(All amounts in US$ unless otherwise specified
and reflect 100% of the project)
Capstone Mining Corp. ("Capstone" or the “Company”) (TSX:CS)
announces it intends to advance the Cobalt Project at Santo Domingo
in Region III, Chile, ("Santo Domingo" or the "Project") to
Feasibility as described in the Santo Domingo Project, Region III,
Chile NI 43-101 Technical Report and Preliminary Economic
Assessment1 (the “Technical Report” or “PEA”). The production of
battery-grade cobalt sulphate at Santo Domingo is expected to
significantly add to the robust copper-iron-gold project and
maximizes the recovery of future facing metals from this rich
resource.
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Figure 1 : Cobalt Demand Growth – All
Applications (2018-2030 in metric tonnes). By 2025, an estimated
184,000 tonnes of cobalt (or 76% of total cobalt demand) is needed
in Li-ion batteries, of which 118,000 tonnes is required for
various EV applications. (Source: Darton Commodities Ltd.
estimates)
Darren Pylot, Capstone President and CEO said, “Capstone has an
incredible opportunity to produce ethically-sourced battery-grade
cobalt sulphate from Santo Domingo’s future copper-iron tailings
stream. The process is a series of conventional steps, with below
zero costs given significant by-product credits.”
“The potential of cobalt production in Chile has been
underappreciated for decades while copper and, recently, lithium
have been the main focus of investment. Although this market is
small, projections for demand growth suggest that it could triple
in size by 2030 mainly due to the development of electromobility.
As the chemical properties of cobalt extends the life of
rechargeable lithium batteries used in electric vehicles, we are
seeing a significant boost to exploration and extraction activity.
Capstone’s plans for a cobalt feasibility study at Santo Domingo
could represent a great step forward and an example of Chile’s
potential to become an important world producer.” said Edgar
Blanco, Chile’s mining ministry undersecretary.
The Santo Domingo Advantage in the Global Cobalt Supply
Landscape2
- Downstream cobalt users are actively seeking ethical supply to
meet future demand needs and Chile is one of the best mining
jurisdictions in the world.
- In 2020, an estimated 71% of the 133,000 tonnes of cobalt
produced globally originated from the Democratic Republic of Congo
(DRC) and the majority of this was shipped to China, the leading
importer of mined cobalt and exporter of refined cobalt.
- Global cobalt sulphate production in 2020 is estimated at
43,000 tonnes of cobalt contained. Of this, greater than 85% was
produced in China and greater than 90% originated from DRC
intermediates.
- By 2025, an estimated 140,000 tonnes of cobalt contained in
cobalt sulphate will be required for lithium-ion (Li-ion)
batteries.
- Cobalt contained in sulphate currently sells at a premium over
the cobalt metal benchmark price3.
- The bulk of global cobalt sulphate production is dependent on
refining third-party feedstock imported from other countries. The
majority of cobalt sulphate producers are currently processing feed
that is priced at around 93-94% of the cobalt metal benchmark
price.
- Santo Domingo’s PEA estimated costs of -$4 per pound (net of
by-products in cobalt operation) positions it to be a unique, fully
integrated producer of battery-grade cobalt sulphate4.
- Santo Domingo will be the only cobalt sulphate project in the
Americas not dependent on third-party DRC feed5.
- Santo Domingo’s cobalt processing capacity could supply enough
battery-grade material for more than 500,000 electric vehicles
(EV’s) annually6.
Mr. Pylot added, “A cobalt operation at Santo Domingo would
unlock Chile’s vast potential for this critical metal and it is
exciting that Capstone is leading this vision. The selection of a
strategic partner due later this year, will accelerate this unique
project to recover a future-facing, green metal from a waste
stream, a plan that I’m set on making a reality.”
Table 1 and Table 2 outline the top 10 cobalt miners and
refiners outside of the DRC and top three cobalt projects to come
online within the next five years.
Table 1: Top 10 Cobalt Miners / Refiners Outside of DRC
Miner/Operator
Mine
Refinery
End Product
2021 Est. Volume (t)
1
Sumitomo Metal Mining
Philippines
Japan
Metal + Chloride
6,000
2
Vale
Canada + New Caledonia
Canada
Metal + Intermediates
4,700
3
Nornickel
Russia
Russia
Metal + Intermediates
4,600
4
Glencore
Various
Norway
Metal
4,400
5
Sherritt / General Nickel (Moa
JV)
Cuba
Canada
Metal
3,300
6
Glencore
Australia
Australia
Metal
3,300
7
MCC
Papua New Guinea
N/A
Intermediates
3,000
8
Cengiz Holding
Turkey
Turkey
Intermediates
2,700
9
Cubaniquel
Cuba
N/A
Concentrates
2,000
10
Ambatovy
Madagascar
Madagascar
Metal
1,900
Source: Darton Commodities Limited (2020-2021 Report)
Table 2: Top Three Cobalt Projects Within Next Five Years
Outside of DRC
Mine/Operator
Mine
Refinery
End Product
Future Volume (t)
1
QMB New Energy JV
Indonesia
Indonesia
Intermediates + Cobalt
Sulphate
5,000
2
Capstone Mining Santo Domingo
Chile
Chile
Cobalt Sulphate
4,700
3
Cleanteq Sunrise
Australia
Australia
Cobalt Sulphate
4,000
NOTE: First Cobalt in Canada is expected to produce up to 4,500
MT of Cobalt by 2023 in sulphate form but will be processing mostly
DRC feed. Source: Darton Commodities Limited (2020-2021
Report).
Cobalt Sulphate Demand Growth
According to Darton’s recently published 2020-2021 Cobalt Market
Review, Nickel Cobalt Manganese (NCM) is to remain the dominant
cathode chemistry in EV batteries and cobalt sulphate is the prime
ingredient for NCM precursor materials. By 2025, an estimated
184,000 tonnes of cobalt (or 76% of total cobalt demand) is needed
in Li-ion batteries, of which 118,000 tonnes is required for
various EV applications. Refer to Figure 1 for Darton’s Cobalt
Demand forecast.
Expert Hire to Lead Cobalt Feasibility Work at Santo
Domingo
Romke Kuyvenhoven joined Capstone in February 2021 and is
leading the cobalt feasibility work and overall metallurgical
strategy for Santo Domingo. She has a M.Sc. in Mining Engineering
from Delft University of Technology in The Netherlands and a Degree
in Geo-Mining-Metallurgy from the Universidad de Chile. Previously,
Romke worked at the Sustainable Minerals Institute in Santiago,
where one of her focus areas was the characterization and
metallurgical assessment of IOCG ores in Chile’s Atacama Region,
where Santo Domingo is located. She is co-author on several recent
international publications related to cobalt and was also the
technical lead of the First International Cobalt Workshop in
November 2018 in Santiago. As an independent consultant and
formally registered QP, she has been involved in several NI 43-101
based due diligence studies and has acted as geometallurgical
consultant for international financial institutions involved in
these studies of Chilean mineral properties.
Dr. Albert Garcia, Ph.D., PE, Capstone’s Vice President of
Projects commented, “I am very pleased to announce that we have
hired Romke Kuyvenhoven as her experience in IOCG deposits and
cobalt metallurgy is invaluable. Santo Domingo benefits from simple
metallurgy and as it relates to cobalt recovery, means that we can
recover nearly 80% of the cobalt contained in run-of-mine ore to
refined battery-grade cobalt sulphate product that sells for a
premium. Costs will be amongst the lowest in the world at negative
$4 per pound given the by-product credits in the cobalt process in
the form of increased copper recovery, sulphuric acid production
and energy generation.”
Table 3: Santo Domingo Cobalt PEA Recap
Key Metrics
2020 Colbalt Opportunity
PEA
Life of Mine "LOM" (years)
18
Cobalt production period
(years)
16
Initial capital cost (US$
billions)
$0.67
Net Present Value "NPV"
(after-tax, 8% discount) (US$ billions)
$0.63
Internal Rate of Return "IRR"
(after-tax) (%)
27%
Cobalt production LOM (tonnes per
annum)
4,700
Sulphuric Acid (millions tonnes
per annum)
1.4
C1 cash costs7 per pound of
cobalt (net of by-products)
-$4.11
Note: PEA assumptions include $20 per pound cobalt with no
premium attributed to cobalt sulphate, $45 per tonne sulphuric acid
prices ex-Santo Domingo Mine, $3.00 copper, and power credits from
cogeneration process.
Santo Domingo Cobalt Project Timeline & Feasibility
Stage-Gates
The $20 million work program will consist of two phases and
several stage gates as outlined in Figure 2. Following the Phase 1
work program in Q1-2022, Capstone will provide an update to the
market on final met work, final process design and updated cobalt
resources. The feasibility report is expected by Q4 2022 with
construction to start in 2023 or 2024 following permitting. The
integration of the cobalt project with the copper-iron concentrator
has been designed so that, if necessary, pyrite-cobalt concentrate
can be safely stored in a lined, wet pond for two years, allowing
for the cobalt plant to be built later than the mill. Figure 3
illustrates key pre-production milestones and expected life of mine
cobalt production anticipated to commence by 2025 or 2026.
Cobalt Process is a Series of Conventional Metallurgical
Steps
Capstone’s concept for cobalt recovery is based on its bond with
pyrite, which is concentrated by preferential flotation on a
tailings stream. Approximately 840,000 tonnes per year of pyrite
containing 0.6% cobalt and 0.4% copper is expected to be recovered
at this step. The concentrate is fed through a five-stage process
consisting of roasting, leaching, copper precipitation, cobalt
solvent extraction and crystallization to yield battery-grade
cobalt sulfate heptahydrate. Recovery of cobalt from pyrite
concentrate is expected to be approximately 90% at very low cost
due to significant by-products from increased copper recovery,
sulfuric acid production and energy generation. The flowsheets are
simple and incorporate a series of conventional technologies that
are used extensively in the mining industry, as shown in Figure 4
and Figure 5. The Santo Domingo concentrator is expected to
commence construction in late 2021, with first year of operation in
2024.
ABOUT CAPSTONE MINING CORP.
Capstone Mining Corp. is a Canadian base metals mining company,
focused on copper. Our two producing mines are the Pinto Valley
copper mine located in Arizona, US and the Cozamin copper-silver
mine in Zacatecas State, Mexico. In addition, Capstone owns 100% of
Santo Domingo, a large scale, fully-permitted, copper-iron-gold
project in Region III, Chile, as well as a portfolio of exploration
properties. Capstone's strategy is to focus on the optimization of
operations and assets in politically stable, mining friendly
regions, centred in the Americas. We are committed to the
responsible development of our assets and the environments in which
we operate. Our headquarters are in Vancouver, Canada and we are
listed on the Toronto Stock Exchange (TSX). Further information is
available at www.capstonemining.com.
COMPLIANCE WITH NATIONAL INSTRUMENT 43-101
Unless otherwise indicated, Capstone has prepared the scientific
and technical information in this news release based on information
contained in the technical reports and news releases (collectively
the “Disclosure Documents”) available under Capstone Mining Corp.’s
company profile on SEDAR at www.sedar.com. Each Disclosure Document
was prepared by or under the supervision of a qualified person (a
“Qualified Person” or “QP”) as defined in National Instrument
43-101 – Standards of Disclosure for Mineral Projects of the
Canadian Securities Administrators (“NI 43-101”). For readers to
fully understand the information in this news release, they should
read the Technical Reports (available on www.sedar.com) in their
entirety, including all qualifications, assumptions and exclusions
that relate to the information set out in this presentation which
qualifies the Scientific and Technical Information. Readers are
advised that mineral resources that are not mineral reserves do not
have demonstrated economic viability. The Disclosure Documents are
each intended to be read as a whole, and sections should not be
read or relied upon out of context. The Technical Information is
subject to the assumptions and qualifications contained in the
Disclosure Documents. For further details refer to the Company’s NI
43-101 Technical Report Santo Domingo Project, Region III, Chile,
Feasibility Study Update, published March 24, 2020, effective
February 19, 2020. The Scientific and Technical Information in this
news release has been prepared in accordance with NI 43-101 and
reviewed and approved by the following Qualified Persons, as
defined by NI 43-101, who are independent from Capstone (except as
noted below) based on content from their respective portions of the
2020 Technical Report:
Mr. Antonio Luraschi, CMC, Wood Dr. Gregg Bush, P.Eng.
(Non-independent) Mr. David Rennie, P.Eng., RPA Mr. Lyn Jones,
P.Eng., Mplan International Dr. Albert Garcia III, Ph.D., PE.,
Capstone Mining Corp. (Non-independent)
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release, and the documents incorporated by reference
herein, contains “forward-looking information” within the meaning
of Canadian securities legislation and “forward-looking statements”
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 (collectively, “forward-looking
statements”). These forward-looking statements are made as of the
date of this document and Capstone Mining Corp. (“Capstone” or the
“Company”) does not intend, and does not assume any obligation, to
update these forward-looking statements, except as required under
applicable securities legislation.
Forward-looking statements relate to future events or future
performance and reflect our expectations or beliefs regarding
future events. Forward-looking statements include, but are not
limited to,statements with respect to the estimation of Mineral
Resources and Mineral Reserves, the realization of Mineral Reserve
estimates, the timing and amount of estimated future production,
costs of production, the timing and possible outcome of legal
proceedings and regulatory actions, and capital expenditures, the
success of our mining operations, environmental risks,
unanticipated reclamation expenses and title disputes, Capstone’s
ability to satisfy the conditions of closing the Gold Stream
Agreement and complete required corporate matters, Capstone’s
ability to complete the required agreements contemplated in the
Framework Agreement with Puerto Ventanas, Capstone and Puerto
Ventanas’ ability to finance the construction of the Port,
Capstone’s ability to finance the Santo Domingo Project, the
successful completion of our strategic process for the Santo
Domingo Project. In certain cases, forward-looking statements can
be identified by the use of words such as “aims”, “plans”,
“expects”, “aiming”, “approximately”, “guidance”, “scheduled”,
“target”, “estimates”, “forecasts”, “extends”, “convert”,
“potential”, “intends”, “anticipates”, “believes” or variations of
such words and phrases, or statements that certain actions, events
or results “may”, “could”, “should”, “would”, “will”, “might” or
“will be taken”, “occur” or “be achieved” or the negative of these
terms or comparable terminology. By their very nature,
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, amongst
others, permitting risks related to the Santo Domingo Port and
other permits required for the Santo Domingo Project our ability to
finance the Santo Domingo Project, our ability to find a strategic
partner for the Santo Domingo Project, risk related to compliance
with our covenants under our RCF, risks related to inherent hazards
associated with mining operations and closure of mining projects,
the inherent uncertainty of mineral exploration and estimations of
exploration targets, future prices of copper and other metals,
compliance with financial covenants, surety bonding, our ability to
raise capital, Capstone’s ability to acquire properties for growth,
counterparty risks associated with sales of our metals, foreign
currency exchange rate fluctuations, changes in general economic
conditions, accuracy of mineral resource and mineral reserve
estimates, operating in foreign jurisdictions with risk of changes
to governmental regulation, compliance with governmental
regulations, compliance with environmental laws and regulations,
reliance on approvals, licences and permits from governmental
authorities, changes in governmental tax legislation or
interpretation thereof, impact of climatic conditions on our
operations, aboriginal title claims, land reclamation and mine
closure obligations, uncertainties and risks related to the
potential development of the Santo Domingo Project, increased
constructions costs, increased operating and capital costs,
challenges to title to our mineral properties, maintaining ongoing
social license to operate, dependence on key management personnel,
potential conflicts of interest involving our directors and
officers, corruption and bribery, limitations inherent in our
insurance coverage, labour relations, increasing energy prices,
competition in the mining industry, risks associated with joint
venture partners, our ability to integrate new acquisitions into
our operations, cybersecurity threats, legal proceedings, and other
risks of the mining industry as well as those factors detailed from
time to time in the Company’s interim and annual financial
statements and MD&A of those statements, all of which are filed
and available for review under the Company’s profile on SEDAR at
www.sedar.com. Although the Company has attempted to identify
important factors that could cause our actual results, performance
or achievements to differ materially from those described in our
forward-looking statements, there may be other factors that cause
our results, performance or achievements not to be as anticipated,
estimated or intended. There can be no assurance that our
forward-looking statements will prove to be accurate, as our actual
results, performance or achievements could differ materially from
those anticipated in such statements. Accordingly, readers should
not place undue reliance on our forward-looking statements.
ALTERNATIVE PERFORMANCE MEASURES
"C1 Cash Costs" and "Total Project Operating Cost" are
Alternative Performance Measures. These performance measures are
included because these statistics are key performance measures that
management uses to monitor performance. Management uses these
statistics to assess how the Company is performing to plan and to
assess the overall effectiveness and efficiency of mining
operations. These performance measures do not have a meaning within
International Financial Reporting Standards ("IFRS") and,
therefore, amounts presented may not be comparable to similar data
presented by other mining companies. These performance measures
should not be considered in isolation as a substitute for measures
of performance in accordance with IFRS.
CAUTIONARY NOTE TO UNITED STATES INVESTORS REGARDING
PRESENTATION OF MINERAL RESERVE AND MINERAL RESOURCE
ESTIMATES
As a British Columbia corporation and a “reporting issuer” under
Canadian securities laws, we are required to provide disclosure
regarding our mineral properties in accordance with Canadian
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”). NI 43-101 is a rule developed by the
Canadian Securities Administrators that establishes standards for
all public disclosure an issuer makes of scientific and technical
information concerning mineral projects. In accordance with NI
43-101, we use the terms mineral reserves and resources as they are
defined in accordance with the CIM Definition Standards on mineral
reserves and resources (the “CIM Definition Standards”) adopted by
the Canadian Institute of Mining, Metallurgy and Petroleum. In
particular, the terms “mineral reserve”, “proven mineral reserve”,
“probable mineral reserve”, “mineral resource”, “measured mineral
resource”, “indicated mineral resource” and “inferred mineral
resource” used in this news release and the documents incorporated
by reference herein and therein, are Canadian mining terms defined
in accordance with CIM Definition Standards. These definitions
differ from the definitions in the disclosure requirements
promulgated by the SEC. Accordingly, information contained in this
news release and the documents incorporated by reference herein may
not be comparable to similar information made public by U.S.
companies reporting pursuant to SEC disclosure requirements.
United States investors are also cautioned that while the SEC
will now recognize “measured mineral resources”, “indicated mineral
resources” and “inferred mineral resources”, investors should not
assume that any part or all of the mineralization in these
categories will ever be converted into a higher category of mineral
resources or into mineral reserves. Mineralization described using
these terms has a greater amount of uncertainty as to their
existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, investors are cautioned not
to assume that any “measured mineral resources”, “indicated mineral
resources”, or “inferred mineral resources” that we report are or
will be economically or legally mineable. Further, “inferred
resources” have a greater amount of uncertainty as to their
existence and as to whether they can be mined legally or
economically. Therefore, United States investors are also cautioned
not to assume that all or any part of the inferred resources exist.
In accordance with Canadian rules, estimates of “inferred mineral
resources” cannot form the basis of feasibility or other economic
studies, except in limited circumstances where permitted under NI
43-101.
1 Santo Domingo Project, Region III, Chile NI 43-101 Technical
Report effective date 19 February 2020 (Joyce Maycock, P.Eng.,
Antonio Luraschi, CMC, Marcial Mendoza, CMC, Mario Bianchin,
P.Geo., David Rennie, P.Eng., Carlos Guzman, CMC, Roger Amelunxen,
P.Eng., Michael Gingles, QP MMSA, Tom Kerr, P.Eng., Roy Betinol,
P.Eng., Lyn Jones, P.Eng., Gregg Bush., P.Eng.) 2 Darton
Commodities Limited (2020-2021 Cobalt Market Review) 3 Fastmarkets
MB Standard Grade Cobalt Metals Price on March 22, 2021 was US$
24/lb. 4 By 2025 there could be two other ‘integrated’ cobalt
sulphate producers in operation: (1) Cleanteq (Sunrise project in
Australia) – 4,000 MT capacity and (2) QMB New Energy JV
(Tsingshan, GEM a.o. in Indonesia) 5,000 MT capacity. 5 First
Cobalt in Canada is expected to produce up to 4,500 MT of Co by
2023 in sulphate form but will be processing mostly DRC feed. 6
Assumes by 2025 a 68 KWh average battery pack in BEV with
predominantly NCM811 chemistry. Source Darton Commodities 7 This is
an Alternative Performance Measure. C1 cash cash costs reflect
operating costs related to the cobalt process, net of by-product
credits from sulphuric acid sales of $45 per tonne ex-minesite,
power credits from cogen plant, and copper recovered in
process.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210325005352/en/
Jerrold Annett, SVP, Strategy and Capital Markets 647-273-7351
jannett@capstonemining.com
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