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Low production costs benefit Capstone as earnings climb by 76% for Q2 2010

Published: 01:26 11 Aug 2010 BST

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Canadian mining company Capstone Mining Corp. (TSX:CS) reported net earnings today of $45.4 million for the quarter ending 30 June 2010 - up from $25.8 million in the prior year quarter.


Mining operations accounted for $27.1 million of the company`s total net earnings. Adjusted net earnings came out to $10 million for Q2 2010 or $0.05 per common share.


Copper produced in the second quarter at Capstone's two mines, Cozamin, its copper-silver-zinc-lead mine located in Zacatecas State, Mexico and Minto, its copper-gold-silver mine in the Yukon, Canada, totalled 17.3  million pounds of payable copper at an estimated total cash cost of $1.31 per payable pound, compared to 22 million pounds in Q2 2009.


 The company sold 17.7 million pounds of copper, 3.2 million pounds of zinc, 3.6 million pounds of lead, 6,201 ounces of gold and 428,767 ounces of silver.


"Capstone's operations continue to generate significant cash flow from operating activities which, combined with the sale of some investments, has significantly increased our financial strength," said vice chairman and CEO of Capstone, Darren Pylot. "We benefit from low production costs and have a very strong balance sheet, with $141 million in unrestricted cash on June 30, 2010, which positions us well to grow both organically (through exploration and development), and through external transactions."


The company generated cash flow from operating activities of $32.5 million up from $20.1 million for the same period last year.


Capstone has also began exploration drilling at the Cozamin Mine, with underground drilling intersecting significant copper grades in a zone located in the footwall of the principal Mala Noche vein (which hosts the mineral resources and reserves at the Cozamin Mine). Drilling is continuing, and will expand to other areas of the Cozamin Mine during the rest of the year.


The company also reported a first-time mineral resource estimate for the Minto East discovery at the Minto Mine, while infill drilling commenced to increase the confidence to a level suitable for inclusion in a pre-feasibility study.

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