A Leading Intermediate Copper Producer. February 2017

Transcription

1 A Leading Intermediate Copper Producer February

2 Cautionary Note On Forward Looking Information This presentation, and the documents incorporated by reference herein, 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 Company management s expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as plans, expects or does not expect, is expected, outlook, guidance, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or 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 guidance, may, future, expected, intends and estimates. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves, grade or recovery rates; accidents; assumptions related to geotechnical conditions of tailings facilities; dependence on key personnel; labour pool constraints; labour disputes; availability of infrastructure required for the development of mining projects; delays or inability to obtain governmental and regulatory approvals for mining operations or financing or in the completion of development or construction activities; counterparty risks associated with sales of our metals; increased operating and capital costs; operating in foreign jurisdictions with risk of changes to governmental regulation; impact of climatic conditions on our Pinto Valley, Cozamin and Minto operations; compliance with debt covenants, 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 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 forwardlooking 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 forwardlooking 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. Alternative Performance Measures C1 cash cost, cash cost, all-in cost, fully-loaded all-in cost, adjusted net income/loss, operating cash flow before changes in working capital and net debt are Alternative Performance Measures. Alternative performance measures are furnished to provide additional information. These non-gaap performance measures are included in this presentation because these statistics are key performance measures that management uses to monitor performance, to assess how the Company is performing, to plan and to assess the overall effectiveness and efficiency of mining operations. These performance measures may not be comparable to similar data presented by other mining companies. These performance measures should not be considered in isolation as a substitute for measures of performance included in the Company s unaudited condensed interim consolidated financial statements prepared in accordance with IFRS. Currency All amounts are in US$ unless otherwise specified. 2

3 About Capstone Low-risk copper producer focused on the Americas Cash flow generation from a portfolio of three mines Financial flexibility Proven track record of sustainable growth A leading intermediate copper producer 3

4 Short term Diversified Operations in Low Risk Jurisdictions PRODUCTION GROWTH Three operating mines in stable geographies in the Americas 94 k tonnes 1 of copper C1 Cash Cost 1,2 $1.60-$1.70/lb All-in Cost 1,2 $2.15-$2.25/lb Portfolio Growth projects and early-stage base metals exploration properties Long term Pinto Valley Arizona, US 61 k tonnes copper 1 Santo Domingo Region III, Chile CS 70%; KORES 30% Cozamin Zacatecas State, Mexico 14 k tonnes copper 1 Minto Yukon, Canada 19 k tonnes copper 1 Chile SQM - option to earn up to 70% of Project Providencia guidance, see news release dated January 16, Production guidance is ±5%. 2. C1 Cash Cost and All-in Cost are per payable pound of copper produced and are alternative Performance Measures. See Forward-Looking Statements and Cautionary Note for NI information. 4

5 Pinto Valley Mine Open Pit Mine in Arizona, US Mine life remaining (years) Production Guidance 1 (k tonnes) 2017 C1 Cash Cost 1,2,3 Guidance ($/payable lb produced) 2017 All-In-Cost 1,2,3 Guidance ($/payable lb produced) 2016 Production (k tonnes) 2016 C1 cash cost 2,3 ($/payable lb produced) 2016 All-In Cost 2,3 ($/payable lb produced) By-products 61.0 $1.75-$1.85 $2.10-$ $1.61 $1.95 Mo, Ag Q4 and full year 2016 throughput above plan at 56,800 and 56,200 tpd, respectively Focus on optimization, yielding sustainable cost reductions Evaluating potential production increase and regional resource opportunities Mine Cost Breakdown 4 (2016) Salaries Contractors & Consultants Maintenance Diesel, Gas & Lubricants Power Consumables Minesite G&A 17% 12% 6% 6% 19% 28% 12% Pinto Valley continues to demonstrate it s potential 1. ±5%; see news release dated January 16, C1 Cash Cost and All-In Cost are Alternative Performance Measures. See Forward-Looking Statements and Cautionary Note for NI information. 3. C1 cash cost per pound of payable copper produced is net of by-product credits and selling costs. All-In cost per pound of payable copper produced is C1 cash cost plus NSR and production royalties, non-cash deferred revenue, all sustaining capital expenditures (including exploration and cash portion of production-phase capitalized stripping), accretion of reclamation obligations, amortization of reclamation assets and PV3 development. 4. Cost of production in US$ for the 12 months ended December 31, Excluding by-product credits and TCRCs. 5

6 Million Tonnes PV3 Mine Plan 1 PV3 mine plan more than doubles mine life to 23 years, increases throughput by 8% and lowers operating costs without significant capital investment No significant changes moving from PV2 to PV3 Planning further 10% throughput expansion 2020/2021 with timeline aligned to permitting % % % 0.30% Cu Grade % % PV2 Ore PV3 Ore Ore to Stockpile Stockpile to Mill PV2 Waste PV3 Waste Cu Grade to Mill 1. See Technical Report dated February 23,

7 Pinto Valley: Long Life Asset in Stable Mining District Pinto Valley Copper Cities (BHP) Old Dominion (BHP) Miami (BHP) Carlota (KGHM) Miami (FCX) Permitting of brownfield PV3 expansion in mining friendly region Source: Bing maps and boundaries are approximated 7

8 Cozamin Mine Underground Mine in Zacatecas State, Mexico Mine life remaining (years) Production Guidance 1 (k tonnes) 2017 C1 Cash Cost 1,2,3 Guidance ($/payable lb produced) 2017 All-In-Cost 1,2,3 Guidance ($/payable lb produced) 14.0 $1.10-$1.20 $1.90-$ Production (k tonnes) 2016 C1 cash cost 2,3 ($/payable lb produced) 2016 All-In Cost 2,3 ($/payable lb produced) By-products 14.3 $1.48 $1.88 Zn, Pb, Ag Silver stream expires April 2017 reducing cash costs; Evaluating potential to bring zinc resource into mine plan Further exploration targets aimed at extending mine life; Potential zinc/silver production 1. ±5%; see news release dated January 16, C1 Cash Cost and All-In Cost are Alternative Performance Measures. See Forward-Looking Statements and Cautionary Note for NI information. 3. C1 cash cost per pound of payable copper produced is net of by-product credits and selling costs. All-In cost per pound of payable copper produced is C1 cash cost plus NSR and production royalties, non-cash deferred revenue, all sustaining capital expenditures (including exploration and production-phase capitalized stripping), accretion of reclamation obligations and amortization of reclamation assets. 8

9 MASL Cozamin Mine Exploration Potential Zaragoza Shaft San Roberto Shaft 2016 Zinc Drilling San Rafael Shaft 2016/2017 Zinc Drilling San Bernabe Shaft Exploration Potential To West MNV 2016 MNV Drilling MNFWZ 2016/2017 MNFWZ Drilling Exploration Potential To East VIEW IS LOOKING NORTH LEGEND MNV Copper Grades MNFWZ Copper Grades Key Points Current mineral resource/reserve (MNV and MNFWZ) over 2.0 km strike length Mala Noche Vein (MNV) - extends 5.5 km east to west; open in both directions Mala Noche Footwall Zone (MNFWZ) extends 1.0 km; still open to the southeast and up-dip Surface and underground exploration targeting new mineralized zones Along strike, up and down-dip of existing resources & historic mines & in parallel structures and splays off main structures Testing potential to accelerate zinc production 9

10 Minto Mine Open Pit & Underground Mine in Yukon, Canada Mine life remaining (years) Production Guidance 1 (k tonnes) 2017 C1 Cash Cost 1,2,3,4 Guidance ($/payable lb produced) 2017 All-In-Cost 1,2,3,4 Guidance ($/payable lb produced) 2016 Production (k tonnes) 2016 C1 cash cost 2,3,4 ($/payable lb produced) 2016 All-In Cost 2,3,4 ($/payable lb produced) By-products 19.0 $1.60-$1.70 $1.65-$ $1.03 $1.12 Au, Ag Mining of additional open pit (Area 2 Stage 3) until Q3 with underground mining and stockpile processing through 2017 Transitions to underground mine with potential to extend operations into 2018 and beyond; restart is copper price dependent Significant contributor through H1 2017; option on future copper prices 1. ±5%; see news release dated January 16, C1 Cash Cost and All-In Cost are Alternative Performance Measures. See Forward-Looking Statements and Cautionary Note for NI information. 3. C1 cash cost per pound of payable copper produced is net of by-product credits and selling costs. All-In cost per pound of payable copper produced is C1 cash cost plus NSR and production royalties, non-cash deferred revenue, all sustaining capital expenditures (including exploration and production-phase capitalized stripping), accretion of reclamation obligations and amortization of reclamation assets. 4. Operating costs are adjusted to exclude the cost of mining ore and waste which is not related to concentrate produced in the period; these costs are capitalized or inventoried in the financial statements, and then expensed when the associated ore is processed. 10

11 Santo Domingo Provides Future Growth Potential Copper Development Project in Region III, Chile Superior infrastructure Approved EIA and Port Concession Owned 70% Capstone; 30% Korea Resources Corporation (KORES) Evaluating Alternatives Copper-only project Evaluating economics of combining with another copper deposit Exploration potential on Santo Domingo land Chañaral Sierra Norte (Alxar) Radiss (Sumitomo) Manto Verde (Audley) Diego de Almagro Santo Domingo (CS) Inca de Oro (PanAust) Permitable project provides upside optionality 11

12 Santo Domingo July 2014 Feasibility Study Summary Summary of July 2014 FS 1,2 Mine life (years) 18 Average annual production Planned throughput (tpd) LOM Avg: 128M lbs Cu, 4.2 Mt Fe, 16 koz Au First 5 years: 248M lbs Cu, 3.3 Mt Fe, 35 koz Au *Off-take agreements committed for 50% of Cu and Fe LOM LOM Avg: 60,500 First 5 Years: 65,000 Estimated C1 cash cost 3 By-product Basis (Cu) LOM Average ($/payable lb Cu): First 5 years ($/payable lb Cu): Co-product Basis (Cu & Fe) LOM Average ($/payable lb Cu): LOM Average ($/payable t Fe): ($0.06) $0.49 $1.50 $43.00 Development capital Investment return (after tax) By-products $1.7B IRR: 17.9% (27.3% assuming $1B project debt or 60% leverage) 8% discount rate: $797M Payback: 4.2 years Fe, Au Metal Price Assumptions Cu: $2.85/lb Fe: $1.31/dmtu ($85/t 65% Fe) Au: $1,275/oz 1. Source: Santo Domingo Project; Region III, Chile; NI Technical Report on Feasibility Study dated July 8, 2014, 100% basis. 2. The report was compiled by AMEC s Santiago office with an accuracy range of -10% to +15% for capital and operating costs. The estimates presented in the FS are current as of October C1 Cash Cost is an Alternative Performance Measure. C1 Cash Cost on a by-product basis includes gold and iron credits. See Forward-Looking Statements and Cautionary Note for NI information. 12

13 Expected Free Cash Flow to Further Repay Debt 2017 Capital Guidance ($M) (including capitalized stripping in development costs) $5.0 2 At December 31, 2016 ($M) Cash and cash equivalents $130.4 LESS: Long Term Debt & Leases $329.0 Net Debt $198.6 $18.0 $ $ Undrawn Credit Facilities $91.1 Total Liquidity $221.5 Corporate RCF due 2019 with no scheduled amortization payments $17.0 Sustaining Development Total Pinto Valley Cozamin Reduced debt and credit available by $20 million in Q4 and an additional $20 million in Q Price Protection: Collars for 43kt throughout 2017 at $2.28-$2.53/lb; Sold forward 21.5kt at $2.22/lb for settlement periods through Jun 17 Protected near term with significant exposure to copper price in H Includes $30M of capitalized stripping at Pinto Valley. 2. Reflects capitalized brownfield exploration. 3. Does not include $5M budgeted as an expense for greenfield exploration. 13

14 Operating and Growth Strategy 1. Maintain financial and operating flexibility Maintain disciplined, balanced approach Optimize core operations Continue to reduce debt 2. Robust organic growth potential Significant mine life extension at Pinto Valley Option value at Minto and zinc potential at Cozamin Maintain optionality on Santo Domingo project Prudently progressing exploration Criteria for acquisition - low-risk, mining-friendly jurisdictions in the Americas, copper asset in or near production where we can add value Manage at the trough to take advantage of growth opportunities 14

15 Capstone Is Well-Positioned For The Future 2017 and beyond Financial Flexibility Copper price protection through 2017 with significant exposure to copper price in H2 2017; any free cash flow intended to further de-lever balance sheet Pinto Valley Significant mine life extension with focus on optimization, cost efficiencies and expansion opportunities Cozamin Exploration upside and zinc potential Minto Low-cost production continuing through H1 2017; operating through 2017 with potential to extend operations into 2018 and beyond Internal Growth Portfolio Maintaining Santo Domingo and exploration optionality for future organic growth History of opportunistic growth and successful integration Experienced team with demonstrated ability to finance, construct, expand, optimize and integrate Significant leverage to rising copper market 15

16 Appendix 1. Board of Directors 2. Senior Management Team 3. Financial & Operating Results 4. Revolving Credit Facility 5. Protecting Near-Term Downside Risk 6. C1 Cash Costs 7. Mine Cost Breakdown 8. Historical Operating and Financial Performance 9. Historical Operating and Financial Performance cont d 10. History of Pinto Valley Mine 11. Minto Mineral Reserve and Mineral Resource Areas 12. Minto Mineral Resources and Underground Development 13. Providencia Exploration Project 14. Track Record of Growth in Mineral Resource Base 15. Consolidated Mineral Reserve Estimate 16. Consolidated Mineral Resource Estimate 17. Consolidated Mineral Resource Estimate cont d 18. Notes on Consolidated Mineral Reserve and Resource Estimates 19. NI Information 16

17 Board of Directors Name Lawrence Bell George Brack - Non-Executive Chairman Bob Gallagher Jill Gardiner Soon Jin Kwon Kalidas Madhavpeddi Dale Peniuk - Audit Committee Chairman Darren Pylot - President, CEO & Director Richard Zimmer Experience Former Chairman & CEO of BC Hydro, former Chairman UBC Board of Directors and Canada Line (Rapid Transit) Project, served as Deputy Minister of Finance and Secretary to Treasury Board of BC. Former Director of Goldcorp and Matrix Asset Management, current Director of Silver Wheaton. Mining and investment banking, former industry head of Scotia Capital and former President and CEO of Macquarie North America. Current Director of Silver Wheaton, Timmins Gold and Geologix. Former President & CEO of New Gold and Peak Gold and current director of New Gold; previously with Placer Dome and Newmont. Former Managing Director and Regional Head (BC) for RBC Capital Markets. Director of Capital Power, Parkbridge Lifestyle Communities and SilverBirch Hotels. Former Chairman of Turquoise Hill Resources. Director & COO of KORES Canada Corporation. Advisor to China Molybdenum, former Senior VP Business Development of Phelps Dodge. Current Director and Chair of Compensation Committee of NovaGold Resources. Former Partner with KPMG. Director & Audit Committee Chair of Lundin Mining and Argonaut Gold. Founder of Capstone Mining. Former President & CEO of Far West Mining, previously with Teck and Bow Valley Industries. Current Director of Alexco Resources. 17

18 Senior Management Team Name Darren Pylot, President, CEO & Director Experience Years Experience Years Mining Experience Founder of Capstone Mining Jim Slattery, Senior VP & CFO Former CFO of Inmet Mining, Wescast Industries and Canadian General Tower Gregg Bush, Senior VP & COO Former COO of Minefinders, Mine GM & Operations of Barrick/Placer Dome, 12 years in Chile Brad Mercer, Senior VP Exploration Formerly with Sherwood Copper, Miramar Mining, Royal Oak and US Borax Cindy Burnett, VP Investor Relations Formerly with Western Lithium, Skye Resources, Ivanhoe Energy and Nova Chemicals 38 9 Jason Howe, VP Corporate Development Wendy King, VP Legal, Risk & Governance Gillian McCombie, VP Human Resources Co-founder & former CFO of Silverstone Resources. Formerly with PricewaterhouseCoopers LLP Former Sr. VP General Counsel, Government Relations, Chief Compliance Officer and Corporate Secretary with Central 1 Credit Union and Weyerhaeuser Company Formerly with Placer Dome, Hunter-Dickinson and TELUS

19 Financial & Operating Results Q Q Revenue ($M) Copper produced (tonnes) 29,853 25, ,583 92,577 Payable copper produced (tonnes) C1 cash cost per payable pound produced 1 ($/lb) All-in cost per payable pound produced 1 ($/lb) Fully-loaded all-in cost per payable pound produced 1 ($/lb) 28, , , , Copper sold (tonnes) Realized copper price per pound sold ($/lb) * Adjusted realized copper price per pound sold ($/lb) ** C1 cash cost per payable pound sold 1 ($/lb) All-in cost per payable pound sold 1 ($/lb) Fully-loaded all-in cost per payable pound sold 1 ($/lb) 29, , , , Net loss ($M) Net loss attributable to shareholders ($M) Per common share ($) (182.4) (125.4) (0.33) (19.5) (19.3) (0.05) (197.4) (140.0) (0.37) (251.5) (202.7) (0.53) Adjusted net income (loss) 1 ($M) Adjusted net income (loss) 1 attributable to shareholders ($M) Per common share ($) (8.0) (7.8) (0.02) (31.9) (30.4) (0.08) Operating cash flow before changes in working capital 1 ($M) Per common share ($) Cash and cash equivalents ($M) Net debt 1 ($M) These are Alternative Performance Measures. See Forward-Looking Statements and Cautionary Note for NI information. * Q includes a negative provisional pricing adjustment of $0.1 million (2015 negative $4.2 million) related to prior shipments, equivalent to $0.00 per pound (2015 $(0.09) per pound) of copper sold during the quarter. YTD includes a negative provisional pricing adjustment of $12.7 million (2015 negative $25.8 million) related to prior shipments, equivalent to $(0.05) per pound (2015 $(0.13) per pound) of copper sold during the year. ** Q adjusted realized copper price includes the provisional pricing adjustments noted above and realized loss of $8.5 million (2015 gain $10.1 million) equivalent to $(0.13) per pound (2015 gain - $0.21 per pound) related to copper derivative contracts exercised during the quarter. YTD includes a realized gains of $3.3 million (2015 $15.9 million) equivalent to $0.01 per pound ( $0.08 per pound) related to copper derivative contracts exercised during the year. 19

20 Revolving Credit Facility Amount Senior Secured $460M credit facility ($400M committed plus a $60M accordion) Term 4 years from January 2015 Interest Rate Standby Fee Payment Schedule US LIBOR % (adjustable in certain circumstances) 0.62% on undrawn balance (adjustable in certain circumstances) Interest only Covenants 1 EBITDA/Interest Expense 2.5:1 (Dec. 31, 2016 actual was 11:1) Senior Secured Net Debt/EBITDA not more than 3.0:1 (Dec. 31, 2016 actual was 1.15:1) Total Net Debt/EBITDA not more than 4.0:1 (Dec. 31, 2016 actual was 1.15:1) Use Replaced borrowings initially drawn to support PV acquisition. Eliminated scheduled amortization payments attached to previous facility. Provides financial flexibility to meet operating requirements and to address potential market or operational disruptions. Provides financial flexibility 1. EBITDA calculated on a trailing 12 month basis. 20

21 Protecting Near-Term Downside Risk Price Protection Contracts Tonnes Price (US$/lb) Settlement Copper Collars 43,000 $2.28-$ Forward Sales 21,500 $2.22 Through June 17 Illustrative 2017 Impact on Capstone 1 Market Copper Price in 2017 (US$/lb) $2.15 $2.30 $2.45 $2.60 $2.75 Price Received by Capstone (US$/lb) $2.23 $2.28 $2.40 $2.48 $2.53 Premium/(Discount) 4% (1%) (2%) (5%) (8%) Approximately 50% of H production unhedged 1. Based on production guidance announced January 16, Price received by Capstone assumes 21,500 tonnes forward $2.22; 43,000 tonnes subject to copper collars ($ $2.53) and 20,500 tonnes open to market pricing. 21

22 C1 Cash Cost per payable pound produced $2.00 Consolidated Total $2.00 Pinto Valley $1.60 $1.20 $1.23 $0.37 ($0.16) $1.44 $1.60 $1.20 $1.26 $0.41 ($0.06) $1.61 $0.80 $0.80 $0.40 $0.40 $0.00 Operating Costs Treatment & Selling Costs By-Product Credits C1 Cash Costs $/lb $0.00 Operating Costs Treatment & Selling Costs By-Product Credits C1 Cash Costs $/lb $2.00 Cozamin $2.00 Minto $1.60 $1.20 $1.38 $0.37 ($0.27) $1.48 $1.60 $1.20 $0.30 $0.80 $0.80 $1.08 ($0.35) $1.03 $0.40 $0.40 $0.00 Operating Costs Treatment & Selling Costs By-Product Credits C1 Cash Costs $/lb $0.00 Operating Costs Treatment & Selling Costs By-Product Credits C1 Cash Costs $/lb 1. C1 Cash Cost is an Alternative Performance Measure, which is net of by-product credits as well as treatment and selling costs. 22

23 2016 Mine Cost Breakdown 1 Consolidated Pinto Valley 5% 6% 14% 26% 17% 28% 10% 12% 6% 12% 23% 16% 6% 19% Cozamin Minto 7% 3% 8% 4% 25% 3% 7% 4% 22% 9% 19% 8% Salaries Contractors & Consultants Maintenance Diesel, Gas & Lubricants Power Consumables Minesite G&A 36% 45% 1. Cost of production in US$ for the 12 months ended as of December 31, Excluding by-product credits and TCRCs. 23

24 Historical Operating and Financial Performance Copper Sold (tonnes) Realized Price/lb of Copper Sold ($) 120, ,000 80,000 60,000 40,000 20, , ,901 87,521 45,405 38,691 33,022 35,879 35, $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $3.42 $3.90 $3.66 $3.30 $3.03 $2.31 $2.35 $ $2.50 $2.00 $1.50 $1.00 $0.50 $1.03 C1 Cash Cost 1 ($ per payable lb of Cu sold) $1.40 $1.45 $1.50 $1.72 $1.89 $2.00 $1.53 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 Cash Margin/lb of Copper Sold 2 ($) 55% 59% 63% 59% 48% 38% 15% 33% $1.28 $2.02 $2.45 $2.16 $1.58 $1.14 $0.35 $0.74 $ $ Commencing in 2011, financial results in accordance with IFRS. 1. This is an Alternative Performance Measure. 2. Data prior to 2014 reflects C1 cash costs per payable pound produced. 24

25 Historical Operating and Financial Performance cont d Operating Cash Flow Before Changes in Working Capital ($M) $250 $199 $200 $157 $150 $120 $114 $94 $100 $75 $86 $60 $50 $ Capital Additions 1 ($M) $160 $120 $80 Deferred Stripping Capital Additions $85 $59 $56 $121 $123 $94 $142 $71 $40 $ Commencing in 2011, financial results in accordance with IFRS. 1. Includes deferred stripping at Minto and Pinto Valley. 25

26 Historical Cu Production (mlbs) History of Pinto Valley Mine Pinto Valley Historical Production/Copper Prices PV production commenced by owner Cities Service (formerly Tennessee Corporation) PV acquired by Newmont subsidiary and placed PV on care and maintenance Newmont announced plans to restart PV PV Cu Production BHB acquired PV Average Cu Price BHB placed PV on care and maintenance due to low copper prices PV operations restarted BHB placed PV on care and maintenance due to low copper prices BHB restarts PV Capstone acquires PV $5.00 $4.00 $3.00 $2.00 $1.00 Historical Cu Price (US$/lb) 0 $ Re-start Capital Cost BHP Billiton US$194M re-start capital incorporated lessons learned from previous re-start Acquired new mining fleet Upgraded electrical and controls Significantly improved plant conditions to HSEC standards In-sourced mining Contractors' Indirect $8.9 (5%) SMARRCO $11.4 (6%) EPCM $14.2 (7%) Infrastructure $21.2 (11%) Owner Cost $27.1 (14%) Processing $43.7 (22%) Mine $3.9 (2%) Mine Fleet $63.8 (33%) Source: BHP Copper. 26

27 Minto Mineral Reserve & Mineral Resource Areas A Minto North Minto Main Inferno North (extension of Minto North) Inferno Mill Camp Minto East 2 N LEGEND Mineral Reserves & Resources Other Deposits Mining Complete >3% Cu over 5m >2% Cu over 5m >1% Cu over 5m >0.5% Cu over 5m All other drill holes >50 Deposit Area Exploration Corridor Fault Creeks and Streams All Weather Gravel Road Area 2/118 Minto East Minto South Copper Keel Wildfire/ Copper Keel NE Key Points Current Mineral Resource/Reserve has a 3.5 km strike length Other underground geophysical and geological targets exist Ridgetop A 500 meters 27

28 Minto Mineral Resources & Underground Development N Inferno North 118 OP/UG Area 2 OP/UG Wildfire S 900masl 700masl Minto North Ridgetop 500masl Mining Complete Mineral Reserves and Resources Minto Main Minto East Minto East 2 Copper Keel Minto Permitting and Mining Phases I III: Minto Main pit mining completed Q2 2011, stockpiles processed until Q IV: Area 2/118 mined by underground (open pit mining completed Q4 2014) V: Minto North mining completed Q3 2016; Area 2 Stage 3 to be mined by open pit; Minto East by underground VI: 2012 PFS added Copper Keel and Wildfire underground Mineral Reserves 28

29 Providencia Exploration Project Region II, Chile Metallogeny 1. Jurassic IOCG (Iron Oxide Copper Gold) Deposits Mantoverde Santo Domingo Julia Reventon 2. Cretaceous Manto & Porphyry Deposits Candelaria Mantos Blancos La Casualidad Tersa de Colmo Franke Altamira 3. Cretaceous Paleocene Porphyry Deposits Spence Virgo Sierra La Overa Three copper discoveries since

30 Cu tonnes/share (basic) Cu tonnes/share (basic) Thousands (tonnes) Thousands (tonnes) Proven Track Record of Growth in Mineral Resource Base 3,000 Cu tonnes in Mineral Reserves 1 8,000 Cu tonnes in M&I Mineral Resources 1 2,500 2,000 1,500 1,000 Pinto Valley SD Kutcho Minto Cozamin 1,165% 7,000 6,000 5,000 4,000 3,000 Pinto Valley SD Kutcho Minto Cozamin Santo Domingo 914% Pinto Valley 500 2,000 1, Cu tonnes in Mineral Reserves 1 Per Share Cu tonnes in M&I Mineral Resources 1 Per Share % % Includes Mineral Resources and Reserves as reported in Annual Information Forms for each respective year. 70% share of Santo Domingo Mineral Resources as at August 31, 2012 and Mineral Reserves as at May 2, Kutcho as at Dec. 31, See Forward-Looking Statements and Cautionary Note for NI information 30

31 Consolidated Mineral Reserve Estimate Category kt MINERAL RESERVES CONTAINED METAL Cu Zn Pb Mo Ag Au Fe Cu Zn Pb Mo Ag Au Fe 6 % % % % g/t g/t % kt kt kt kt koz koz Mt Pinto Valley 1 Proven 350, , Jan-16 Probable 123, Total 474, , Cozamin 2 Proven Jan-16 Probable 6, , Total 7, , Minto 3 Proven 1, Jan-16 Probable 3, Total 5, , Santo Domingo 4 (100%) Proven 65, May-14 Probable 326, Total 391, , Kutcho 5 Probable 10, , Feb-11 Total 10, , TOTAL MINERAL RESERVES 3, , See corresponding Notes on Consolidated Mineral Reserve Estimate at the end of this presentation. 31

32 Consolidated Mineral Resource Estimate MINERAL RESOURCES Inclusive of Mineral Reserves CONTAINED METAL Category kt Cu Zn Pb Mo Ag Au Fe Cu Zn Pb Mo Ag Au % % % % g/t g/t % kt kt kt kt koz koz Pinto Valley 1 Measured 648, , Jan-2016 Indicated 772, , M&I 1,420, , Inferred 125, Cozamin 2 01-Jan-2016 Copper Zones (San Roberto and Mala Noche Footwall) Measured Indicated 8, ,167 - M&I 8, ,733 - Inferred 7, ,214 - Zinc Zone (San Rafael) Indicated 2, ,818 - Inferred 1, ,425 - Minto 3 Measured 8, , Jan-2016 Indicated 36, , M&I 45, , Inferred 25, , See corresponding Notes on Consolidated Mineral Resource Estimate at the end of this presentation. 32

33 Consolidated Mineral Resource Estimate cont d MINERAL RESOURCES Inclusive of Mineral Reserves CONTAINED METAL Category kt Cu Zn Pb Mo Ag Au Fe Cu Zn Pb Mo Ag Au % % % % g/t g/t % kt kt kt kt koz koz Santo Domingo 4 Measured 64, (100%) 31-Aug-2012 Indicated 449, , M&I 513, , Inferred 58, Kutcho 5 Measured 5, , Feb-2011 Indicated 5, , M&I 11, , Inferred 1, , TOTAL MEASURED & INDICATED MINERAL RESOURCES 6, ,924 1,382 TOTAL ADDITIONAL INFERRED MINERAL RESOURCES , See corresponding Notes on Consolidated Mineral Resource Estimate at the end of this presentation. 33

34 Notes: Consolidated Mineral Reserve Estimate NOTES: Mineral Reserves take into account mining activities (where applicable) until January 1, Gregg Bush, P.Eng., Senior Vice President and Chief Operating Officer at Capstone, is the Qualified Person for the disclosure of Capstone's consolidated Mineral Reserves table. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content. All Mineral Reserve estimates are inclusive of dilution and mining recovery factors. Contained ounces (oz) are troy ounces. COG is cut-off grade. NSR is net smelter return. All amounts in US$ unless otherwise specified. Stockpiled material is treated as Proven Mineral Reserves. See Technical Reports filed under Capstone s profile on SEDAR for further information. 1. John Marek, PE, SME-RM, of Independent Mining Consultants, Inc., is an independent Qualified Person responsible for the preparation of the Mineral Reserves estimate with an effective date of January Economic inputs to the block model were USD$2.75/lb per pound copper, USD$12.75/lb Molybdenum. Cut-off Grade variable between 0.17% Cu to 0.18% Cu through the LOM. The minimum mill feed cut-off grade is 0.17% Cu, but in years where sufficient higher grade mill feed is available, the mill cut-off grade may be higher, resulting in material between the yearly mill cut-off grade and 0.18% being stockpiled. The additional 0.01% from 0.17% to 0.18% is to cover the additional cost of rehandling material from the stockpile to the mill. Material between 0.17% to 0.18% that is not fed directly to the mill is not stockpiled as it cannot pay for the mining rehandling cost at the price assumptions used. Proven mineral reserves include an additional 323 kt of stockpiled material not considered in the Pinto Valley Mine Life Extension - Phase 3 (PV3) Pre-Feasibility Study NI Technical Report. 2. Gregg Bush, P.Eng., Senior Vice President and Chief Operating Officer at Capstone, is the Qualified Person responsible for the disclosure of the Cozamin Mine Mineral Reserves taking into account ongoing mine production. Mel Lawson, SME-RM, and Allan Schappert, SME-RM, of Stantec Consulting International LLC, are independent Qualified Persons responsible for the preparation of the San Roberto zone Mineral Reserves estimate with an effective date of December 31, Metal prices used in the San Roberto reserve estimate for copper, silver, zinc, and lead, respectively, are $2.50/lb, $20/oz, $0.80/lb, and $0.85/lb. Processing recoveries were Cu=92%, Ag=72%, Zn=69%, Pb=64%. The exchange rate used is MEX12.50 to US$1.00. Allan Schappert, SME-RM, of Stantec Consulting International LLC, is an independent Qualified Person responsible for the preparation of the Mala Noche Footwall Zone Mineral Reserves estimate with an effective date of September 30, Metal prices used in the MNFW zone reserve estimate for copper, silver, and zinc, respectively, are $2.50/lb, $14/oz, $0.80/lb, and $0.85/lb. Contribution from Pb was not considered because a Pb concentrate will not be produced during Processing recoveries were Cu=94%, Ag=58%, and Zn=72%. A NSR COG of $42.50/t was used for the San Roberto and MNFW zones. The exchange rate used is MEX16 to US$ Pooya Mohseni, P.Eng., Chief Engineer at Minto, is the Qualified Person responsible for the disclosure of the Minto Mine Mineral Reserves taking into account ongoing mine production, in addition to the preparation of the Mineral Reserves estimate of the Minto deposits. The open-pit Mineral Reserves estimate at Minto North has an effective date of January 1, The Mineral Reserves estimates for MSD (Area 2 open pit, Area 2/118 underground, Copper Keel underground) and Minto East underground have an effective date of December 31, Metal Price assumptions used to calculate the NSR COG for all deposits are: Cu=$2.50, Au=$300, Ag=$3.90. Processing recoveries for all deposits are: Cu=91%, Au=70%, Ag=78%. Open pit mineral reserves are reported above 0.5% Cu COG. Underground mineral reserves are reported above a $64.40 NSR COG. 4. Santo Domingo Project Mineral Reserves shown on 100% basis (Capstone s share is 70%). Carlos Guzman, FAusIMM, CMC, of NCL Ingeniería y Construcción SpA, is the independent Qualified Person responsible for the preparation of the Mineral Reserves estimate with an effective date of May 2, Mineral Reserves are reported as constrained within Measured and Indicated pit designs, and supported by a mine plan featuring variable throughput rates and cut-off optimization. The pit designs and mine plan were optimized using the following economic and technical parameters: metal prices of $2.75/lb Cu, $1,275/oz Au and $80/dmt of Fe concentrate; recovery to concentrate assumptions of a maximum of 93.6% for Cu and 75% for Au, with magnetite concentrate recovery varying on a block-by-block basis; copper concentrate treatment charges of $70/dmt, $0.07/lb of Cu refining charges, $5/oz of Au refining charges, $48/wmt and $3/wmt for shipping Cu and Fe concentrates respectively; waste mining cost of $1.53/t, mining cost of $1.53/t ore, and process and G&A costs of $7.84/t processed; average pit slope angles that range from 37.6º to 43.6º; a 2% royalty rate assumption, and an assumption of 100% mining recovery. There have been no mining activities at Santo Domingo since the release of the NI Technical Report. 5. Michael Makarenko, P.Eng., is an independent Qualified Person responsible for the preparation of the Kutcho Mineral Reserves estimate with an effective date of February 15, Mineral Reserves are reported within 1.0% Cu grade shells used for stope design. There have been no mining activities at Kutcho since the release of the NI Technical Report. 6. Fe as magnetite concentrate (Fe3O4) 34

35 Notes: Consolidated Mineral Resource Estimate NOTES: Mineral Resources take into account mining activities (where applicable) until January 1, Jeremy Vincent, P.Geo., Manager of Production and Development Geology at Capstone, is the Qualified Person responsible for the disclosure of Capstone's consolidated Mineral Resources table. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resources are reported inclusive of the Mineral Reserves. All Mineral Resources are exclusive to dilution and mining recovery factors. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content. Contained ounces (oz) are troy ounces. COG is cut-off grade. NSR is net smelter return. M&I = Measured & Indicated. All amounts in US$ unless otherwise specified. Stockpiled material is treated as Measured Mineral Resources. See Technical Reports filed under Capstone s profile on SEDAR for further information. 1. Garth Kirkham, P.Geo., FGC, of Kirkham Geosystems Ltd., is an independent Qualified Person responsible for the preparation of the Mineral Resources estimate with an effective date of January 1, 2016, which are reported above a total copper (TCu) COG of 0.17% TCu. Measured Mineral Reserves include an additional 323 kt of stockpiled material that was not considered in the Pinto Valley Mine Life Extension - Phase 3 (PV3) Pre- Feasibility Study NI Technical Report. 2. Jeremy Vincent, P.Geo., Manager of Production and Development Geology at Capstone, is the Qualified Person responsible for the disclosure of the Cozamin Mine Mineral Resources taking into account ongoing mine production. Jeremy Vincent, P.Geo., is the Qualified Person responsible for the preparation of the Mala Noche Footwall Zone Mineral Resources estimate with an effective date of September 30, The MNFW Mineral Resources are reported above a NSR of $35/t using respective metal prices for copper, silver, zinc, and lead of $2.50/lb, $14.00/oz, $0.80/lb, and $0.85/lb. Processing recoveries used to calculate the NSR COG for the MNFWZ zone were Cu=94%, Ag=58%, and Zn=72%. Contribution from Pb was not considered because a Pb concentrate will not be produced during Exchange rate used for MNFW zone Mineral Resource estimate is MEX16 to US$1.00. Ali Shahkar, P.Eng., is an independent Qualified Person responsible for the preparation of the San Roberto zone Mineral Resources estimates. The cut-off date for mining and drillhole/mine sample data for the San Roberto zone Mineral Resource estimate is December 31, The San Roberto Mineral Resources are reported above a NSR of $35/t using respective metal prices for copper, silver, zinc, and lead of $2.50/lb, $20.00/oz, $0.80/lb, and $0.85/lb. Processing recoveries used to calculate the NSR COG for the San Roberto Mineral Resources are based on historical site operating experiences reflecting recoveries of: Cu=92%; Ag=72%; Zn=69%; Pb=64%. Robert Sim, P.Geo., of Sim Geological Inc., is an independent Qualified Person responsible for the San Rafael zone Mineral Resources estimate. The cut-off for drillhole data for the San Rafael zone is November 26, The San Rafael Mineral Resources are reported above a NSR of $35/t using respective metal prices for copper, silver, zinc, and lead of $2.50/lb, $14.00/oz, $0.80/lb, and $0.85/lb. Processing recoveries used to calculate the NSR COG for the San Rafael Mineral Resources are based on laboratory results reflecting recoveries of: Cu=41%, Ag=32%, Zn=84%, and Pb=65%. Exchange used for San Roberto and San Rafael zones Mineral Resources estimates is MEX12.50 to US$ Douglas McIlveen, P.Geo., Chief Geologist at Minto, is the Qualified Person responsible for the disclosure of the Minto Mine Mineral Resources taking into account ongoing mine production. Garth Kirkham, P.Geo., FGC, of Kirkham Geosystems Ltd., is an independent Qualified Person responsible for the preparation of the Mineral Resources estimates for the Minto North, Minto East, and Minto East 2 areas. The drilling data cut-off date for Minto North of December 1, The Minto East and Minto East 2 areas were re-estimated with an effective date of May 31, Dr. Wayne Barnett, Ph.D., P.Geo., of SRK Consulting (Canada) Inc., is an independent Qualified Person responsible for the preparation of the Mineral Resources estimate at Ridgetop that takes into account drillhole data until August 2010, and the MSD deposit, which includes the Area 2/118, Wildfire, and Copper Keel areas. The MSD Mineral Resource estimate has an effective date of May 31, Minto North and Ridgetop areas are amenable to open pit extraction. Area 2/118 and Wildfire areas are amenable to open pit and underground mining, while Minto East, Minto East 2, and Copper Keel areas are suitable for underground mining. Mineral Resources are reported above a 0.5% Cu COG. Metal price assumptions used to determine the COG for reasonable prospects of economic extraction for the MSD area are: Cu=$2.85, Au=$900, Ag=$12.00, and for all deposit areas are: Cu=$3.50, Au=$1,300, Ag=$ Resources exclude material mined but not processed during pre-stripping activities in the Area 2 region of MSD and currently held in stockpiles. 4. Santo Domingo Project Mineral Resources shown on 100% basis (Capstone s share is 70%). David Rennie, P.Eng., of Rosco Postle Associates Inc. and an independent Qualified Person responsible for the preparation of the Mineral Resources estimates for the Santo Domingo Sur, Iris, and Iris Norte deposits, which have an effective date of August 31, Mineral Resource estimates for the Estrellita deposit have an effective date of October 30, Mineral Resources for the Santo Domingo Sur, Iris, and Iris Norte deposits are reported using a COG of 0.25% copper equivalent (CuEq). CuEq grades are calculated using average long term prices of US$3.50/lb Cu, US$1,500/oz Au and US$1.94/dmtu Fe (US$120/dmt conc. at 62% Fe). The CuEq equation is: Metal Value = Grade*Cm*R%/100*(Price-TCRC-Freight)*(100-Royalty)/100, where Cm is a constant to convert grade of metal to metal price units; R is metallurgical recovery and %Cu Equivalent = (Cu Value + Au Value + Fe Value)/(Cu Value per 1%Cu). An assessment of reasonable prospects for economic extraction for the Santo Domingo Sur, Iris, and Iris Norte deposits was performed using a Lerchs Grossman pit shell that has the following assumptions: pit slopes averaging 45 ; mining cost of US$1.19/t, processing cost of US$ 4.49/t; processing recovery of 85%; selling price of US$2.25/lb, and a selling cost of US$0.247/lb. At the 0.25% CuEq cut-off, all but 5% of the Mineral Resources were captured by the pit shell. On the basis of this result, it was concluded that there was little merit in restricting the Mineral Resources to those blocks contained only within the pit shell. Accordingly, the Mineral Resource inventory was reported in its entirety. Mineral Resources for the Estrellita deposit are reported using a 0.3% Cu COG. 5. Garth Kirkham, P.Geo, FGC, is an independent Qualified Person responsible for the preparation of the Mineral Resources estimates with an effective date of February 15, Mineral Resources are reported above a 1.5% Cu COG. 35

36 Compliance with NI Unless otherwise indicated, Capstone has prepared the technical information in this presentation ( Technical Information ) based on information contained in the technical reports and news releases (collectively the Disclosure Documents ) available under Capstone Mining Corp. s company profile on SEDAR at Each Disclosure Document was prepared by or under the supervision of a qualified person (a Qualified Person or QP ) as defined in National Instrument Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ( NI ). For readers to fully understand the information in this presentation, they should read the Technical Reports (available on in their entirety, including all qualifications, assumptions and exclusions that relate to the information set out in this presentation which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents. The technical information in this presentation has been prepared in accordance with Canadian regulatory requirements set out in National Instrument Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI ") and reviewed and approved by Gregg Bush, P.Eng., Senior Vice President and Chief Operating Officer for Capstone Mining. Technical Information related to mineral exploration activities has been reviewed and approved by Brad Mercer, P. Geol., Senior Vice President, Exploration. Both are QP s under NI This presentation summarizes some of the information disclosed in the Pinto Valley Mine Life Extension Phase 3 (PV3) Pre-Feasibility Study Technical Report dated February 23, The following QP s authored the technical report: Gregg Bush, P.Eng of Capstone Mining Corp., Garth Kirkham, P.Geo. of Kirkham Geosystems Ltd., John Marek P.E. of Independent Mining Consultants, Inc., Ken Major, P.Eng. of KWM Consulting Inc., Tony Freiman, P.E. of Amec Foster Wheeler Environment & Infrastructure Inc. and Cori Hoag C.P.G. of SRK Consulting (U.S.), Inc. This presentation summarizes some of the information contained in the NI Technical Report on the Cozamin Mine, Zacatecas, Mexico dated July 31, The following QP s were responsible for the preparation of their relevant portions of the Technical Report: Patrick Andrieux, PhD., P.Eng. (Itasca Consulting Group. Inc), Dave Hallman, PE (Tetra Tech, Inc), Jenna Hardy, P.Geo. (Nimbus Management Ltd.), Mel Lawson, SME-RM (Stantec Consulting International LLC), Ken Major, P.Eng. (KWM Consulting Inc.), Vivienne McLennan, P.Geo. (Capstone Mining Corp.), Allan Schappert, SME-RM (Stantec Consulting International LLC), Ali Shahkar, P.Eng. (Lions Gate Geological Consulting Inc.), Robert Sim, P.Geo. (Sim Geological Inc.), Brad Skeeles, P.Eng. (formerly with Capstone Mining Corp.), and Jeremy Vincent, P.Geo. (Capstone Mining Corp.). This presentation summarizes some of the information contained in the Minto Phase VI Preliminary Feasibility Study Technical Report dated January Qualified Persons under National Instrument responsible for this report: John Sagman, BASc., P.Eng., PMP, Wayne Barnett, Pr.Sci.Nat., SRK Consulting (Canada), Inc., John Eggert, P.Eng, Eggert Engineering Ltd; Bruce Murphy, P.Eng., SRK Consulting (Canada), Inc.; Bill Hodgson, P.Eng., Genivar Inc.; Garth Kirkham, P. Geo, Kirkham Geosystems Ltd; Michael Levy, PE, SRK Consulting (Canada), Inc.; Brad Mercer, P.Geol. Capstone Mining Corp.; Pooya Mohseni, P.Eng., Minto Exploration; Marek Nowak, P.Eng., SRK Consulting (Canada) Inc.; and Colleen Roche, P.Eng., Capstone Mining Corp. who are responsible for certain sections of the PFS as detailed in the PFS. This presentation summarizes some of the information contained in the Santo Domingo Project; Region III, Chile; NI Technical Report on Feasibility Study dated July 8, 2014, 100% basis. The following QP s were responsible for the preparation of their relevant portions of the Technical Report based on the Feasibility Study: David Frost, F.AusIMM (AMEC Ingeniería y Construcción Ltda.), Hans Gopfert, P.Eng (AMEC Ingeniería y Construcción Ltda.), Joyce Maycock, P. Eng (AMEC Ingeniería y Construcción Ltda.), Vikram Khera, P. Eng (AMEC Ingeniería y Construcción Ltda.), Anna Klimek, P.Eng (AMEC Ingeniería y Construcción Ltda.), Roy Betinol, P.Eng. (BRASS Chile S.A.) -- Seawater and Magnetite Concentrate Pipeline System, Carlos Guzmán, F.AusIMM (NCL Ingeniería y Construcción Ltda.) -- Mineral Reserve Model, Mine Equipment and Mine Development, Tom Kerr, P.Eng. (Knight Piésold S. A.) - Tailings Storage Facility, David Rennie, P. Eng (Roscoe Postle Associates Inc.) -- Mineral Resource Model. The technical information in the July 8, 2014 report was reviewed by Court Muggli, P.E., Project Director, Capstone Mining Corp., and Gregg Bush, P. Eng., Senior Vice President and Chief Operating Officer, Capstone Mining Corp., both QP s under NI

37 For additional information, please visit capstonemining.com or contact us at: Phone: Toll Free: Updated February 15, 2017