Cozamin is a copper-silver underground mine with a surface milling facility, located 3.6 km north-northwest of Zacatecas City in the mineral-rich state of Zacatecas, Mexico.

In 2006, Capstone acquired Cozamin mine for ~$3.5 million and invested under $30 million to bring the mine into production, then two years later, invested an additional ~$20 million to expand the operation. Since then, Cozamin has generated free cash flow at all points of the copper cycle and has delivered over $450 million in cumulative free cash flow (up to December 31, 2019). In 2020, a capital investment of $5 million to debottleneck the underground operation by building a one-way ramp, will unlock 50% more metal output to over 50 million pounds copper and 1.5 million ounces of silver per year by early 2021. The project is currently on schedule for completion in December 2020 and on budget.

Updated Reserve Estimate (Apr 30/20)

Proven & Probable Reserve of 10.2Mt at 1.79% Cu

108 km’s drilled within a budget of US$10 million since the 2018 Technical Report

134% increase to contained copper metal

To 1.82 million pounds of contained copper metal at 1.79% Cu

102% increase to contained silver metal

To 13.53 million ounces of silver at 36 g/t Ag

Capstone’s Exploration team has delivered NAV creation at Cozamin with exploration excellence. Twice the mine was considered a sunset operation and subsequent exploration success resulted in significant mine life extensions with high grades. A 200-hole drill program 2019/2020 has shown the best is yet to come for Cozamin. The Exploration team drilled over 108,000 meters within a US$10 million budget aiming to double the mine life.

In June 2020, an updated Mineral Resource estimate was released, increasing total Measured and Indicated tonnes by 66%, with an 83% increase to contained copper metal to 949 million pounds and a 71% increase to contained silver metal to 39 million ounces of silver. 

In September 2020, an updated Mineral Reserve was released, increasing Proven and Probable Mineral Reserves by 97%, relative to December 31, 2019, to 10.2 million tonnes grading 1.79% copper.

Location

Mexico Cozamin Location

Geology and Mining

Geological setting Epithermal and mesothermal vein deposit hosted in intercalated carbonaceous meta-sedimentary rocks and andesitic volcanic rocks ranging in age from Triassic to Cretaceous, and Tertiary rhyolite intrusive rocks and flows.
Economic Mineralization Chalcopyrite, Sphalerite, Galena, Argentite
Mining method Underground longhole stoping
Primary product mined Copper
By-products mined Silver, zinc, lead

Mineral Reserves & Resources

Cozamin Mine Estimated Mineral Reserves as at April 30, 2020

Classification Tonnes
(kt)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Pb
(%)
Copper Metal
(kt)
Silver Metal
(koz)
Zinc Metal
(kt)
Lead Metal
(kt)
Proven 0 0.00 0 0.00 0.00 0 0 0 0
Probable 10,178 1.79 41 0.36 0.05 182 13,527 36 5
Proven + Probable 10,178 1.79 41 0.36 0.05 182 13,527 36 5

NOTE: Tucker Jensen, P.Eng., Superintendent Mine Operations at Capstone Mining Corp., is the Qualified Person for this Cozamin Mineral Reserve update. Disclosure of the Cozamin Mineral Reserves as of April 30, 2020 was completed using fully diluted mineable stope shapes generated by the Maptek Vulcan Mine Stope Optimizer software and estimated using the 2020 MNFWZ resource block model created by Garth Kirkham, P.Geo., FGC and the 2017 MNV resource block model created by J. Vincent, P.Geo., formerly of Capstone Mining Corp. Mineral Reserves are reported at a US$52.29/t net smelter return (“NSR”) cut-off using the NSR20CuRSV formula: ($50.762*%Cu + $0.412*Ag ppm)*(1-NSRRoyalty%) for copper zones based on metal price assumptions (in US$) of Cu = $2.75/lb and Ag = $17.00/oz, and metal recoveries of 96% Cu, 86% Ag and the NSR20ZnRSV formula: ($49.756*%Cu + $0.381*Ag ppm + $8.035*%Pb + $11.820*%Zn)*(1-NSRRoyalty%) for zinc zones based on metal price assumptions (in US$) of Cu = $2.75/lb, Ag = $17.00/oz, Pb = $0.90/lb, Zn = $1.00/lb and metal recoveries of 94% Cu, 78% Ag, 47% Pb and 67% Zn. Mineral reserve calculations consider mining by long-hole stoping and mineral processing by flotation. Tonnage and grade estimates include dilution and mining losses and do not include unmined pillars as described in Table 4. The NSR royalty rate applied varies between 1% and 3% depending on the mining concession, and royalties are treated as costs in mineral reserve estimation. An exchange rate of MX$20 per US$1 is assumed. All metals are reported as contained. Figures may not sum exactly due to rounding.

Cozamin Mine Estimated Mineral Resources as at April 30, 2020

Classification Tonnes
(kt)
Copper
(%)
Silver
(g/t)
Zinc
(%)
Pb
(%)
Copper Metal
(kt)
Silver Metal
(koz)
Zinc Metal
(kt)
Lead Metal
(kt)
Measured (M) 409 1.23 53 1.23 0.40 5 699 5 2
Indicated (I) 27,050 1.57 44 1.14 0.31 425 38,509 309 85
Total M + I 27,459 1.57 44 1.14 0.32 430 39,209 314 87
Inferred 16,558 0.64 36 2.26 0.61 106 18,983 375 101

NOTE: Mineral Resources are classified according to CIM (2014) definitions, estimated following CIM (2019) guidelines and have an effective date of April 30, 2020. Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The independent Qualified Person for the estimates is Mr. Garth D. Kirkham, P. Geo., FGC., of Kirkham Geosystems Ltd. Mineral Resources are reported using NSR20RES formula: (Cu*$60.535 + Ag*$0.472 + Zn*14.865 + Pb*$9.147)*(1-Royalty%) based on metal price assumptions (in US$) of Cu = $3.25/lb, Ag = $20.00/oz, Zn = $1.20/lb, Pb = $1.00/lb, metal recoveries of 95% Cu, 82% Ag, 70% Zn, 48% Pb, confidential current smelter contract terms, transportation costs and royalty agreements from 1 to 3%, as applicable, are incorporated. An exchange rate of MX$20 per US$1 is assumed. Totals may not sum exactly due to rounding. The NSR cut-off of US$50/tonne is based on historical mining and milling costs plus general and administrative costs. The Mineral Resource Estimate encompasses both the MNFWZ and the MNV. Drilling campaigns from 2018 have focused on the MNFWZ and no drilling has been performed on the MNV since 2017. The Mineral Resource considers underground mining by longhole stoping and mineral processing by flotation. No dilution is incorporated in the Mineral Resource. All metals are reported as contained. Mineral Resource estimates do not account for 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. However, it is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Resources.