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Nov 03, 2011
Scorpio Mining Announces Third Quarter Financial Results

Toronto, November 3, 2011 - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Corporation") is pleased to announce its unaudited financial and operating results for the third quarter ("Q3") ended September 30, 2011. This press release should be read in conjunction with the Corporation's Management Discussion & Analysis and Financial Statements for the nine month period ended September 30, 2011, available on the Corporation's website at and on SEDAR at All monetary figures are expressed in Canadian dollars unless otherwise specified.

Highlights for the Three and Nine Months Ended September 30, 2011:

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Three months ended Sep 30, 2011

Three months ended Sep 30, 2010

Nine months ended Sep 30, 2011

Nine months ended Sep 30, 2010

Mine operating earnings ($000s) $6,773 $1,192 $29,618 $3,471
Net earnings (loss) ($000s)(1) $3,801 $(1,810) $13,618 $15,658
Earnings (loss) per share (basic) $0.02 $(0.01) $0.07 $0.10
Adjusted EBITDA(2) ($000s) $6,717 $2,307 $30,273 $6,686
Cash flows from operating activities ($000s) $9,951 $2,328 $32,740 $4,888
Underground ore production (tonnes) 126,725 87,328 358,824 249,710
Plant throughput (tonnes) 126,975 106,636 377,711 268,342
Head grades:
Silver grade (g/t) 90 96 104 94
Zinc grade (%) 1.77 1.91 2.19 2.05
Lead grade (%) 0.77 1.05 0.89 2.05
Copper grade (%) 0.28 0.28 0.32 0.29
Surface stockpile (tonnes) 6,220 32,034 6,220 32,034
Contained metals:
Silver (ounces) 308,211 252,450 1,042,769 635,611
Zinc (pounds) 4,028,925 3,628,163 15,473,451 9,966,765
Lead (pounds) 1,410,286 1,767,900 5,116,769 4,495,911
Copper (pounds) 451,017 385,082 1,620,623 1,039,986
Revenue from metal payable ($000s) $15,762 $10,548 $56,547 $26,535
Silver 61% 43% 58% 43%
Zinc 21% 30% 22% 30%
Lead 9% 15% 9% 15%
Copper 9% 12% 11% 12%
Recovered silver equivalent ounces(3) 604,975 537,698 2,153,520 1,401,190
Silver payable ounces 264,809 252,450 909,298 615,669
Total cash cost (recovery) per silver payable ounce(2) (US$) $6.22 $3.03 $(0.68) $3.54

Results of Operations
  • Mine operating earnings for Q3 2011 increased 468% to $6.8 million compared to $1.2 million for Q3 2010.
  • Net earnings for Q3 2011 increased 310% to $3.8 million or $0.02 per share (basic) compared to a net loss of ($1.8) million or $(0.01) per share (basic) for Q3 2010.
  • Adjusted EBITDA(2) for Q3 2011 increased 191% to $6.7 million compared to $2.3 million for Q3 2010.
  • Cash flows from operating activities in Q3 2011 increased by 335% to $10.0 million compared to $2.3 million in Q3 2010.
  • Underground ore production and plant throughput in Q3 2011 increased 45% and 19% respectively compared to Q3 2010.
  • Contained metals produced in concentrates in Q3 2011 reflect an increase of 22%, 11% and 17% for silver, zinc and copper respectively, and a decrease of 20% for lead compared to Q3 2010.
  • Recovered silver equivalent ounces(3) for Q3 2011 increased 13% to 604,975 ounces compared to 537,698 ounces in Q3 2010.
  • As of September 30, 2011, the Corporation had $30.2 million in cash compared to $16.8 million as of June 30, 2011.
  • As of June 15, 2011 the Corporation no longer maintained significant influence over the operations of Scorpio Gold Corporation ("Scorpio Gold"). The Corporation elected to record its investment in Scorpio Gold as an available-for-sale financial instrument measured at fair value with changes in fair value being recognized in other comprehensive income. Included in other comprehensive income for the three-month period ended September 30, 2011 is an unrealized gain on these shares of $3.5 million. As of September 30, 2011, Scorpio Mining still holds approximately 15.5 million shares in Scorpio Gold representing 13.7% of Scorpio Gold's issued and outstanding shares.

(1) Includes a $19.8 million gain on dilution and deconsolidation of Scorpio Gold Corporation for the nine-months ended September 30, 2010.
(2) This is a non-IFRS performance measure; please see Non-IFRS Performance Measures section in the Corporation's Management Discussion and Analysis.
(3) Silver equivalent ounces in 2011 were established using budgeted prices as follows: silver US$24 per oz.; zinc US$1.01 per lb.; lead US$1.02 per lb.; and copper US$3.58 per lb.

During Q3 2011, the operation was able to maintain a high processing rate with the introduction of profitable lower grade ore from contingent sources despite problems with mobile mining equipment which disrupted production from higher-grade mining areas.

Delivery was taken of a new jumbo drill, which was commissioned at the end of the quarter and is accelerating the advance of development for production and exploration purposes. The Corporation has made a further $4.5M purchase of new mining equipment that will replace aging machines as delivery occurs in Q1 and Q2 of 2012. As a contingency, the Corporation has engaged a contractor in the key area of production drilling to ensure that adequate long hole stoping tonnes are available in the near term. This contractor is expected to mobilize to site in early November 2011.

Review of Resources at Nuestra Señora

The Corporation has recognized an unexpected divergence between the Nuestra Señora mineral reserve estimate set out in the independent technical report (the "Technical Report") dated March 28, 2011 and entitled Mineral Reserve Update, Nuestra Señora, 43-101 Technical Report prepared for Scorpio Mining Corporation by Genivar Inc., and the actual mineralization that the Corporation has encountered in the main production areas between Levels 8 and 12 at the Nuestra Señora Mine. While the Corporation has encountered lower than estimated lead and copper grades in these production areas, development and definition drilling has resulted in a shortfall of tonnes in some of the mineralized zones in these areas, compared to the reserve estimate in the Technical Report. In order to better understand this discrepancy, the Corporation has initiated a comprehensive review of the Nuestra Señora mineral reserve and resource estimates set out in the Technical Report. As part of this review, the Corporation has engaged an independent expert to review and produce a new resource and reserve estimate that is compliant with NI 43-101, and that takes into account, among other things, the Corporation's most recent available results and data. The Corporation expects the new resource and reserve estimate to be available by the end of the Q2 2012. Based on current information from production at the Nuestra Señora Mine, the Corporation expects that the new estimate will show a reduction of the Corporation's resources and reserves at Nuestra Señora, the amount of which cannot be accurately quantified at this time.

Other Developments and Exploration

Development at Candelaria continued on three levels with 8,500 tonnes of high-grade ore excavated in Q3 2011 grading 202 g/t silver, 2.89% zinc, 1.38% lead and 0.67% copper. In the coming quarter, open stope mining will be tested at Candelaria to assess the impact of dilution that results from that bulk mining method.

The Corporation is aggressively advancing its exploration activities to further build its mineral resource base and prove additional reserves. In the Cosalá District, the Corporation has NI 43-101 compliant mineral resources at the San Rafael and El Cajón deposits (see independent technical report prepared by Mine Development Associates and filed on SEDAR December 4, 2009), and over 40 exploration targets at various stages of advance. An 8,000 m delineation drilling program is currently underway with the objective of adding to and upgrading mineral resources at the San Rafael Deposit and recently operating La Verde Mine, to support near-term production growth.

There are currently six diamond drilling rigs operating on multiple projects, including step-out exploration drilling at the Nuestra Señora, Candelaria and La Verde deposits in the Cosalá District, and exploration drilling at the La Revancha and Tepozan deposits in the Parral District, Chihuahua. The potential for expanding known mineralization and discovering new zones of high-grade mineralization is high, and continued exploration success in these areas could potentially result in significant increases to the mineral resource base and overall mine life.

Corporate Update

Scorpio is pleased to announce the appointment of Victoria Vargas to the position of Vice President Investor Relations and Corporate Communications. In this role, Ms. Vargas will be the primary liaison between Scorpio Mining and its investors, analysts and the financial community globally.

Ms. Vargas has over 18 years of experience in the mining industry and brings a wealth of experience in investor relations and stakeholder communications to Scorpio Mining. She holds an honors B.Sc in Economics with an MBA in Finance.

Prior to joining Scorpio Mining, she held senior roles with a variety of publicly traded mining sector companies. These include serving as Vice President of Investor Relations with Greystar Resources Ltd., Romarco Minerals Inc. and VP Investor Relations and Corporate Communications for Iberian Minerals Corp. Previously, Victoria worked for almost 5 years at Alamos Gold Inc. and held a variety of financial and corporate development positions at Kinross from 1994 until 1999.

"Victoria is a seasoned investor relations leader who has a deep understanding of the investment community" said Scorpio Mining President and Chief Executive Officer, Parviz Farsangi. "She has been involved in a number of industry-leading transactions and has held senior communications roles with industry advocacy associations and advisory boards with Peruvian, Mexican and Canadian mining industry organizations that will help in the future growth of Scorpio Mining. We are extremely pleased that Victoria has decided to join us."

About Us

Scorpio Mining Corporation is a silver producer operating in Mexico with significant base metal by-product credits. The 100%-owned Nuestra Senora Mine and plant located in the Cosalá district of Sinaloa State, Mexico, has proven to be a low-cost operation with the benefit of flexible mining methods and diversified metal production. It boasts a fully mechanized underground operation and a processing facility built for expansion to 4,000 tonnes per day. The plant produces zinc, copper and lead concentrates; with a significant silver component in the copper and lead concentrates. In addition, the company has over 40 exploration targets mostly in the vicinity of its current operations. The Corporation also holds a 100% interest in the prospective La Revancha silver and Tepozán silver-gold projects in the Parral District of Chihuahua State, Mexico.The Corporation's strategy focuses on exploring and developing its existing mineral properties.

Scorpio Mining's President and CEO, Parviz Farsangi, MEng, MBA, PhD, PEng, is a Qualified Person for the Corporation's Mexico projects and has reviewed the content of this release.


Parviz Farsangi
President & CEO

For further information contact:
Victoria Vargas, Vice President Investor Relations and Corporate Communications +1 416-585-2200
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 production, objectives, strategy, mine operations, exploration, future performance and forecasts, our management team, and plans. 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 Señora and La Verde projects, risks related to international operations, construction delays and cost overruns, equipment breakdowns, 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.
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