A Leading Intermediate Copper Producer Q2 2017 Conference Call/Webcast Presentation July 31, 2017 1
Cautionary Note On Forward Looking Information This presentation, and the documents incorporated by reference herein, may contain “forward - looking information” within the meaning of Canadian securities legislation and “forward -looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward -loo king statements”). These forward -looking statements are made as of the date of this document and Capstone does not intend, and does not assume any obligation, to update these forward-looking statements, except as required under applicable securities legislation. Forward-looking statements relate to future events or future performance and reflect our expectations or beliefs regarding future events. Forward-looking statements include, but are not limited to, statements with respect to the estimation of mineral resources and mineral reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production and capital expenditures, the success of our mining operations, environmental risks, unanticipated reclamation expenses and title disputes. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes” or variations of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative of these terms or comparable terminology. In this document certain forward- looking statements are identified by words including “anticipation”, “guidance”, “plan” and “expected”. By their very nature, forward -looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, amongst others, risks related to inherent hazards associated with mining operations, future prices of copper and other metals, compliance with financial covenants, surety bonding, our ability to raise capital, Cap stone’s ability to acquire properties for growth, counterparty risks associated with sales of our metals, use of financial derivative instruments and associated counterparty risks, foreign currency exchange rate fluctuations, changes in general economic conditions, accuracy of mineral resource and mineral reserve estimates, operating in foreign jurisdictions with risk of changes to governmental regulation, compliance with governmental regulations, compliance with environmental laws and regulations, reliance on approvals, licences and permits from governmental authorities, impact of climatic conditions on our Pinto Valley, Cozamin and Minto operations, aboriginal title claims and rights to consultation and accommodation, land reclamation and mine closure obligations, uncertainties and risks related to the potential development of the Santo Domingo Project, increased operating and capital costs, challenges to title to our mineral properties, maintaining ongoing social license to operate, dependence on key management personnel, potential conflicts of interest involving our directors and officers, corruption and bribery, limitations inherent in our insurance coverage, labour relations, increasing energy prices, competition in the mining industry, risks associated with joint venture partners, our ability to integrate new acquisitions into our operations, cybersecurity threats, legal proceedings and other risks of the mining industry as well as those factors detailed from time to time in the Company’s interim and annua l f inancial statements and management’s discussion and analysis of those statements, all of which are filed and available for review under the Company’s profile on SEDAR at www.sedar.com Although the Company has attempted to identify important factors that could cause our actual results, performance or achievements to differ materially from those described in our forward- looking statements, there may be other factors that cause our results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that our forward- looking statements will prove to be accurate, as our actual results, performance or achievements could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on our forward-looking statements. Alternative Performance Measures “C1 cash cost”, “cash cost”, “all - in cost”, “fully -loaded all- in cost”, “adjusted net income/loss”, “operating cash flow before changes in working capital” and “net debt” are Alternative Performance Measures. Alternative performance measures are furnished to provide additional information. These non-GAAP performance measures are included in this presentation because these statistics are key performance measures that management uses to monitor performance, to assess how the Company is performing, to plan and to assess the overall effectiveness and efficiency of mining operations. These performance measures may not be comparable to similar data presented by other mining companies. These performance measures should not be considered in isolation as a substitute for measures of performance included in the Company’s unaudited condensed interim consolidated financial statement s prepared in accordance with IFRS. Currency All amounts are in US$ unless otherwise specified. 2
Participants Darren Pylot Jim Slattery Gregg Bush President, CEO & SVP & CFO SVP & COO Director 3
Q2 2017 Financial Highlights ➢ Q2 net income of $12.8 million ▪ Adjusted net income of $0.7 million, removes non- cash and non-recurring items ➢ Q2 and H1 2017 operating cash flow before changes in working capital of $26.0 and $50.1 million, respectively All three operating mines generated positive net earnings for the quarter 4
Debt Repayment & Revised Cost Guidance Debt Repayment ➢ Paid $10 million on revolving credit facility during the quarter ▪ Reduced drawn debt to under $300 million Revised Cost Guidance ➢ Consolidated C1, All-in and Fully-loaded All-in costs between $0.15 and $0.20/lb of payable copper produced higher than originally guided ▪ Q2 PV costs back down to run rate, will not make up all of the Q1 cost overrun ▪ At Minto, decision to extend the mine life adds another open pit stage of the Area 2 pit and Minto East underground with stripping and development (both expensed) to begin shortly and resulting cash flow primarily in 2018 Costs slightly higher at Cozamin due to lower by-product credits than ▪ anticipated and additional approved capital Continue to use free cash flow to de-lever balance sheet 5
Operating Performance Pinto Valley (Arizona, US) Q2 2017 H1 2017 Copper Production (tonnes) 15,491 26,791 C1 Cash Cost (1) ($/lb Cu produced) $1.84 $1.98 C1 Cash Cost (1) ($/lb Cu sold) $1.89 $1.99 All-in Cost (1) ($/lb Cu produced) $2.17 $2.42 Fully-loaded All-in Cost (1) ($/lb Cu produced) $2.19 $2.42 Cozamin (Zacatecas, Mexico) Copper Production (tonnes) 4,106 8,236 C1 Cash Cost (1) ($/lb Cu produced) $1.19 $1.26 C1 Cash Cost (1) ($/lb Cu sold) $1.39 $1.29 All-in Cost (1) ($/lb Cu produced) $1.73 $1.84 Fully-loaded All-in Cost (1) ($/lb Cu produced) $1.92 $2.02 Minto (Yukon, Canada) Copper Production (tonnes) 4,406 9,926 C1 Cash Cost (1) ($/lb Cu produced) $1.93 $2.00 C1 Cash Cost (1) ($/lb Cu sold) $1.63 $1.37 All-in Cost (1) ($/lb Cu produced) $1.95 $2.03 Fully-loaded All-in Cost (1) ($/lb Cu produced) $2.14 $2.30 1. Per payable pound of copper. These are Alternative Performance Measures. See Forward-Looking Statements slide. 6
Operating Results Mine Operating Results ➢ Operated on plan for the quarter ➢ Set new throughput records Pinto Valley ▪ Quarterly and monthly throughput of 58,700 and 60,300 tpd ➢ Continued to operate well ▪ Production and development ahead of plan ➢ Added $1 million in additional capitalized development and Cozamin $1.1 million to exploration budget to test copper targets for strike and dip extensions to the footwall zone and to better define zinc resources in the Main Vein on the San Rafael trend ➢ Expect 2017 production within guidance ▪ Advancing an extension to the Area 2 pit and additional underground, which adds stripping and development costs Minto in 2017 ▪ Extending mine life to mid-2020 and lays groundwork to take mine life potentially beyond 7
Q2 Highlights and Looking Forward Q2 Highlights: All three mines produced according to plan in Q2 ➢ ➢ Production guidance unchanged ➢ Consolidated cost guidance increased by between $0.15 and $0.20 per pound of payable copper Looking Forward: ➢ Operations running well with achievable operating forecasts ➢ Making the investment to extend the mine life at Minto ➢ Continued copper and zinc drilling and zinc metallurgical work at Cozamin ~50% of H2 production unhedged, no hedges beyond 2017 ➢ 100% exposed to copper price in 2018 and beyond 8
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