Cozamin

The Cozamin project is a polymetallic (copper, silver, lead, zinc) mine located 3.8 km north-northwest of Zacatecas City in the mineral-rich state of Zacatecas, Mexico.  The property covers approximately 2,020 hectares in the Zacatecas Mining District and lies at 2,450m above sea level. 

Capstone's completed exploration, development and initial production of 350,000 tpy on time and under budget. Within 12 months of initial production, Capstone expanded production by 120% (750,000 tpy) at a cost of US$13 million - capex funded from cash flow.

Capstone has started the expansion of the Cozamin mine from the current rate of 2,200 tpd or 750,000 tpy to 3,000 tpd or approximately 1 million tpy – 36% increase in production. With the latest expansion we are on track to produce in excess of 30 million pounds of copper, 9 million pounds of zinc, and 5.1 million pounds of lead and 1.3 million ounces of silver in 2008.

The 2009 forecast at full capacity is in excess of 40 million pounds of copper.

Mexico's geopolitically stable environment and membership in NAFTA provide a secure operating environment for the project.  The location of the Cozamin mine is also ideal because of its proximity to Zacatecas City, excellent logistics, roads, power, and water access available at the mine site.  In addition, the local residents of Zacatecas have a strong mining tradition, providing the project with a knowledgeable and skilled source of labour.

Ownership

Capstone has a 100% interest in the Cozamin mine.  A 3% Net Smelter Royalty is paid to Grupo Bacis on all metals produced.

Financial

Capstone has no project finance debt or long-term debt, and has a strong cash position.  Capstone owns 22% of Silverstone Resources Corp.

Exploration

Excellent possibilities exist for finding additional mineralization at Cozamin because the Mala Noche vein has only been partially exploited and not systematically explored to depth.  Capstone's deepest holes in the Mala Noche vein indicated that the copper-silver phase of mineralization extends to greater depths.

The current resources are contained within a 1.5 km strike length of the 5 km long Mala Noche vein that the company controls.

Objectives

• Optimize throughput and recovery.
• Explore along strike and down dip of the reserve/resource base.
• Infill drill to upgrade inferred resources.
• Aggressively looking for potential acquisitions.
  

2007 Proven and Probable Reserves

2007 Measured, Indicated and Inferred Resources

*These resources included a non-material update to the resources released October 15, 2007.
** 1 kilogram = 2.2 lbs; 31.103 grams = 1 oz. Troy.

The current resources are contained in 1.5 km of strike while Capstone controls 5 km of strike of the Mala Noche vein system.