Aug 14, 2013
Scorpio Mining Reports Financial Results for its Second Quarter 2013
Toronto, August 14, 2013 - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Company") reports its financial and operating results for the second quarter ("Q2") ended June 30, 2013. This press release should be read in conjunction with the Company's unaudited Financial Statements and Management's Discussion and Analysis for the second quarter ended June 30, 2013, available on the Company'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 THREE MONTHS ENDED JUNE 30, 2013
SECOND QUARTER 2013 HIGHLIGHTS & SUBSEQUENT EVENTS
(2) Silver equivalent ounces were calculated using the following metal prices: silver US$24/oz.; zinc US$0.90/lb.; copper US$3.50/lb.; and lead US$0.90/lb.
Although production from the Nuestra Señora Mine in Q2 2013 encountered lower silver, copper and lead grades compared to Q1 2013; a thorough review of previously mined sections of the ore body, including the Candelaria zone, in conjunction with the on-going placement of backfill, and other initiatives should allow for the improvement of head grades going forward. Mining of resources at Nuestra Señora will continue with additional ore as defined by short-term definition drilling while ensuring that safe, sustainable methods are used.
Over the past year, a series of steps were taken to reduce costs. However, the implemented cost reduction programs have been impacted by the lower mined feed grades, which translate into higher cash cost per ounce of payable silver.
In response to the recent drop in silver and base metals prices, we have intensified our focus on improving margins through cost reduction efforts. We have taken additional measures to reduce overall spending and increase cash flow generation, including a 10% reduction in personnel to be implemented during Q3 2013. We have identified new reduction in capital and exploration spending for 2013. The planned 2013 exploration program, originally budgeted at $5.2 million, has been reduced to $3.1 million of which $1.8 million has been spent to date.
The Company's goal is to commence production at El Cajón and feed its ore to the processing plant, initially in conjunction with Nuestra Señora Mine output. A window of six months would be required, from receipt of the remaining permit, to complete sufficient development work underground at El Cajón to start supplying material at the plant. An additional quarter will be needed to ramp the mining activities to a regular production regime at an expected potential of up to 1,500 tpd using design assumptions based solely on surface drilling data. A level of sustainable output will be better determined once underground operations are underway and access to the ore body is achieved.
As at June 30, 2013 the Company had $23.8 million in its treasury. Despite reduced cash flows brought by the difficult metal pricing environment, planned reduction in the operating and exploration expenditures, coupled with the possibility of improving head grades and the commencement of mining at La Verde, give the Company confidence that its treasury and future cash flows will be adequate to finance its immediate capital, development and exploration plans.
Scorpio Mining Corporation is a silver producer operating in Mexico with significant base metal by-product credits. The 100% owned Nuestra Señora Mine in the Cosalá District of Sinaloa State, Mexico, has flexible mining methods and diversified metal production. It has a fully mechanized underground operation and a processing facility with permitted capacity for expansion to 4,000 tonnes per day. The plant produces zinc, copper and lead concentrates, with a significant payable silver component in the copper and lead concentrates.
In addition, the Company has numerous exploration targets in the vicinity of its current operations as well as the advanced El Cajón and San Rafael development projects. The Company's strategy for near-term growth is currently focused on mine development of the El Cajón deposit upon receipt of permitting.
Scorpio Mining's President and CEO, Mr. Pierre Lacombe, Eng, is a Qualified Person as defined under National Instrument 43-101 and has reviewed and approved 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
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 Company'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 Company'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 14, 2013. 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.