Operations

Overview

Exploration forms part of Capstone's strategy to grow our production profile. In addition to the ongoing exploration at our Cozamin and Minto mines aimed at increasing mine life, we have a portfolio of early stage base metals exploration projects that have the potential to add to production over the longer term.

Our exploration focus is in mining friendly jurisdictions, with preference given to areas where a team is in place and the permitting process is well understood. In addition to our own exploration properties, investments have been made in exploration partnerships and joint ventures with exploration-focused companies and we continue to evaluate additional opportunities on an ongoing basis.

Organic Growth

Our continued focus on developing exploration opportunities at our operating mines has yielded great results with the Cozamin Mine mill throughput tripling since start up in 2006, and the mine life extending from three years at start up to nine years currently in reserve, with further exploration opportunities. At Minto Mine, our discovery of ten deposits in six years has allowed us to more than double the mill throughput since start up in 2007 and has extended the mine life to 2022 with further underground exploration opportunities. We aim to continue ongoing exploration programs at both mines to provide organic mineral resource growth.

Chile

The Iron Oxide-Copper-Gold (IOCG) belt stretches over a length of almost 1,200 kilometres from just north of Santiago in the south, to the city of Antofagasta in the north along the coastal cordillera of Chile. The belt is one of the most prospective IOCG provinces in the world and hosts numerous large copper deposits, including Candelaria operated by Freeport-McMoRan (470Mt at 0.95% Cu) and Manto Verde operated by Anglo American (350Mt at 0.75% Cu).

The Chilean IOCG belt has traditionally been under explored and the exploration potential for IOCG deposits remains high. Large parts of the belt are under cover similar to Santo Domingo and, using the knowledge obtained through the Santo Domingo discovery, Capstone is continuing exploration activities. Following the discovery of Santo Domingo in 2005, an additional prospective land package was acquired along the IOCG belt both north and south of Santo Domingo. There are 6 exploration properties owned jointly by Capstone (70%) and KORES (30%).

In addition, Capstone has an option agreement with Sociedad Química y Minera de Chile S.A. (SQM) to earn up to 70% of Project Providencia by spending on exploration and land holding costs. The project is located 50 kilometres east of the city of Taltal in Region II, approximately half way between Capstone's Santo Domingo Project and Anglo American's Mantos Blancos copper mine at a mean elevation of 1,800 metres above sea level with mostly gentle topography and the Pan-American Highway cutting through the centre of the block. The initial option is on 350,000 hectares (3,500 square kilometres), reducing over time.

Other Projects

Capstone has earn-in agreements for several properties located in North America whereby we may earn further interests by funding ongoing exploration activities.