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11/9/16

Capstone Mining (CS.to) and "Zero Cost" collars

This from Capstone Mining (CS.to) this afternoon:

VANCOUVER, Nov. 9, 2016 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (CS.TO) today announced that it has entered into zero-cost collars for 43,000 tonnes of copper with settlements between January and December 2017 at a minimum of US$5,025 and a maximum of US$5,585 per tonne of copper. There was no cost to Capstone to put this protection in place. Continues here

It all sounds so win-win, doesn't it? After all, they told us "zero-cost" and "no cost" and "protection" and those are all wonderful yummy words and phrases in an expensive and high risk business like mining. So here's a simple statement of fact: If copper goes above U$2.54/lb between now and early next year those of you wondering why all the gross profits have suddenly disappeared from the CS.to 1q17 and 2q17 results will receive a sharp lesson in just how "zero cost" this all is. And the higher copper goes the nastier it'll get, as anyone old enough to remember what Whisler did to Phelps Dodge back in the day will know all too well.

Bottom line: Capstone just removed the blue sky from its stock and investors looking for a speculative copper vehicle will now avoid it and go somewhere else. Dress it up anyway you want, but this news is shareholder-unfriendly.