Mar 27, 2012
Scorpio Mining Reports Record Revenues, Mine Operating Earnings and Cash Flow for 2011 and Provides Update on Mineral Resources and Reserves at Nuestra Señora
Toronto, March 27, 2012 - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Corporation") is pleased to announce its financial and operating results for the year and fourth quarter ("Q4") ended December 31, 2011. This press release should be read in conjunction with the Corporation's audited Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2011, available on the Corporation's website at www.scorpiomining.com and on SEDAR at www.sedar.com. All monetary figures are expressed in Canadian dollars unless otherwise specified.
HIGHLIGHTS FOR THE YEAR AND THREE MONTHS ENDED DECEMBER 31, 2011
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FOURTH QUARTER 2011 HIGHLIGHTS
(1) The year ended December 31, 2010 results include a $20.2 million gain on dilution and deconsolidation of Scorpio Gold Corporation and a $9.9 million future income tax recovery adjustment; the Q4 2010 results include an $11.5 million future income tax recovery adjustment.
(2) This is a non-IFRS performance measure; please see Non-IFRS Performance Measures section in the 2011 Management's 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.; copper US$3.58 per lb.; and lead US$1.02 per lb.
NUESTRA SENORA MINERAL RESOURCES AND RESERVES UPDATE
The Corporation has identified an unexpected divergence between the mineral resource and reserve estimates set out in the technical report dated March 28, 2011 and entitled Mineral Reserve Update, Nuestra Señora, NI 43-101 Technical Report (the "Nuestra Señora Technical Report") prepared for the 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. The Corporation has encountered ore with lower than estimated lead and copper grades in these production areas, and development and definition drilling has identified lower tonnages relative to what was expected in the Nuestra Señora Technical Report.
In order to better understand this divergence, the Corporation has commissioned a comprehensive update of the Nuestra Señora mineral resource and reserve estimates. As part of this update, in Q3 2011 the Corporation engaged Mine Development Associates, an independent expert, to prepare new resource and reserve estimates that are compliant with NI 43-101 and that take into account the latest information available to the Corporation. The Corporation expects the new resource estimate to be available by the end of Q2 2012. An updated reserve estimate is expected in late Q3 2012 or early Q4 2012.
As of the date of this press release, the Corporation's current assessment of the geology, exploration and production data indicates that the mineral deposit at Nuestra Señora is not as continuous as previously interpreted. The model developed by the Corporation based on the geological information and data available to it at the time, predicted areas suitable for block mining from large stopes. However, geological information and data from actual mining received by the Corporation since the development of such model suggests that the mineral deposit is more variable in distribution and continuity, and more confined in extent than anticipated. Accordingly, management expects a significant reduction in the resource and reserve estimates at the Nuestra Señora Mine. The magnitude of the reduction cannot be accurately quantified at this time. Such a reduction could adversely impact production, life of mine, and cash flow forecast, including the Corporation's previously released production guidance for 2012. A reduction in operating earnings from this mine could negatively impact earnings and the financial condition of the Corporation.
OUTLOOK FOR 2012
The Nuestra Señora processing plant has an existing capacity of approximately 1,500 tonnes per day (tpd) but is expandable up to approximately 4,000 tpd. The Corporation has commenced Phase I of the plant expansion to 2,750 tpd. The commencement of Phase II of this expansion depends on the results of the resource and reserve update at Nuestra Señora and geological interpretation of the La Verde Mine to ascertain their ability to provide immediate expanded ore feed while the San Rafael and El Cajón deposits are being developed. Other growth alternatives being evaluated include the development of a second processing facility in the Cosalá District. Such expansion would allow for the diversification of process circuits and reduce the distances between multiple ore sources and processing facilities. Near term and future production growth to support these expansion scenarios are expected to come through advancement of deposits in the Cosalá District.
Conference Call & Webcast Details
Scorpio Mining plans to host a conference call on Monday April 2, 2012 at 10:30 a.m. (EDT) to discuss these results. To participate in the call please dial:
North America Toll Free: (888) 231-8191
Toronto Area: (647) 427-7450
Conference ID: 67041078
A digital recording of the conference call will be available two hours after the call's completion at 1-855-859-2056. An archived webcast of the conference call will also be available on the Scorpio Mining website at: www.scorpiomining.com/s/Events.asp.
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 area in the respective states of Chihuahua and Durango, 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.
ON BEHALF OF SCORPIO MINING CORPORATION
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 the Corporation's operations, exploration and development plans, expansion 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 29, 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.