Technical Report on the Cozamin project, Zacatecas State, Mexico October 2007 1 TITLE PAGE TECHNICAL REPORT ON THE COZAMIN PROJECT, ZACATECAS STATE, MEXICO COZAMIN PROJECT, ZACATECAS STATE, MEXICO Zacatecas Mining District o o (Centred near: 22 47’00”N, 102 34’00”W) Prepared by: Michelle S. Stone, Ph.D., P.Geo. CAPSTONE MINING CORP. Suite 1980 - 1055 West Hastings Street Vancouver, B.C., Canada V6E 2E9 and Robert B. Barnes, B.Sc., M.B.A., P.Eng. CAPSTONE MINING CORP. Suite 1980 - 1055 West Hastings Street Vancouver, B.C., Canada V6E 2E9 and Jenna Hardy, M.Sc., M.B.A., P.Geo. NIMBUS MANAGEMENT LTD. 535 East Tenth Street North Vancouver, B.C., Canada V7L 2E7 For CAPSTONE MINING CORP. Suite 1980 – 1055 West Hastings Street Vancouver, B.C., Canada V6E 2E9 October 31, 2007 Capstone Mining Corp. 1 Technical Report on the Cozamin project, Zacatecas State, Mexico October 2007 2 TABLE OF CONTENTS 1 TITLE PAGE ........................................................................................................................... 1 2 TABLE OF CONTENTS........................................................................................................ 2 3 SUMMARY .............................................................................................................................. 5 3.1 Property Description, Location and Access ................................................................ 5 3.2 Property Ownership and Terms of Agreement........................................................... 5 3.3 Geological Setting ........................................................................................................... 5 3.4 Property Geology and Mineralization........................................................................... 5 3.5 Exploration Concept........................................................................................................ 6 3.6 Status of Exploration, Development and Operations ................................................ 6 3.7 Resource Estimation for the Cozamin Project............................................................ 6 3.8 Reserves........................................................................................................................... 8 3.9 Conclusions and Recommendations............................................................................ 9 4 INTRODUCTION .................................................................................................................... 9 5 RELIANCE ON OTHER EXPERTS................................................................................... 10 6 PROPERTY DESCRIPTION AND LOCATION............................................................... 10 6.1 Location and Property Status ...................................................................................... 10 6.2 Location of Mineralization and Workings................................................................... 11 6.3 Terms of Agreements ................................................................................................... 11 6.4 Environmental Liabilities and Required Permits....................................................... 15 6.5 Environmental and Permitting Considerations and Activities Highlights.............. 15 7 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY .................................................................................................................... 16 8 HISTORY ............................................................................................................................... 18 8.1 Prior Ownership and Ownership Changes................................................................ 18 8.2 Historical Mineral Resource and Mineral Reserve Estimates ................................ 20 9 GEOLOGICAL SETTING.................................................................................................... 20 9.1 Regional Geological Setting ........................................................................................ 20 9.2 Property Geology........................................................................................................... 23 10 DEPOSIT TYPES............................................................................................................... 23 10.1 Mineral Deposit Type.................................................................................................. 23 10.2 Geological Concept Used For Exploration of the Property................................... 24 11 MINERALIZATION............................................................................................................. 24 12 EXPLORATION.................................................................................................................. 26 13 DRILLING............................................................................................................................ 32 14 SAMPLE METHOD AND APPROACH.......................................................................... 42 14.1 Diamond Drill Core Sampling.................................................................................... 42 14.2 Underground Chip Sampling..................................................................................... 44 15 SAMPLE PREPARATION, ANALYSES AND SECURITY......................................... 45 15.1 Sampling Personnel.................................................................................................... 45 15.2 Drill Core Sample Preparation and Analytical Procedures................................... 45 15.3 Underground Channel Sample Preparation and Analytical Procedures............ 48 16 DATA VERIFICATION ...................................................................................................... 49 16.1 Introduction................................................................................................................... 49 Capstone Mining Corp. 2 Technical Report on the Cozamin project, Zacatecas State, Mexico October 2007 16.2 QA/QC Summary for Phase IV and V Drill Samples............................................. 50 16.3 QA/QC Summary for the 2006 – 2007 Underground Chip Channel Samples.. 56 17 ADJACENT PROPERTIES .............................................................................................. 66 18 MINERAL PROCESSING AND METALLURGICAL TESTING................................. 66 18.1 Introduction................................................................................................................... 66 18.2 Ore Processing............................................................................................................ 66 18.2.1 Ore Types ................................................................................................................. 66 18.2.2 Previous Plant Performance .................................................................................. 66 19 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ........................... 74 19.1 2005 Initial Resource Estimate ................................................................................. 74 19.2 2007 Updated Resource Estimate ........................................................................... 76 19.2.1 Database, software and three dimensional models ........................................... 76 19.2.2 Domain Modelling .................................................................................................... 77 19.3.3 Compositing.............................................................................................................. 78 19.2.4 Block model .............................................................................................................. 81 19.2.5 Density....................................................................................................................... 81 19.2.6 Block Interpolation ................................................................................................... 81 19.2.7 Classification............................................................................................................. 82 19.3 Mineral Reserves Estimation..................................................................................... 84 19.3.1 Introduction ............................................................................................................... 84 19.3.2 Cut-off Grade............................................................................................................ 85 19.3.3 Recovery and Dilution............................................................................................. 85 19.3.4 2007 Cozamin Reserves ........................................................................................ 85 19.3.5 Reconciliation ........................................................................................................... 89 19.4 Conclusions.................................................................................................................. 90 20 OTHER RELEVANT DATA AND INFORMATION....................................................... 90 21 INTERPRETATION AND CONCLUSIONS ................................................................... 90 22 RECOMMENDATIONS..................................................................................................... 92 23 REFERENCES AND SOURCES OF INFORMATION................................................. 94 24 SIGNATURE, STAMP AND DATE ................................................................................