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The Santo Domingo copper and iron project is located in Chile’s north, 50 kilometres west of Codelco’s El Salvador copper mine. (Image courtesy of Capstone Mining Corp.)
Capstone Mining Corp. (TSX:CS) said Wednesday that low commodity prices have forced the company to halt work at its 70%-owned Santo Domingo copper development project in northern Chile, adding it will lay off most of the employees at its South American offices.
The Vancouver-based miner noted the move would affect 23 of the 31 people it employs at its two Chilean offices.
“As copper prices continue to deteriorate, we have looked at a range of actions to preserve our financial flexibility,” Capstone president and CEO Darren Pylot said in a statement. “This includes reducing and deferring capital expenditures at our operating mines, suspending all work on the Santo Domingo project, eliminating non-essential operating and general and administrative expenses and reducing exploration expenditures.”
He added the company anticipates the cost of community relations going forward will be about $2 million a year.
“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,” Pylot said.
The Santo Domingo copper and iron project, located 50 kilometres west of Codelco’s El Salvador copper mine, is co-owned by Korea Resources, which holds a 30% stake on it. The project estimated initial cost was $1.7 billion as per June 2014.
Capstone highlighted that despite the gloomy news its operating mines — in Canada’s Yukon Territory, Arizona and the Mexican state of Zacatecas — are on track to meet the company’s overall 2015 output guidance.
The move move comes on the heels of mining giant Glencore’s (LON:GLEN) decision to scrap dividends and suspend production at two of its copper mines in Africa, to prepare for the possibility that commodity prices may fall even further amid questions over Chinese demand.
