All amounts in US$ unless otherwise indicated

Capstone Copper Corp. (“Capstone” or the “Company”) (TSX:CS) today announced consolidated copper production for 2022 and provided operations and capital expenditure guidance for 2023.

Consolidated Copper Production for the nine-month period April 1 to December 31, 2022

Capstone achieved its production and cost guidance for the nine-month period ended December 31, 2022. Consolidated copper production was 136.3 thousand tonnes at C1 cash costs^1,2 of $2.68 per payable pound of copper produced. For Q4 2022, consolidated copper production was 45.5 thousand tonnes at C1 cash costs^1,2 of $2.50 per payable pound of copper produced.

John MacKenzie, CEO of Capstone, commented, “We had a strong finish to 2022 with consolidated cash costs down 9% quarter-over-quarter, helped by cost control at our operations and increased contribution of lower cost sulphide production. Our growth in high-margin sulphide production will be significantly boosted by the ramp-up of the Mantoverde Development Project next year, a transformational project for Capstone that remains on budget and on schedule for completion by year-end 2023.”

2023 Production and Costs Guidance

The Mantoverde Development Project is progressing well and remains on track for commissioning and feeding first ore to the mill in late 2023. Total projected capital cost remains unchanged at $825 million.

Consolidated C1 cash costs¹ are expected to decline in 2023 compared to 2022 due to an increased proportion of lower-cost copper production from concentrates versus higher-cost copper cathode. This will be driven primarily by increased throughput at the Mantos Blancos concentrator, after the completion of the ramp-up in 2022 of the Mantos Blancos Concentrator Debottlenecking Project. The decline in 2023 cathode production is a result of the anticipated grade decline in Mantoverde oxides. Helping offset lower oxide grades are lower sulphuric acid prices, and we have secured over 70% of our 2023 requirement at prices in the $130 - $150 per tonne range, which is over $100 per tonne lower than prices paid in 2022. Pinto Valley is expected to perform similarly year-over-year for production and costs.

C1 cash costs¹ at the Cozamin mine are expected to increase to $1.50 to $1.65 per payable pound of copper produced. The additional costs are expected with the operation of the new paste backfill and dry stack tailings plant currently being commissioned and ramping up. We are also introducing cut-and-fill mining in certain areas of the mine this year. Some areas of the Mala Noche Footwall Zone will benefit from this change in mining method which will increase the realized mineral recovery in the mining process. A new technical report will be issued at the end of Q1 2023 outlining the incorporation of cut-and-fill to the mine plan. We anticipate that this method will provide future opportunity to convert more of the resource to the reserve and a pathway to increase mine production in the future to better utilize the installed mill capacity of 4,400 tonnes per day. We intend to update the mine plan in 2024 to incorporate these improvement opportunities. 

2023 Capital and Exploration Guidance

In 2023, the Company plans to spend a total of $400 million in sustaining and expansionary capital expenditures at its operating mines and the Santo Domingo Project. This is broken down into $140 million on sustaining capital and $260 million on expansionary capital, mainly related to completing the construction of the Mantoverde Development Project. Pinto Valley sustaining capital spend relates to investments in infrastructure upgrades that will increase water reliability and strengthen tailings stewardship. 

In addition, the Company plans to spend a total of $220 million in capitalized stripping at its three open pit mines.

A portion of waste material mined at the Mantos Blancos and Mantoverde mines in 2023 is considered eligible for capitalization as a stripping asset under Capstone’s accounting policies. In the Mantoverde and Mantos Blancos technical reports dated November 29, 2021, the costs associated with mining this waste material were considered to be operating costs. Total mine movement has not increased compared to the technical reports, only the classification between operating costs and capitalized stripping.

Finally, the Company plans to spend $10 million in brownfield and greenfield exploration activities in 2023. Brownfield exploration is focused on resource to reserve conversion at Cozamin, Mantos Blancos and Mantoverde with greenfield exploration focused mainly on the high-grade Planalto project in Brazil. 

2023 Key Catalysts

2023 will be a catalyst-rich year with the following feasibility studies and milestones expected to be delivered:

• Updated 43-101 Cozamin Mine Plan – Q1 2023
• ESG strategy roll-out – Q1 2023
• PV4 Feasibility Study – H1 2023
• Mantos Blancos Phase II Feasibility Study – H2 2023
• Mantoverde Phase II Feasibility Study – H2 2023
• Updated Santo Domingo Feasibility Study (Copper-Iron) including MV-SD district synergies – H2 2023
• Commissioning of MVDP – Before year-end 2023

2022 Year-end Results Announcement and Conference Call

Capstone will release its 2022 Full-year results on Wednesday, February 15, 2023 prior to market open. Management will host an investor conference call on Wednesday, February 15, 2023 at 11:00 am ET/8:00 am PT. Details to join the call are as follows:

An audio replay of the conference call will be available until March 1, 2023.

After the replay expiration, an audio file will be available on Capstone’s website at Capstone Copper - Events and Presentations. Further information is available at www.capstonecopper.com

ABOUT CAPSTONE COPPER CORP.

Capstone Copper Corp. is an Americas-focused copper mining company headquartered in Vancouver, Canada. We own and operate the Pinto Valley copper mine located in Arizona, USA, the Cozamin copper-silver mine located in Zacatecas, Mexico, the Mantos Blancos copper-silver mine located in the Antofagasta region, Chile, and 70% of the Mantoverde copper-gold mine, located in the Atacama region, Chile. In addition, we own the fully permitted Santo Domingo copper-gold project, located approximately 30 kilometres northeast of Mantoverde in the Atacama region, Chile, as well as a portfolio of exploration properties in the Americas.

Capstone Copper’s strategy is to unlock transformational copper production growth while executing on cost and operational improvements through innovation, optimization and safe and responsible production throughout our portfolio of assets. We focus on profitability and disciplined capital allocation to surface stakeholder value. We are committed to creating a positive impact in the lives of our people and local communities, while delivering compelling returns to investors by sustainably producing copper to meet the world’s growing needs.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document 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-looking statements”). These forward-looking statements are made as of the date of this document and the Company 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 and the impacts of the ongoing and evolving COVID-19 pandemic and the evolving geopolitical environment. Forward-looking statements include, but are not limited to, statements with respect to the execution of our future growth projects, our financial liquidity and development of our projects, the estimation of Mineral Resources and Mineral Reserves, the success of the underground paste backfill and tailings filtration projects at Cozamin, the timing and cost of the construction of the paste backfill and dry stack tailings plant at Cozamin, the success and timing of the Mantos Blancos Concentrator Debottlenecking Project, the timing and cost of the Mantoverde Development Project, the timing and results of the PV4 study, timing and success of the Jetti Technology, the successful execution of a port services agreement with Puerto Abierto S.A., the expected reduction in capital requirements for the Santo Domingo project, the timing and success of the Cobalt Study for Santo Domingo, the timing and results of the integrated plan for Mantoverde - Santo Domingo, the realization of Mineral Reserve estimates, the timing and amount of estimated future production, the costs of production and capital expenditures and reclamation, the budgets for exploration at Cozamin, Santo Domingo, Pinto Valley, Mantos Blancos, Mantoverde and other exploration projects, the timing and success of the Copper Cities project, the success of our mining operations, the continuing success of mineral exploration, the estimations for potential quantities and grade of inferred resources and exploration targets, our ability to fund future exploration activities, our ability to finance the Santo Domingo project and other current or future projects and expansions, environmental risks, unanticipated reclamation expenses and title disputes, the success of the synergies and catalysts related to the combined business following the Company’s recent arrangement, and the anticipated future production, costs of production, including the cost of sulphuric acid and oil and other fuel, capital expenditures and reclamation of the Company's operations and development projects and the risks included in our continuous disclosure filings on SEDAR at www.sedar.com. The potential effects of the COVID-19 pandemic on our business and operations are unknown at this time, including Capstone Copper’s ability to manage challenges and restrictions arising from COVID-19 in the communities in which Capstone Copper operates and our ability to continue to safely operate and to safely return our business to normal operations. The impact of COVID-19 to Capstone Copper is dependent on a number of factors outside of our control and knowledge, including the effectiveness of the measures taken by public health and governmental authorities to combat the spread of the disease, global economic uncertainties and outlook due to the disease, supply chain delays resulting in lack of availability of supplies, goods and equipment, and evolving restrictions relating to mining activities and to travel in certain jurisdictions in which we operate.

In certain cases, forward-looking statements can be identified by the use of words such as “anticipates”, “approximately”, “believes”, “budget”, “estimates”, “expects”, “forecasts”, “guidance”, intends”, “plans”, “scheduled”, “target”, or variations of such words and phrases, or statements that certain actions, events or results “be achieved”, “could”, “may”, “might”, “occur”, “should”, “will be taken” or “would” or the negative of these terms or comparable terminology. In this document certain forward-looking statements are identified by words including “anticipated”, “expected”, “guidance” and “plan”. The forward-looking statements in this document are necessarily based on a number of estimates and assumptions that, while considered reasonable by the Company as at the date of such statements, are inherently subject to the business, economic and competitive uncertainties and contingencies. The Company has based these forward-looking statements on the Company’s current expectations and projections about future events. 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 and closure of mining projects, future prices of copper and other metals, compliance with financial covenants, surety bonding, our ability to raise capital, Capstone Copper’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, market access restrictions or tariffs, changes in general economic conditions, availability and quality of water, 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 and potential legal challenges to permit applications, contractual risks including but not limited to, our ability to meet the completion test requirements under the Cozamin Silver Stream Agreement with Wheaton Precious Metals Corp. ("Wheaton"), our ability to meet certain closing conditions under the Santo Domingo Gold Stream Agreement with Wheaton, acting as Indemnitor for Minto Metals Corp.’s surety bond obligations post divestiture, impact of climate change and changes to climatic conditions at our operations and projects, changes in regulatory requirements and policy related to climate change and greenhouse gas ("GHG") emissions, land reclamation and mine closure obligations, aboriginal title claims and rights to consultation and accommodation, risks relating to widespread epidemics or pandemic outbreak including the COVID-19 pandemic; the impact of COVID-19 on our workforce, risks related to construction activities at our operations and development projects, suppliers and other essential resources and what effect those impacts, if they occur, would have on our business, including our ability to access goods and supplies, the ability to transport our products and impacts on employee productivity, the risks in connection with the operations, cash flow and results of Capstone Copper relating to the unknown duration and impact of the COVID-19 pandemic, impacts of geopolitical events and the effects of global supply chain disruptions, uncertainties and risks related to the potential development of the Santo Domingo project, risks related to the Mantos Blancos Concentrator Debottlenecking Project and the Mantoverde Development Project, increased operating and capital costs, increased cost of reclamation, challenges to title to our mineral properties, increased taxes in jurisdictions the Company operates or is subject to tax, changes in tax regimes we are subject to and any changes in law or interpretation of law may be difficult to react to in an efficient manner, maintaining ongoing social licence to operate, seismicity and its effects on our operations and communities in which we 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 input costs such as those related to sulphuric acid, electricity, fuel and supplies, increasing inflation rates, competition in the mining industry including but not limited to competition for skilled labour, risks associated with joint venture partners and non-controlling shareholders or associates, our ability to integrate new acquisitions and new technology into our operations, cybersecurity threats, legal proceedings, the volatility of the price of the Common Shares, the uncertainty of maintaining a liquid trading market for the Common Shares, risks related to dilution to existing shareholders if stock options or other convertible securities are exercised, the history of Capstone Copper with respect to not paying dividends and anticipation of not paying dividends in the foreseeable future and sales of Common Shares by existing shareholders can reduce trading prices, and other risks of the mining industry as well as those factors detailed from time to time in the Company’s interim and annual financial statements and MD&A 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.

CAUTIONARY NOTE TO UNITED STATES INVESTORS REGARDING PRESENTATION OF MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES

As a British Columbia corporation and a “reporting issuer” under Canadian securities laws, we are required to provide disclosure regarding our mineral properties in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. In accordance with NI 43-101, we use the terms mineral reserves and resources as they are defined in accordance with the CIM Definition Standards on mineral reserves and resources (the “CIM Definition Standards”) adopted by the Canadian Institute of Mining, Metallurgy and Petroleum. In particular, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” used in this annual information form and the documents incorporated by reference herein and therein, are Canadian mining terms defined in accordance with CIM Definition Standards. These definitions differ from the definitions in the disclosure requirements promulgated by the SEC. Accordingly, information contained in this annual information form and the documents incorporated by reference herein may not be comparable to similar information made public by U.S. companies reporting pursuant to SEC disclosure requirements.

United States investors are also cautioned that while the SEC will now recognize “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”, investors should not assume that any part or all of the mineralization in these categories will ever be converted into a higher category of mineral resources or into mineral reserves. Mineralization described using these terms has a greater amount of uncertainty as to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to assume that any “measured mineral resources”, “indicated mineral resources”, or “inferred mineral resources” that we report are or will be economically or legally mineable. Further, “inferred resources” have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that all or any part of the inferred resources exist. In accordance with Canadian rules, estimates of “inferred mineral resources” cannot form the basis of feasibility or other economic studies, except in limited circumstances where permitted under NI 43-101.

COMPLIANCE WITH NI 43-101

Unless otherwise indicated, Capstone has prepared the technical information in this document (“Technical Information”) based on information contained in the technical reports, news releases and other public filings (collectively the “Disclosure Documents”) available under Capstone Copper Corp.’s company profile on SEDAR at www.sedar.com. Each Disclosure Document was prepared by or under the supervision of a qualified person (a “Qualified Person”) as defined in National Instrument 43-101. For readers to fully understand the information in this document, readers are encouraged to review the full text of the Disclosure Documents, including the qualifications, assumptions and exclusions that relate to the Technical Information set out in this document, which qualifies the Technical Information. Readers are advised that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents.

Disclosure Documents include the National Instrument 43-101 compliant technical reports titled “Santo Domingo Project, Region III, Chile, NI 43-101 Technical Report” effective February 19, 2020 and “Mantoverde and Mantoverde Development Project, NI 43-101 Technical Report, Chañaral / Región de Atacama, Chile” effective November 29, 2021.

The disclosure of Scientific and Technical Information in this document was reviewed and approved by Cashel Meagher, P.Geo., President and Chief Operating Officer and Peter Amelunxen, PE, VP Technical Services (technical information related to project updates at Santo Domingo and Mineral Reserves and Resources at Mantos Blancos and Mantoverde), all Qualified Persons under NI 43-101.

ALTERNATIVE PERFORMANCE MEASURES

This document refers to certain non-GAAP financial performance measures, including “C1 cash cost”, “cash cost”, “EBITDA”, “adjusted EBITDA”, “operating cash flow before changes in working capital”, “adjusted net (loss) income”, “net debt”, “net cash”, “all-in sustaining costs”, “all-in costs”, “available liquidity”, “expansionary capital” and “sustaining capital” 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 internally 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 do not have a standard meaning within IFRS and, therefore, amounts presented 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 in accordance with IFRS. For full information, please refer to the Company’s latest Management Discussion and Analysis published on its Financial Reporting webpage or on SEDAR (the “MD&A”)

C1 Cash Cost per pound: C1 cash costs per payable pound of copper produced is a measure reflective of operating costs per unit. C1 cash costs is calculated as cash production costs of metal produced net of by-product credits and is a key performance measure that management uses to monitor performance. Management uses this measure to assess how well the Company’s producing mines are performing and to assess overall efficiency and effectiveness of the mining operations and assumes that realized by-product prices are consistent with those prevailing during the reporting period.

EBITDA: EBITDA is net income before net finance expense, tax expense, and depletion and amortization.

Adjusted EBITDA: Adjusted EBITDA is EBITDA before the pre-tax effect of the adjustments made to adjusted net (loss) income (above) as well as certain other adjustments required under the RCF agreement in the determination of EBITDA for covenant calculation purposes. The adjustments made to Adjusted net (loss) income and Adjusted EBITDA allow management and readers to analyze our results more clearly and understand the cash generating potential of the Company.

Operating cash flow before change in working capital: Operating Cash Flow before changes in working capital per common share is a performance measure used by the Company to assess its ability to generate cash from its operations, while also taking into consideration changes in the number of outstanding shares of the Company.

Adjusted net (loss) income: Adjusted net (loss) income is net income as reported, adjusted for certain types of transactions that in our judgment are not indicative of our normal operating activities or do not necessarily occur on a regular basis.

Net debt / net cash: Net debt / Net cash is a performance measure used by the Company to assess its financial position and is composed of Long-term debt (excluding deferred financing costs and purchase price accounting ("PPA") fair value adjustments), due to related parties, cash and cash equivalents and short-term investments.

All-in sustaining costs: All-in sustaining costs per payable pound of copper produced is an extension of the C1 cash costs measure discussed above and is also a key performance measure that management uses to monitor performance. Management uses this measure to analyze margins achieved on existing assets while sustaining and maintaining production at current levels. Consolidated All-in sustaining costs includes sustaining capital and corporate general and administrative costs.

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