(Please note that all dollar amounts in this news release are expressed in Canadian dollars unless otherwise indicated. Refer to the third quarter 2012 Management Discussion and Analysis (''MD&A'') and unaudited financial statements for more information which are available on the Company's website at www.scorpiomining.com and on SEDAR at www.sedar.com )
TORONTO, Nov. 8, 2012 /CNW/ - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Company") reported operating and financial results for its third quarter (Q3) ended September 30, 2012. The Company produced a total 534,075 silver equivalent ounces in Q3 2012 compared to production of 606,786 during Q2 2012. Net earnings for Q3 2012 were $1.1 million or $0.01 per share (basic) compared to net earnings of $0.6 million or $0.00 per share (basic) in Q2 2012.
Third Quarter 2012 Highlights:
- Mine operating earnings of $3.4 million an increase of 79% from $1.9 million in Q2 2012;
- Recovered 534,075 silver equivalent ounces(1);
- Cash cost per silver payable ounce, net of by-product credits, decreased to $14.74 due to decreased costs resulting from the Company's focus on the rationalization and reduction of mining costs, and higher silver ounces payable;
- Cash flow from operating activities of $2.8 million before movements in working capital in Q3 2012 increased 40% from $2.0 million in Q2 2012 as a result of the increase in revenues and reduction of costs;
- Adjusted EBITDA(2) of $2.7 million in Q3 2012 increased 35% from $2.0 million in Q2 2012
- Commissioned a flash flotation cell in the process plant, which is currently under evaluation and expected to improve efficiency as head grades to the plant are stabilized;
- Strengthened Scorpio Mining's operations team with the addition of a Chief Mine Geologist, Mine Maintenance Superintendent and a new Mine Manager;
- Reported Mineral Resource Update at the El Cajón Development Project (Press release September 24, 2012);
- Received archaeological clearance for the first phase of the Cosalá Norte project which encompasses the underground mining areas at San Rafael and El Cajón; and
- Achieved significant progress in advancing the Environmental Impact Statement (the acronym in Spanish "MIA") for exploitation of the El Cajón deposit which is anticipated to be filed with Mexico's Secretary of Environment and Natural Resources ("SEMARNAT") in Q4 2012.
(1) Silver equivalent ounces were calculated using the following: silver US$24/oz.; zinc US$0.90/lb.; copper US$3.50/lb.; and lead US$0.90/lb.
(2) This is a non-IFRS performance measure; please see Non-IFRS Performance Measures section of the Company's Q3 2012 Management's Discussion and Analysis.
Peter J. Hawley, President and Interim CEO stated: "Despite slightly lower silver equivalent production as a result of lower by-product credits at Nuestra Señora, we were able to cut our quarterly costs by reducing mine and administration costs and increasing silver production. With a stronger operations team in place, and a newly commissioned flash flotation cell in the processing plant, we will continue to grow production at Nuestra Señora. We also advanced our development projects in the Cosalá Norte area (San Rafael and El Cajón) during the quarter by updating the mineral resource and defining underground development and power requirements at El Cajón, and receiving archaeological clearance for the first phase of underground development of both projects. We are pleased with these recent advances and are on track to complete a Preliminary Economic Assessment ("PEA") and file the Environmental Impact Statement for El Cajón and San Rafael by the end of the fourth quarter."
Subsequent to Third Quarter
- Reported Mineral Resource Update at the San Rafael Development Project (Press release October 1, 2012); and
- Reported additional results from the recently completed drill program at El Cajón. The extension of hole EC-109 at the La Emma Zone cut two new mineralized horizons: 14.4 meters of 94 g/t silver and 0.024% copper and 2.8 meters of 120 g/t silver and 0.327% copper.
The Nuestra Señora operations continue on their path to improvement with the processing plant operating at full capacity during the quarter, and the mine returning to more normal production parameters. Cost reduction programs are ongoing and meeting with success. During Q3 2012, the Company took delivery of a new production drilling machine (Cubex Aries BB) and, subsequent to quarter end, a new scoop tram (Atlas Copco ST-1030). Both pieces of equipment are vital additions to mine operations and central to our forthcoming new mine plan.
Several long-hole stopes of relatively high in-situ metal grades are currently in the process of becoming operational: the Company expects these stopes will sustain higher grade feed to the processing plant for the remainder of this year. From mid-August, 2012, average head grade of approximately 100 g/t silver was attained and the Company expects to maintain this level for the remainder of 2012. In addition, the Company plans to maintain an inventory of drilled and blasted ore equivalent to three months of production to enable blending of materials with various other stopes being developed.
The updated reserve estimate for the Nuestra Señora Mine undertaken by Mine Development Associates of Reno, Nevada ("MDA") is expected to be available in late Q4 2012. The reserve estimate will be based upon a mine design, production schedule and other criteria in compliance with NI 43-101 and incorporate the resource estimate as disclosed on June 29, 2012,
Land agreements for the Cosalá Norte area, which includes the San Rafael and El Cajón deposits, have been reached and registered with the Mexican national regulatory body. Environmental studies for the El Cajón exploitation permit have been completed with the formal documentation, which includes the latest mine design details, expected to be submitted in Q4 2012 to SEMARNAT, the Mexican federal government agency responsible for the permitting process. The Company expects to receive the first written response from SEMARNAT in connection with its submission within 60 working days of the submission.
In anticipation of receiving the exploitation permit for El Cajón, the Company has defined underground development and power requirements and commenced work to improve the haulage road to its Nuestra Señora processing plant. Following the permitting process, the Company's goal is to commence production at El Cajón and feed the ore to its processing plant.
The Company expects to complete the filing of Technical Reports on SEDAR as follows:
- Nuestra Señora Mineral Reserve estimate in Q4 2012; and
- A PEA incorporating the exploitation of the El Cajón project by the end of Q4 2012.
The decision to proceed with the final Phase II of the plant expansion to increase plant capacity by 80% from 1,500 tonnes per day ("tpd") to 2,750 tpd is still on hold pending the reserve estimate and permitting of the El Cajon project.
On the exploration front, the Company has drilled more than 38,000 meters as part of its 2012 drill program for Nuestra Señora and its properties in the Cosalá and Parral districts. Underground drilling is continuing at Nuestra Señora at a rate of approximately 1,000 meters per month.
The discovery of the new La Emma trend, at El Cajón, and the significant increase in resources recently announced demonstrate the exploration and development potential of the Cosalá district.
Given the Company's focus on exploration programs during 2012, the Company's attention at this time has turned to eliminating all backlogs of sampling and logging, while awaiting new exploration permits and planning future drill targets. Currently, the Company is also compiling baseline work including: geochemical studies, mapping, geophysical studies, and review of all historical assay results data in order to prioritize the targets for future exploration work.
As at September 30, 2012 the Company had $21.1 million in its treasury and is well positioned to continue exploration and development of its projects within the Cosalá and Parral districts
Scorpio Mining Corporation is a silver producer operating in Mexico with significant base metal by-product credits. The 100% owned Nuestra Señora Mine and processing 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 tpd. 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 and has recently updated its resource calculations for the San Rafael and El Cajón Projects. Scorpio Mining 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 Company's strategy focuses on developing the San Rafael and the El Cajón Cajon projects.
Scorpio Mining's President and Interim CEO, Mr. Peter J. Hawley P. Geo, is a Qualified Person for the Company's Mexico projects and has reviewed the content of this release.
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley
President & Interim CEO
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 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.
SOURCE: Scorpio Mining Corporation
For further information:
Victoria Vargas, Vice President Investor Relations and Corporate Communications +1 416-585-2200
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North America)