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Capstone Mining extends mine life at Pinto Valley by 8 years

Published: 15:58 26 Mar 2014 GMT

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Shares of Capstone Mining (TSE:CS) were rising Wednesday after the company said it extended the mine life at its Pinto Valley Mine in Arizona by eight years, to 2026. 

The company announced the results of a "prefeasibility study -- mine life extension" (PV2 PFS) for the project, which it said doesn't even include all the process improvements currently underway at the mine. 

Under the latest study, average annual production for the first five years is 128.4 million pounds of copper contained in concentrate, and 6.6 million pounds of copper cathode. 

The after-tax net present value, discounted at 8%, is $738 million, with expected life-of-mine cash costs estimated at $2.00 per pound of payable copper. Total sustaining capital costs have been pegged at $187.9 million over 12.3 years. 

The mine will operate to 2026 under the most recent study's parameters, including proven and probable mineral reserves of 232 million tonnes at 0.33% copper. The company said that mineral resources increased by 61% with an economic cut off grade of 0.18% copper, to 1.56 billion tonnes at 0.3% copper. 

The Pinto Valley mine, which has been in operation since 1974 with three shutdown periods, most recently started up again in December 2012. 

Capstone said Wednesday it believes there is potential to extend the mine life beyond 2026 if mineral resources not included in the latest study can be proved up to reserves. 

The company is planning to begin engineering and economic studies to consider all remaining mineral resources and their potential for development.

"Completion of the PV2 PFS extends the mine life to 2026 and provides us with the platform to stabilize operations, gain efficiencies and gives us the opportunity to take a longer-term view towards the future of the Pinto Valley Mine in Arizona," said president and CEO Darren Pylot. 

"The PV2 PFS does not include all the projected impact of the process improvements that are underway at the mine, which we expect to generate cost savings in the years ahead," he said. 

Capstone said it has the existing infrastructure to support the operations for the extended mine life, with only minor upgrades to mine maintenance facilities required to increase efficiencies. 

Shares of Capstone added 6.2% to C$2.90 in Toronto on Wednesday, paring year-to-date losses to just over 3.3%. 

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