Capstone to produce 40 million lbs. copper in 2009

Capstone Mining (CS-T) has started an expansion of its Cozamin polymetallic mine in Zacatecas state, Mexico, to increase production by 36% to 40 million lbs. copper per year by 2009.

Capstone will increase mill throughput to 3,000 tonnes of ore per day from 2,200 tonnes, totaling 1 million tonnes of ore per year. Expansions completed this year will bring 2008 copper production to 30 million lbs.

The company plans to spend US$9.5 million in total on mining-related upgrades, which will bring silver production to 1.5 million oz. per year, zinc to 10 million lbs. per year and lead to 5 million lbs. per year by 2009.

The company has made progress in short time. When production started in mid-2006, Capstone expected to produce 16 million lbs. copper per year but even then the company was making plans to double production to 2,000 tonnes per day by 2008.

To meet its new production goals, Capstone is adding a new larger production ramp driven 1,400 metres from surface down to the level 8 decline ramp in the mine. Ramps from level 8 to 12 will be enlarged and the underground crusher will be moved to a new dump pocket at level 11.5. The larger ramps will allow larger trucks to transport more ore to surface.

Capstone is also adding a new 115 kilovolt high tension power line and substation to supply up to 7.5 megawatts to the mine, and a 1.5 megawatt generator will be added for emergencies.

In the plant, the company is going to increase belt sizes within the crushing area and make larger flotation cells to handle the increase in concentrates.

Capstone plans to spend US$2.5 million to do 18,000 metres of underground drilling and 650 metres of drifting in the mine to upgrade inferred resources to measured and indicated and to explore at depth.

The company has earmarked another US$1.7 million for 6,500 metres of surface drilling to explore the Mala Noche vein, which is located outside the current resource area.

Proven and probable reserves as of 2007 were 3.7 million tonnes grading 2.37% copper, 82 grams silver per tonne, 0.4% lead and 1.18% zinc.

Measured, indicated and inferred resources total 8.7 million tonnes grading 2.47% copper, 84.35 grams silver per tonne, 1.11% zinc, 0.3% lead and 0.04 gram gold per tonne.

Capstone shares were trading up 4%, or 12, today at $3.17 apiece on a trading volume of 334,000 shares.