Minto copper mine plugged into powergrid

Vancouver – The recently completed connection of Capstone Mining’s (CS-T) Minto copper mine to the powergrid in the Yukon could not have come sooner.

Capstone chief operating officer Stephen Quin says it should translate into a decrease in energy costs for Capstone at a time when the price of copper is hovering around US$1.65 per lb.

“The savings are much more significant at these prices,” Quin says.

Capstone – which recently merged with the Minto mine’s former owner Sherwood Copper – chipped in $10 million towards the cost of having hydropower extended.

Of that $10 million about three quarters helped cover the costs of an 80-km extension of the main line from Carmacks to Minto Landing while the rest paid for a 27-km dedicated spur from Minto Landing to the Minto mine.

The Yukon Electrical Company has estimated the capital costs for the 80-km extension at around $25 million.

The connection means Capstone will no longer have to rely on diesel for power. But Quin says it is difficult to put a firm figure on the savings given the variable price of fuel.

“The one sort of hard number…worked out to be about 10¢-per-lb. copper,” he says.

Year-to-date Capstone has produced copper at US$1.30 per lb. However Quin notes Capstone has at times been able to push that number down to around US$1.

Although in the last quarter cash costs at Minto were higher than usual at US$2.10-per-lb. copper Quin says that figure will come down substantially in the next quarter.

Much of the higher costs in that quarter stemmed from waste stripping as part of Capstone’s efforts to access higher grade ore.

Capstone’s cash costs at Minto should benefit from those efforts and the connection to the powergrid in the next quarter.

Taking into account for capital expenditures of the electrification project Quin says the lower energy bill should translate into a savings of about $4 million a year.

In addition to the Minto mine, 240 km northwest of Whitehorse, Yukon, Capstone operates the Cozamin mine in Zacatecas state, Mexico. In the last quarter ending Sept. 30, 2008, both produced around 7-million-lbs. copper.

On news of the connection to the powergrid Capstone’s share price slid 2¢ to close at 88¢. The company has about 80 millions shares issued.