NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
THE U.S.
TORONTO, May 19 /CNW/ -
Scorpio Mining Corporation (TSX: SPM) (“Scorpio“ or the “Corporation“) is pleased to announce its unaudited financial and operating results for the first quarter of 2011 (“Q1“). This press release should be read in conjunction with the Corporation's Management Discussion & Analysis, Financial Statements and Notes to Financial Statements for the three month period ended March 31, 2011, available on the Corporation's website at www.scorpiomining.com and on SEDAR at www.sedar.com. All monetary figures are expressed in Canadian dollars unless otherwise specified.
Performance Highlights:
Q1 2011 Q1 2010
Revenue ('000 of $CAD) $18,265 $6,022
Mine operating earnings ('000 of $CAD) $12,547 $1,359
Gain on dilution and deconsolidation of
Scorpio Gold Corporation ('000 of $CAD) $1,051 $19,796
Net earnings ('000 of $CAD) $6,557 $18,644
Earnings per share - Basic $0.03 $0.17
Earnings per share - Diluted $0.03 $0.16
Adjusted EBITDA((1) )('000 of $CAD) $11,554 $1,982
Cash operating cost per tonne ((1) ) US$42.93 US$36.80
Cash operating cost per silver equivalent
ounce((2)) US$7.10 US$8.12
Silver equivalent ounces produced((2)) 737,833 419,681
Parviz Farsangi, President & CEO comments, “We are very pleased to report record production of all metals in the first quarter of 2011 and a further substantial increase in mine operating earnings from our turnaround quarter, Q4 2010. Combined with a strong operational cash flow and relatively low operating cost, Scorpio Mining is well positioned among the best performing silver producers with significant base metal by-product credits in Mexico. We are committed to continue building on our current assets with an aggressive exploration program in 2011 and planned plant expansion.“
Highlights for the First Quarter Ended March 31, 2011 and Subsequent Events:
-- The Corporation achieved record mine operating earnings of
$12.5 million in Q1 2011, an increase of 823% over mine
operating earnings in Q1 2010 and 123% over mine operating
earnings in Q4 2010.
-- Net earnings were $6.6 million or $0.03 per share (basic) for
Q1 2011 compared to $18.6 million or $0.17 per share (basic)
for Q1 2010. The Q1 2010 net earnings included a $19.8 million
gain on dilution and deconsolidation of Scorpio Gold
Corporation ('Scorpio Gold'). Basic earnings per share of $0.09
in Q4 2010 was due to the inclusion of $12.4 million of
non-cash corporate tax recoveries.
-- Adjusted EBITDA((1)) increased 483% to $11.6 million in Q1 2011
compared to $2.0 million for Q1 2010.
-- Cash flow from operating activities increased by 506% to $10.8
million in Q1 2011, primarily as a result of higher production,
higher grades and better metal prices compared to Q1 2010.
-- Underground ore production in Q1 2011 increased 14% over Q1
2010 to 113,826 tonnes.
-- The Nuestra Señora plant processed 122,062 tonnes in Q1 2011, a
32% increase over Q1 2010.
-- Processed head grades during Q1 2011 averaged 115 g/t silver,
2.49% zinc, 0.98% lead and 0.42% copper compared to 88 g/t
silver, 2.07% zinc, 1.17% lead and 0.25% copper during Q1 2010.
-- In Q1 2011, contained metals produced in concentrates amounted
to 368,866 ounces of silver, 5.856 million pounds of zinc,
731,000 pounds of copper and 1.835 million pounds of lead;
reflecting increases from Q1 2010 of 89%, 68%, 161% and 2%,
respectively.
-- Total cash operating cost per silver equivalent ounce((2)) in
Q1 2011 was US$7.10 (Q1 2010: US$8.12) based on silver
equivalent ounces of 737,833 (Q1 2010:419,681).
-- Revenue from metal payable for the quarter totalled $20.8
million (Q1 2010: $7.9 million) and was distributed as follows:
silver 53% (2010: 38%); zinc 23% (2010: 33%); lead 9% (2010:
21%); copper 15% (2010: 8%).
-- Following the construction of a new power line and the
installation of a sub-station, the Nuestra Señora mine was
energized from the national electrical grid on January 19,
2011. This has reduced the mine's dependence on
diesel-generated power.
-- On March 9, 2011, the Corporation announced an updated mineral
resource and reserve estimate at its Nuestra Señora mine. The
proven and probable reserves increased to 2.764 million tonnes,
providing an estimated mine life of six years at current
production levels.
-- During Q1 2011, Scorpio Gold issued 21.9 million shares, none
of which were subscribed for by the Corporation. This resulted
in the Corporation's investment in Scorpio Gold decreasing from
approximately 35% to approximately 27% and creating a gain on
dilution recorded in the statement of operations of $1.1
million. On March 24, 2011, the Corporation sold 8,139,568
shares of Scorpio Gold for proceeds of $5.2 million. Following
this transaction, Scorpio Mining still holds approximately 19.8
million shares in Scorpio Gold, representing 19.6% of Scorpio
Gold issued and outstanding shares.
-- As of March 31, 2011, the Corporation had $27.7 million in
cash, compared to $12.6 million as of December 31, 2010. The
Corporation used existing cash to repay the $20 million
outstanding convertible debentures at maturity on May 5, 2011.
((1)) This is a non-IFRS performance measure; please see Non-IFRS
Performance Measures section in the Corporation's Management
Discussion & Analysis.
((2)) The non-IFRS measure of cash operating cost per silver
equivalent ounce is used by the Corporation to manage and
evaluate operating performance and is widely reported in the
silver mining industry as a benchmark for performance, but
does not have a standardized meaning. Silver equivalent above
is calculated on a produced metal basis using weighted
average Q1 2011 prices of silver US$31.31/oz, zinc
US$1.08/lb, lead US$1.14/lb and copper US$4.29/lb.
Outlook
The existing mineral reserves at the Nuestra Señora mine provide the equivalent of six years of production at the current processing capacity of the Nuestra Señora plant. In the Cosalá district, the Corporation has NI 43-101 compliant mineral resources at the San Rafael and El Cajón projects, as well as having several advanced exploration projects. The Corporation is aggressively advancing its exploration activities to further increase mineral resources and prove additional reserves.
The Nuestra Señora processing plant has an existing capacity of approximately 1,500 tonnes per day (“TPD“), but is expandable up to approximately 4,000 TPD. The Corporation has commenced engineering studies to quantify the investment required for varying expansion scenarios. Other growth alternatives being evaluated include the development of a second processing facility in the Cosalá district. Such expansion would allow for the diversification of process circuits and reduce the distances between multiple ore sources and processing facilities.
The Corporation will advance feasibility studies for the expansion of processing capacity and make development decisions during 2011.
Scorpio Mining's Mexico Country Manager, John A. Sadek, B.Eng. (Mining), MAusIMM, 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
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, 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 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 29, 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.
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Contact:
Rich Kaiser,
YES International:
1-800-631-8127;
001-757-306-6090 (outside North America)
Email: rkaiser@scorpiomining.com
