The "quick mitigation measures" that TSX-listed Capstone Mining implemented have positioned the copper miner to weather the current low price environment, without delaying its 2021 growth targets, president and CEO Darren Pylot said this week.

Like many others in the industry, the company will reduce its capital and exploration expenditure for the year, by C$32-million. The miner is also targeting cost savings measures that will lower cash operating costs by about $22-million over the remainder of the year.

These operating cost savings will include locking in contract purchases and hedges on very low diesel prices, transportation and the Mexican Peso for the remainder of 2020. This is expected to result in consolidated C1 operating costs and all-in sustaining costs of about $1.80/lb and $2.20/lb, respectively, for the balance of this year, senior VP and CFO Raman Randhawa said.

These measures should not impact on its growth plans at Cozamin, in Mexico, or Pinto Valley, in the US state of Arizona.

Capstone ramped down operations at Cozamin on April 7 to comply with a Mexican government decree that required mining operations to be closed as part of a response to Covid-19. The decree was extended from April 30 to May 30, but mining companies that operate in municipalities which present low or no transmissions of the virus will be allowed to resume work on May 18. As such, Cozamin should be ramping back up to full capacity by May 18.

In the first quarter, Capstone produced 35.5-million pounds of copper at a C1 cash cost of $2.05/lb. Copper sales were lower at 30.4-million pounds, owing to timing of shipments at Pinto Valley.

Meanwhile, Capstone completed two major projects this month that represent a significant achievement on its path to expanding copper and silver production in 2021.

The final key component of the expansion, the Calicanto one-way ramp, continues as scheduled and on budget to be completed in December 2020. The company said its 818 m raisebore was completed 52 days ahead of schedule, which immediately improved ventilation and decreased the temperature in the deepest area of the mine.

The second milestone was completion of an upgrade to the underground electrical substation, to boost the mine from 7.5 MW to 9.5 MW. In addition, an additional underground maintenance shop has been completed, increasing fleet maintenance capacity by 50%.

Once completed, the underground expansion is expected to increase production to a new yearly run rate of about 50-million to 55-million pounds of copper and 1.5-million ounces of silver in 2021.

Capstone said that updated mineral resource and mineral reserve estimates for Cozamin were still expected to be completed in late 2020.

At Pinto Valley, the PV3 Optimisation initiative continues. It aims to enhance performance through a series of low capital, quick payback, high impact debottlenecking steps and operational tweaks. The goal is to sustainably boost throughput, enhance recovery and lower costs. All required permits are in place to operate at levels up to 79 500 t/d.

Work on the PV4 expansion to 100 000 t/d continued, but Capstone said at a slower rate, given Covid-19 restrictions. The update to the project has been delayed for an “indeterminate period”.

The study is focused on evaluating potential scenarios to take advantage of the one-billion tonnes of mineral resources not currently scheduled in the current mine plan pit shell (PV3).