history-and-milestones

Kutcho

History

Mineralization was first discovered on the Kutcho property in 1968 by a joint venture exploration company operated by Imperial Oil Ltd. The property has changed hands a number of times with ownership by companies such as Sumac Mines Ltd. (a subsidiary of Sumitomo Metal Mining Co. Ltd.), Homestake Canada Ltd, American Reserve Mining Corporation, Teck Cominco Ltd and Barrick Gold Corp. Western Keltic Mines Ltd. purchased the property from Barrick and Sumitomo in early 2004. Western Keltic carried out diamond drilling within the Main and Esso deposits to confirm historical results and obtain material for metallurgical studies. The Sumac deposit was also drilled in 2005 to test for higher grade zones. In September 2007, Western Keltic completed a Pre-Feasibility Study evaluating the potential development of the Kutcho Creek deposit.

In May 2008, Capstone successfully acquired 100% ownership in Western Keltic and the project is now operated by Kutcho Copper Corp., a wholly-owned subsidiary of Capstone. Prior to the acquisition, Western Keltic had been advancing the project towards completion of a feasibility study by conducting geotechnical and environmental baseline studies, as well as advancing the permitting process for approval of production. Western Keltic had also been actively engaged in discussions with the Talhtan and Kaska First Nations, as well as other local communities, to ensure there was broad based support for the development of a mine at Kutcho Creek, while taking into account the concerns of the First Nations and other stakeholders.

Capstone's first objective was to reassess the development options and, in March of 2008, commenced work on a preliminary assessment aimed at a re-scoped and redesigned project that is focused on a smaller, less capital intensive high grade open pit and/or underground project that could be developed faster than that previously planned. Remodelling and re-estimating mineral resources for all three known VMS deposits was initiated. It immediately highlighted several large gaps in the Main deposit mineral resource that needed to be filled in order to demonstrate continuity of high grade mineralization. In June of 2008, using a newly revamped Main deposit mineral resource based upon drilling by the previous operators as a platform, Capstone completed a Preliminary Economic Assessment (PEA) which demonstrated positive base case economics and outlined several opportunities for significant future enhancements.

Before the recommendations of the PEA study were received, Capstone started revamping the Esso and Sumac deposit mineral resource estimates and embarked upon a 10,000 metre diamond drill program in order to infill the gaps then identified in the Main deposit resource model. This drill program was successful and a new and much more robust NI 43-101 compliant mineral resource for the Main deposit was announced on February 9, 2009. It included 81 new diamond drill holes and is significantly higher grade than all previous models.

Milestones
May/08 Sherwood Copper and Western Keltic Mines, owner of the Kutcho Cu-Zn-Ag-Au deposit, close business combination
Feb/09 High grade resources reported for Kutcho project
Sep/09 Results of Preliminary Economic Assessment ("PEA") reported
Jul/10 Enhanced PEA results reported
Dec/10 Updated mineral resource estimate; all mineral resources converted to indicated category
Feb/11 Results of Pre-feasibility study reported
May/11 Submitted revised Project Description to provincial and federal agencies initiating the informal pre-application phase
Dec/11 Pre-application stage of EA review process re-activated
Mar/16 Withdrawl of EA
Jun/17 Reached agreement to sell the Kutcho Project