Scorpio Mining Advances Expansion Planning to Increase Production Capacity
at Nuestra Se�ora Processing Plant by Over 80%
Toronto, January 30, 2012 - Scorpio Mining Corporation (TSX: SPM)
("Scorpio" or the "Corporation") is pleased to announce
that the proposal to expand its 100% owned Nuestra Se�ora processing plant,
located in Sinaloa, Mexico has been approved by its Board of Directors.
Parviz Farsangi, President & CEO, comments, "Our continued
improvements and success in the areas of production, processing and financial
strength have allowed us to focus on a major expansion project that is expected
to increase our current production capacity by over 80%. Scorpio Mining has a
strong resource base from which to build on and significant exploration upside
in the Cosal� and Parral districts, providing excellent opportunity to grow
substantially in the near term through advancing our 100% owned assets."
Over the past four months, the Corporation carried out internal engineering and
scoping studies to determine the optimum size of the Nuestra Se�ora plant
expansion from its current capacity of 1,500 tonnes per day (tpd). Scorpio is
pleased to report that the planned expansion is expected to result in a daily
processing capacity of approximately 2,750 tpd, reflecting an increase of over
80% from current processing capacity. Additional tonnage to support the
increased processing capacity may be delivered from several sources, including
additional production from the Nuestra Se�ora Mine, the refurbished La Verde
Mine, and new production from the San Rafael and El Caj�n deposits. Further
evaluation will determine the best feed combination according to potential
production schedules and permitting status.
The La Verde Mine has been in continuous production since 1988 and is located
23 km by road from the Nuestra Se�ora processing facility. Since being acquired
by Minera Platte River Gold in 2008, mine production was leased to a private
contract mining company. Production at La Verde during 2010 by non-mechanized
methods totalled 121,000 tonnes grading 114 g/t silver and 0.44% copper, with
silver and copper recoveries of 78% and 82%, respectively. Scorpio assumed
control of the operation in early 2011 and commenced refurbishment for improved
safety and future production. In addition, over 8,000 tonnes of La Verde ore
were processed at the Nuestra Se�ora plant during 2011 to determine
metallurgical performance.
Work completed to date and currently in progress to prepare the La Verde Mine
for mechanized mining production includes:
- Refurbishment
of all services (mostly completed).
- Upgrading
electrical network in preparation for mechanized mining methods
(completed).
- Installing
roof bolts and developing safer accesses (in progress).
- Formalizing
access and employment agreements with the local community (completed).
- Exploration
and definition drilling to support a NI 43-101 reserve and resource
estimate (in progress).
Presently, 3,200 metres of the initial drilling program of 4,000 metres have
been completed on the La Verde Phase I Program; results will be released on a
timely basis as received and compiled. Completion of a NI 43-101 compliant
mineral reserve and resource estimate for La Verde is expected by early
Q2-2012.
The San Rafael and El Caj�n deposits are located approximately 15 km by road
from the Nuestra Se�ora processing facility. NI 43-101 compliant mineral
resources have been defined for both deposits (see News Release dated October
15, 2009). Diamond drilling to increase the resource base and support an
upgrade to reserve category is in progress. Completion of the drilling program
is expected by the end of Q1-2012; results will be released on a timely basis
as received and compiled. Updated NI 43-101 compliant mineral reserve and
resource estimates for the San Rafael and El Caj�n deposits are expected in
Q2-2012.
Key elements included in the Nuestra Se�ora plant expansion studies were
capital cost and construction schedule estimation supported by performance
guarantees, the identification of major component requirements, and used
equipment sourcing. With the increase in plant capacity from the original plan
of 2,250 tpd (see News Release dated June 27, 2011) to 2,750 tpd, completion of
the plant expansion is now scheduled for the fourth quarter 2012, providing for
full operation at 2750 tpd throughout 2013.
The cost of expansion is estimated at US$20 million and includes detailed
engineering, procurement and construction, as well as associated mine capital
to support the increased capacity. All required capital for this expansion
project will be funded internally from operational cash flows.
The plant expansion project is subject to granting of permits by Mexico's
Ministry of Environment and Natural Resources (SEMARNAT). Reaching a processing
rate of 2750 tpd by January 2013 is contingent on a successful drilling program
at La Verde to confirm mineral resources and a reliable source of ore feed to
the plant. La Verde, by virtue of its recent operating status, is positioned as
the earliest source of ore feed amongst the advanced deposits in the Cosal�
District.
About Us
Scorpio Mining Corporation is a silver producer operating in Mexico with
significant base metal by-product credits. The 100% owned Nuestra Se�ora Mine
and plant located in the Cosal� 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 boasts 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. The Corporation also holds a 100% interest in the La Revancha
silver and Tepoz�n silver-gold exploration properties in the Parral District of
Chihuahua State, 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.
ON BEHALF OF SCORPIO MINING CORPORATION
Parviz Farsangi
President & CEO
For further information contact:
Victoria Vargas, Vice President Investor Relations and Corporate Communications
+1 416-585-2200
Email: vvargas@scorpiomining.com
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North
America)
Email: rkaiser@scorpiomining.com
Website: www.scorpiomining.com
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 plant expansion,
production, objectives, strategy, mine operations, exploration, future
performance, our management team, and plans. 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 Nuestra Se�ora and La Verde projects, risks related to international
operations, construction delays and cost overruns, equipment breakdowns, 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 30, 2011. 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.
Copyright � 2011 SCORPIO MINING
CORPORATION (TSX: SPM) All rights reserved. For more information visit our
website at http://scorpio.pubco.net/ or send
email to scorpio@scorpiomining.com
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