After the acquisition of the Kutcho Project, Capstone reassessed the development plans and focused on the development of a smaller scale, lower capital cost operation, focussing on high grade production.

In June of 2008, Capstone completed a preliminary economic assessment which evaluated the potential for a smaller scale open pit operation. Subsequent to this study, Capstone conducted a detailed resource definition drill program within the Main deposit, as well as metallurgical and environmental baseline studies. The results of this work were incorporated into a new preliminary economic assessment published in September 2009, revised in July 2010 and further refined in a Pre-Feasibility Study (PFS) filed in March 2011.

The Kutcho site is located at approximately 1500 metres above sea level and has an average annual temperature of -1° C. The site is accessible via a 900 metre long gravel airstrip located 10 kilometres from the deposit and a 100 kilometre long seasonal road from Dease Lake that is only suitable for off-highway vehicles during the summer months. The Pre-Feasibility Study anticipates that access will be via an all-weather road to be constructed, connecting with Highway 37 to the port of Stewart where it will be shipped to world markets.

Following the PFS in 2011, Capstone completed basic engineering work and prepared the Kutcho Project Environmental Assessment Certificate (EAC) Application, which has since been withdrawn. In June 2017, Capstone entered into an agreement to sell the Kutcho Project to Desert Star Resources Ltd. (TSX-V:DSR) and is expected to close in the third quarter of 2017.

Back In and Off Take Rights

Upon receipt of a feasibility study, Royal Gold, Inc (interest formerly owned by Barrick Gold Inc.) and AMI Resources Inc., or Royal Gold alone, have a 120 day period to provide Kutcho Copper written notice of its intention to earn a 50% back-in interest on the Kutcho property subject to aggregate payments equal to 300% of development expenditures on the Kutcho property. This applies only to that portion of the property on which Royal Gold previously held and interest. This would give Royal Gold and AMI, or Royal Gold alone, a 20% interest in the Main deposit and a 50% interest in the Esso deposit, based on the property definition per the acquisition agreements and as interpreted in the September 2007 Pre-Feasibility Study. In addition, Sumitomo Metal Mining Co. Ltd. have right of first refusal on the sale of a portion of the concentrates from the Kutcho property and Sumac, Royal Gold and AMI are entitled to various royalties on the portion of the project they sold to Kutcho Copper.