Emerging copper and silver producer Capstone Mining (CS-T, CSFFF-O) has updated its resource estimate for the Cozamin copper-silver-zinc project in Zacatecas state, Mexico.
Measured and indicated resources at the advanced project stand at 2.34 million tonnes grading 87.75 grams silver per tonne, 2.73% copper, 1.11% zinc, 0.41% lead. The mine also boasts inferred resources of 2.62 million tonnes running 81.09 grams silver, 2.4% copper, 1.27% zinc, and 0.27% lead. Both estimates are based on 1.4% copper cutoff grade.
The new estimates reflect around 10,321 meters worth of diamond drilling, 47 underground NQ-size core holes, and 768 channel samples collected in 2006. The company says the drilling significantly boosted the amount of metal contained in the measured and indicated categories.
In all, Capstone has completed 114 underground NQ holes to define resources in about 65% of an prospective area defined surface drilling in 2004 and early 2005. The area remains open along strike and down dip. The company intends to launch a 10,000-metre surface drill campaign in September; another 20,000 metres of underground definition drilling will begin in the fourth quarter.
In May, Capstone reported that construction of the mill and plant at Cozamin was around 95% complete. The work includes rehabilitation and upgrade of the crusher circuit, construction of a 1,000-tonne fine ore bin, installation of the ball mill, and an upgrade of the flotation circuit.
Additionally, an expansion of the tailings dam dyke to provide four years worth of capacity has been completed. Plans call for the dyke to raised two more times during the life of the operation. The internal ramp connecting levels 8, 9, and 10 at the San Roberto mine has been rehabilitated, and is being driven down to level 11.
Running at 350,000 tonnes per year, Cozamin is expected to churn out an average of 16 million lbs. copper, 700,000 oz. silver, and 4 million lbs. zinc annually over 6.5 years. Total cash costs are estimated at US80 per lb. copper, net of byproduct credits, including freight and smelter costs. Operations are slated to begin by the third quarter.
A feasibility study released in early March pegged the project’s net present value (at a 5% discount) at US$17.9 million, with an estimated pre-tax internal rate of return of 43%. The estimates are based on base-case metal price assumptions of US$1.25 per lb. copper, US$6.25 per oz. silver, US50 per lb. zinc and US38 per lb. lead.
Existing infrastructure keeps the forecast price tag at a modest US$10 million.
The feasibility study was based on proven and probable reserves totalling 2.26 million tonnes of 76 grams silver, 2.16% copper, 0.56% lead, and 0.99% zinc, based on a cutoff of 1.25% copper.
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