Mining News: Northern Neighbors: Capstone questions Minto economics

Capstone Mining Corp. Feb. 17 reported that its Minto Mine in Yukon Territory produced 18,411 metric tons of copper in concentrates during 2014 at a C1 cash cost of US$2.33 per pound of payable copper. Surface mining at Minto was suspended at the end of the third quarter 2014 due to delays in receipt of a water use license amendment required for pre-stripping at Minto North. Fresh ore from underground mining was supplemented with stockpiled ore to feed the mill during the fourth quarter. As a result of additional information requested by the Yukon Water Board and provided by Minto in mid-February, Capstone does not expect stripping of the Minto North deposit to occur early in the second quarter of 2015, as planned. Capstone said it will continue to work to secure the required license amendment as expeditiously as possible, but will not be making any commitment of capital until an acceptable permit is received. Copper prices are currently at levels where the economics of Minto, without the Minto North deposit, are questionable. The company said it is evaluating all options for optimizing cash flows from Minto in the current market climate. Copper production from all three of Capstone’s operating mines totaled 99,739 metric tons of payable copper at a C1 cash cost of C$1.93 per lb. Capstone posted a record US$199.4 million of operating cash flow for 2014, before changes in working capital. The company, however, posted a loss for the year of US$22.4 million due to non-cash charges of US$55.8 million, including US$36.2 million related to a write down of inventory and capitalized mineral property costs at Minto, US$11 million related to the impairment of available-for-sale securities and US$8.6 million in the carrying value of the Kutcho development project in British Columbia. Capstone ended 2014 with US$106.5 million in working capital, including US$150.1 million in cash and cash equivalents.

- Shane Lasley