August 31, 2007
compared to the year ended August 31, 2006 are due to the Company attaining
commercial production as well as professional fees related to the sale of the
Company's silver.
A future
income tax provision of $2.5 million was recorded in 2007 compared to $Nil in
2006. The increase in the income tax provision is mainly due to the
excess of book value of capital assets over tax values.
Glencore
International AG purchases the concentrates produced by the Cozamin mine
pursuant to the terms of a written contract. The Company has also
agreed to terms with Trafigura Beheer B.V. to purchase additional copper
concentrates from the expansion pursuant to the terms of a written contract.
Capstone
Mining Corp. Selected Financial Information
Consolidated
Balance Sheets
|
|
Aug
31,
|
Aug
31,
|
|
|
2007
|
2006
|
|
|
|
|
|
Cash
|
$
35,988,166
|
$
20,614,359
|
|
Investment in Silverstone Resources Corp.
|
28,498,044
|
-
|
|
Property, plant and equipment
|
44,616,033
|
31,479,079
|
|
Other assets
|
24,888,492
|
6,739,335
|
|
|
|
|
|
Total assets
|
133,990,735
|
58,832,773
|
|
|
|
|
|
Deferred revenue
|
43,056,390
|
-
|
|
Other liabilities
|
15,561,814
|
6,474,770
|
|
|
|
|
|
Total liabilities
|
58,618,204
|
6,474,770
|
|
Shareholder's equity
|
75,372,531
|
52,358,003
|
|
|
|
|
|
Total liabilities and shareholders'
equity
|
133,990,735
|
58,832,773
|
Consolidated
Statements of Operations
|
|
Aug
31,
|
Aug
31,
|
|
|
2007
|
2006
|
|
|
|
|
|
Total revenues
|
$
55,335,647
|
$
-
|
|
Total cost of sales
|
(27,304,725)
|
-
|
|
Operating profit
|
28,030,922
|
-
|
|
G&A and other expenses
|
(4,607,226)
|
(2,879,614)
|
|
Other items
|
1,726,946
|
255,013
|
|
Earnings (loss) before income taxes
|
25,150,642
|
(2,624,601)
|
|
Future income tax
|
(2,479,593)
|
-
|
|
Earnings (loss) for the year
|
22,671,049
|
(2,624,601)
|
|
|
|
|
|
EPS - Basic
|
0.28
|
(0.04)
|
|
EPS - Diluted
|
0.27
|
(0.04)
|
Capstone will
host a conference call on Thursday, November 15 at 8:30 a.m. Pacific Time
(11:30 AM Eastern Time) to discuss these results. The conference call may be
accessed by dialing 1.866.365.1119 in North America or 1.416.849.7329
internationally, please ask for the Capstone Mining Corp. conference call.
The conference call will be archived for later playback until November 29,
2007 and can be accessed by dialing 1.866.501.5559 and the passcode is
21253140#.
ABOUT
CAPSTONE
Capstone is a
Canadian based mining company currently operating the 100% owned Cozamin
copper-silver-lead-zinc mine located in Zacatecas State, Mexico. Capstone has
approximately 81.8 million shares outstanding and is well financed with no
bank debt. More information is available online at: http://www.capstonemining.com/ .
For further
information about the Company, please contact:
Chris Tomanik, Telephone: (604) 684-8894 / Facsimile: (604) 688-2180
Email: ctomanik@capstonemining.com
|