Nov 06, 2014
Scorpio Mining Reports Third Quarter 2014
Toronto, November 6, 2014 - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Company") reports its financial and operating results for the third quarter ("Q3") ended September 30, 2014. This press release should be read in conjunction with the Company's unaudited Financial Statements and Management's Discussion and Analysis ("MD&A") for the third quarter ended September 30, 2014, 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 AND NINE MONTHS ENDED SEPTEMBER 30, 2014
THIRD QUARTER 2014 HIGHLIGHTS
(2) Silver equivalent ounces were calculated using the following 2014 budget metal prices: silver US$19/oz.; zinc US$0.95/lb.; copper US$2.97/lb.; and lead US$0.99/lb.
As previously disclosed, the Company had identified discrepancies between registered data and mapped information relative to the boundaries of the concessions encompassing the Company's El Cajón resource outline. In conjunction with its ongoing internal review of the matter, the Company had also previously announced that it is seeking confirmation from the DGRM of the concessions boundaries. While the Company continues to await a final determination of the concessions boundaries from the DGRM, the DGRM recently passed a resolution that confirmed the position of the respective reference points that were used to register the concessions. In accordance with the Resolution, the Company and the owner of the adjacent Silvia Maria concession are now required to provide the DGRM with legal surveying data within 30 days from the Resolution date, after which time the final boundaries are expected to be confirmed by the DGRM.
In light of the DGRM's Resolution, and based on the surveying work carried out by the Company's independent contractors and its own personnel since the boundary discrepancy first became known to the Company, the Company now believes that there is a strong likelihood that there will be a significant change to the positions of the boundaries of the concessions encompassing the Company's El Cajón mineral deposit as they were previously understood to be. If any such variation to the concessions boundaries is finally confirmed by the DGRM, the Company's management also expects that it will be necessary to prepare a revised mineral resource estimate based on the confirmed boundaries, which will likely result in a significant reduction of the quantity of estimated mineral resources compared to the Company's estimate disclosed in its most recent technical report.
As a result of the foregoing developments, management cautions investors that the mineral resource estimate with respect to the Company's El Cajón deposit and the Preliminary Economic Assessment (the "PEA") for its Nuestra Señora, San Rafael and El Cajón deposits set out in the "Technical Report and Preliminary Economic Assessment, Nuestra Señora , San Rafael and El Cajón Deposits", dated April 12, 2013 and prepared for the Company by Mine Development Associates should no longer be relied upon as it relates to the mineral resource estimate for El Cajón deposit.
The Company intends to prepare an updated mineral resource estimate for its El Cajón deposit and a revised technical report, prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects, following the DGRM's final confirmation of the concessions boundaries underlying the El Cajón deposit.
The Company is focused on maintaining ore production at current levels, to meet the nominal plant capacity of 1,600 tpd throughout 2014, first through providing the plant with material mined from the Nuestra Señora Mine, complemented with output from the La Verde Mine and the historical terreros. Towards the end of the year, the El Cajón Project is expected to become a new regular source of plant feed, with its importance increasing during the first two quarters of 2015 while it is ramping up.
Mining of the reserves and resources at Nuestra Señora will continue, with additional plant feed likely provided as defined by definition drilling.
The Company is committed to advancing the establishment of a ramp into the El Cajón orebody and eventual development of San Rafael. This underground development work at El Cajón is expected to allow for the provision of mill feed from production stopes starting in Q4 2014. Two additional quarters will be needed to ramp up mining activities to a regular production level. This level of sustainable output will be better determined once underground operations are underway and multiple accesses to the orebody are achieved.
The Company has delayed the completion of the PFS related to the El Cajón orebody that is being prepared with the assistance of JDS Energy and Mining Inc. ("JDS") until the boundary issue is finally determined by the DGRM.
As at September 30, 2014, the Company had $13.9 million in its treasury, over $28 million in working capital and no debt. The Company is expending significant efforts to maintain positive cash flow from its existing operations and continues to believe that its treasury and future cash flows will be adequate to finance the development of the El Cajón Project, advance towards the definition of resources at the La Verde Mine, proceed with infill drilling in San Rafael's Main Zone and sustain minimal regional exploration during the remainder of 2014.
Scorpio Mining Corporation is a silver producer operating in Mexico with significant base metal by-product credits. The 100% owned Nuestra Señora Mine located in the Cosalá District of state of Sinaloa, has flexible mining methods and diversified metal production. It has a fully mechanized underground operation and a 1,600 tonnes per day 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.
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
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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 the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the resolution of the boundary at El Cajón and the impact of any associated reduction of resources, any future mineral resource estimate, the preparation and delivery of a technical report or PEA, 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 the Company's required securities filings on SEDAR, including its Annual Information Form dated March 13, 2014. Although the Company 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.