Combatting Cycles Through Diversification

Mining models are fundamentally different from any other industry. For example, operators do not see fellow operators as their competition but rather partners that can add value to projects, says Darren Pylot, President and CEO of Capstone Mining. “Mining is a very capital-intensive business and the industry is seeing increasing joint ventures to share infrastructure costs to bring new projects online,” he says.
In Capstone’s case, at its Cozamin mine, it has an agreement with Endeavour Silver to allow both companies access to abutting land. Capstone has reaped the benefits of this partnership by being able to carry out an intensive drilling program at Cozamin with significant exploration success. “In mid-2018, we updated Cozamin’s Mineral Resource converting an additional 115,000 tons of indicated copper resources in the Mala Noche Footwall Zone, bringing the total measured and indicated for all drilling up to March 19, 2018, to 217,000 tons of contained copper,” says Pylot. “Based on the exploration success we have seen at Cozamin, we increased the brownfield exploration cost guidance an additional US$2 million to a total of US$9 million for 2018.”
Due to variations in copper prices, in 2018 Capstone branched out to start mining the previously undeveloped San Rafael zinc zone at Cozamin to take advantage of the elevated zinc prices and fill some of the mill’s excess capacity. “This additional zinc production has allowed us to lower our overall costs by increasing our by-product credits,” says Pylot. “LME zinc inventories are at historic lows and we continue to believe zinc prices will remain strong over the short and medium term.”