Capstone brings Cozamin in

Capstone Mining is starting plant commissioning at its Cozamin copper-silver-zinc mine in Zacatecas State, Mexico.
Estimated average annual metal production is 16 Mlb of copper, 700,000 oz of silver and 4 Mlb of zinc at 1,000 t/d. Four stopes are being developed for mining (two are ready) and producing ore. These stopes are located on the east and west side of level 8 and central and east side of level 9. On level 9, an additional 30 m of drifting to the east was completed by the end of May. Development on level 10 has commenced with drifting both east and west on this level.

Rehabilitation and construction of the internal ramp connecting the 8, 9 and 10 levels is complete. This ramp is being driven down to level 11. By the end of May, this ramp had reached the 10.5 level where the loading station for the 10 level dump pocket in the shaft will be installed. The San Ernesto decline ramp from surface to level 8 is used for access to the mine for personnel and mining equipment. At present, this ramp is also being used to haul ore to surface from the stope on level 8 east. Ore is also being hoisted via the San Roberto Shaft which will be the main ore conveyance when the mine is in full-scale production. Capstone has received and is operating its fleet of mining equipment including 5 LHDs, 2 jumbos and 4 haul trucks.

Construction in the mill and plant areas is almost complete. This includes the rehabilitation and upgrade of the crusher circuit, construction of a 1,000 t fine ore bin, the installation of the 12’ X 14’ ball mill, and upgrade of the flotation circuit. Ore has recently been crushed and the fine ore bin is full. Testing of the ball mill and the rest of the flotation plant is underway. Test runs of the plant with ore have commenced.

The tailings dam dyke expansion is completed. This 12 m lift is designed to store an additional four years of tailings. Two more tailings lifts are planned over the life of the operation. The assay/metallurgical laboratory is currently operating and processing mine samples.

The Phase III underground definition programme has been completed. A total of 114 NQ core holes have been drilled for a total of 18,100 m. This definition drilling was distributed over only 750 m of strike length below the existing level 9 (260 m below surface) in the San Roberto mine area. These extents represent about ~70% of the mineralized volume within the area of exploration drilling. Results for the first 109 holes have been reported in previous news releases, with results for the remaining five holes pending.

The definition drilling indicates that the copper-silver-zinc mineralization is present to a depth of at least 400 m below level 9 over a strike length of at least 1,400 m. The copper-silver-zinc mineralization remains open along strike to the west and to depth. Drill results confirm that the copper grades in the San Roberto mine increase significantly below level 8 and that the silver grades remain undiminished. At least 3 km of known strike extent of the Mala Noche vein remain untested by surface exploration drilling.

An updated resource estimate is currently being completed. During the second half of 2006, Capstone plans to continue definition drilling below level 9. This work will focus on the western part of the deposit in order to increase resources in the measured and indicated categories.