Capstone Mining Corp.
TSX : CS

Capstone Mining Corp.

January 15, 2007 17:05 ET

Capstone Mining Corp.: Record Earnings of $12.3 Million and Earnings Per Share of $0.15 in Q1-2007

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 15, 2007) - CAPSTONE MINING (TSX:CS) reported 1st quarter results ended November 30, 2006, its first producing quarter.

Significant events are as follows:

- Net earnings after tax were $12.3 million (including future income tax asset of $5.8 million), (2006 - $Nil).

- Earnings per share were $0.15 in Q1-2007, compared to earnings per share of ($0.01) in Q1-2006.

- Total throughput was 93,055 tonnes (103% of planned throughput). Production was 2.7 million pounds of copper, 161,000 ounces of silver, 1.9 million pounds of zinc and 900,000 pounds of lead.

- 90% of copper and zinc concentrates sold during the quarter were priced when loaded on the vessel, for realized prices of US$3.10 per pound copper and US$1.90 per pound zinc.

- On-site copper cash costs net of by-product credits were US$(0.04)/lb. Cash costs (the aggregate of smelter, refinery, transportation and all site costs) were US$0.44/lb in Q1-2007.

- Total costs (the aggregate of cash costs, depletion, amortization and royalty allowance) were $0.85/lb in Q1-2007.

- Working capital was $26.7 million at November 30, 2006.

2007 Metal Production

The forecasted copper, silver, lead and zinc production for the fiscal year 2007 is estimated to be 13 - 14 million pounds of copper, 750,000 ounces of silver, 3.5 million pounds of lead and 8 million pounds of zinc.

Expansion

During the quarter, basic engineering, capital costs and construction schedule were prepared for the expansion of the mine capacity from 350,000 tonnes per year to 750,000 tonnes per year (115% increase). All of the major equipment for the plant and mine has been purchased. The cost of expansion is estimated to be US$15 million which will be funded from operating cash flow. Expansion capacity will incrementally increase throughout the year with 2,200 tpd capacity expected to be achieved by the 4th calendar quarter. The expansion will increase the 2008 production at Cozamin to 26 million pounds of copper, 1.3 million ounces of silver, 4.0 million pounds of lead and 11.0 million pounds of zinc.

Exploration

Capstone has an exploration budget of US$6 million for the fiscal year 2007. A 5,000 m Phase 4 surface exploration program and a 20,000 m Phase 5 underground infill drill program are currently underway. To date, the Company has drilled 10 holes from underground, totaling 3,300 m and 2 holes from surface, totaling 1,800 m. In this ongoing drill program, the underground holes are designed to upgrade and expand the existing inferred resources adjacent to the areas being mined. The surface holes are exploring the potential of the Mala Noche vein below the areas of known resources and will test for other types of mineralization, such as stockwork and skarn at depth.

The information in this news release should be read in conjunction with the Interim Consolidated Financial Statements and Management Discussion and Analysis for the quarter ended November 30, 2006, which will be available on the Company's web site www.capstonemining.com and at www.sedar.com.

ABOUT CAPSTONE

Capstone is a Canadian based mining company currently operating the 100% owned Cozamin copper-silver-lead-zinc mine located in Zacatecas State, Mexico. Capstone has approximately 80.8 million shares outstanding and is well financed with no bank debt. More information is available online at: www.capstonemining.com.

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