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Capstone Mining Announces Significant Increase to Cozamin Resource Estimate

06/05/2018

VANCOUVER, June 5, 2018 /CNW/ - Capstone Mining Corp. ("Capstone" or the "Company") (TSX: CS) today announced the results of an updated National Instrument 43-101 ("NI 43-101") compliant Mineral Resource estimate for the Cozamin Mine in Zacatecas, Mexico (Table 1 below). Compared to the Mineral Resources as at December 31, 2017, this latest estimate converted or added an additional 115 thousand tonnes of copper in the Indicated category in the Mala Noche Footwall Zone ("MNFWZ"), reflecting all drilling for which assays have been received up to March 19, 2018. At a US$42 net smelter return ("NSR") cut-off grade ("COG"), the Cozamin Mine's total Measured and Indicated ("M&I") copper Mineral Resources, including adjustments for mining to March 31, 2018, were 217 thousand tonnes of contained copper (Table 3 below).

"We are extremely pleased with our recent drilling success in the MNFWZ at Cozamin," said Brad Mercer, Senior Vice President of Exploration at Capstone. "This new resource estimate, the culmination of over a year of intensive drilling, nearly triples the ore tonnes and doubles the contained copper in the MNFWZ M&I classification."

"We remain optimistic about the extension of operations at Cozamin well into the future," said Darren Pylot, President and CEO of Capstone. "The increasing copper resource creates the potential for a mine expansion and utilization of surplus mill capacity that is currently being partially filled using ore from the San Rafael zinc zone (Resource estimate in table 4 below).  The additional 115 thousand tonnes of contained copper added to the M&I class in the MNFWZ will be targeted by mine engineering for potential conversion into mineral reserves in 2018, and Inferred resources will be targeted in 2018 and 2019 for a potential classification upgrade to M&I (Table 2 below). All resources in Table 2 will provide the basis for a materials handling study, kicking off in mid-2018, to evaluate potential infrastructure needs to leverage upon our drilling success."

Subsequent to this resource estimate a further 31 holes have been drilled in the MNFWZ and the zone remains open up dip and to the southeast, where we are continuing 40,000 metres of step-out and infill drilling this year on the Inferred class resource (Table 2 below), part of our US$7 million 2018 exploration program. Further drilling is anticipated in 2019.

Table 1 - Estimate of All MNFWZ Mineral Resources by Class and COG as at March 31, 2018

NSR

Tonnes

NSR

Copper

Silver

Zinc

Lead

Copper

Metal

Silver

Metal

Zinc

Metal

Lead

Metal

COG

(kt)

(US$)

(%)

(g/t)

(%)

(%)

(kt)

(koz)

(kt)

(kt)

Indicated Classification

56

8,741

148.05

2.02

45

0.54

0.06

177

12,561

47

6

49

9,112

144.14

1.97

44

0.53

0.07

179

12,769

49

6

42

9,350

141.62

1.93

43

0.54

0.07

180

12,896

50

6

35

9,485

140.15

1.91

43

0.54

0.07

181

12,963

51

6

28

9,594

138.91

1.89

42

0.53

0.07

181

13,008

51

7

Inferred Classification

56

4,883

135.52

1.7

46

1.02

0.43

83

7,156

50

21

49

5,127

131.54

1.64

45

1.03

0.42

84

7,357

53

22

42

5,354

127.88

1.59

44

1.03

0.41

85

7,584

55

22

35

5,506

125.40

1.56

44

1.03

0.4

86

7,742

57

22

28

5,621

123.47

1.53

44

1.04

0.39

86

7,861

58

22

Mineral resources reported using NSR2018 formula: Cu*61.676+Ag*0.354+Zn*14.521+Pb*11.208. Metal price assumptions (in US$) used to calculate the NSR for all deposits are: Cu = $3.50/lb, Ag = $18.00/oz, Zn = $1.20/lb, and Pb = $1.00/lb. An exchange rate of MX$18.50 per US$1 is assumed. The following metal recoveries are used: 90% Cu, 74% Ag, 79% Zn, 76% Pb. Resources are reported above US$42/t NSR cut-off. Totals may not sum exactly due to rounding.

The current Mineral Reserves at the MNFWZ are primarily located in two sub-domains called Vein 10 and Vein 20 that are actively being mined. These two veins, of the five MNFWZ veins, are best suited to the current mining method and are the target of the upcoming reserve evaluation. The potential of the remaining three veins will be examined in the future by looking at possible changes in mining method and the possibility of introducing ore sorting technology underground.

Table 2 - Targeted MNFWZ Mineral Resource Estimate by Class as at March 31, 2018, at a US$42 NSR COG*

Domain

Tonnes

NSR

Copper

Silver

Zinc

Lead

Copper
Metal

Silver
Metal

Zinc
Metal

Lead
Metal


(kt)

(US$)

(%)

(g/t)

(%)

(%)

(kt)

(koz)

(kt)

(kt)

MNFWZ Resources Targeted for Conversion to Reserve in 2018

Vein 10 Indicated

1,517

123.33

1.68

34

0.67

0.04

25

1,651

10

1

Vein 20 Indicated

5,368

168.79

2.42

52

0.44

0.04

130

8,947

24

2

Vein 10 + Vein 20 Indicated

6,885

158.77

2.26

48

0.49

0.04

155

10,599

34

3

MNFWZ Resources Targeted for Infill Drilling in 2018/2019

Vein 10 Inferred

771

120.49

1.61

34

0.74

0.05

12

848

6

0

Vein 20 Inferred

3,347

138.85

1.90

48

0.57

0.04

64

5,176

19

1

Vein 10 + Vein 20 Inferred

4,119

135.42

1.84

45

0.6

0.05

76

6,024

25

2

Mineral resources reported using NSR2018 formula: Cu*61.676+Ag*0.354+Zn*14.521+Pb*11.208. Metal price assumptions (in US$) used to calculate the NSR for all deposits are: Cu = $3.50/lb, Ag = $18.00/oz, Zn = $1.20/lb, and Pb = $1.00/lb. An exchange rate of MX$18.50 per US$1 is assumed. The following metal recoveries are used: 90% Cu, 74% Ag, 79% Zn, 76% Pb. Resources are reported above US$42/t NSR cut-off. Totals may not sum exactly due to rounding.


Table 3 - Mineral Resource Estimate by Class for all Copper Zones as at March 31, 2018, at a US$42 NSR COG*

Classification

Tonnes

Copper

Silver

Zinc

Lead

Copper
Metal

Silver
Metal

Zinc
Metal

Lead
Metal


(kt)

(%)

(g/t)

(%)

(%)

(kt)

(koz)

(kt)

(kt)

Copper Zone – MNV San Roberto

Measured (M)

409

1.23

53

1.23

0.40

5

696

5

2

Indicated (I)

3,233

0.99

43

1.60

0.38

32

4,478

52

12

Total M + I

3,642

1.02

44

1.56

0.38

37

5,174

57

14

Inferred

4,534

0.63

36

1.49

0.14

29

5,178

68

6

MNFWZ

Measured (M)

-

-

-

-

-

-

-

-

-

Indicated (I)

9,350

1.93

43

0.54

0.07

180

12,896

50

6

Total M + I

9,350

1.93

43

0.54

0.07

180

12,896

50

6

Inferred

5,354

1.59

44

1.03

0.41

85

7,584

55

22

Total - Copper Zones

Measured (M)

409

1.23

53

1.23

0.40

5

696

5

2

Indicated (I)

12,583

1.69

43

0.81

0.15

212

17,374

102

18

Total M + I

12,992

1.67

43

0.83

0.16

217

18,070

107

20

Inferred

9,888

1.15

40

1.24

0.29

114

12,762

123

28

Mineral resources reported using NSR2018 formula: Cu*61.676+Ag*0.354+Zn*14.521+Pb*11.208. Metal price assumptions (in US$) used to calculate the NSR for all deposits are: Cu = $3.50/lb, Ag = $18.00/oz, Zn = $1.20/lb, and Pb = $1.00/lb. An exchange rate of MX$18.50 per US$1 is assumed. The following metal recoveries are used: 90% Cu, 74% Ag, 79% Zn, 76% Pb. Totals may not sum exactly due to rounding.

The Zinc Mineral Resources of the Mala Noche Vein ("MNV"), updated with the NSR formula used for MNFWZ, are reported in Table 4. No additional drilling for zinc resources was performed in 2018.

Table 4 - Mineral Resource Estimate by Class for MNV Zinc Zones as at March 31, 2018, at a US$42 NSR COG*

Classification

Tonnes

Copper

Silver

Zinc

Lead

Copper
Metal

Silver
Metal

Zinc
Metal

Lead
Metal


(kt)

(%)

(g/t)

(%)

(%)

(kt)

(koz)

(kt)

(kt)

Total – MNV Zinc Zones (San Rafael and San Roberto Zinc)

Measured (M)

-

-

-

-

-

-

-

-

-

Indicated (I)

2,676

0.26

42

3.56

0.55

7

3,608

95

15

Total M + I

2,676

0.26

42

3.56

0.55

7

3,608

95

15

Inferred

4,681

0.20

32

3.06

0.33

9

4,817

143

15

Mineral resources reported using NSR2018 formula: Cu*61.676+Ag*0.354+Zn*14.521+Pb*11.208. Metal price assumptions (in US$) used to calculate the NSR for all deposits are: Cu = $3.50/lb, Ag = $18.00/oz, Zn = $1.20/lb, and Pb = $1.00/lb. An exchange rate of MX$18.50 per US$1 is assumed. The following metal recoveries are used: 90% Cu, 74% Ag, 79% Zn, 76% Pb. Totals may not sum exactly due to rounding.

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 considered too speculative geologically to apply economic considerations for categorization as mineral reserves. Even though mining has been undertaken in areas of the MNFWZ with Proven and Probable class mineral reserves there is no certainty that Inferred mineral resources will be converted to Measured and Indicated categories through further drilling, or into Mineral Reserves, once economic considerations are applied.

Mineral Resource Estimate Methodology
The mineral resource estimate reported herein was prepared by Garth Kirkham of Kirkham Geosystems Ltd. of Burnaby, BC, Canada, an Independent Qualified Person under Canadian Securities Administrators' National Instrument 43-101 ("NI 43-101"). The mineral resources presented herein have been estimated in conformity with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with NI 43-101. Mineral resources are not mineral reserves and do not have demonstrated economic viability. The estimate was completed using MineSightTM software using a three-dimensional block model (12 metre by 5 metre by 10 metre block size with 4 metre by 0.5 metre by 5 metre sub-blocks). The MNFWZ model is comprised of seven interpreted three-dimensional wireframes which were the primary estimation domain and hard boundaries were used to constrain the interpolation of grades into the block model. Interpolation parameters have been derived based on geostatistical analysis conducted on 1 metre composited drill hole. Block grades have been estimated using Ordinary Kriging (OK) methodology and the mineral resources have been classified based on proximity to sample data and the continuity of mineralization in accordance with CIM Definition Standards and Estimation Best Practices. The MNFWZ resource has been estimated using a total of 833 diamond drill holes with 2382 sample composites.

About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian base metals mining company, focused on copper. We are committed to the responsible development of our assets and the environments in which we operate. Our three producing mines are the Pinto Valley copper mine located in Arizona, US, the Cozamin polymetallic mine in Zacatecas State, Mexico and the Minto copper mine in Yukon, Canada. In addition, Capstone has the large scale 70% owned copper-iron Santo Domingo development project in Region III, Chile, in partnership with Korea Resources Corporation, 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. Our headquarters are in Vancouver, Canada and we are listed on the Toronto Stock Exchange (TSX). Further information is available at www.capstonemining.com.

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 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI 43-101") and supervised and reviewed by Brad Mercer, P. Geol., Capstone's Senior Vice President, Exploration, a "Qualified Person" as defined in National Instrument 43-101 and the person who oversees exploration activities on the Cozamin Mine property. In addition, Gregg Bush, Capstone's Senior Vice President and Chief Operating Officer, reviewed and approved this news release.

Analyses for copper, zinc, lead, and silver were completed by ALS Minerals laboratory using the following method. The entire sample is crushed to a minimum of 70% passing a 2mm screen. A 250g subsample of the crushed material is then pulverized to 85% passing 75 micron. Copper, zinc, lead and silver are determined by ICP analysis after 4 acid digestion of a 0.25g subsample of the pulverized material. Cozamin Mine Laboratory analyzed 7.5% of the samples since 2012. The entire sample was crushed to a minimum of 80% passing 9.5mm. A 200g subsample is then pulverized to 100% passing 74 micron. Copper, zinc, lead and silver are determined by ICP analysis after 3 acid digestion of a 0.2g subsample of pulverized material. Blank, standard and duplicate samples are used for quality assurance and quality control at both laboratories.

Cautionary Note Regarding Forward-Looking Information
This document may contain "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 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 and capital expenditures, the success of our mining operations, environmental risks, unanticipated reclamation expenses and title disputes. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. In this document certain forward-looking statements are identified by words including "optimistic", "targeted", "potential" and "possibility". 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, risks related to actual results of current exploration activities, inherent hazards associated with mining operations, 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, use of financial derivative instruments and associated counterparty risks, 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, impact of climatic conditions, aboriginal title claims and rights to consultation and accommodation, land reclamation and mine closure obligations, 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, 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 management's discussion and analysis 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.

Cautionary Note to United States Investors
This news release contains disclosure that has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of US securities laws. Without limiting the foregoing, this news release may refer to technical reports that use the terms "indicated" and "inferred" resources. US investors are cautioned that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under US standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. US investors are cautioned not to assume that all or any part of indicated resources will ever be converted into reserves. US investors should also understand that "inferred resources" have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of "inferred resources" will ever be upgraded to a higher category. Therefore, US investors are also cautioned not to assume that all or any part of inferred resources exist, or that they can be mined legally or economically. Accordingly, information concerning descriptions of mineralization and resources contained in this news release may not be comparable to information made public by US companies subject to the reporting and disclosure requirements of the SEC.

For further information please contact: Cindy Burnett, VP, Investor Relations and Communications, 604-637-8157, cburnett@capstonemining.com