Jun 27, 2011
Scorpio Mining to Advance Feasibility Study of an Additional Plant and Plans to Increase its Existing Nuestra Señora Plant Capacity in the Cosalá District
Toronto, June 27, 2011 - Scorpio Mining Corporation (TSX: SPM) ("Scorpio" or the "Corporation") is pleased to announce that as a result of internal strategic evaluations, it is seeking to engage a lead engineering consultant to conduct a feasibility study for a second plant facility located 14 km northeast of the town of Cosalá and 17 km north of the existing Nuestra Señora plant by existing road.
Parviz Farsangi, President & CEO comments. "Our recent focus has been optimizing the performance of our existing assets, and as results of the last two quarters clearly show, we are operating at a significantly higher level than before. The combination of improved performance and strong metal prices enabled the Corporation to reach a debt-free status as of May 5, 2011. While continuing with the improvement of our existing operations and generating significant cash flow, our focus now is to take advantage of our strong resource base and significant exploration upside to grow through expansion. We are fast tracking the required work to enable a decision point on either expanding our existing plant to designed full capacity or constructing a new plant situated more central to the majority of our known resource base in the Cosalá district. While this work is in progress, we have the advantage to increase the capacity of our existing plant by 50% within a relatively short time frame."
The feasibility study will evaluate the viability of a nominal 4,000 tonnes per day (tpd), multi-product concentrator situated proximal to the historical mines of La Verde and La Estrella, and the San Rafael and El Cajón deposits where NI 43-101 compliant mineral resources have been defined as follows (Reference: News Release - October 15, 2009):
Table 1. Mineral Resource Estimate - San Rafael Deposit (August 12, 2009)
<< Drag to view table >>
Note: Metal prices used in the above estimates are US$12/oz silver, US$0.80/lb zinc, US$0.70/lb lead, US$2.00/lb copper and US$750 /oz gold. A 4.5% zinc equivalent cutoff was applied. The NI 43-101 technical report to support this estimate was filed on SEDAR Dec. 4, 2009. Mineral resources that are not reserves do not have demonstrated economic viability.
Table 2. Mineral Resource Estimate -- El Cajón Deposit (October 8, 2009)
Note: Metal prices used in the above estimate are US$12/oz silver, US$2.00/lb copper and US$750 /oz gold. A 100 g/t silver equivalent cutoff was applied. The NI 43-101 technical report to support this estimate was filed on SEDAR Dec. 4, 2009. Mineral resources that are not reserves do not have demonstrated economic viability.
Some components of the feasibility study are actively being advanced; including, an 8,000-metre surface drilling program currently under tender that will cover infill, extension and sterilization drilling of the San Rafael and La Verde mineralization. One of the key objectives of this study will be to upgrade mineral resources within the San Rafael, La Verde and El Cajón deposits to NI 43-101 compliant mineral reserves. It is anticipated that the feasibility study will be completed by Q3 2012.
The Corporation's internal strategic evaluation also concluded that notwithstanding the feasibility study for the addition of a second plant, the existing Nuestra Señora processing facility should be expanded by 50%, taking production from 1,500 tpd to 2,250 tpd. The ore for the expanded plant would be sourced from the Nuestra Señora mine and supplemented with high-grade material from the Candelaria deposit and the La Verde mine. The completion schedule of this expansion will depend upon the sourcing of major processing components, but is expected to be completed before second half of 2012.
This expansion does not preclude additional expansion of the Nuestra Señora processing facility in the future. This will be determined pending the results of the feasibility study on the proposed new plant as well as continued exploration success in the Cosalá district. The Corporation has the advantage of multiple options from which to select the best cost-benefit growth scenario.
The La Verde mine, located approximately 20 km by road from the Nuestra Señora processing plant, is currently being refurbished and small quantities of high-grade ore are being metallurgically tested through the plant.
The Candelaria underground deposit is situated above the Nuestra Señora mineralization and is connected to the Nuestra Señora mine via an existing haulage ramp. The Corporation is currently developing two levels at Candelaria to assess the viability of mechanized mining techniques. The high-grade nature of the deposit was verified in 2004-2005, where results from 53 underground drill holes returned >300 g/t silver and >1,000 g/t silver in 56% and 22% of sampled intersections respectively (average sampled core length was 2.2 m). The mineralization is variably enriched in other metals, returning best assays of 7.69% copper, 23.51% zinc, 15.21% lead and 13.55 g/t gold. Candelaria exhibits the typical pinch and swell nature of carbonate replacement deposits and exhibits high variation in widths and grades of mineralization over short distances (Reference: News releases dated October 7, 2004 to May 12, 2005).
Scorpio Mining's Mexico Country Manager, John A. Sadek, B.Eng. (Mining), MAusIMM, is a Qualified Person for the Corporation's Mexico projects and has reviewed the content of this section of the release.
ON BEHALF OF SCORPIO MINING CORPORATION
President & CEO
For further information contact:
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North America)
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 the Corporation's operations, plans, estimates, expectations, forecasts, objectives, predictions and projections of the future. 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 Corporation's projects in Mexico, 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, risks relating to completing acquisition transactions 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 30, 2011. 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.