(All amounts in US$ unless otherwise specified)

VANCOUVER, British Columbia--(BUSINESS WIRE)--#capstonemining--Capstone Mining Corp. (�Capstone� or the �Company�) (TSX:CS) announces updated Proven and Probable Mineral Reserves and positive results of an updated Technical Report for its Cozamin Mine in Zacatecas, Mexico.

HIGHLIGHTS

• Proven and Probable Mineral Reserves increased by 97% relative to December 31, 2019, to 10.2 million tonnes grading 1.79% copper.
• Ramp-up to 1.35 million tonnes milled per annum (�tpa�) by Q2 2021 is on time and budget. A new section of ramp to complete a one-way traffic circuit remains on schedule for completion in Q4 2020.
• Updated life of mine plan (�LOMP�) released. For the three years post-expansion (2021-2023) when compared to the three years pre-expansion (2018-2020), annual average copper and silver production increases by 70% to 61.4 million pounds and 43% to 1.75 million ounces, respectively. Additionally, average annual C1 costs (net of by-products) are expected to move 23% lower to $0.67 per payable pound of copper.
• Tailings management transformation activities are progressing on schedule, including design and permitting of a filtered (dry stack) tailings storage facility. This strategy aligns with industry leading environmental best practice for tailings management.
• A pre-feasibility study (�PFS�) of an underground paste backfill system is underway to assess the potential for increasing the extraction ratio from Vein 20 in the Mala Noche Footwall Zone (�MNFWZ�). The updated LOMP currently excludes these pillars and assumes an extraction ratio of 74%, leaving 3.5 million tonnes of Indicated Mineral Resources grading 1.89% copper and 42 g/t silver in unmined pillars that will be the subject of the PFS. This pillar extraction PFS is targeted for completion in Q4 2020 and assuming positive economics, it will include updated capital and net present value estimates and changes to the LOMP presented herein.
• A new step-out hole drill program totalling 80 holes targeting the down dip extension to the southeast of both Vein 10 and Vein 20 is underway. Hole S499 and S503 intersected high grade polymetallic copper, zinc, lead and silver in a 650-meter step-out from the current mineral resource. A 1 km exploration drift is being considered to provide a drilling platform to target this new area.
• An updated Mineral Resource Estimate is expected to be released with the pillar extraction PFS results. Drilling on the outer edges of the current resource is ongoing and will include all new drill holes with assay data received since April 30, 2020 (see Table 5 for current Mineral Resource Estimate).

Brad Mercer, Capstone�s SVP Exploration and Operations said, �We decided to take a two-phase approach and release the Mineral Reserves ahead of our 2021 budgeting cycle, allowing us to greenlight key projects by year-end. The second phase of this work, targeted for completion in Q4 2020, will focus on opportunities we have identified, such as the feasibility of high-grade pillar extraction using paste backfill, updating the block model with ongoing exploration results and ongoing metallurgical and geotechnical work on Vein 10 not in Reserve.�

Darren Pylot, Capstone�s President and CEO said, �I�m pleased to see Cozamin evolving into a safer and more productive mine with the one-way ramp in service and the potential for truckless headings as we look to add ore passes in our mine design. Additionally, it will be a more socio-environmentally responsible operation with the transition to dry-stack tailings and potentially a paste backfill plant that could return up to 60% of our tailings underground, so we can safely recover high grade pillars. This plan reinforces my view that Cozamin is a Tier 1 asset that will continue to generate exceptional value for all stakeholders.�

MINERAL RESERVE ESTIMATE

Table 1 presents the Mineral Reserve estimate for all zones as of April 30, 2020. Estimated Reserves have increased by 97% relative to December 31, 2019, and average copper grade of these Reserves has increased from 1.50% to 1.79%. Contained copper and silver have increased by 134% and 102%, respectively. Approximately 92% of current Reserves are in Vein 20, the principal vein in the MNFWZ.

TABLE 1 � Mineral Reserve Estimate as of April 30, 2020 at a US$52.29/t Net Smelter Return Cut-off

LIFE OF MINE PLAN AS OF APRIL 30, 2020

Cozamin�s LOMP has been updated based on the Mineral Reserves presented in Table 1 above. The LOMP should be considered interim as it is subject to change should the pillar extraction PFS prove positive in Q4 2020 (see Short-Term Opportunities section below for details). This interim plan includes full throughput rates of approximately 1.35 to 1.38 million tonnes per annum from 2021 through 2026, followed by declining rates to early 2029. See Table 3 below for a detailed year-by-year mine plan.

For the three years post-expansion (2021-2023) when compared to the three years pre-expansion (2018-2020), annual average copper and silver production increases by 70% and 43%, respectively, and copper grades increase by 31% with recoveries increasing for copper to 96.1% from 95.0% and silver to 85.5% from 78.0%. Silver recoveries are expected to benefit from improved metallurgical performance by processing copper-silver ore only versus a blend of copper-silver and lead-zinc-silver ore. Economies of scale and mining productivity improvements helped by one-way ramp completion have moved the three-year (2021-2023) average per tonne mining costs, milling costs and G&A costs by -14%, -4%, and -13%, respectively, relative to 2018-2020. See Table 2 below for detailed pre- and post-expansion comparisons on an annual average basis.

TABLE 2 � Comparison of Three Years Average Annual Pre- and Post-Expansion

TABLE 3 � Updated LOMP Subject to Change Pending Results of Pillar Extraction PFS¹ Targeted for Completion in Q4 2020

TAILINGS MANAGEMENT

Due to increased tailings storage requirements of the updated LOMP, Cozamin intends to convert from the current slurry tailings facility that has been safely operated for over 15 years to a filtered (dry stack) tailings facility. Preliminary design of two filtered tailings storage facility options has been completed, and feasibility-level engineering in support of permitting of these two options is in progress. It is expected that this conversion to filtered tailings will significantly decrease the mine�s socio-environmental, geotechnical and water supply risks, while decreasing water consumption and make-up water costs.

SHORT-TERM OPPORTUNITIES

Cozamin is advancing several initiatives with the potential to extend mine life, increase safety standards and improve operational efficiencies. The following short-term opportunities are not included in this updated LOMP or the Mineral Reserve estimate as of April 30, 2020.

Underground Paste Backfill

Cozamin�s updated LOMP assumes a mineral extraction ratio of 74% from the MNFWZ, leaving 3.5 million tonnes of Indicated Mineral Resources grading 1.89% copper and 42 g/t silver in pillars (see Table 4) for geotechnical stability. Internal analysis supports Capstone�s decision to proceed with a PFS to assess the potential for using underground paste backfill to increase this mineral extraction ratio. This study is targeted for completion in Q4 2020. A potential advantage to both capital and operating expenditures of paste backfill is the use of up to 60% of the tailings produced by the mine, rather than mining or purchasing aggregate. The use of filtered tailings for paste backfill reduces the mine�s surface tailings management costs and socio-environmental risk. Figure 1 below illustrates the design location of Indicated Mineral Resources locked up in pillars in Vein 20.

TABLE 4 � MNFWZ Pillars Excluded from Mineral Reserve Estimate as of April 30, 2020

FIGURE 1 � MNFWZ Vein 20 Resource with Updated LOMP Stopes and Pillars

NOTE: View looking north-northeast at 15�. Indicated Mineral Resources are shown in green. Inferred Mineral Resources are shown in light blue. Mineral Reserves are shown in red. Pillars left unmined in the updated LOMP, comprising Indicated Mineral Resources, are illustrated in black.

Stope Dilution

Stope dilution in the deeper areas of the NW end of the MNFWZ have been high compared to other longhole open stope mines, driven by narrow veins and local geotechnical conditions. As mining progresses away from this area, an initiative is underway to reduce dilution site-wide through improved engineering, planning, long-hole drill control and optimized explosives design guided by a team of consultants and site experts.

Truckless Headings

An initiative is underway to redesign the upper areas of Cozamin Reserves to ore pass use, increasing safety and efficiency, while increasing air quality, thereby decreasing ventilation requirements in these areas.

Further Resource to Reserve Conversion (MNFWZ)

The Indicated Mineral resource in the MNFWZ copper-silver zones exclusive of the pillars and the Mineral Reserves totals 7,248 kt of 1.74% copper, 39 g/t silver and 0.57% zinc, containing 278 million pounds of copper, 9.2 million ounces of silver and 92 million pounds of zinc remaining. Additionally, the Indicated Mineral Resource in the MNFWZ zinc-lead-silver zones exclusive of the pillars and the Mineral Reserves totals 3,704 kt of 0.21% copper, 36 g/t silver, 3.12% zinc and 1.48% lead, containing 17 million pounds of copper, 4.3 million ounces of silver, 255 million pounds of zinc, and 121 million pounds of lead remaining. In addition to the pillar extraction study, Capstone intends to initiate work to evaluate alternative mining techniques capable of lower costs and decreased dilution to determine if further mineral resources can be converted to mineral reserves.

MINERAL RESOURCE ESTIMATE

Table 5 presents the Mineral Resource estimate for all zones as of April 30, 2020. Estimated Measured and Indicated (�M+I�) Resources have increased by 60% relative to December 31, 2019. Contained copper, silver, zinc and lead have increased by 83%, 74%, 58% and 92%, respectively, relative to December 31, 2019. Mineral Resource estimates do not account for mining loss and dilution.

Capstone previously announced a total M+I Mineral Resource as of April 30, 2020 of 26,458 kt on June 11, 2020. The current Mineral Resource estimate is an increase of 3.8% from this previous estimate. This change is the result of an updated net smelter return (�NSR�) formula adopted for the cut-off applied, that includes long-term metals prices in line with current industry norms, updated recovery curves, royalties and other operational considerations.

TABLE 5 � Mineral Resource Estimate as of April 30, 2020 at a US$50/t NSR Cut-Off

NATIONAL INSTRUMENT 43-101

A National Instrument 43-101 ("NI 43-101") Technical Report will be prepared to summarize the Mineral Resource and Mineral Reserve estimates by the Qualified Persons and will be filed on SEDAR within 45 days of this news release.

Readers are cautioned that the conclusions, projections and estimates set out in this news release are subject to important qualifications, assumptions and exclusions, all of which will be detailed in the 2020 Technical Report. To fully understand the summary information set out above, the 2020 Technical Report that will be filed on SEDAR at www.sedar.com should be read in its entirety.

QUALIFIED PERSONS

The following Qualified Persons, as defined by NI 43-101, are independent from Capstone (except as noted below) and have reviewed and approved the content of this news release that is based on content from their respective portions of the 2020 Technical Report:

• Gregg Bush, P.Eng. (Non-independent)
• Jenna Hardy, P.Geo., FGC, Nimbus Management Ltd.
• Tucker Jensen, P.Eng., Capstone Mining Corp. (Non-independent)
• Garth Kirkham, P.Geo., FGC, Kirkham Geosystems Ltd.
• Chris Martin, CEng MIMMM, Blue Coast Metallurgy Ltd.
• Vivienne McLennan, P.Geo., Capstone Mining Corp. (Non-independent)
• Josh Moncrieff, P.Geo., Capstone Mining Corp. (Non-independent)
• Humberto Preciado, PhD, P.E., Wood Environment & Infrastructure Solutions, Inc.

EXPLORATION UPDATE AND NEW 80-HOLE DRILL PROGRAM

Results from five step-out drill holes released today demonstrate the expansion potential to the southeast, both within and external to the last Mineral Resource estimate. Drill results from Cozamin�s MNFWZ are summarized in Table 6 below and Figure 2 shows the location of holes S499 and S503 relative to the current Resource. Holes S499 and S503 intersected high grade polymetallic copper, zinc, lead and silver in a 650-meter step-out from the outer resource boundary.

�Both Vein 10 and Vein 20 are showing very interesting results in the step-out program targeting an area southeast of the last Mineral Resource estimate on June 11, 2020,� said Brad Mercer, SVP Exploration and Operations. �The holes released today point to a potential expansion of silver-lead-zinc resources in Vein 10. I am also excited to see the continuation of copper mineralization on the down-dip side of an inferred fault that appears to cut off the current high-grade mineral resource. Interestingly, Vein 20 is present on the other side of this break and is copper bearing, which gives us great reason to continue drilling along strike and down dip.�

FIGURE 2 � Location of Step-Out Holes S499 and S503 Relative to Current Resource of Vein 10 and Vein 20

NOTE: View looking north.

TABLE 6 � Selected MNFWZ Drilling Results � September 9, 2020

For drill hole location and context, please view the long-sections of the MNFWZ for Vein 10 here: https://capstonemining.com/files/images/maps/MNFWZ-Vein-10-PR-Long-Section-09Sept2020.pdf and Vein 20 here: https://capstonemining.com/files/images/maps/MNFWZ-Vein-20-PR-Long-Section-09Sept2020.pdf.

New 80-Hole Drill Program and 1 km Exploration Drift

Capstone also announces today a new 80-hole drill program. Results from the five step-out drill holes released demonstrate the expansion potential to the southeast, both within and external to the last Mineral Resource estimate. Figure 3 below shows the proposed targets for the new drill program.

FIGURE 3 � Proposed Target Zones for New 80-Hole Drill Program

NOTE: View looking north.

MINERAL RESOURCE ESTIMATE METHODOLOGY

The Mineral Resource estimate reported herein was prepared by Garth Kirkham of Kirkham Geosystems Ltd. of Burnaby, BC, Canada, an Independent Qualified Person under Canadian Securities Administrators� National Instrument 43-101. The Mineral Resources presented herein have been estimated in conformity with generally accepted CIM best practice guidelines and are reported in accordance with NI 43-101.

Contacts

FOR FURTHER INFORMATION PLEASE CONTACT:
Jerrold Annett, VP, Strategy and Capital Markets

416-572-2272

[email protected]

Virginia Morgan, Manager, IR and Communications

604-674-2268

[email protected]

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