Zacatecas State's geopolitically stable environment and Mexico's membership in NAFTA provides a secure operating environment for the Cozamin Mine. The Cozamin mine site is very accessible and the area has excellent infrastructure with roads, power, and water access available at the mine site and services available in the surrounding communities. In addition, the city provides an environment for the employees of the Cozamin Mine to live and raise their families in an area with excellent educational and medical facilities. Zacatecas has a strong mining tradition, dating back hundreds of years, providing the Cozamin Mine with a community both knowledgeable and skilled in mining.
The underground mining method at Cozamin is either long hole stoping, or cut and fill. Mined ore is brought to surface via either a shaft or two production ramps. The ore is trucked to the crusher and processed through a three stage crushing plant and stored ahead of the grinding circuit, where it is reduced in size and then sent to flotation. The flotation steps involve flotation of lead and copper first, followed by zinc. All products go through multiple stages of upgrading (or cleaning) in the flotation circuit ending with a silver-rich copper concentrate, a silver-rich lead concentrate and a zinc concentrate. The concentrates are trucked daily to the port of Manzanillo to overseas smelters for treatment or sale. The silver at Cozamin has been sold in a streaming transaction to Silver Wheaton at US$4.04 per ounce, until April 2017.
Commercial production commenced in September 2006 and Capstone completed exploration, development and initial production at 350,000 tonnes per year (tpy) on time and under budget with an initial three year mine life in reserves. Production at Cozamin was quickly expanded by 120% in the first 12 months with all capital expenditures funded from cash flow generated by the mine, and a further expansion in 2008 saw production rise to 1 million tpy. Production is primarily from the Mala Noche Main Zone, supplemented by ore from the Mala Noche Footwall Zone, which is higher in grade, but narrower widths than the Main Zone.
The 2017 exploration program includes over 30,000 metres of primarily underground infill drilling aimed at increasing reserves in the Mala Noche Footwall Zone and the San Rafael zinc zone. In 2017, we will evaluate the potential to bring the existing zinc resource into the mine plan. The silver stream expires in April 2017, resulting in full silver revenue returning to Capstone.