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Capstone Mining Receives NI 43-101 Compliant Resource Estimate Results for Kutcho Project

Capstone Mining Corp. (CS: TSX) today announced the results of a National Instrument 43-101 compliant mineral resource estimate for the Esso deposit at its high grade copper-zinc-gold-silver Kutcho Project in British Columbia, in which all mineral resources in the Esso deposit were converted to the indicated category.

The net result of the successful 2010 infill drill program was significantly improved continuity of the mineralization in the high grade Esso deposit, resulting in all of the mineralization being moved into the indicated mineral resource category, including mineralization previously classified in the inferred category. Using a 1.5% copper cut-off for illustrative purposes, grades for zinc and silver increased by approximately 50% versus prior estimates and increased gold by more than 15% even though this was just an infill-focussed drill program. The actual cut-off grade applicable to Esso will be established as part of the pre-feasibility study ("PFS") currently nearing completion and will be based upon an NSR formula including by-product credits and accounting for metallurgical recovery rates.

"The significant increase in the grade and confidence level of the mineral resources at the Esso deposit should enhance the overall economics of the Kutcho Project," said Stephen Quin, Capstone's President. "Combining very high grade feed from Esso with high grade tonnage from the Main deposit in the early years of operation should boost production and reduce costs per pound in the pre-feasibility study that is currently nearing completion."

Change in Mineral Resource Estimates 2009-2010

The 2010 updated mineral resource estimate for the Esso deposit resulted in an overall gain in tonnage, grade and contained metal, as well as a substantial positive upgrade in the classification of the mineral resource over that reported in February 2009, prior to the commencement of the 2010 infill drill program.

Mineral resources that are not mineral reserves 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. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.

Timing of Prefeasibility Study

Capstone also reports that the PFS for the Kutcho Project will be completed in January 2011. All major components of the PFS are nearing completion, with final metallurgical testing on the Esso deposit and annual composites of Main and Esso mineralization currently underway.

Resource Estimation Methodology & Responsibility

Mr. Garth Kirkham, P.Geo. of Kirkham Geosystems Ltd. ("KGL") estimated the mineral resources at Esso in November 2010 and on February 9, 2009.  

The Esso mineral resource estimation was completed in MineSight® using a 3 dimensional block model consisted of 5 x 5 x 5 m block sizes using 1.5m composites and the mineralization was coded to the assay database. A wireframe was created and geostatistical analysis completed on both the assay data and the composite data for each of the metals estimated. The resulting interpretation is a moderately dipping mineralized zone with good continuity. The block grades were interpolated using independently derived ordinary kriged parameters. Resource classification methodology takes into account both continuity of the mineralization and sample density of the exploration drilling. In summary, the parameters used are as follows:

  • Composite Length is 1.5 meters.
  • Block size is 5m X 5m X 5m.
  • Estimation strategy was Ordinary Kriging.
  • Ellipse direction is 0 degrees azimuth and -50 degrees dip to follow bedding.
  • Three passes were used; 100m X 100m X 30m; 50m X 50m X 20m; 25m X 25m X 15m.
  • Minimum# of composites was 4.
  • Maximum# of composites was 16.
  • Maximum# of composites per drill hole was 3.
  • Grade cutting was applied to outlier data where grades exceeded the following thresholds:
    • 11% Cu
    • 27% Zn
    • 2.2 gpt Au
    • 300 gpt Ag

Classification of resources were determined to be in the Indicated category.

The prior mineral resources for the Kutcho Project were also estimated by Garth Kirkham, P.Geo., an independent Qualified Person as defined by National Instrument 43-101 ("NI 43-101") and were reported in a news release dated February 9, 2009 but are summarized herein for convenience. Readers should review the February 9, 2009 news release for additional information, including the mineral resource estimates at different cut-off grades, the parameters used in the estimate and the required NI 43-101 disclosure.

Quality Assurance

The technical information in this news release has been prepared in accordance with Canadian regulatory requirements set out in National Instrument 43-101 and reviewed by Stephen P. Quin, P. Geo., President of Capstone Mining Corp. The exploration activities at the Kutcho project site are carried out under the supervision of Brad Mercer, P. Geo., VP Exploration of Capstone, who has reviewed and approves the content of this news release.

Source: Capstone Mining Corp.

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