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May 04, 2012
Scorpio Mining Improves Q1 2012 Net Earnings to $4M

Toronto, May 4, 2012 - Scorpio Mining Corporation (TSX:SPM) ("Scorpio Mining" or the "Corporation") reports its financial and operating results for the first quarter ("Q1") ended March 31, 2012. This press release should be read in conjunction with the Corporation's unaudited condensed interim consolidated financial statements and the Management's Discussion and Analysis for the three months ended March 31, 2012 which are available on the Corporation's website at and on SEDAR at All monetary figures are expressed in Canadian dollars unless otherwise specified.


Mar 31


Dec 31


Mar 31


Mine operating earnings ($000's) $5,983 $3,613 $12,547
Net earnings ($000's) $4,013 $(1,040) $6,557
Earnings per share (basic) $0.02 $ - $0.03
Adjusted EBITDA ($000's)(1) $5,485 $3,574 $12,852
Adjusted EBITDA per share (basic)(1) $0.03 $0.01 $0.07
Cash flows from operating activities ($000's) $2,915 $1,129 $10,836
Underground ore production 140,653 135,084 113,826
Plant throughput 132,042 131,581 122,062
Head Grades:
   Silver Grade (g/t) 98 91 115
   Zinc Grade (%) 1.65 2.05 2.49
   Copper Grade(%) 0.39 0.34 0.42
   Lead Grade (%) 0.82 1.03 0.98
Contained metals in concentrates:
   Silver (ounces) 330,487 320,448 368,866
   Zinc (pounds) 3,832,948 4,922,536 5,856,347
   Copper (pounds) 599,854 522,468 731,078
   Lead (pounds) 1,564,132 2,094,092 1,834,694
Contained silver equivalent ounces(2) 620,356 659,765 763,896
Total cash (recovery) cost per silver payable ounce (US$)(1) $7.78 $10.81 $(7.63)
Silver payable ounces 265,009 246,114 321,713
Zinc payable pounds 3,381,615 4,103,691 4,546,654
Copper payable pounds 523,897 464,203 689,768
Lead payable pounds 1,425,840 1,646,566 1,626,241
Revenue from metal payable ($000's) $15,585 $13,776 $20,812

(1) This is a non-IFRS performance measure; please see Non-IFRS Performance Measures section of the Q1 2012 Management's Discussion and Analysis.
(2) Silver equivalent ounces were established using the following: silver US$24 per oz.; zinc US$0.90 per lb.; copper US$3.50 per lb.; and lead US$0.90 per lb.

  • Revenue from metal payable increased 13% from $13.8 million in Q4 2011 to $ 15.6 million in Q1 2012 due to improved silver grade and higher recorded metal prices. Revenue from metal payable decreased 25% compared to $20.8 million in Q1 2011 which was the best quarter in the history of the Corporation. The decrease in revenue relative to Q1 2011 was due mainly to lower production of contained metals as a result of lower head grades in all metals, decreases in the recorded metal prices and an increase in all metal concentrate inventories at the end of Q1 2012;
  • Cash cost (recovery) per silver payable ounce, net of by-product credits, was $7.78 in Q1 2012 compared to $10.81 in Q4 2011 and $(7.63) in Q1 2011. The decrease in Q1 2012 relative to Q4 2011 was due to reduced costs and higher silver payable. The increase in Q1 2012 relative to Q1 2011 resulted from lower base metal credits due to a decrease in base metal prices for lead, copper and zinc in Q1 2012 compared to Q1 2011, a decrease in contained metals produced, and higher copper and lead concentrates in inventory, which contains significant silver. In addition, the Corporation incurred additional costs in Q1 2012 beyond those incurred in Q1 2011, specifically relating to contracting a third party to perform drilling until April 2012;
  • Mine operating earnings increased 65% from $3.6 million in Q4 2011 to $6.0 million in Q1 2012 due to increased revenues and decreased costs. Mine operating earnings in Q1 2012 decreased 52% compared to $12.5 million in Q1 2011. The decrease in mine operating earnings is mainly to decreases in metal payables and metal prices, an increase in concentrate inventories which led to reduced revenues, and additional costs;

  • Recovered silver equivalent ounces(2) in Q1 2012 decreased 6% from 659,765 ounces in Q4 2011 to 620,356 ounces mainly due to reduction in zinc and lead. Recovered silver equivalent ounces decreased 19% compared to 763,896 silver equivalent ounces in Q1 2011;
  • However, copper concentrate inventory increased twofold at the end of Q1 2012 compared to Q4 2011 which included approximately 17,500 ounces and 3,100 ounces of silver payable, respectively. This increase in inventory was due to the Corporation awaiting third party sampling for assay content. The silver content in the copper concentrate inventory was significantly higher for Q1 2012 inventory compared to Q4 2011 inventory.


The Corporation is continuing to work with Mine Development Associates, an independent firm that has been engaged to prepare new resource and reserve estimates for the Nuestra Señora Mine. The Corporation expects the new resource estimate to be available by the end of Q2 2012 followed by the new reserve estimate in late Q3 2012 or early Q4 2012.

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 completion of new resource estimates for the San Rafael and El Cajón is expected by the end of Q2 2012. Drilling at San Rafael is complete and the final planned hole at El Cajón is in progress.

The Corporation is continuing the construction of Phase I of the existing processing facility and is on time and within its $5 million budget. The decision to proceed with, and eventual implementation schedule of Phase II of the plant expansion, which increases processing capacity by 80%, taking production from 1,500 tpd to 2,750 tpd, will depend on the results of the resource and reserve estimates at Nuestra Señora, San Rafael and El Cajón, drilling results at La Verde and permitting.

At the Parral Mining District, the Corporation has currently completed 4,068 meters of its Phase I 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. A follow up program of at least 2,000 meters for La Revancha is planned beginning in late June or July 2012. Subject to results, the Corporation anticipates conducting a preliminary resource calculation for this project by year end. The Tepozán program is expected to be completed by June 2012 at the earliest, with results reported at that time.

About Us

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 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 Email: [email protected]
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North America)
Email: [email protected]


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.
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