VANCOUVER – Capstone Mining Corp. (TSX:CS) has suspended work on its Santo Domingo copper development project and will lay off most of the employees at its offices in Chile in response to low commodity prices.
The Vancouver-based company says the decision affects 23 positions, out of a workforce of 31 employees at two offices in Chile. It anticpates the cost of community relations going forward will be $2 million annually.
The project — which had an estimated initial cost of $1.7 billion as recently as June 2014 — is 70 per cent owned by Capstone and 30 per cent owned by Korea Resources.
Capstone says its operating mines in Yukon Territory, Arizona and the Mexican state of Zacatecas, are on track to meet the company’s overall 2015 output guidance.
“While we continue to believe that Santo Domingo is an excellent project, a number of factors, including uncertainty over the future direction of copper prices and our financing capacity for the project, make capital preservation a priority at this time,” Capstone president and CEO Darren Pylot said in a statement.
He said the “most prudent course of action” is to put Santo Domingo on hold while retaining options for future development “when conditions improve.”
Capstone said that its Minto mine, northwest of Whitehorse, has outperformed expectations but the Cozamin mine in Mexico has fallen short. As a result, its 2015 output will meet output guidance but expectations for the individual mines is adjusted.
It’s now aiming a producing copper at a cost of between $1.95 and $2.05 per pound, a reduction of five cents per pound from the previous range.