Aug 13, 2009
Scorpio Announces Second Quarter 2009 Results
Vancouver, August 13, 2009 - Scorpio Mining Corporation (TSX: SPM) ("Scorpio" or the "Company") today reported unaudited financial and operating results for the second quarter ended June 30, 2009 and provided an update on its operations.
Peter J. Hawley, Chairman, CEO reports, "We, as a team, are very proud to report a record second quarter for commercial production with positive mine operating cash flows, positive net earnings, an increase in concentrate sales, underground production, mill throughput and silver grades and lower than budgeted Mexican cash operating costs per tonne, smelter treatment charges and underground development costs.
Since the end of second quarter, metal prices have strengthened, changes in mill blending have resulted in increased silver grades and long-term mining extraction plans have been implemented to begin mine and mill ramp-ups. For example, in the month of July, the mill throughput was in excess of 18,000 tonnes compared to approximately 15,000 tonnes per month for the second quarter. These positive factors should begin to be recognized in the third quarter resulting in increased revenues per tonne of concentrates sold. The Company has set strict mandates for 2009 to show profitability, and to date has exceeded all goals set. The Company continues to aggressively seek acquisitions of near-term, high-grade development projects and/or operating assets in Mexico."
This earnings release should be read in conjunction with the Company's MD&A, Financial Statements and Notes to Financial Statements for the corresponding period, which are available on the Company's website at www.scorpiomining.com
and have been posted on SEDAR at www.sedar.com
Second Quarter Highlights:
- Nuestra Senora mine operating earnings were $1,100,429 compared to $895,596 in the first quarter of 2009.
- Net earnings were $462,634 or $0.00 per share compared to a loss of $385,854 in the first quarter of 2009.
- The Company's Mexican operations generated positive cash flows.
- Nuestra Senora cash operating costs were lower than budgeted at US$43.95 per tonne compared with the forecasted cost of US$46.50 per tonne(1) a favourable variance of 5%, despite additional operating costs including major equipment overhauls such as one of the cone crushers and a scoop tram and the purchase of grinding balls required to maintain productivity at the mill.
- The average cost per meter of development declined from US$1,105 in the first quarter of 2009 ("Q1") to US$998 in the second quarter ("Q2") a decrease in costs of 10%.
- Underground ore production increased from 9,658 tonnes in March to 10,722 tonnes in June, an increase of 11% in underground ore production.
- Mill throughput increased from 12,078 tonnes in April to 15,387 tonnes in May, a 27% increase from April and to 14,960 tonnes in June, a 24% increase from April. The Company expects to maintain or exceed throughput above 15,000 tonnes during the remainder of the year.
- During Q2, the mill processed 42,427 tonnes (Q1: 39,594), a 7% increase in 58 days (Q1: 53 days) at an average grade of 1.42% lead, 0.40% copper, 2.43% zinc and 114 g/t silver (Q1: 1.44% lead, 0.44% copper, 2.66% zinc and 109 g/t silver).
- During Q2, contained metals produced in concentrates consisted of 960,000 pounds of lead, a 3% decrease; 201,000 pounds of copper, a 8% increase; 1.68 million pounds of zinc, a 8% decrease and 137,982 ounces of silver, a 10% increase. In comparison, in Q1 the contained metals produced were 993,000 pounds of lead, 184,000 pounds of copper, 1.81 million pounds of zinc and 123,577 ounces of silver. The Company's mandate for Q2 was to focus on producing concentrates which generated higher revenues as a result of an increase in metals prices for the quarter.
- Concentrate inventory at the end of Q2 consisted of 143 tonnes of lead, 28 tonnes of copper and 75 tonnes of zinc.
- For the half year production, contained metals produced in concentrates consisted of 1.95 million pounds of lead, 385,000 pounds of copper, 3.49 million pounds of zinc and 261,559 ounces of silver.
- In addition to the six-month (May to October 2009) contracts secured through its marketing agent Ocean Partners USA Inc. ("Ocean") for all of its copper and zinc concentrates, on July 1st, 2009 Ocean renewed the Company's annual contract to deliver all of its lead concentrate production to the Penoles smelter and refinery facility in Torreon, Mexico for a period of 12 months. All of the 2009 off-take contracts are on more favourable terms to the Company than those negotiated in 2008.
- Now that the Company has demonstrated two positive solid quarters of commercial production, it intends to follow industry standards of reporting by only issuing quarterly statements as to the performance of the Company and the mine, contrary to the first six months of 2009 where the Company issued monthly operational updates to demonstrate the positive progress of the Mexican operations.
Further information is available on the Company's web site at: www.scorpiomining.com.
President, Mr. D. Roger Scammell, PGeo, is the Company's Qualified Person for the Nuestra Señora project and has reviewed the content of this release.
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley
Chairman & CEO
For further information contact:
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North America)
(1) This is a non-GAAP performance measure; please see Non-GAAP Performance Measures on page 12 of the MD&A.
This news release includes certain statements that may be deemed "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to enhancing mine operations and Scorpio Mining Corporation's commitment to, and plans for developing the Nuestra Senora Project. Generally, these forward-looking statements can be identified by the forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "projects", "intends", "anticipates", or "does not anticipate", or "believes", or "variations of such words and phrases or state that certain actions, events or results "may", "can", "could", "would", "might", or "will" be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Scorpio Mining Corporation to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the exploration and development and operation of the Nuestra Senora Project, risks related to international operations, construction delays and cost overruns, the actual results of current exploration, development and construction activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, future prices of silver, zinc, copper, lead and gold, as well as those factors discussed in the sections relating to risk factors of our business filed in Scorpio Mining Corporation's required securities filings on SEDAR, including its Annual Information Form dated March 27, 2009. Although Scorpio Mining Corporation has attempted to identify important factors that could cause results to differ materially from those contained in forward-looking statements, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended.
There can be no assurance that any forward-looking statements will prove accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Scorpio Mining Corporation does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.