Capstone Mining Corp.
TSX : CS

Capstone Mining Corp.

May 25, 2006 07:00 ET

Capstone Mining Corp.: Construction 95% Complete at the Cozamin Copper-Silver-Zinc Mine, Zacatecas, Mexico

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 25, 2006) - CAPSTONE MINING (TSX:CS) is pleased to report the recent progress at its Cozamin copper-silver-zinc mine located in Zacatecas State, Mexico.

Highlights

- Construction is 95% complete with mill and plant testing currently underway.

- Commissioning is planned to begin June 1.

- Total cash on hand will be US$20.0 million after all construction costs are incurred.

- Estimated average annual metal production is 16 million lbs of copper, 700,000 oz of silver and 4 million lbs of zinc at 1,000 tonnes per day.

San Roberto Mine

Four stopes are being developed for mining (2 are complete) and producing ore. These stopes are located on the east and west side of level 8 and central and east side of level 9. On level 9, an additional 30 m of drifting to the east will be completed by the end of May. Development on level 10 has commenced with drifting both east and west on this level. To date, 15,000 tonnes of ore have been stockpiled on surface.

Rehabilitation and construction of the internal ramp connecting the 8, 9 and 10 levels is complete. This ramp is being driven down to level 11. By the end of May, this ramp is expected to reach the 10.5 level where the loading station for the 10 level dump pocket in the shaft will be installed.

The San Ernesto decline ramp from surface to level 8 is used for access to the mine for personnel and mining equipment. At present, this ramp is also being used to haul ore to surface from the stope on level 8 east. Ore is also being hoisted via the San Roberto Shaft which will be the main ore conveyance when the mine is in full-scale production.

Capstone has received and is operating its fleet of mining equipment including 5 scoops, 2 jumbos and 4 haul trucks.

Mill, Plant and Tailings Dam

Construction in the mill and plant areas is 95% complete. This includes the rehabilitation and upgrade of the crusher circuit, construction of a 1,000 tonne fine ore bin, the installation of the 12' X 14' ball mill, and upgrade of the flotation circuit. Ore has recently been crushed and the fine ore bin is full. Testing of the 12' X 14' ball mill and the rest of the flotation plant is underway. Test runs of the plant with ore are scheduled to commence at the end of May. Commissioning is planned to start June 1, 2006.

The tailings dam dyke expansion is completed. This 12 m lift is designed to store an additional 4 years of tailings. Two more tailings lifts are planned over the life of the operation. Refurbishments to the offices, warehouse and maintenance shop are complete. The assay/metallurgical laboratory is currently operating and processing mine samples.

Budget

Capstone has a current bank balance of US$23.5 million. The remaining costs to complete the project are estimated at US$3.0 million. After all project costs are paid, including working capital, Capstone will have an estimated remaining cash balance of US$20.0 million.

Exploration and updated Resource Study

The Phase III underground definition program has been completed. A total of 114 NQ core holes have been drilled for a total of 18,100 m. This definition drilling was distributed over only 750 m of strike length below the existing level 9 (260 m below surface) in the San Roberto mine area. These extents represent about approximately 70% of the mineralized volume within the area of exploration drilling. Results for the first 109 holes have been reported in previous news releases, with results for the remaining 5 holes pending.

The definition drilling indicates that the copper-silver-zinc mineralization is present to a depth of at least 400 m below level 9 over a strike length of at least 1,400 m. The copper-silver-zinc mineralization remains open along strike to the west and to depth. Drill results confirm that the copper grades in the San Roberto mine increase significantly below level 8 and that the silver grades remain undiminished. At least 3 km of known strike extent of the Mala Noche vein remain untested by surface exploration drilling.

An updated resource estimate is currently being completed and the results are expected within 30 days. During the second half of 2006, Capstone plans to continue definition drilling below level 9. This work will focus on the western part of the deposit in order to increase resources in the measured and indicated categories.

Qualified Persons, Robert Barnes, P.Eng., Vice-President of Mining, and Hugh Willson, P.Geo., Vice-President of Exploration for Capstone Mining, have reviewed and approved the contents of this news release.

ABOUT CAPSTONE

Capstone is a Canadian based mining company focused on developing its Cozamin copper-silver-zinc mine located in Zacatecas State, Mexico. Capstone has approximately 78.5 million shares outstanding and is well financed with no debt. More information is available online at: www.capstonemining.com.


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