Cozamin poised for production

With mine and mill construction proceeding on schedule, Capstone Mining (CS-T, CSFFF-O) expects to begin operations by the third quarter of this year at its Cozamin copper-silver-zinc project in Zacatecas state, Mexico.

Cozamin is a past-producing property situated in the Zacatecas mining district, which forms part of the Sierra Madre mineral belt. Since acquiring the project, Capstone has spent several years outlining resources in the historic San Roberto mine, while also rehabilitating its hoist and shaft facilities and underground workings.

At last report, measured and indicated resources at Cozamin stood at 2.07 million tonnes grading 86.3 grams silver per tonne, 2.5% copper, 0.59% lead, and 1.28% zinc. The mine also hosts an inferred resource of 1.2 million tonnes grading 79.5 grams silver, 2.29% copper, 0.6% lead and 1.02% zinc.

These resources include proven and probable reserves of 2.26 million tonnes of 76 grams silver, 2.16% copper, 0.56% lead, and 0.99% zinc. Updated estimates are expected this year, and will incorporate assay results from underground holes drilled since the initial resource estimates were prepared in late 2005.

The vein system hosting existing resources remains open along strike to the west and at depth. Also, at least 3 km of its known strike extent remains untested by surface exploration.

Based on a recent feasibility study, average annual production is estimated at 16 million lbs. copper, 700,000 oz. silver, and 4 million lbs. zinc. Total cash costs are estimated at US80 per lb. copper, net of byproduct credits, including freight and smelter costs.

All major equipment for the mill is on-site, and a new cone crusher was commissioned in early March. Foundations for the fine-ore bin and ball mill are complete, and installation of new and refurbished flotation cells in the plant also began in early March.

The mill facilities will have a throughput capacity of 350,000 tonnes per year, or 1,000 tonnes per day.

Underground development is under way by contractors. Internal ramps and a decline ramp from surface are completed, and the first two stopes are scheduled to be ready for mining by the end of May, with a total of five stopes planned for production mining in the third quarter. The company has ordered its own fleet of mining equipment, which is scheduled to be on-site by the end of June.

Capstone is debt-free, and has the remaining $7 million needed to complete construction at Cozamin. Because of pre-existing development and infrastructure, capital costs were a modest $10 million.