Opportunity to Build a Low Cost, Vertically Integrated Cobalt Business in Chile

Santo Domingo is strategically located 50 kilometres southwest of Codelco's El Salvador copper mine and 130 kilometres north-northeast of Copiapó, near the town of Diego de Almagro, in Region III, Chile, in an established mining district with several significant copper and iron mining and smelting operations. The project is 100 kilometres from the Pacific coast, providing access to deep water port facilities. The elevation at the site is approximately 1,000 metres above sea level (“masl”) with relatively gentle topographic relief. Access to the property is one kilometre off the paved highway C-17 from Diego de Almagro to Copiapó.

In July 2015, Capstone received approval of the Environmental Impact Assessment (EIA) for the Santo Domingo project. In 2019, all critical long-lead construction permits were received, including approval of the Closure Plan.

In January 2020, Capstone released positive updates to the Feasibility Study-level Technical Report (published on January 3, 2019) (“Base Case”). Updates includes a higher level of CAPEX/OPEX certainty, additional key permits and the development in Section 24 of a Preliminary Economic Assessment with respect to cobalt production (“2020 PEA Opportunity”).

The Base Case and the 2020 PEA Opportunity includes development of two open pit mines using conventional drilling, blasting, loading with diesel hydraulic shovels, and truck haulage, and a copper-iron concentrator designed to process a maximum 65,000 tpd to a nominal capacity of 60,000 tpd (throughput is reduced in the latter years as the ore becomes slightly harder) using Semi-Autogenous Grinding (“SAG”) and ball milling, with conventional flotation utilizing desalinated water to produce a copper concentrate. Magnetite iron will be recovered from the copper rougher tailings using Low Intensity Magnetic Separation. The planned infrastructure in both the Base Case and 2020 PEA Opportunity include a tailings storage facility (“TSF”); an iron concentrate pipeline and a third party desalinated water supply pipeline; a port-located magnetite iron concentrate filter plant and stockpile; a port-located copper concentrate storage building; a desalination plant; ship loading facilities; and on-site and off-site infrastructure and support facilities.

The magnetite filter plant and stockpile, the copper storage building, the desalination plant and other port infrastructure will be located in Punta Roca Blanca, 41 kilometres north of Caldera. The name of the proposed port development is Puerto Santo Domingo.

For the first five years of full operation, Santo Domingo will have an annual average copper production of approximately 259 million pounds (approximately 117,500 tonnes). The LOM average production is 137 million pounds of copper (approximately 61,000 tonnes) per year over a period of approximately 18 years. The total LOM copper production is estimated at 2.4 billion pounds (approximately 1.1 million tonnes).

For the first five years of full operation, the annual average iron-ore concentrate production is estimated to be 3.3 million dmt. Over the LOM, the iron-ore concentrate production will increase to an annual average of 4.2 million dmt, with a total estimated production of approximately 75.1 million dmt.