Capstone Mining Reports Record Cash Flow for 2014 Second Quarter

Press Release –

August 7, 2014

Operating cash flow before changes in working capital of $56.5 million
Net earnings of $16.6 million or $0.04 per share
(All amounts in US$ unless otherwise specified)

Vancouver, British Columbia – Capstone Mining Corp. (“Capstone”) (TSX: CS) today announced its financial results for the three and six months ended June 30, 2014. Net earnings for the quarter were $16.6 million and operating cash flow before changes in working capital(1) was a record $56.5 million. Copper production for the quarter at Capstone’s three operating mines, Pinto Valley, Cozamin and Minto, totalled 27,738 tonnes of copper in concentrates and cathode (26,785 tonnes of payable copper) at a C1 cash cost(1) of $2.03 per payable pound of copper produced.

Capstone will hold a conference call and webcast on Friday, August 8, 2014 at 11:30 am Eastern time (8:30 am Pacific time) to discuss these results; call-in details are provided at the end of this release. This release should be read in conjunction with Capstone’s unaudited condensed interim consolidated financial statements and management’s discussion and analysis (“MD&A”) for the three and six months ended June 30, 2014, which are available on Capstone’s website at:http://capstonemining.com/s/financial-statements.asp and on SEDAR. An updated corporate presentation, including results to June 30, 2014, will also be available at http://capstonemining.com/s/presentations.asp.

NOTE: The transaction to acquire the Pinto Valley Mine closed on October 11, 2013 and therefore its results of operations are included in the Company’s reported results from that date forward. As such, there are no comparable Q2 2013 or 2013 YTD figures for the Pinto Valley Mine.

Overview

	Q2 2014	Q2 2013	2014 Yth	2013 Yth
Revenue ($ millions)	171.7	58.3	332.5	115.9
Copper in concentrates produced (tonnes)	27,212	8,765	54,235	17,195
Copper cathode produced (tonnes)	526	–	1,147	–
Payable copper produced (tonnes)	26,785	8,419	53,444	16,530
C1 cash cost per payable pound of copper produced(1) ($)	2.03	1.70	1.96	1.71
Copper sold (tonnes)	24,563	7,783	51,164	14,632
Realized copper price per pound sold ($)	3.36	3.16	3.17	3.33
Net  earnings ($ millions)	16.6	9.2	12.2	16.2
Net  earnings per common share ($)	0.04	0.02	0.03	0.04
Adjusted EBITDA(1) ($ millions)	64.8	28.8	121.2	52.8
Adjusted EBITDA(1) per common share ($)	0.17	0.08	0.32	0.14
Operating cash flow before changes in working capital(1) ($ millions)	56.5	28.6	104.7	49.4
Operating cash flow before changes in working capital per common share(1) ($)	0.15	0.08	0.27	0.13
Net debt (cash)(1) ($ millions)	181.0	(456.3)	181.0	(456.3)

“The second quarter shows a significant increase in cash flow driven by higher copper sales, primarily from Pinto Valley, coupled with consistent production from Cozamin and Minto,”said Darren Pylot, President and CEO of Capstone. “Year-to-date Adjusted EBITDA(1) more than doubled year over year, demonstrating Capstone’s substantial growth over the last 12 months.” 

Financial and Production Highlights for the Three Months Ended June 30, 2014

• Net earnings of $16.6 million or $0.04 per common share which included:Adjusted EBITDA(1) of $64.8 million or $0.17 per common share after making adjustments for certain non-cash and other items.
  • Earnings from mining operations of $45.5 million,
    • Realized copper price of $3.36 per pound.
  • Production costs included a $1.8 million non-cash charge related to the write-down of inventory at Minto,
  • $15.2 million tax expense.
• Operating cash flow before changes in working capital(1) of $56.5 million or $0.15 per common share.
• Working capital increased to $162.8 million at June 30, 2014 (which included $128.5 million of cash and cash equivalents) from $137.4 million at December 31, 2013.
• Production of 26,785 tonnes of payable copper at a C1 cash cost(1) of $2.03 per pound of payable copper produced.
• Revenue of $171.7 million generated primarily from the sale of 24,563 tonnes of payable copper.