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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 and on SEDAR at All monetary figures are expressed in Canadian dollars unless otherwise specified.


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Year ended

Dec 31, 2011

Year ended

Dec 31, 2010

Three months ended

Dec 31, 2011

Three months ended

Dec 31, 2010

Mine operating earnings ($000s) $33,231 $8,959 $3,613 $5,488
Net earnings (loss) ($000s)(1) $12,577 $30,657 $(1,040) $14,999
Earnings per share (basic) $0.07 $0.18 $0.00 $0.08
Adjusted EBITDA(2) ($000s) $35,002 $14,325 $3,574 $7,376
Adjusted EBITDA per share (basic)(2)   $0.18 $0.09 $0.01 $0.04
Cash flow from operating activities ($000s) $33,869 $11,511 $1,129 $6,623
Underground ore production (tonnes) 511,605 351,874 135,084 102,164
Plant throughput (tonnes) 509,292 381,215 131,581 112,783
Surface stockpile (tonnes) 8,947 25,239 8,947 25,239
Head grades:
  Silver grade (g/t)

101 97 91 97
  Zinc grade (%)

2.16 2.04 2.05 2.01
  Copper grade (%)

0.33 0.32 0.34 0.37
  Lead grade (%)

0.92 1.02 1.03 0.91
Contained metals:
  Silver (ounces)

1,363,217 910,352 320,448 274,741
  Zinc (pounds)

20,395,987 14,103,587 4,922,536 4,136,424
  Copper (pounds)

2,143,091 1,666,377 522,468 626,295
  Lead (pounds)

7,210,861 6,158,650 2,094,092 1,663,750
Revenue from metal payable ($000s) $70,323 $42,231 $13,776 $15,696
Revenue distribution:

57% 45% 53% 49%

23% 28% 25% 25%

11% 13% 12% 15%

9% 14% 10% 11%
Recovered silver equivalent ounces(3) 2,847,687 2,014,188 694,538 612,941
Silver payable (ounces) 1,155,412 817,512 246,114 251,809
Zinc payable (pounds) 16,820,739 11,798,390 4,103,591 3,547,136
Copper payable (pounds) 1,953,147 1,498,453 464,203 583,771
Lead payable (pounds) 6,366,495 5,812,413 1,646,566 1,607,756
Total cash cost (recovery) per silver payable ounce(2) (US$) $1.14 $1.89 $9.65 $(1.82)


  • Revenue from metal payable increased 67% to $70.3 million in 2011 compared to $42.2 million in 2010 as a result of record production and increased metal prices;
  • Cash cost per silver payable ounce, net of by-product credits, was $1.14 in 2011 compared to $1.89 in 2010;
  • Mine operating earnings in 2011 increased 271% to a record of $33.2 million compared to $9.0 million in 2010;
  • Net earnings for 2011 decreased 59% to $12.6 million or $0.07 per share (basic) compared to net earnings of $30.7 million or $0.18 per share (basic) for 2010. Included in the net earnings for 2010 is a $20.2 million gain on dilution and deconsolidation of Scorpio Gold Corporation and a $9.9 million deferred income tax recovery adjustment which in the aggregate accounted for $0.18 per share (basic);
  • Adjusted EBITDA(2) in 2011 increased 144% to $35.0 million compared to $14.3 million in 2010;
  • Cash flow from operating activities in 2011 increased 194% to $33.9 million compared to $11.5 million in 2010;
  • Attained debt-free status through the repayment of $20 million to fully retire convertible debentures;
  • After the repayment of the $20 million debentures in May 2011, and prepayments in December 2011 of $4 million for equipment and $1.8 million for reagents, which will be delivered in 2012, the Corporation had $25.8 million in cash as at December 31, 2011 compared to $12.6 million as at December 31, 2010; and
  • Working capital as at December 31, 2011 was $48.9 million compared to a negligible amount as at December 31, 2010.

  • Zero environmental non-compliance;
  • Reduced lost time and severity frequencies by 91% and 89%, respectively, compared to 2010;
  • Underground ore production and plant throughput in 2011 increased 45% and 34%, respectively, compared to 2010;
  • Recovered silver equivalent ounces(3) in 2011 increased 41% to 2,847,687 ounces compared to 2,014,188 ounces in 2010;
  • Contained metals produced in concentrates in 2011 reflect an increase of 50%, 45%, 29% and 17% for silver, zinc, copper and lead, respectively, compared to 2010;
  • Commenced development of the Candelaria deposit in preparation for test mining;
  • Assumed control of mining operations at the La Verde Mine and commenced refurbishment for improved safety and future production. Initial metallurgical testing performed at Nuestra Señora plant;
  • Initiated replacement of aging mining fleet; and
  • Closed agreement with Grupo Mexico to obtain its district concessions in the Cosalá District.


  • Revenue from metal payable decreased 12% to $ 13.8 million in Q4 2011 compared to $15.7 million in Q4 2010. Although there was increased production of contained metals in Q4 2011 compared to Q4 2010, the decrease in revenue was due mainly to lower silver and copper payables due to variations in metallurgy, and commercial settlement variations which have subsequently returned to acceptable ranges; decreases in the recorded metal prices and an increase in lead concentrate inventory at the end of Q4 2011;
  • Cash cost (recovery) per silver payable ounce, net of by-product credits, was $9.65 in Q4 2011 compared to $(1.82) in Q4 2010. This increase in Q4 2011 resulted from lower than usual payable silver as explained above; and the fact that not all of the contained metals from production were realized since a customer was not able to purchase all of the December production of lead concentrate, which contains a significant portion of silver. In addition, the Corporation incurred approximately $0.9 million of additional costs in Q4 2011 beyond those incurred in Q4 2010, specifically relating to additional spare parts for the mill, increased insurance premiums for increased coverage, year-end adjustments for labour, and contracting a third party to perform drilling. This increased cost accounted for $3.66 cash cost per silver payable ounce;
  • Mine operating earnings in Q4 2011 decreased 34% to $3.6 million compared to $5.5 million in Q4 2010. The decrease in mine operating earnings is due to the factors explained above, namely decreases in metal payables and metal prices, an increase in concentrate inventory which led to reduced revenues; and the additional $0.9 million costs;
  • Net loss in Q4 2011 was $(1.0) million or $0.00 per share (basic) compared to net earnings of $15.0 million or $0.08 per share (basic) in Q4 2010 as a result of the reduction in revenues and increased costs described above; the Q4 2010 earnings included a $11.5 million deferred income tax recovery adjustment which accounted for $0.06 per share (basic);
  • Adjusted EBITDA(2) in Q4 2011 decreased 52% to $3.6 million compared to $7.4 million in Q4 2010 as a result of the reduction in revenues, and additional costs described above; and
  • Cash flow from operating activities in Q4 2011 decreased by 83% to $1.1 million compared to $6.6 million in Q4 2010 as a result of the reduction in revenues, additional costs described above and the prepayment of $1.8 million for reagents to be delivered in 2012.

  • Underground ore production and plant throughput in Q4 2011 increased 32% and 17%, respectively, compared to Q4 2010;
  • Recovered silver equivalent ounces(3) in Q4 2011 increased 13% to 694,538 ounces compared to 612,941 ounces in Q4 2010;
  • Contained metals produced in concentrates in Q4 2011 reflect an increase of 17%, 19% and 26% for silver, zinc and lead, respectively, and a decrease of 17% for copper compared to Q4 2010;
  • Announced high-grade results from San Rafael drilling (Press release November 7, 2011); and
  • Appointed Vice-President of Exploration.

(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.


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.

  • Continuous improvement of safety and environmental systems building on the recent achievement of 1 million hours with no lost time accidents;
  • Sustaining capital expenditures of $5.2 million allocated for maintaining and improving existing operations at Nuestra Señora;
  • Approved $5 million for Phase I of the Nuestra Señora plant expansion by 80% to 2,750 tonnes per day. Phase I of this expansion which includes engineering, civil works, and the purchasing of long lead time items such as an additional used ball mill and the installation of a flash flotation cell, is expected to be concluded in Q2 2012. The commencement and completion of Phase II which includes construction and commissioning will depend on the results of the updated NI 43-101 resource and reserve estimates at Nuestra Señora, El Cajón and San Rafael, drilling results at La Verde and permitting. The total plant expansion is estimated at $20 million and will be funded internally;
  • $9.3 million allocated for exploration including exploration drilling at Nuestra Señora and its adjacent deposits; infill and exploration drilling at San Rafael, El Cajón and La Verde to support near-term production growth; exploration drilling of multiple prospects in the Cosalá North District; and drill testing of the La Revancha and Tepozán projects in the Parral area;
    - Updated resource estimates at San Rafael and El Cajón deposits are expected by the end of Q2 2012 and reserve estimates are expected by the end of Q3 2012 or early Q4 2012;
    - Drilling on the La Verde Mine is expected to finish in Q2 2012 to be followed by geological modelling and interpretation. The Corporation will make an assessment at that time to determine whether the data will support a resource estimate. The mine is currently undergoing refurbishment to improve safety and production efficiency; and
    - 4,500 meters surface drilling program at La Revancha and Tepozán. The initial drill results from La Revancha in Parral District have returned significant silver values over substantial widths (Press release March 5, 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:

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 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.


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 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.
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