Capstone Mining First Quarter 2018 Financial Results

Press Release

April 24, 2018

Vancouver, British Columbia – Capstone Mining Corp. (“Capstone”) (TSX: CS) today announced its financial results for the quarter ended March 31, 2018. Operating cash flow before changes in working capital¹ from all operations was $24.6 million or $0.06 per share, with net income from continuing operations of $10.3 million and adjusted net income from continuing operations of $10.6 million or $0.03 per share after adjusting for certain non-cash and non-recurring charges. Copper production from continuing operations totalled 15,706 tonnes (15,152 tonnes of payable copper) at a C1 cash cost¹ from continuing operations of $1.95 per payable pound produced.

“Capstone reported positive net income and cash flow in the first quarter of 2018, on contributions from both Pinto Valley and Cozamin,” said Darren Pylot, President and CEO of Capstone. “We also announced the sale of our Minto Mine for $37.5 million of cash plus working capital.”

“Additionally, we updated our 2018 guidance to reflect the decision to mine the San Rafael Zinc Zone, which is expected to significantly increase our by-product revenue at Cozamin” continued Mr. Pylot.

As of March 31, 2018, Minto is treated as a discontinued operation for financial reporting purposes. To comply with disclosure requirements, Capstone’s results have been adjusted to exclude Minto’s contribution in certain cases, and are referred to throughout this release as “continuing operations”. Please refer to financial statements ended March 31, 2018 for further information.

Financial and Operational Overview

	Q1 2018	Q1 2017
Revenue (2), (3), (4) ($ millions)	103.7	97.9
Copper produced by continuing operations (tonnes)	15,706	15,430
Payable copper produced by continuing operations (tonnes)	15,152	14,890
C1 cash cost per payable pound produced (1) ($/lb)	1.95	1.95
All-in sustaining cost per payable pound produced (1) ($/lb)	2.59	2.48
Net Income (loss) from continuing operations ($ millions)	10.3	(13.1)
Net Income (loss) from continuing operations attributable to shareholders ($ millions)	10.5	(13.3)
Net income (loss) from continuing operations attributable to shareholders per common share ($)	0.03	(0.03)
Adjusted net income (loss) from continuing operations (1)  ($ millions)	10.6	(7.7)
Adjusted net income (loss) from continuing operations attributable to shareholders (1)  ($ millions)	10.8	(7.8)
Adjusted net income (loss) attributable to shareholders per common share (1) ($)	0.03	(0.02)
Cash flow from operating activities (4)  ($ millions)	32.8	22.0
Cash flow from operating activities per common share (1), (4) ($)	0.08	0.06
Operating cash flow before changes in working capital (1, (4) ($ millions)	24.6	24.2
Operating cash flow before changes in working capital per common share (1), (4) ($)	0.06	0.06
Long term debt (excluding financing fees)  ($ millions)	274.9	308.9
Net debt (1)($ millions)	160.1	199.5

2.  Q1 2018 includes a provisional pricing adjustment of $(2.3) million (2017 – $2.2 million) related to prior shipments, equivalent to $(0.07) per pound (2017 – $0.06 per pound) of copper sold during the quarter.
3.  Q1 2018 adjusted realized copper price does not include any realized derivative losses (2017 loss – $11.6 million) equivalent to nil per pound (2017 loss – $(0.29) per pound) related to copper derivative contracts exercised during the quarter.
4.  In accordance with IFRS 5, Minto’s results are excluded from revenue in both the current and comparative period. Minto’s results are included within cash flow amounts in both the current and comparative period.

Financial and Operational Highlights for the Quarter Ended March 31, 2018

• Net income from continuing operations of $10.3 million. The net income was attributable to higher realized copper prices of $2.98 per pound compared to $2.73 per pound in 2017.
• The absence of any commodity derivative losses as Capstone has been completely unhedged from the beginning of 2018.
• Cash flow from operating activities of $32.8 million or $0.08 per common share.
• Working capital decreased by $5.4 million to $184.0 million at March 31, 2018 from $189.4 million at December 31, 2017.
• Operating cash flow before changes in working capital¹ of $24.6 million or $0.06 per share was slightly higher due to higher operating cash flows at Cozamin, primarily due to higher copper prices, the absence of any negative forward commodity derivative contracts settlements in Q1 2018, mostly offset by lower operating cash flows at Minto.
• Produced a total of 15,152 tonnes of payable copper from continuing operations at a C1 cash cost¹ of $1.95 per pound of payable copper produced.
• Revenue of $103.7 million generated primarily from the sale of 15,962 tonnes of copper from continuing operations.

Production and Additional Highlights for the Quarter Ended March 31, 2018

Pinto Valley Mine:

• Produced 11,421 tonnes of copper during Q1 2018 at a C1 cash cost¹ of $2.41 per pound of payable copper produced and all-in sustaining cost¹ of $2.96 per pound of payable copper produced.
• At Pinto Valley, production was lower than planned with throughput and recoveries at the low end of expectations due to unplanned downtime. Grade was in line with the mine plan for the quarter, with higher head grade and production expected over the remainder of the year.

Cozamin Mine:

• Produced 4,285 tonnes of copper during Q1 2018 at a C1 cash cost¹ of $0.71 per pound of payable copper produced and all-in sustaining cost¹ of $1.43 per pound of payable copper produced.
• At Cozamin, production for the quarter was better than expected from higher grade.
• Metallurgical test work was completed around the technical and economic recoverability of the existing zinc resource in the San Rafael zinc zone. This resulted in a revision to the mine plan, bringing in additional zinc resources, starting in July. It is expected that in 2018 this could double contained zinc production (an additional 7 million pounds) and lower C1 cash cost¹ by $0.25 per pound of payable copper produced and all-in sustaining cost¹ by $0.15 per payable pound produced. Additional zinc production of between 7 million and 12 million pounds per year and approximately 200,000 ounces of silver per year are anticipated, with associated increases to by-product credits over the next three years. Copper production remains unchanged as the added zinc processing will come from existing unutilized mill capacity.

Operating Outlook

Capstone’s consolidated production and cost guidance from continuing operations remains unchanged for the full year.

Cozamin’s cost guidance has been updated to reflect lower unit costs resulting from the additional zinc resources expected to be mined from the San Rafael deposit in 2018, lowering Cozamin’s expected 2018 C1 cash cost¹ by approximately $0.25 and all-in sustaining cost¹ by approximately $0.15 per payable pound of copper produced.  Cozamin’s 2018 capital guidance has been increased by $3.0 million as a result of this change, primarily related to the additional required development to access the San Rafael zone. Cozamin’s expected 2018 copper production remains unchanged.

Exploration cost guidance is unchanged.  Consolidated capital guidance is $90.0 million with the addition of the $3.0 million development expenditure related to San Rafael zone at Cozamin.

Conference Call and Webcast Details

Capstone will hold a conference call and webcast on Wednesday, April 25, 2018 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results; call-in details and information on associated slides are provided below. This release is not suitable on a standalone basis for readers unfamiliar with Capstone and should be read in conjunction with Capstone’s consolidated financial statements and management’s discussion and analysis (“MD&A”) for the quarter ended March 31, 2018, which are available on Capstone’s website at http://capstonemining.com/investors/financial-reporting/default.aspx and on SEDAR, all of which have been reviewed and approved by Capstone’s Board of Directors. An updated corporate presentation, including results to March 31, 2018 and Q1 webcast slides will also be available at http://capstonemining.com/investors/events-and-presentations/default.aspx.

Date:	Wednesday, April 25, 2018
Time:	11:30 am Eastern Time (8:30 am Pacific Time)
Dial in:	North America: 1-888-390-0546, International: +416-764-8688
Webcast:	http://event.on24.com/r.htm?e=1626391&s=1&k=ED9664FBED1580A051E48EE6D0B7D2E2
Replay:	North America: 1-888-390-0541, International: +416-764-8677
Replay Passcode:	285507#

The conference call replay will be available until Wednesday, May 2, 2018. The conference call audio and transcript will be available on Capstone’s website within 48 hours of the call at http://capstonemining.com/investors/events-and-presentations/default.aspx.

About Capstone Mining Corp.

Capstone Mining Corp. is a Canadian base metals mining company, focused on copper. We are committed to the responsible development of our assets and the environments in which we operate. Our three producing mines are the Pinto Valley copper mine located in Arizona, US, the Cozamin polymetallic mine in Zacatecas State, Mexico and the Minto copper mine in Yukon, Canada. In addition, Capstone has the large scale 70% owned copper-iron Santo Domingo development project in Region III, Chile, in partnership with Korea Resources Corporation as well as a portfolio of exploration properties. Capstone’s strategy is to focus on the optimization of operations and assets in politically stable, mining-friendly regions, centred in the Americas. Our headquarters are in Vancouver, Canada and we are listed on the Toronto Stock Exchange (TSX). Further information is available at www.capstonemining.com.

For further information please contact: Cindy Burnett, VP, Investor Relations and Communications, 604-637-8157, cburnett@capstonemining.com

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