Feb 05, 2015
Scorpio Mining Announces Fourth Quarter and Year End 2014 Results and 2015 Guidance
TORONTO, ONTARIO—February 5, 2015—Scorpio Mining Corporation (TSX: SPM)(OTCQX: SMNPF) (“Scorpio Mining” or “the Company”) today announced production and preliminary cash costs for the fourth quarter and full year ending December 31, 2014 and provided guidance for 2015 for its Cosalá Operations and Galena Complex. Please note: the merger with U.S. Silver & Gold Inc. closed on December 23, 2014 and the results that follow reflect U.S. Silver & Gold operations for the full fourth quarter and all of 2014. All figures in $USD unless otherwise indicated.
• Consolidated production of approximately 647,000 silver ounces and 1.11 million silver equivalent ounces for the quarter, and approximately 2.80 million silver ounces and 4.37 million silver equivalent ounces for the year.
Year-end financial statements for Scorpio Mining are scheduled to be released by March 27, 2015. References to cash, cash costs and all-in sustaining costs for both the quarter and full year are unaudited and may change based on final audited results.
“With our merger transaction complete, we’ve been working hard to develop plans that will transition Scorpio Mining into a leading junior silver producer,” said President & CEO Darren Blasutti. “The first step was to assess each of our operating mines and identify opportunities for productivity improvements, cost reductions and organic growth. This focused approach will enable us to achieve our production and cost guidance for 2015 and our long term goals. El Cajón has been placed on care and maintenance effective immediately resulting in a staffing reduction of approximately 90 jobs representing almost 25% of the workforce at the Cosalá Operations. While this was a difficult decision, it is necessary. We are optimistic about the exploration potential in the Cosalá District, and are particularly focused on bringing forward development of the highly attractive San Rafael deposit.”
Consolidated silver production totaled 647,043 ounces compared with 712,032 ounces in the prior year’s fourth quarter, while silver equivalent production increased 5% year-over-year to 1,106,074 ounces. Annual silver production totaled 2.80 million ounces and silver equivalent production was 4.37 million ounces. Cost and capital controls led to reductions in cash costs and all-in sustaining costs of 15% and 11% respectively which were offset by capital spending on El Cajón underground development. Further productivity improvements are expected in 2015 while systematic cost controls are being implemented at the Cosalá Operations. Lead production increased almost 80% in the fourth quarter and 16% for the year as the Galena mine continued its focus on silver-lead ore.
Galena Complex Production
During the fourth quarter of 2014, the Galena Complex produced 357,870 ounces of silver and 542,114 ounces of silver equivalent at a cash cost of $16.58 per ounce and an all-in sustaining cost of $21.04 per ounce. Production for the full year totaled 1.62 million silver ounces and 2.14 million silver equivalent ounces. This production was delivered at a cash cost of $15.67 per ounce and an all-in sustaining cost of $19.91 per ounce which represent year-over-year cost reductions of 12% and 18% respectively. Increased lead production during 2014 reduced cash and all-in sustaining costs, but transitioning our focus to silver-lead production also reduced silver production. With capital spent in 2014, more working faces will facilitate a ramp up silver and lead production throughout 2015.
Cosalá Operations Production
2015 Consolidated Guidance
Consolidated production of 2.6 - 3.0 million silver ounces and 4.6 - 5.2 million silver equivalent ounces is expected for 2015. Although silver production will be flat year-over-year despite the decision to put El Cajón on care and maintenance, silver equivalent production is expected to increase by 5 - 20%. Increased silver equivalent production will be driven by increased silver-lead ore tonnage from the Galena Complex. Cash costs are projected to fall approximately 15% to between $11.50 - $12.50 per silver ounce, and all-in sustaining cash costs are projected to drop approximately 20% to $16.50 - $17.50 per silver ounce compared with 2014.
The 2014 exploration mandate at the Galena Complex was to develop near-term resources, define the highest grade areas close to existing infrastructure and complete block modeling on priority veins. Drilling for the year totaled 7,550 meters and focused mainly on the 2400, 4600, 4900 and 5500 levels in support of the Company’s transition to silver-lead dominant production.
As anticipated, drilling on the 4900 level successfully intersected the upward extension of the 175 Vein, and test mining is currently taking place between the 5200 and 5500 levels to fully define the resource in this area. Drilling in the 171 Vein resulted in good intercepts ranging in depth from approximately 4 - 20 meters below track elevation. This new information is being incorporated into current development activities in the area. Block-modeling of the newly re-evaluated Upper Country Silver Lead (UCSL) Veins is continuing and additional silver-lead resources have been defined between the 2400 and 3700 levels.
Although the Cosalá exploration budget was limited in 2014, field work was completed in several areas and the entire region was re-mapped using satellite-based structural analysis to provide a clearer understanding of the geology.
In the La Verde Mine, approximately 84 holes and 10,800 meters of previous drilling were re-logged and sampled and a model of the mineralization was developed. Several zones of mineralization were found to be faulted extensions or repetitions of the two principle zones and 2,000 meters of drilling was completed to follow up where previous intersections had been detected. Potential extensions of these known zones were investigated and explored. One of these areas, the South Zone, was tested and preliminary indications are that this area could yield as much as 300,000 tonnes of silver-copper mineralization. Further definition of this area will be completed by February 2015. Please see Table 5 below for selected details. Additional results are available at scorpiomining.com.
At the San Rafael project, 1,000 meters of geotechnical drilling was completed to assess and better define the characteristics of the host rocks and mineralization. The deposit hosts a large resource and current efforts are focused on updating geological models, confirming metallurgy and establishing preliminary mine design. The Company expects that this work will be completed in the second half of 2015. The El Cajón mine was placed on care and maintenance in January 2015. Prior to suspension, several milling campaigns were completed which allowed metallurgical performance to be confirmed. The decision to halt development was made in light of prevailing metal prices. With considerable underground infrastructure already in place, the project can be reactivated on short notice when silver prices turn upward.
Scorpio Mining Corporation is a silver and gold mining company focused on growth from its existing asset base and execution of targeted accretive acquisitions. It owns and operates the Cosalá Operations in Sinaloa, Mexico, the Galena Mine Complex in the Silver Valley/Coeur d'Alene Mining District, Shoshone County, Idaho and the Drumlummon Mine Complex in Lewis and Clark County, Montana.
Mr. Jim Atkinson, Vice-President Exploration and a Qualified Person under Canadian Securities Administrators guidelines, has approved the applicable contents of this news release.
For further information please see SEDAR or scorpiomining.com.
Quality Assurance / Quality Control (“QA/QC”):
Cautionary Statement on Forward-Looking Information:
For more information:
Galena 2014 Q4 Underground Drilling Results