Apr 18, 2012
Scorpio Mining Reports First Quarter 2012 Production Results and Exploration Update
Toronto, April 18, 2012 - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Corporation") reports that production in the first quarter ended March 31, 2012 ("Q1 2012") from the Nuestra Señora operation totalled 620,356 silver equivalent ounces.
First Quarter 2012 Production Highlights:
The following table compares Q1 2012 with the Corporation's 2012 production guidance (News Release dated January 27, 2012). Q1 2012 production on a silver equivalent basis was on average 6% below expectations due to lower head grades.
* For comparative purposes the metal prices used to calculate silver equivalent ounces recovered are based upon the following: silver at US$24 per oz.; zinc at US$0.90 per lb.; copper at US$3.50 per lb. and lead at US$0.90 per lb.
As previously disclosed, independent technical consultant, Mine Development Associates (MDA) of Reno, Nevada is working on updated NI 43-101 compliant mineral resource and reserve estimates for the Nuestra Señora Mine, scheduled for completion in the coming quarters. When those are delivered, the Corporation will review its previous production guidance and disclose any material modification as necessary.
While the resource and reserve estimates at the Nuestra Señora Mine are currently under review, Scorpio Mining is working on several initiatives to mitigate some of the expected reserve reduction, such as the development campaigns at the San Rafael and El Cajón deposits. The Corporation is continuing the construction of Phase I of the existing processing facility and is on time and within budget. Phase I includes process flow 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. The decision to proceed with, and eventual implementation schedule of Phase II of the plant expansion, which increases processing capacity by 80%, will depend on the results of the resource and reserve estimates at Nuestra Señora, El Cajón and San Rafael, drilling results at La Verde and permitting.
Engineering studies have commenced with the objective of producing a Preliminary Economic Assessment (PEA) for the Cosalá district based upon processing several feed sources initially at the Nuestra Señora processing facility. The PEA will evaluate the potential development schedule of various mines as well as the completion of Phase II of the plant expansion.
Scorpio Mining has completed the first phase of the drilling program at its 100% owned La Revancha Project, Chihuahua State, Mexico, and commenced a 2,500 meter drilling program at its nearby 100% owned Tepozán Project, Durango State. Both projects are located in the Parral Mining District, which has a mining history dating back to colonial times and hosts several 100 million ounce silver deposits.
La Revancha has over 1.5 kilometer of outcropping veins oriented north-south and dipping steeply. Mineralization is hosted in silicified breccia and replacement zones filling fractures and faults. A considerable amount of historic mining has taken place in the vein system. A location map, geology and drill hole plan, longitudinal section, and selected cross-sections are available for review at www.scorpiomining.com/s/ParralDistrict.asp.
The Tepozán silver-gold vein system has been traced over a 1.3 kilometer strike length. The vein system has seen limited historical production and offers excellent potential for down-dip, high-grade silver-lead-zinc sulphide mineralization. Mineralized veins mapped on surface range up to 6 meters in thickness and are hosted in felsic volcanics. It is postulated that the downward extension of these veins could transect the sedimentary Parral Formation, which is considered to be a more productive horizon by Scorpio Mining's geological team working in the Parral District.
The Tepozán program is expected to be completed by June 2012 at the earliest, with results reported at that time. Final results from Phase I at La Revancha are being reviewed and will be reported shortly. A follow up program of a minimum of 2,000 meters is planned to commence in June for completion by the end of August 2012. The Corporation hopes to report a preliminary resource estimate for La Revancha by year end.
In other developments, work continues to compile information and verify the databases for both the San Rafael and El Cajón project areas in the Cosalá District. The completion of new resource estimates for these two projects is expected by the end of Q2 2012. Results of these exploration programs will be released in the next several weeks. Drilling at San Rafael is complete and the final planned hole at El Cajón is in progress. Results for both projects should be available for review by mid to late May 2012.
Scorpio Mining Corporation is a silver producer operating in Mexico with significant base metal by-product credits. The 100% owned Nuestra Señora 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 has 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. At the nearby San Rafael and El Cajón deposits, an extensive diamond drilling program is in progress to potentially increase the mineral resource base and support an upgrade to reserve category. The Corporation also holds a 100% interest in the advanced, high-grade La Revancha silver and Tepozán silver-gold projects, both located in the productive Parral District within 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 projects and has reviewed and is responsible for 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 26, 2012. 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.