Capstone Mining Corp has completed the sale of its Kutcho development project to Kutcho Copper Corp (formerly Desert Star Resources Ltd). Under the terms of the agreement, Capstone received C$28.8 million in cash and 4,646,892 common shares of the newly named Kutcho Copper.

The Kutcho property is located approximately 100 km east of Dease Lake in the Liard mining division of northern British Columbia, and consists of one mining lease and 46 mineral exploration claims covering an area of approximately 17,060 ha. The site is accessible via a 900 m long gravel airstrip located 10 km from the deposit and a 100 km long seasonal road from Dease Lake suitable for tracked and low-impact vehicles.

It is a development project located in British Columbia, a top tier mining jurisdiction with major mines and active projects including Brucejack (Pretium), Red Chris (Imperial Metals) and Galore Creek (Teck/NovaGold) – a high grade copper-zinc-gold-silver volcanic massive sulphide (VMS) system with a Probable Mineral Reserve (2017 estimate) of 10.4 Mt @ 2.01% Cu, 3.19% Zn, 34.61 g/t Ag and 0.37 g/t Au. The 2017 updated PFS demonstrates robust economics: after-tax NPV (8% discount rate) and IRR of C$265 million and 27.6% respectively with a manageable initial capex (including 15% contingency) of C$220.7 million

There is significant potential for improvement through expansion of reserve/resources and a focused permitting effort.

2017 PFS Highlights

•12 year mine life with 2,500 t/d production rate for a total life-of-mine payable production of 378 Mlb of copper and 473 Mlb of zinc.

•Average annual production of 33 Mlb of copper and 46 Mlb of zinc

•Initial capital costs, including 15% contingency, for a 100% owner-operated mine are estimated at C$220.7 million

•Operating costs of C$73.72/t of material milled

•Unit operating costs of $1.60/lb copper excluding byproducts, and $0.59/lb copper net of byproducts

•Pre-tax payback of 3.3 years and post-tax payback of 3.5 years.

“The divestiture of Kutcho allows us to further strengthen our balance sheet and focus on our core assets,” said Darren Pylot, President and Chief Executive Officer of Capstone. “We look forward to participating in the future anticipated success of Kutcho Copper through our share ownership.”

Capstone intends to use net proceeds from the sale to reduce outstanding borrowings under its revolving credit facility and for general corporate purposes.