Toronto, October 1, 2012 – Scorpio Mining Corporation (TSX:SPM) (“Scorpio Mining” or the “Company”) today announced an independent updated Mineral Resource estimate for its 100% owned San Rafael Development Project in Sinaloa State, Mexico completed by Mine Development Associates of Reno, Nevada (“MDA”).
Peter J. Hawley, Scorpio’s Interim CEO commented: “The solid increase in the resource and upgraded categories of the San Rafael deposit acquired in the Platte River acquisition puts another development project in the pipeline for the Company’s growth. Along with completed geotechnical studies and land access agreements, the new resources have moved this project closer to the development stage. San Rafael will enhance the Company’s future, including the potential to develop a second processing operation in the Cosalá district.”
The new resource estimation demonstrates an increase in tonnage and all contained metals compared to the resource estimate presented in November, 2009 as shown in Tables 1 and 2 below. Although a portion of this increase is due to higher metal prices, a large portion is attributable to increased drill density and confidence in the resource. In addition, the ratio of Measured to Indicated Resources increased from 26% to 35%.
At the reported resource cut-off of 1.5% zinc equivalent, the following changes in the new Measured and Indicated Resources were found:
- 26.5% increase of 4.171 million tonnes to 19.912 million tonnes
- 18% increase in silver of 6.006 million ounces to 39.422 million ounces
- 33.2% increase in copper of 9.705 million pounds to 38.963 million pounds
- 3.9% increase in lead of 10.898 million pounds to 287.315 million pounds
- 10.8% increase in zinc of 66.921 million pounds to 684.140 million pounds
- 23.3% increase in zinc equivalent by 1% to 5.28% zinc equivalent
Table 1. Current and Historic Resource Estimates for the San Rafael Project
Prices used to calculate Zn Eq. in 2009 were Zn=$0.80,Pb=$0.70, Ag=$12.00, Cu=$2.00, and Au=$750.00
Prices used to calculate Zn Eq. in 2012 were Zn=$0.85,Pb=$0.85, Ag=$24.00, Cu=$2.70, and Au=$1300.00
San Rafael is a skarn deposit related to a contact between calcareous sediments and overlying volcanic rocks. Mineralization occurs in three distinct zones: the Upper Zone characterized by moderate sulfide Ag-Au mineralization, the Main Zone which is characterized by high sulfide Zn-Pb ore with significant Ag, and the deeper structurally controlled, low sulfide 120 Zone characterized by Ag-Cu-Au mineralization. All of these zones contributed to the new resource model. A total of 141 new holes were drilled by the Company in 2011 and 2012 to upgrade and increase the resource at San Rafael.
General methodology used and details on the parameters of the Mineral Resource estimate are as follows:
- The block model is made up of 3m by 3m by 3m blocks and the resource is fully diluted to that block size.
- Geologic cross sections on 25m intervals and long sections on 3m intervals were interpreted.
- Silver, zinc, lead, copper, gold and % sulfide were each modeled and estimated separately and each with their own set of mineral-domain interpretations on 25m and 3m intervals for sections and long sections, respectively.
- Inverse-distance to the second power estimation was used for the reported resource.
- Specific gravity assigned to the block model is based on total sulfide content and varied by mineral zone and ranges from 2.55 g/cm3 to 3.88 g/cm3.
- 349 holes, which include 141 new holes drilled by Scorpio, were used to create the geologic model and carry out the estimate.
- The numbers of assays used in the resource estimation are 4623 assays for Silver, 3611 for Zinc, 3329 for Lead, 2242 for Copper and 1875 for Gold.
Table 2. San Rafael Mineral Resources
Notes to Mineral Resource Statement:
1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the estimated Mineral Resources will be converted into Mineral Reserves.
2. All Mineral Resources have been classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the Standards Committee on Reserve Definitions and adopted by the CIM Council on December 11, 2005 and updated on November 27, 2010.
3. Mineral Resource estimates are as of September 7, 2012.
4. Zinc Equivalent (Zn Eq) is calculated using metal prices of $24/oz Ag, $1,300/oz Au, $0.85/lb Zn, $0.85/lb Pb, and $2.70/lb Cu.
5. Zinc Equivalent is calculated on a contained-metal basis using the metal prices noted above, without recovery factors taken into account.
6. Mineral Resources tonnage and contained-metal have been rounded to the nearest thousand and numbers might not add due to rounding.
The Mineral Resource estimate for the San Rafael Development Project was prepared by Mr. Paul Tietz, C. P. G. of MDA, who is a “Qualified Person”, as defined in NI 43-101. Mr. Paul Tietz has reviewed and approved the contents of this news release with respect to the Mineral Resource estimates.
Quality Assurance and Quality Control
Scorpio Mining’s Vice President of Exploration, Mr. James Stonehouse, is a Registered Geologist with the Society of Mining Engineers (Registration #4168919) and is a Qualified Person for this disclosure and has supervised the preparation of the technical information submitted to MDA which formed the basis for the updated Mineral Resource estimates disclosed in this press release.
Scorpio Mining’s exploration programs are directly supervised by Mr. Stonehouse, and all technical information for the Corporation’s projects is obtained and reported under a formal quality assurance and quality control (QA/QC) program. Data used in the updated Mineral Resource estimate comes from numerous drill programs conducted since 1999 and continuing to the present day. For purposes of this new Mineral Resource estimate, the QA/QC program was reviewed in terms of current standards and found to be adequate and typical of databases of this size.
For details of QA/QC procedures and results implemented for all exploration programs, reference should be made to the Company’s website at www.scorpiomining.com.
Scorpio Mining is a silver producer operating in Mexico with significant base metal by-product credits. In addition, the Company has over 40 exploration targets mostly in the vicinity of its current operations.
The Company’s 100% owned Nuestra Señora Mine and 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 tonnes per day. The plant produces zinc, copper and lead concentrates with a significant silver component in the copper and lead concentrates. Scorpio Mining’s strategy focuses on exploring and developing its existing mineral properties. At the nearby San Rafael and El Cajón deposits, an extensive diamond drilling program is in progress, with the goal of increasing the mineral resource base and ultimately an upgrade to reserve category.
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.
Cautionary Note to U.S. Investors:
Scorpio Mining reports its resource estimates in accordance with standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to as NI 43-101. These standards are different from the standards generally permitted in reports filed with the SEC. Under NI 43-101, Scorpio Mining reports measured, indicated and inferred resources, measurements which are generally not permitted in filings made with the SEC. According to Canadian NI 43-101 criteria, the estimation of measured resources and indicated resources involve greater uncertainty as to their economic feasibility than the estimation of proven and probable reserves. Under SEC Industry Guide 7 criteria, measured, indicated and inferred resources are considered Mineralized Material. The SEC considers that in addition to greater uncertainty as to the economic feasibility of Mineralized Material compared to proven and probable reserves, there is also greater uncertainty as to the existence of Mineralized Material. U.S. investors are cautioned not to assume that measured or indicated resources will be converted into economically mineable reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley, 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 Corporation’s operations, exploration and development plans, expansion plans, the discovery and delineation of mineral deposits/resources/reserves, geological interpretations, 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 Corporation’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.