Capstone Announces Updated Santo Domingo Feasibility Study – Building a World Class District in Chile

(All amounts in US$ unless otherwise indicated)

VANCOUVER, British Columbia--(BUSINESS WIRE)--Capstone Copper Corp. (“Capstone” or the “Company”) (TSX:CS) (ASX:CSC) today announced the results of an updated feasibility study (“FS”) for its 100%-owned, fully-permitted Santo Domingo copper-iron-gold project (“Santo Domingo” or the “Project”) in Region III, Chile, located 35 kilometres northeast of its 70%-owned Mantoverde mine.

“The release of the updated feasibility study for our Santo Domingo Project marks a major step towards the creation of a world-class district in the Atacama region of Chile. We have optimized the mine plan, updated the capital and operating cost estimates, and incorporated all experience gained throughout the engineering and construction of our nearby Mantoverde Development Project”, John MacKenzie, Capstone’s Chief Executive Officer, commented. “The 2024 feasibility study significantly enhances the mine’s economics backed by low capital intensity and first quartile costs. A construction decision and the integration of Santo Domingo represents the next phase of our transformational growth as we become a leading long-life and low-cost producer of critical metals essential for the world’s decarbonization efforts. We now intend to progress with the assessment of the optimal financing structure for the project, which may include bringing in a minority partner at the project level. In parallel we will also continue to advance the detailed engineering on the project. Our team is committed to pursuing the highest standards in safety and environmental management as well as continued engagement with all stakeholders as we progress our growth plans.”

2024 SANTO DOMINGO FEASIBILITY STUDY SUMMARY

• The 2024 FS outlines a robust copper-iron-gold project with an after-tax net present value at an 8% discount rate (“NPV_8%”) of $1.7 billion and an after-tax internal rate of return (“IRR”) of 24.1%
• Over the first seven years of the mine plan, production is expected to average 106,000 tonnes of copper and 3.7 million tonnes of iron concentrate at first quartile cash costs of $0.28 per payable pound of copper produced
  • Over the Project’s 19-year mine life, production is expected to average 68,000 tonnes of copper and 3.6 million tonnes of iron concentrate at first quartile cash costs of $0.33 per payable pound of copper produced
• Total initial capital cost of $2.3 billion drives a capital intensity of approximately $21,900 per tonne of annual copper equivalent production over the life of mine
• A 19-year mine life is supported by a higher Mineral Reserve¹ estimate of 436 million tonnes at a copper grade of 0.33%, iron ore grade of 26.5%, and a gold grade of 0.05 grams per tonne
  • Mineral Reserve tonnes have increased by 11% while contained copper has increased by 23% since the 2020 Feasibility Study
• Total Measured and Indicated (“M&I”) Mineral Resources of 547 million tonnes at a copper grade of 0.31% and a gold grade of 0.04 grams per tonne, including 506 million tonnes with an iron grade of 25.8%
  • M&I Resource tonnes increased by 2% while contained copper in M&I Resources increased by 6% since the 2020 Feasibility Study
• The Company plans to progress several value enhancement initiatives within the Mantoverde-Santo Domingo (“MV-SD”) district that are noted in the Opportunities section but not yet incorporated into the base case 2024 FS, including:
  • The processing of Santo Domingo’s oxide material using Mantoverde’s excess SX-EW capacity
  • The recovery of cobalt and additional copper from a pyrite concentrate
  • Ongoing exploration of the MV-SD district, including the recently acquired Sierra Norte deposit

For a virtual tour of Santo Domingo and the MV-SD district, please visit: https://youtu.be/n-FyVJ9t2JE

¹ Comprised of 131 million tonnes in the Proven category and 305 million tonnes in the Probable category. Please refer to the detailed breakdown of the Santo Domingo Mineral Reserve estimate below.

SUMMARY OF RESULTS

The 2024 FS reflects the results of the Company’s further technical and optimization work at Santo Domingo. A summary of key financial, production, cost, and operating details from the 2024 FS can be found below, in addition to a comparison to the previous Feasibility Study published in 2020. For further details, please refer to Exhibit 1 at the end of this news release.

² Contained production includes recovery loss.
³ C1 cash costs are net of magnetite iron and gold by-product credits and selling costs. These are Non-GAAP performance measures; please see “Non-GAAP and Other Performance Measures” at the end of this news release.
⁴ C1 cash costs on a co-product basis consist of mining costs, processing costs, mine-level G&A, gold revenue credit, and refining charges over payable copper equivalent pounds (copper plus magnetite). These are Non-GAAP performance measures; please see “Non-GAAP and Other Performance Measures” at the end of this news release.
⁵ After recovery loss.

Project Valuation Metrics – Price Sensitivities

⁶ Copper recovery is for the copper concentrator only.
⁷ The 2024 FS includes three iron ore magnetite products, a 62% Fe magnetite, a 65% Fe magnetite, and a 67% Fe magnetite. For more details regarding the pricing breakdown, please see section “Commodity Pricing – Iron Ore” and Exhibit 1.

Cashel Meagher, President and COO, commented, “The mine plan presented today at Santo Domingo represents the next major step for Capstone in the evolution of the world-class Mantoverde-Santo Domingo district. Having recently completed construction at our Mantoverde Development Project, we have an experienced mine-build team which today is rare in our industry. The feasibility study for Santo Domingo outlines an actionable investment opportunity with an attractive rate of return and a short payback period. Over time, we plan to further augment these base case numbers with additional opportunities, including unlocking cobalt production in the district, processing Santo Domingo’s oxides at Mantoverde, and continuing to explore the district to improve our understanding of the longer-term potential. The plan presented today sets the stage for two major processing centers in our world class Mantoverde-Santo Domingo district.”

SANTO DOMINGO PROJECT DESIGN

The updated Santo Domingo 2024 feasibility study was prepared by Ausenco Chile Limitada, part of Ausenco, a multinational engineering, procurement, construction management, and operations service provider with broad international experience in the design and construction of concentrator projects of this scale. Ausenco was specifically responsible for the construction of Capstone’s nearby Mantoverde Development Project, which was completed under a lump-sum turn-key engineering, procurement, and construction (“EPC”) contract.

The Santo Domingo project includes development of two open pit mines using conventional drilling, blasting, and loading with electric and hydraulic shovels. The project includes a copper-iron concentrator designed to process a maximum of 72,000 tonnes per day using Autogenous Grinding (“AG”) milling, with conventional rougher cell flotation, regrinding and classification, with Jameson Cells used in the cleaner, cleaner scalper, cleaner scavenger, and re-cleaner stages. Magnetite iron will be recovered from the copper rougher tailings using Low Intensity Magnetic Separation. The planned infrastructure includes a tailings storage facility (“TSF”); an iron magnetite concentrate pipeline and a third party operated desalination plant and desalinated water supply pipeline; a port-located magnetite iron concentrate filter plant and stockpile; a port-located copper concentrate storage building; ship loading facilities; a high voltage transmission line; and on-site and off-site infrastructure and support facilities.

The Project is located 35 kilometres northeast of our Mantoverde copper-gold mine, 50 kilometres southwest of Codelco's El Salvador copper mine, and 130 kilometres north-northeast of Copiapó, near the town of Diego de Almagro, in Region III, Chile. The elevation at the site is approximately 1,000 metres above sea level (“masl”) with relatively gentle topographic relief. Access to the property is one kilometre off the paved highway C-17 from Diego de Almagro to Copiapó. The magnetite filter plant and stockpile, the copper storage building, the desalination plant and other port infrastructure will be located in Punta Roca Blanca, 43 kilometres north of Caldera. The name of the proposed port development is Puerto Santo Domingo.

For the first seven years of full operation, Santo Domingo will have an annual average copper production of approximately 106,400 tonnes. The LOM average production is 68,100 tonnes of copper per year over a period of approximately 19 years. The total LOM copper production is estimated at approximately 1.3 million tonnes.

For the first seven years of operation, the annual average iron concentrate production is estimated to be 3.7 million dmt. Over the LOM, the iron concentrate production is estimated at an annual average of 3.6 million dmt, with a total estimated production of approximately 68.4 million dmt.

MINERAL RESERVE ESTIMATE

The updated Mineral Reserve estimate as at March 31, 2024, was prepared by Clay Craig, P.Eng., Capstone Copper. Based on the Mineral Resource estimate, a standard methodology for pit limit analysis, mining sequence, and cut-off grade optimization, including application of mining dilution, process recovery, economic criteria and physical mine and plant operating constraints, has been followed to design the open pit mines and determine the Mineral Reserve estimate for each deposit. The Mineral Reserves are summarized in the following table.

Mineral Reserve Estimate Notes:

1. Mineral Reserves are reported as constrained within Measured and Indicated Resources and pit designs optimized using the following economic and technical parameters: metal prices of US$3.75/lb Cu, US$1,400/oz Au and Fe prices ranging from US$69/dmt to US$114.51/dmt based on the Fe grade in concentrate (net of Fe concentrate transport costs); average recovery to concentrate is 90.1% for Cu and 56.3% for Au, with magnetite concentrate recovery varying on a block-by-block basis; copper concentrate treatment charges of US$80/dmt, U$0.08/lb of copper refining charges, US$5.0/oz of gold refining charges, US$40/wmt and US$25.75/dmt for shipping copper and iron concentrates respectively; waste and ore mining cost of $1.55/t and process and G&A+SUSEX of US$9.77/t processed; average pit slope angles that range from 36.3° to 47.9°; a 2% royalty rate assumption and an assumption of 100% mining recovery.
2. Rounding as required by reporting standards may result in apparent summation differences between tonnes, grade and contained metal content.
3. Tonnage measurements are in metric units. Copper and iron grades are reported as percentages, gold as grams per tonne. Contained gold ounces are reported as troy ounces, contained copper as million pounds and contained iron as metric million tonnes.

MINERAL RESOURCE ESTIMATE

Following is the current Mineral Resource Estimate as at March 31, 2024.

Mineral Resource Estimate Notes:

1. Mineral Resources in this document are reported inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
2. The average Iron grades for the Project (Total Indicated, Total Measured plus Indicated, and Total Inferred Resources) cannot be calculated because Estrellita does not contain iron resources.
3. Notes specific to the Mineral Resources for the Santo Domingo and Iris Norte deposits: a. Mineral Resources for SD include Iris. b. Mineral Resources are reported using a net smelter return (NSR) cut-off value of US$9.85/t. NSR is calculated using average long-term prices of US$4.10/lb Cu, US$1,600/oz Au, and Fe prices that depend on the expected grade of the Fe concentrate (US$94.75/dmt or $129.77/dmt or $140.26/dmt Fe concentrate). c. Mineral Resources are constrained by preliminary pit shells derived using a Lerchs–Grossmann algorithm and the following assumptions: pit slopes 36.3°- 47.9°; mining cost is calculated using a function that depends on where the material comes from (Santo Domingo or Iris Norte) and its destination (dumps, plant or stock); processing cost based on Fe concentrate routing code (including G&A costs); processing recovery based in the recovery equations for copper, gold, and iron as detailed above.
4. Notes specific to the Mineral Resources for the Estrellita deposit: a. Mineral Resources are reported using an NSR cut-off value of US$9.63/t. NSR is calculated using average long-term prices of US$4.10/lb Cu and US$1,600/oz Au. b. Only copper, and gold were considered in the NSR calculation; iron was excluded. c. Mineral Resources are constrained by preliminary pit shells generated using a Lerchs–Grossmann algorithm and the following assumptions: pit slopes 43º; mining cost of US$1.55/t, processing cost of US$9.46/t (including G&A cost); processing recovery are calculated based in the recovery curves for copper and gold.
5. Rounding as required by reporting standards may result in apparent summation differences.
6. Tonnage measurements are in metric units. Copper and iron are reported as percentages (%) and gold as grams per tonne (g/t).

For this update, Capstone undertook significant revisions and improvements to the geological models (lithology and oxidation models), the domaining strategy and the estimation scheme for both deposits. Two block models, one for Santo Domingo – Iris Norte and one for Estrellita were created incorporating the new geological modelling and an updated drill hole database that included the more recent drillholes from the Project. All grade interpolation was performed using ordinary kriging and an NSR was calculated using updated recovery curves for Cu, Au and Fe, and updated metal prices and costs. Whittle shells were used to constrain the final Mineral Resource estimates.

When comparing only the 2024 Mineral Resources for Santo Domingo and Iris Norte compared with the 2020 Feasibility Study, the update has resulted in higher Cu and Au grades, slightly lower Fe grades, and a slight increase in an additional 5% to 15% metal in Measured and Indicated and approximately two to four times more metal in Inferred Resources.

Readers are advised that Mineral Resources are not Mineral Reserves and 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 with Measured and Indicated 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.

MINE PRODUCTION SCHEDULE

The cash flow model is supported by a mine plan developed to an annual level of detail, which is available in Exhibit 1 at the end of this release. Approximately 45 million tonnes of material would be pre-stripped prior to start-up of operations and used in the construction of the TSF starter dam. The overall strip ratio for the LOM is 2.5:1.

PROCESS DESCRIPTION

The Santo Domingo process broadly consists of the following stages: crushing, grinding, copper flotation, magnetite recovery, copper dewatering and load-out, magnetite pumping and dewatering, tailings dewatering and storage.

The primary crushing plant will process run of mine (“ROM”) ore feed in a gyratory crusher. A belt feeder transfers the ore from crusher area to the stockpile feed conveyor, and ultimately discharges fresh ore over a covered conical coarse ore stockpile. The stockpile allows ore reclaim using four apron feeders located within the reclaim tunnels (two trains of two feeders), which feed two parallel grinding circuits via dedicated conveyors.

Each grinding circuit consists of one 18 MW autogenous grinding mill (“AG mill”), one pebble AG mill discharge screen, two pebble crushers (duty & standby), one cyclone cluster and one ball mill. The AG mill product slurry discharges over a horizontal single deck vibrating screen for pebble washing and transferring of pebbles to pebble conveyors and then to pebble crushing. Crushed pebbles report to the AG mill feed conveyor.

There is the option of bypassing the pebble crushers and recycling uncrushed material to the AG mill using the same belt conveyor system, when required. Also, a belt plow mechanism is available on the conveyors for purging pebbles to grade to aid grind-out of mills when required.

The AG mill screen undersize feeds the 9 MW variable speed ball mill and discharges into the grinding cyclone cluster feed box, where it is mixed with the ball mill product and is pumped to a cluster of 33” classification cyclones. Cyclone underflow reports by gravity to the ball mill and cyclone overflow feeds the downstream copper flotation circuit.

Copper flotation consists of conventional rougher cell flotation, regrinding and classification, with Jameson Cells used in the cleaner scalper, cleaner scavenger, and re-cleaner stages. The rougher flotation stage recovers both copper minerals and pyrite minerals. The cleaner circuit selectively recovers copper sulphides and pyrite preferentially reports to the cleaner scavenger tail stream. There is allowance in the design for future installation of a pyrite recovery circuit to recover pyrite that contains cobalt. Final copper concentrate is pumped to downstream copper thickening and dewatering prior to stockpiling and load-out.

The iron concentrate plant is designed to produce two simultaneous products, determined by the nature of the magnetite mineral: a) a higher iron grade product (“high grade concentrate”), and; b) a lower iron grade (“low grade concentrate”).

A detailed Mine Production Summary and Plant Feed Production Schedule showing tonnes processed, grades and recoveries is available in Exhibit 1 at the end of this release.

The tailings storage system will consist of a tailings storage facility (“TSF”) located approximately 2 kilometres southeast of the proposed process plant. The TSF is designed to store approximately 361 million tonnes of high density thickened tailings, which is sufficient capacity for the approximately 19 years of the mine life. Storage of both desalinated and process water is proposed in lined ponds near the plant site. Water make-up is proposed to be desalinated water.

OFFSITE INFRASTRUCTURE AND SERVICES

The 2024 FS includes 100% of the capital requirements for a greenfield port in the Punta Roca Blanca area (“Puerto Santo Domingo”) on the coast 43 kilometres north of Caldera in the Atacama Region (Region III). The port facility is designed to accommodate the maximum throughput requirements of 5.4 million tpa of magnetite concentrate and 0.72 million tpa of copper concentrate, considering the Santo Domingo Project requirements and the future Mantoverde operation requirements.

The planned route for transporting cargo, staff and equipment to the Santo Domingo mine-plant site is from the south of the mine site by Route C-17 and from the north by Route C-13. Capstone has commenced & partially completed construction of approximately 18.5 km of the C-17 bypass road, to reroute this public highway around the mine-plant project site. The closest commercial airport is the Desierto de Atacama Airport, 113 km south from Chañaral, which has regular scheduled flights to Santiago. The closest airport to the Santo Domingo site is the El Salvador Airport, a private airport, 44 km from the mine-plant site.

WATER AND CONCENTRATE TRANSPORT

The process water required by the Santo Domingo operation will be produced by a desalination plant located at the port. Capstone has held detailed discussions with water supply companies to confirm interest in supplying desalinated water to the operation, from a facility at the port or from another location. The current plan is that a build–own–operate–transfer (BOOT) contractor will construct and operate the sea water intake, reverse osmosis desalination plant and brine return system at the port and the desalinated water pipeline as part of the BOOT contract. Alternatives under consideration are the purchase of desalinated water from an existing plant, from a plant that is planned to be built in the Atacama Region for multiuser supply, or, as part of a district integration opportunity, from a potential expansion to the desalination plant supporting Capstone’s nearby Mantoverde operation.
Contacts

Jerrold Annett, SVP, Strategy & Capital Markets
647-273-7351
[email protected]

Daniel Sampieri, Director, Investor Relations & Strategic Analysis
437-788-1767
[email protected]
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