Capstone Updates Mineral Resource Estimate for Footwall Zone at Cozamin Mine

Tonnage Increases 53% and Contained Copper Increases 39% in the M&I Resource Class Detailed Mine Planning has Commenced

VANCOUVER, Feb. 8, 2012 /CNW/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today announced the result of an updated National Instrument 43-101 compliant mineral resource estimate for the Mala Noche Footwall Zone ("MNFWZ") at its Cozamin Mine in Zacatecas, Mexico.  Follow-up drilling in the MNFWZ in the second half of 2011 has added an additional 28 million pounds of copper resource in the measured and indicated ("M&I") categories. At a US$35 NSR copper cut-off grade ("COG"), total measured and indicated mineral resources at the Cozamin Mine at the end of 2011 was 419 million pounds of copper.  A tabulation of total mineral resource by classification is appended at the end of this news release.

"With this increase in tonnage and contained copper, Capstone has mine planning and cost analysis studies underway directed toward converting much of the M&I class resource to mineral reserves," said Brad Mercer, Vice President, Exploration for Capstone. "In addition, underground exploration drilling is continuing with two drills, for further infill drilling aimed at upgrading the classification of the more than three million tonnes of resource currently in the inferred class and to seek further expansion of the deposit by stepping out in both the down dip and eastward directions."

Compared to the June 20, 2011 mineral resource estimate, at a US$35 NSR COG the grade of the M&I category decreased from 2.32% Cu to 2.10% Cu, but the tonnage increased by 766 thousand tonnes to 2,217 thousand tonnes and contained copper metal increased by 28 million pounds. These changes are largely attributed to an increase in drill hole density where infill drilling of areas that were previously inferred class have resulted in a reclassification to indicated.

This estimate also uses a revamped approach to sub-domain individual veins and a more robust geological interpretation that uses a percent block model that better constrains metal grades while increasing confidence in geological continuity suitable for mine planning and production development. The new estimate for the MNFWZ is tabulated below at a US$35 NSR COG and it is presented at various other NSR COG's at the end of this news release to show sensitivity to changing cut-off grades. Test mining to date in the MNFWZ has been positive, with the extraction of 61.7 thousand tonnes of development ore from the MNFWZ at an average grade of 2.00% copper.

Subsequent to the mineral resource estimate reported herein an additional 26 holes have been drilled at the MNFWZ but assays are not yet available for inclusion in the resource estimate.  Exploration drilling is ongoing at both the MNFWZ and the Mala Noche Main Vein and is anticipated to continue for the remainder of 2012 in a planned $6.5 million program (32,000 metres).  The Company anticipates re-estimating the Footwall Zone mineral resource when a critical mass of new drill data is attained, expected towards the end of 2012.

Cozamin Mine - Mineral Resources by Class for the MNFWZ as at December 31, 2011 at a US$35 NSR COG*

Classification Tonnes
(000's)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Contained Cu
(M lbs)
Contained Silver
(M oz)
Contained Zn
(M lbs)
Measured (M) 340 1.98 37.1 0.30 14.9 0.4 2.2
Indicated (I) 1,877 2.12 35.4 0.36 87.9 2.1 14.8
Total (M&I) 2,217 2.10 35.6 0.35 102.8 2.5 17.0
Additional Inferred 3,574 1.86 38.6 0.24 146.9 4.4 18.8

* Metal Price assumptions (in USD) used to calculate the NSR COG for all deposits are: Cu=$2.50; Zn=$0.80; Ag=$20.00.
Processing recoveries used to calculate the NSR COG for the MNFWZ Resource are: Cu=92%; Zn=69%; Ag=72%

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. Even though test mining has been undertaken in areas of the MNFWZ with M&I class mineral resources there is no certainty that inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.

Cozamin Mine - Mineral Resources by Class for All Copper Deposits as at December 31, 2011 at a US$35 NSR COG

Classification Tonnes
(000's)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Contained Cu
(M lbs)
Contained Silver
(M oz)
Contained Zn
(M lbs)
Measured (M) 1,802 1.96 70.5 0.92 77.7 4.1 36.5
Indicated (I) 9,611 1.54 53.7 1.42 326.3 16.6 301.6
Total (M&I) 11,413 1.61 56.4 1.34 403.9 20.7 338.1
Additional Inferred 8,359 1.39 42.8 1.00 255.6 11.5 184.1

* Metal Price assumptions (in USD) used to calculate the NSR COG for All Deposits are: Cu=$2.50; Zn=$0.80; Ag=$20.00.
Processing recoveries used to calculate the NSR COG for the MNFWZ Resource are: Cu=92%; Zn=69%; Ag=72%
Processing recoveries used to calculate the NSR COG for the San Roberto Resource are: Cu=92%; Zn=69%; Ag=62%

Cozamin Mine - Mineral Resources by Class for San Rafael Zinc Deposit as at December 31, 2011 at a US$35 NSR COG

Classification Tonnes
(000's)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Contained Cu
(M lbs)
Contained Silver
(M oz)
Contained Zn
(M lbs)
Measured (M) - - - - - - -
Indicated (I) 2,619 0.27 40.6 3.09 15.4 3.4 178.2
Total (M&I) 2,619 0.27 40.6 3.09 15.4 3.4 178.2
Additional Inferred 1,744 0.14 32.7 3.01 5.3 1.8 115.8

* Metal Price assumptions (in USD) used to calculate the NSR COG for All Deposits are: Cu=$2.50; Zn=$0.80; Ag=$20.00.
Processing recoveries used to calculate the NSR COG for the San Raphael Resource are: Cu=57%; Zn=24%; Ag=28%

MNFWZ Mineral Resource Estimate Methodology

The mineral resource estimate for the MNFWZ reported herein was prepared by independent consultant Ali Shahkar P.Eng., Principal Consultant with Lions Gate Geological Consulting Inc. (LGGC) located in Sechelt, BC, Canada.  The estimate was completed using GEMS© software using a three dimensional block model (10 metre by 5 metre by 3 metre block size).  The main structure that hosts the MNFWZ mineralization was interpreted as a three dimensional wireframe domain as was the case in previous models. This domain was treated as a general background within which three individual vein wireframes were interpreted and constructed as part of the new model for the MNFWZ.  The three vein wireframes were used as hard boundaries to constrain the interpolation of grades into the block model.  Interpolation parameters have been derived based on geostatistical analysis conducted on 1 metre composited drill hole data.  Block grades have been estimated using Inverse Distance Squared (ID2) method and the mineral resources have been classified based on proximity to sample data and the continuity of mineralization in accordance with CIM best practices. The MNFWZ resource has been estimated using a total of 109 diamond drill holes, variably spaced at 50 to 150 metre intervals.

About Capstone Mining Corp.

Capstone Mining Corp. is a Canadian mining company with two producing copper mines, the Cozamin copper-silver-zinc-lead mine located in Zacatecas State, Mexico and the Minto copper-gold-silver mine in Yukon, Canada. In addition, Capstone has two development projects, the large scale 70% owned Santo Domingo copper-iron-gold project in Chile in partnership with Korea Resources Corporation and the 100% owned Kutcho copper-zinc-gold-silver project in British Columbia, as well as exploration at properties in Chile, British Columbia and Australia. Using its cash flow and strong balance sheet as a springboard, Capstone aims to grow organically through continued mineral resource and reserve expansions and through acquisitions in politically stable, mining-friendly regions. Capstone is included in the S&P/TSX Composite Index and S&P/TSX Global Mining Index. Additional information is available at www.capstonemining.com.

Quality Assurance

The technical information in this news release has been prepared in accordance with Canadian regulatory requirements set out in National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI 43-101") and supervised and reviewed by Brad Mercer, P. Geol., Vice President, Exploration for Capstone, a "Qualified Person" as defined in National Instrument 43-101 and the person who oversees exploration activities on the Cozamin Mine property.  In addition, Gregg Bush, Senior Vice President and Chief Operating Officer for Capstone, reviewed and approved this news release

The mineral resource estimate reported herein for the MNFWZ has been produced by independent consultant Ali Shahkar P.Eng, of Lions Gate Geological Consulting Inc. (LGGC).  Mr. Shahkar is the Independent Qualified Person under NI 43-101 responsible for the MNFWZ mineral resource estimate and has reviewed the information in this release in respect of the MNFWZ mineral resource estimate. The mineral resources presented herein have been estimated in conformity with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

Analyses for copper, zinc, lead, silver and gold were completed by ALS Chemex using the following method. The entire sample is crushed to a minimum of 70% minus 10 mesh. A 250g subsample of the crushed material is then pulverized to 85% minus 200 mesh. Gold and silver grades are determined by gravimetric fire assay using a 50g charge taken from the pulverized material. Copper, zinc and lead are determined by ICP analysis after 4 acid digestion of a 0.4g subsample of the pulverized material.  Blank, standard and duplicate samples are used for quality assurance and quality control.

Cautionary Note Regarding Forward-Looking Information

This document may contain "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). These forward-looking statements are made as of the date of this document and Capstone Mining Corp. (the "Company") does not intend, and does not assume any obligation, to update these forward-looking statements, except as required under applicable securities legislation. 

Forward-looking statements relate to future events or future performance and reflect Company management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Accordingly, readers should not place undue reliance on forward-looking statements.       

Cozamin Mine - Mineral Resources by Class for the MNFWZ as at December 31, 2011 at various US$ NSR COGs*

NSR
Cut-Off
($)
Classification Tonnes
(000's)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Contained
Cu
(M lbs)
Contained
Silver
(M oz)
Contained
Zn
(M lbs)
30 Measured (M) 346 1.96 36.7 0.29 15.0 0.4 2.2
Indicated (I) 1,955 2.06 34.4 0.35 89.0 2.2 14.9
Total (M&I) 2,301 2.05 34.8 0.34 103.9 2.6 17.2
Additional Inferred 3,734 1.81 37.5 0.23 149.0 4.5 19.2
35 Measured (M) 340 1.98 37.1 0.30 14.9 0.4 2.2
Indicated (I) 1,877 2.12 35.4 0.36 87.9 2.1 14.8
Total (M&I) 2,217 2.10 35.6 0.35 102.8 2.5 17.0
Additional Inferred 3,574 1.86 38.6 0.24 146.9 4.4 18.8
40 Measured (M) 333 2.01 37.5 0.30 14.8 0.4 2.2
Indicated (I) 1,793 2.19 36.4 0.37 86.6 2.1 14.5
Total (M&I) 2,125 2.16 36.6 0.36 101.4 2.5 16.7
Additional Inferred 3,402 1.92 39.8 0.25 144.3 4.4 18.4
45 Measured (M) 328 2.03 37.8 0.30 14.7 0.4 2.2
Indicated (I) 1,722 2.25 37.4 0.38 85.4 2.1 14.3
Total (M&I) 2,050 2.21 37.4 0.36 100.1 2.5 16.4
Additional Inferred 3,232 1.98 41.1 0.25 141.4 4.3 18.0

* Metal Price assumptions (in USD) used to calculate the NSR COG are: Cu=$2.50; Zn=$0.80; Ag=$20.00.
Processing recoveries used to calculate the NSR COG: Cu=92%; Zn=69%; Ag=72%

Cozamin Mine - Mineral Resources by Class for All Copper Deposits as at December 31, 2011 at various US$ NSR COGs*

NSR
Cut-Off
($)
Classification Tonnes
(000's)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Contained
Cu
(M lbs)
Contained
Silver
(M oz)
Contained
Zn
(M lbs)
30 Measured (M) 1,827 1.94 69.8 0.92 78.0 4.1 36.9
Indicated (I) 9,842 1.51 52.9 1.41 328.3 16.7 306.8
Total (M&I) 11,669 1.58 55.5 1.34 406.3 20.8 343.7
Additional Inferred 9,139 1.29 41.8 1.00 260.3 12.3 200.8
35 Measured (M) 1,802 1.96 70.5 0.92 77.7 4.1 36.5
Indicated (I) 9,611 1.54 53.7 1.42 326.3 16.6 301.6
Total (M&I) 11,413 1.61 56.6 1.34 403.9 20.7 338.1
Additional Inferred 8,359 1.39 42.8 1.00 255.6 11.5 184.1
40 Measured (M) 1,775 1.98 71.3 0.92 77.4 4.1 36.1
Indicated (I) 9,359 1.57 54.6 1.43 323.7 16.4 295.6
Total (M&I) 11,133 1.63 57.3 1.35 401.0 20.5 331.6
Additional Inferred 7,860 1.45 44.2 1.00 250.4 11.2 172.8
45 Measured (M) 1,745 2.00 72.0 0.92 77.0 4.0 35.5
Indicated (I) 9,049 1.61 55.6 1.44 320.3 16.2 286.5
Total (M&I) 10,795 1.67 58.2 1.35 397.3 20.2 322.0
Additional Inferred 7,229 1.53 45.9 0.98 243.2 10.7 156.4

* Metal Price assumptions (in USD) used to calculate the NSR COG for All Deposits are: Cu=$2.50; Zn=$0.80; Ag=$20.00.
Processing recoveries used to calculate the NSR COG for the MNFWZ Resource are: Cu=92%; Zn=69%; Ag=72%
Processing recoveries used to calculate the NSR COG for the San Roberto Resource are: Cu=92%; Zn=69%; Ag=62%

Cozamin Mine - Mineral Resources by Class for San Rafael Zinc Deposit as at December 31, 2011 at various US$ NSR COGs*

NSR
Cut-Off
($)
Classification Tonnes
(000's)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Contained
Cu
(M lbs)
Contained
Silver
(M oz)
Contained
Zn
(M lbs)
30 Measured (M) - - - - - - -
Indicated (I) 3,288 0.24 37.4 2.89 17.7 4.0 209.3
Total (M&I) 3,288 0.24 37.4 2.89 17.7 4.0 209.3
Additional Inferred 2,695 0.12 28.3 2.73 7.0 2.5 162.3
35 Measured (M) - - - - - - -
Indicated (I) 2,619 0.27 40.6 3.09 15.4 3.4 178.2
Total (M&I) 2,619 0.27 40.6 3.09 15.4 3.4 178.2
Additional Inferred 1,744 0.14 32.7 3.01 5.3 1.8 115.8
40 Measured (M) - - - - - - -
Indicated (I) 1,983 0.29 44.5 3.29 12.8 2.8 143.7
Total (M&I) 1,983 0.29 44.5 3.29 12.8 2.8 143.7
Additional Inferred 1,226 0.15 35.1 3.25 4.0 1.4 87.9
45 Measured (M) - - - - - - -
Indicated (I) 1,407 0.33 49.5 3.48 10.1 2.2 108.0
Total (M&I) 1,407 0.33 49.5 3.48 10.1 2.2 108.0
Additional Inferred 851 0.16 37.6 3.47 3.0 1.0 65.1

* Metal Price assumptions (in USD) used to calculate the NSR COG for All Deposits are: Cu=$2.50; Zn=$0.80; Ag=$20.00.
Processing recoveries used to calculate the NSR COG for the San Raphael Resource are: Cu=57%; Zn=24%; Ag=28%


 

 

 

 

SOURCE Capstone Mining Corp.

For further information:

Capstone Mining Corp.
Cindy Burnett, VP, Investor Relations
Telephone: 604-637-8157
Email: cburnett@capstonemining.com
Website: www.capstonemining.com


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